• Digital Realty forms $7bn hyperscale datacentre JV
• UK mobile operators face massive class action lawsuit 
• Altice Portugal attracts low bids – report

In today’s industry news roundup: Datacentre operator is forming a $7bn joint venture with investment firm Blackstone to build four new hyperscale campuses; the UK’s four main mobile operators are facing a multibillion-pound class action lawsuit; Altice has received three lowball bids for its Portuguese operation; and more!

International datacentre operator Digital Realty is to form a joint venture with investment firm Blackstone to invest $7bn in four new hyperscale campuses across three metro areas in Europe and the US – Frankfurt, Paris and North Virginia – with each campus supporting 10 datacentres. Blackstone, which will contribute an initial $700m to the venture, will hold an 80% stake while Digital Realty will hold a 20% stake and manage the development and day-to-day operations of the joint venture. “By partnering with Blackstone, the world’s largest alternative asset manager, Digital Realty is better able to deliver capacity to meet the burgeoning demand of our hyperscale customers, by accessing a deep pool of like-minded private capital,” stated Digital Realty president and CEO Andy Power. Jon Gray, president and chief operating officer at Blackstone, added: “Datacentres are experiencing once-in-a-generation demand growth, driven by cloud adoption and the AI revolution. Digital infrastructure is one of our highest conviction investment themes as a firm, and this transaction with a trusted datacentre operator in Digital Realty is another example of how we are investing behind this trend.” Blackstone has plenty of experience in the sector: In 2021 it acquired datacentre operator QTS Realty Trust for $10bn and, according to the Financial Times, plans to invest $8bn in the expansion of the QTS datacentre portfolio to take advantage of the AI boom. 

Britain’s biggest mobile operators have long stood condemned in the dock of public opinion for their sly, underhand, and grasping practice of imposing “loyalty penalties” where, for being good customers and remaining with their service providers at the end of a contract, subscribers are ‘rewarded’ for staying on by paying more for the privilege than new customers who are offered contracts at lower prices for the same services. And now the likes of EE (part of the BT Group), Three, Vodafone UK and Virgin Media O2 are facing concerted action against them in the form of a Loyalty Penalty Claim £3.285bn class action suit brought on the behalf of 4.8 million mobile subscribers by the consumer champion Justin Gutmann (formerly of Citizens Advice, the independent organisation providing advice to people with consumer and legal problems) and the Charles Lyndon legal practice in the City of London. The meat of the lawsuit is that the four biggest mobile operators in the UK routinely use their dominant positions in the market to overcharge subscribers on up to 28.2 million mobile contracts. The most damning specific allegation is that long-term loyal subscribers have been overcharged and forced to make continued payments for their handsets long after the contractual term for them had expired. Gutmann calculates that subscribers who contracted for a service comprising a handset, data minutes, calls and texts with one of the cited mobile operators since 2007 could be in line for compensation of £1,823 each. The class action claim has been filed with the UK’s Competition Appeal Tribunal and is an ‘opt-out’ such that those subscribers who qualify would be automatically included in the claim, gratis, unless they specifically and individually decide, officially and in writing, not to pursue a claim. Gutmann says the evidence of the malpractice is that when subscribers signed-up to a (usually 24-month) contract, the provisions of it were that it covered both the cost of the handset and the use of contracted services. Gutmann alleges that the named mobile operators (and their parent companies) failed to lower the amount subscribers were charged when their contracts expired, even though they had fully paid for their handsets over the contract period. In other words, consumers continued to be charged for a handset they already owned – and they were charged more than a new subscriber on a SIM-only deal. He commented, “If our claim is successful, it will finally stop these firms from taking advantage of their loyal customers and stop the immoral practice of loyalty penalties.” The operators are putting a brave face on things but underneath it all they will be very worried. In response, an EE spokesperson said the company “strongly disagrees” with the speculative claim being brought against it; Vodafone UK said it is aware of the claim but as yet it does not know enough about it to be able to give a response; while Three simply declined to comment at all. Virgin Media O2 says its legal team has not yet been contacted on the matter, adding that it is “proud to have been the first provider to have launched split contracts a decade ago, which automatically and fully reduce customers’ bills once they’ve paid off their handset”, something they urged the other operators to do in a public shaming exercise earlier this year. The legal reality is that since 2019, network operators are obliged to inform subscribers ”via letter, email or text message” to advise them that their contract is shortly to end. However, for some reason that no one seems to be able to explain, they are not obliged to advise those about to exit their contact of the cheapest deal to which they can switch. One wonders why.

Altice, the cash-strapped multinational telecom operator owned by billionaire Patrick Drahi that is seeking to offload assets in order to cut its enormous debt pile of about $60bn, has received three takeover offers for its operation in Portugal, according to a report from Portuguese business newspaper Jornal Economico. The report noted that the non-binding bids are way below Drahi’s valuation, which is believed to be much higher than €7bn. The attempt to sell Altice Portugal is being hampered by a corruption scandal that emerged earlier this year involving Altice group’s co-founder, Armando Pereira, who was arrested and placed under house arrest in Portugal this summer on accusations that he diverted millions of euros to other accounts via Altice’s procurement programmes and processes. Altice tried to draw a line under that scandal by issuing an announcement that claimed Altice Portugal was a victim in the proceedings and pointing out that Altice has severed ties with all the companies implicated in that scandal, but there’s little doubt that the affair will be weighing on the price that any potential acquirers will be willing to pay. 

In the US, the House Foreign Affairs Committee has published a report advising and recommending that more stringent restrictions be imposed on the exportation of “critical” technologies to China and insisting that any hardware or software that is classified as vital to US national security be banned from export in perpetuity. Commenting on the report, Michael McCaul, a Texas Republican, said it is high time the US adopted a “win-at-all-costs mentality” when it comes to dealing with intellectual property that could find its way to the People’s Republic of China. He added, “We can no longer afford to avoid the truth: The unimpeded transfer of US technology to China is one of the largest contributors to China’s emergence as one of the world’s premier scientific and technological powers” and it has to stop. The report baldly states that the regulator with responsibility for export controls, the US Commerce Department’s Bureau of Industry and Security (BIS) has, hitherto, put the expansion of business and commerce above the requirements of US national security, with the result that exported American technology has long been used by the Chinese state, the Chinese military and civilian, commercial Chinese business to bolster Chinese power and influence, to the detriment of the US and its allies. The report demands that, henceforth, the BIS should assume, in every case where export of US intellectual property (IP) and material is concerned, that the goods and products will finish up in the hands off the People’s Liberation Army and be used to fuel aggressive political, military and economic policies. The report further presses for “national security bodies” to have the right to examine all high-tech export proposals and “have input” on their approval or in the denial of it. It adds that additional licence fees be imposed to cover the cost of the additional work required to assess whether or not export licences should be issued. The publication, ‘The Bureau of Industry & Security: 90-Day Review Report’, adds that the BIS routinely approves “almost all” applications for licences to export products to China and produces statistics showing that in the first quarter of 2022 the BIS denied a mere 8% of all applications made to export to Chinese companies. The 66-page report says assurances by the Chinese authorities that US technology will be used only and exclusively for the purposes detailed in the export licences aren’t worth the paper they are printed on as the PRC “regularly violates international agreements to which it agreed.”

- The staff, TelecomTV