What’s up with… Telefónica, UK altnets, Cerillion

• Telefónica proposes major job cuts in Spain
• UK altnets are in desperate financial straits – report
• Cerillion reports growth across the BSS board

In today’s industry news roundup: Telefónica to cull 20% of its Spanish workforce as part of a €3bn cost-cutting exercise; UK altnets report heart-stopping collective losses in 2024, according to a new report; BSS vendor Cerillion has reported impressive growth in sales, margins and profits for its most recent full financial year; and more!

Telefónica has unveiled plans to cut 5,040 jobs in Spain, equivalent to about 20% of its workforce in the country, trade unions have told Reuters. The international telco, which earlier this month unveiled its new strategy that included plans to cut annual costs by €3bn per year, currently has about 25,000 staff in its domestic market. The cuts would impact staff at its fixed-line, mobile and IT services divisions. The operator is also proposing significant job cut plans at its pay-TV operation Movistar+, where about 280 staff, about one-third of the total at that unit, are set to be laid off. Further headcount reductions at the telco’s international and centralised operations are set to be shared with unions on 25 November.   

Many of the UK’s fibre-to-the-premises (FTTP) altnets, as the competitive fibre broadband access players across Great Britain are collectively called, are generally known to be struggling financially, making them prime targets for takeover offers that could be construed as unattractive but potentially acceptable to investors wondering if they will ever see any of their money back. With still way more than 100 altnets across the full length of the UK, highly respected digital media and telecom sector research firm Enders Analysis laid bare today quite how economically constrained they are, in a new report published for its subscribers and entitled UK altnets: Something’s got to give. In its summary, the Enders Analysis team noted that the collective losses reported by the altnets totalled £1.5bn in 2024, “as EBITDA [earnings before interest, taxes, depreciation and amortisation] losses persisted and interest costs rose sharply, with ARPUs [annunal revenue per user] weakening and operating costs stubbornly high, and the increasing interest burden looking unpayable under any reasonable scenario.” It added: “Even the best performing altnets can barely make EBITDA breakeven, and not make sufficient margins to cover ongoing customer acquisition investment, resulting in a perpetual cash drain for their investors. The impact on the rest of the sector is worsening in the short term as pricing falls, but this should accelerate the inevitable consolidation into a sustainable wholesale model under CityFibre and/or VMO2/Nexfibre.” UK altnet consolidation has been anticipated for about five years already, yet few deals have been closed, though there is constant talk about multiple takeover discussions that don’t seem to lead anywhere. The latest mega-rumour in the UK altnet market is that Netomnia, one of the few altnets to have achieved scale and to have broken even at an adjusted EBITDA level, is being lined up for a major acquisition by Virgin Media O2 (VMO2) but that CityFibre, the largest of the altnets, is also interested in acquiring Netomnia to achieve even greater scale.  

For once, here’s some positive industry news! BSS vendor Cerillion, which has been focused on developing and providing business support systems (BSS) solutions to network operators for more than 25 years, has reported a 4% increase in full fiscal year revenues to £45.4m for the 12 months to the end of September, with the company’s adjusted EBITDA margin increasing from 47.4% in the previous year to 50.9%, or £23.1m. Net profit before tax increased by 10% to £21.7m. In addition, the vendor’s order book value increased by 21% to £56.9m. The company’s CEO, Louis Hall, stated: “We continued to invest in the business to support future growth. In particular, we increased R&D spend, focusing further on AI, and expanded our resources in delivery, sales and marketing. Cerillion remains well positioned and we enter the new financial year with a record back-order book and exciting prospects in the new business pipeline. The company’s very strong financial foundations support our growth plans and we view future prospects with great confidence.” Cerillion recently announced the launch of Cerillion 25.2, which includes its new MCP [Model Context Protocol] Server and “a powerful suite of AI agents that bring true conversational intelligence to all aspects of a CSP’s business,” including its Cerillion Billing Agent, the company’s “first fully featured AI agent”.  

Telefónica and Vodafone Spain, now owned by Zegona Communications, have reportedly sold a 30% stake in their wholesale FTTP company, Fiberpass, to BNP Paribas-owned AXA Investment Management for about €600m. The telcos, which had always said they would seek a third-party investor in the joint venture, will see their respective stakes in Fiberpass drop to 60% for Telefónica and 10% for Vodafone Spain. Fiberpass started operations on 1 March this year: Its network reaches about 3.65 million Spanish properties and is currently used to provide commercial services to about 1.4 million end users.

1&1, the mobile operator that is challenging Germany’s major mobile operators with its greenfield 5G network, has acquired its fixed-line sister company Versatel from its parent company United Internet for €1.3bn. United Internet, which holds an 86.46% stake in 1&1, says the intra-group transaction combines its telecom activities and expertise under the umbrella of 1&1. Read more. 

– The staff, TelecomTV