What’s up with… Orange and MásMóvil, Verizon, Elisa

TelecomTV Staff
By TelecomTV Staff

Jan 18, 2024

  • Orange and MásMóvil on course for merger approval 
  • Verizon writes down the value of its enterprise division
  • Elisa snaps up SaaS specialist

In today’s industry news roundup: Spanish merger set for green light; wireline weakness leads to major Verizon Business writedown; Elisa bolsters its application development resources with strategic acquisition; and much more! 

Orange and MásMóvil are set to be granted the go-ahead for their €18.6bn merger in Spain by European antitrust regulators, according to Reuters. The deal was first announced in July 2022 and, because it would create Spain’s largest telco by the number of customer connections and reduce the number of established communications service providers from four to three, the merger has been under close scrutiny by the European Commission. But according to sources cited by Reuters, the deal is set to get the green light as long as an emerging competitive operator, Digi Spain, is given an option for a national roaming deal on the Orange Spain network and that some spectrum licences are offloaded by MásMóvil to Digi. The good news there is that Digi has already struck deals with the merger hopefuls and announced as much last December. A final decision from the European competition authorities is due by 15 February.

Verizon Communications, the second biggest telco in the US, is to write down the value of its enterprise services arm, Verizon Business, by $5.8bn and will include that negative hit in its fourth-quarter 2023 financials that will be published on 23 January. The division, which generates more than 20% of the telco’s near $100bn annual revenues, reflects the increasing trend among enterprise and even government departments and agencies to move away from wireline services (for fixed voice communications) as mobile usage increases. The sea change in behaviour is now directly affecting Verizon’s operations, revenues and valuation. Thus, in a filing with the Securities and Exchange Commission (SEC), the telco revealed that due to “secular declines, as well as continuing competitive and macroeconomic pressure”, a “non-cash goodwill impairment charge” to the value of $5.8bn would be recorded in its fourth-quarter financial results. As a result, the goodwill balance – the value of an operation above and beyond its identifiable assets – assigned to Verizon Business on the telco’s books at the end of 2023 was just $1.7bn. The move was prompted by the results of the telco’s Five Year Strategic Planning Review, which showed reduced financial projections for Verizon Business “as compared to the previous planning cycle.” The new write-down is the biggest financial hit Verizon has taken since 2018, when it took the scythe to the residual value of its fairly disastrous acquisitions of AOL (remember that one?) and Yahoo (with or without the exclamation mark!!) and lopped $4.6bn off their collective balance sheet value. Bloomberg Intelligence reported that Verizon’s wireline enterprise services revenues fell by 8.1% in the third quarter of last year, but pointed out that the trend “is not specific to Verizon” as other telcos are facing “similar declines in their wireline business services” and such diminutions, which have been in play for a decade and more now, will continue as traditional voice calls dwindle and telcos face increasing competition from cable rivals. Verizon derives most of its revenues from domestic consumers’ mobile and broadband service contracts and is turning to that part of its operations to shore up its financials, as the telco is set to raise its prices soon, especially for subscribers on legacy unlimited data tariffs. From the end of this February, those customers will have to pay an extra $4 a month for the privilege of using Verizon’s service – and this comes on top of another price hike imposed six months ago. This week, Verizon’s chairman and CEO Hans Vestberg is, naturally, with his peers at the annual World Economic Forum schmooze-athon in Davos, Switzerland, where he has been discussing multiple industry trends, including AI (as we previously reported). Asked at the event by Bloomberg News if Verizon plans to sell its wireline assets, he responded with a terse “No” and then refused to respond to follow-up questions. He’ll probably have to answer some later on, though, when reality bites and he is no longer basking in the Alpine winter sun but back in the rather less glamorous environment of Basking Ridge, New Jersey.

Still in Davos… India’s minister for electronics and information technology, Ashwini Vaishnaw, told a select audience of the great and the good that his country intends, quickly, to become a world leader in the manufacture and export of 28 nm microprocessors, The Economic Times has reported. And that’s just the start. The ultimate goal is for India to become a global powerhouse in sub 7 nm chips and a “universally trusted” exporter of them. The hugely ambitious plan is feasible, says Vaishnaw, as, “The world is trusting India more of late because of the way it has conducted its foreign policy, which has become a big capital [asset] for the country,” adding that “co-operation pacts” have already been signed with the US, the EU and Japan and close working relationships are being forged with South Korean semiconductor companies. Now, 28 nm chips are not new: Their commercial production began as long ago as 2011 but, to this day, they remain vital components in applications such as central processing units (CPUs), graphic processors (GPUs), high-speed networking chips, smartphones, application processors (APs), tablets, home entertainment, consumer electronics, automotive, internet of things (IoT) modules and other devices. Meanwhile, research into successor generations to the immensely popular 28 nm chips has continued apace and 7 nm is one of the latest processors. These components greatly reduce the size of transistors and provide improvement in silicon area utilisation and in the all-important aspect of power efficiency. However, 7 nm processors are extremely complex to design and manufacture, and cost considerably more to produce than 28 nm chips. Furthermore, at the 7nm point, transistors are sited so close to one another that the chips are at the limit where the “quantum tunnelling” effect comes into play. This means transistors can no longer be turned off properly or reliably and will have to remain permanently powered up, a highly undesirable state that will have consequences for power usage, consistency and safety. Nonetheless, and despite the challenges, the likes of AMD, Arm, Apple and Qualcomm are already producing 7 nm chips and are also working on 5 nm designs. Meanwhile, India is designing 28 nm devices for use in its domestic telecoms, automotive, railways and power utilities sectors and, given the ongoing demand for such chips, the minister says it will, in due course, “capture the market” in the manufacture of 28 nm chips. In Davos, Vaishnaw said “We think there is enough for everybody. It is a question of how much importance we give, how much talent we put in it and how focused we are on it. We have close to 300,000 design engineers, designing practically every complex chip that is manufactured in the world. So, it is very natural to move on to the value chain and towards manufacturing. We are looking at developing the complete ecosystem of semiconductors.” It’s a laudable aim, for sure, but Vaishnaw might soon find out why chip fabrication plants are not two-a-penny and just how long it takes to get from aspirational speeches to efficient, demand-driven production at scale. 

Finland-based telco group Elisa has agreed to buy a majority stake in Moontalk Oy, a domestic software-as-a-service (SaaS) supplier specialising in mobile voice communication management, for an undisclosed amount upon completion. The deal will see Moontalk become a subsidiary of the operator. Elisa said the purchase will help it improve its application development expertise, especially in the area of software-as-as-service (SaaS)-based offerings, and meet its ambition of being “Finland’s most trusted partner for digitalising business processes”. “By uniting Elisa’s strong know-how in corporate digitalisation with Moontalk’s application development expertise, we can develop even better services for our customers. Thanks to comprehensive 5G subscriptions, the speeds of mobile subscriptions are at an excellent level, and we want to continually provide our customers with more value through our solutions,” said Jorma Niemelä, VP for connectivity services at Elisa. Moontalk revenues stand at more than €10m, and it has a customer portfolio of 1,400 small enterprises in the Finnish trade and service sector. Find out more.

Seven telecom operators have ended up in the Global 100 ranking of the world’s most sustainable companies, compiled by Canadian sustainable economy magazine Corporate Knights. Bell Canada scored the highest among its telco peers, ranking 51st globally (down from 42nd in 2023). Next of the telecom providers is Finnish operator Elisa (59th), Singaporean telco Singtel (62nd), North American hybrid fibre coaxial cable operator Cogeco Communications (73rd), Brazilian telco Telefônica Brasil (75th), Singaporean operator StarHub (80th, down from 34th last year) and Canadian telco Telus (85th, down from position 37st last year). On the vendor side, Ericsson is recognised as one of the most sustainable companies worldwide, climbing from position 65 in 2023 to 15 this year. Cisco is also present, ranking 64th. Tech giant Apple has climbed a mere two spots to 71st place globally. Corporate Knights explained that the rankings included all public companies with more than US$1bn in revenue, with assessments made across 25 key indicators, including percentage of “sustainable revenue” and “sustainable investment” into green solutions, such as renewable energy and energy efficiency, taxes paid, carbon productivity, and racial and gender diversity.

- The staff, TelecomTV

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