What’s up with… Liberty Global and Telefónica, Orange and VOO, smartphones
- Liberty Global and Telefónica boost their fibre play with new JV
- Europe goes after Orange’s takeover plans for Belgium’s Voo-Brutélé
- Smartphone market continues its decline
Liberty Global and Telefónica have struck a deal to set up a $4.5bn joint venture (JV) that will roll out fibre-to-the-home (FTTH) networks to between five million and seven million households in the UK. The two companies will jointly hold a 50% stake in the JV through a holding company, while the other half will be owned by investment company InfraVia Capital Partners. The JV will aim to deploy FTTH to greenfield premises across the country in close proximity to Virgin Media O2’s existing fibre deployments as well as in completely new areas. Its first target is rolling out fibre to five million homes that are not currently served by Virgin Media O2 by 2026. According to Liberty Global CEO Mike Fries, the deal will allow Virgin Media O2 to expand its fibre network to up to 23 million homes, covering around 80% of the nation. Telefónica chairman and CEO José María Alvarez-Pallete described the UK as “a growth market for us” and added that the deal will help it accelerate access to next-generation broadband connectivity to many UK homes. Find out more.
The European Commission has opened an in-depth investigation into Orange’s proposed acquisition of Belgium’s Voo-Brutélé, first mooted at the end of 2021. The commission's preliminary investigation showed that the transaction may significantly reduce competition in the markets where Orange, Voo and Brutélé are close competitors, namely fixed internet access, audio-visual services and multiple-play bundles (including FMC services) in the areas covered by VOO and Brutélé's own fixed networks. The commission’s executive vice president, Margrethe Vestager, who is in charge of competition policy, observed that Orange is already a successful challenger to Voo and Brutélé in parts of Belgium and said she wants to make sure that the proposed acquisition will not lead to higher prices or lower quality for customers in the Wallonia region and parts of Brussels. The commission says the risk is that a reduction in the number of operators from three to two in the areas that both cover will not only reduce competition but might have knock-on effects for other players by increasing the merged entity’s bargaining power and disrupting other third-party relationships – all the usual concerns that accompany any three-to-two consolidation.
The smartphone market isn't looking so smart now! It declined by some 9% in the second quarter of 2022 to 295 million units which, according to researchers Counterpoint, was the first time it had dropped below 300 million since Q2 2020. The only vendor winners were Samsung, whose shipments grew by 8% year on year, and a recovering Honor. The Chinese vendors Xiaomi, OPPO and Vivo really lost out with dreaded double-digit declines in shipments. Now the industry has to work out whether this decline marks some sort of mass turning away from the category – perhaps in response to expected hard times and inflation – or whether it’s just due to a freak pile-on of factors. There has certainly been enough of those with Covid-19, global warming, chip shortages, the war in Ukraine and all the supply chain issues that followed. “Geopolitical uncertainty” was certainly another strong headwind. “Looking ahead, the challenges are likely to continue for the rest of the year,” concluded Counterpoint. “A pessimistic economic growth outlook with many countries on the brink of recession, ongoing and prolonged geopolitical uncertainty, rising commodity prices and weakening consumer demand for tech products are all impediments to the smartphone industry’s post-Covid recovery.”
Still on Smartphone woes… Canalys has charted similar results to those offered by Counterpoint, but its smartphone analyst, Toby Zhu, said supply chain shortages are no longer the most pressing issue. “Component orders are being cut rapidly and suppliers have started to be concerned about oversupply,” he said. “That has resulted in price cuts for key components, which reduces costs for vendors. Vendors could use the extra savings to improve the product competitiveness of new launches in the second half of the year. At the same time, that might make getting rid of old models even harder. The oversupply situation is demanding more of vendors’ planning capabilities than the shortage period.” Zhu predicted increasing tensions throughout the entire smartphone supply chain. “Geopolitical issues, a dip in consumer confidence and high inflation will continue to damage future market performance, despite upcoming new launches and festival sales in the second half of 2022,” he warned.
Telecom Italia has reached an agreement with its national trade unions to cut 2,100 jobs through an early retirement scheme as part of a wider cost-cutting plan that is scheduled to play out until 2024, according to a document seen by Reuters.The Italian telco is seeking about €1bn in savings between now and 2024 and is looking to break up its business to counter price competition in its domestic market. According to Reuters, most of TIM's domestic workforce will be affected by a reduction in working hours of between 10% and 25%, and will be involved in retraining programmes. TIM expects to hire around 650 new workers for specialist roles in cloud and cybersecurity.
- The staff, TelecomTV
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