What’s up with… Spark’s TowerCo, 5G in India, Orange and MásMóvil

  • Spark joins the tower sales club
  • Quartet of bidders line up for India’s 5G spectrum auction
  • Spanish telco merger imminent… if credit lines can be signed off

In today’s industry news roundup: New Zealand operator is the latest to raise cash from selling a slice of its tower assets; just four companies have stepped up for India’s 5G spectrum auction, including a newcomer; a €20bn operator merger in Spain is close to completion, reportedly; and much more!

Spark New Zealand is the latest telco to raise much-needed capital through the sale of its mobile tower assets, with the Kiwi operator banking NZ$900m (US$550m) from the sale of 70% of its towers unit. Spark announced in February that it was forming Spark TowerCo as a separate entity to manage its towers portfolio and said at the time it would explore the potential of “external investment”. Well, that investment has come from the Ontario Teachers’ Pension Plan Board, which is to acquire a 70% interest in Spark TowerCo, which has almost 1,300 sites under management. Part of the proceeds will line the pockets of Spark’s shareholders, while some of it will “accelerate Spark’s transition from traditional telecommunications to higher-growth digital services,” noted Spark New Zealand chair, Justine Smyth. For more details on the development, see this press release

Only four companies have applied to take part in India’s 5G spectrum auction, according to the country’s Department of Telecommunications (DoT). The quartet comprises the country’s three major mobile operators – Bharti Airtel, Reliance Jio and Vodafone Idea – and the surprise new addition to the 5G fray, giant conglomerate The Adani Group (under the name Adani Data Networks), which confirmed its interest last weekend, as TelecomTV reported on Tuesday. The DoT now needs to assess the applicants to see if they are suitable, but it seems likely there will be four companies battling for the prime spectrum when the auction begins later this month. The incumbents will not be happy to see a new name encroaching on their turf, even, as Adani has noted, if its interest is only in the 5G private networks sector rather than the mass consumer market. It looks like the battle for the 26GHz spectrum, which is very suitable for high-speed local networks, should be fierce. 

Orange Spain and MásMóvil are close to completing their planned merger to create a single, major Spanish operator valued at around €20bn, as they put the final touches on a multi-bank deal for €6.5bn in credit to help them on their way, according to ElEconomista. Orange and MásMóvil entered into exclusive negotiations in March (much to the chagrin of Vodafone) and are on course to provide a much more robust rival to national incumbent Telefónica – the new company will have annual revenues of €7.5bn, more than 20 million contract mobile customers, 7.1 fixed broadband customers and almost 1.5 million TV customers (all numbers correct as of end of 2021) – see Orange and MásMóvil on course to merge Spanish operations

“No, Patrick, you can’t buy BT!” The bosses of the UK’s venerable incumbent carrier can breathe easier today in the knowledge that Patrick Drahi, the billionaire telecoms and media mogul and investor known for his penchant for aggressive acquisition bids and the imposition of ruthless costs and job cuts when takeovers are completed, is to be prevented from purchasing any more BT stock and will not be allowed to buy the operator. Drahi, who holds both French and Israeli citizenship, became BT’s biggest shareholder in December 2021 via his multinational mass media vehicle, Altice. Drahi privatised Altice at the beginning of 2021 at a valuation of $7.3bn. He built the company by making more than 20 acquisitions of underperforming, weak and moribund mobile telecoms and cable companies and then continued to expand through an ongoing series of purchases that have been notable for being both forceful and highly leveraged. Alarm bells began to ring in the corridors of the UK government when, last year, Drahi increased his stake in BT from 12% to 18% claiming, as he did so, that he had no intention of making a confrontational bid to buy the telco. His increased level of share ownership triggered a six-month-long delay in any further acquisitive actions under the terms of UK takeover regulations. Having given the matter some thought over that period, and particularly during a recent security review, the UK government (or what’s left of it) now looks set to invoke the new National Security and Investment Act (that can be applied retroactively) and will stop Altice and Drahi in their acquisitive tracks. The market took the news in its stride and BT’s share price was barely affected. There is considerable public sentiment in Britain that BT should remain in British hands.

 “Plan B? What Plan B?” Last weekend, in Canada, a massive and prolonged outage resulted in millions of Canadian subscribers to Toronto-headquartered Rogers Wireless, the country’s largest nationwide mobile operator, losing wireless and wireline telephony and internet service for many hours, and in some cases, days. Eleven million consumers, businesses and even emergency services went off the air. According to Tony Staffieri, the president and CEO of Rogers, who, quelle horreur, was forced into making an announcement and apology on a Saturday, of all days, to the effect that the network fell over because routine maintenance work on the core network caused ‘some’ routers to malfunction early on Friday. He did not explain exactly why or how the outage happened or why it continued for so long. The trouble is that the weekend meltdown was the second major outage at the company in just 15 months, and customers and the government are very unhappy. For years, past subscribers and consumer groups have been agitating for the establishment of a fourth national wireless carrier on the grounds that meaningful competition would result in lowering Canada’s infamously high mobile services charges, as well as fostering innovation and improving service reliability. Three companies dominate Canada’s national wireless sector market – Bell, Rogers and Telus. However, where wireline is concerned, most Canadians have to choose a service from a cable operator. Telus and Bell started life as telcos in western and eastern Canada and the cable TV companies Shaw and Rogers deployed cable systems. Now, with Rogers and Shaw proposing to merge and thus reduce competition further, the federal government says it is to compel Canada’s biggest telcos to co-operate and provide backup for one another during any future service flameouts. Therefore, the splendidly named innovation minister, François-Philippe Champagne, has told service providers that they have 60 days to devise formal, binding agreements on “emergency roaming, mutual assistance in outages, and a protocol for communicating with the public and authorities during widespread disruptions.” Meanwhile, Rogers faces paying massive compensation to millions of angry subscribers and even greater scrutiny of its planned merger.  

Chips with everything… hopefully. Deloitte, the auditor, consulting house and reader of the runes, has changed its mind and now reckons the shortage of semiconductors that has caused much angst across many industries, including telecoms,  is almost over. Six months ago, Deloitte was gloomily reporting that the dearth of availability would last until at least the end of 2023. So what’s changed, apart from the cleaner glasses on the guy reading the entrails of a goat? Well, it seems the semiconductor industry has been ploughing money into everything from research and development through to strengthening and adapting the supply chain and building new fabrication plants that will soon be commissioned and operational. The availability of new chips is also being helped, contrarily, because as the world economy contracts and recession looms in many countries, consumers are tightening their purse strings and buying fewer cars, TVs and other electronic devices and goods. In the US, the pending passing by Congress of the Bipartisan Innovation Act (which contained within it the Chips Act) will permit the paying of substantial subsidies, from a government-provided pot of $52bn, to companies prepared to build fabrication plants in the US and stop making chips overseas or importing them. Famously (or infamously), Intel is waiting for the act to pass before building its delayed, huge, new $20bn manufacturing site in New Albany, Ohio. When completed, the new factory will be “the largest silicon manufacturing location on the planet”. Mike deWine, the Republican governor of Ohio, says Intel’s prevarication is designed to “gain leverage” with Congress and get the act onto the statute books before the August recess.

Network sharing among the mobile network operators in Czechia – namely T-Mobile CZ, Cetin and O2 CZ – has been given the green light by the European Commission (EC). The operators “must ensure that their network sharing agreements do not reduce infrastructure competition which enables competition and innovation in the wholesale and retail telecommunications markets” in the central European country. The commission’s executive vice president, Margrethe Vestager, who is in charge of competition policy, said: “Network sharing agreements bring efficiencies, such as faster rollout, cost savings and coverage in rural areas. But such cooperation can also dampen the incentives of mobile operators to independently improve their networks and services. The network sharing agreements between T-Mobile CZ, CETIN and O2 CZ did not strike the right balance for Czech mobile users. So today, the commission made binding commitments offered by T-Mobile CZ, CETIN and O2 CZ that will keep the benefits of network sharing whilst removing technical and financial disincentives to unilateral deployments and limiting information exchange, all to the benefit of Czech mobile users.” You can read the full announcement here

This is a blow for Broadcom… Just as the chip company is aiming to add VMware to its portfolio and create a giant communications and networking unit, it has lost the head of its software business. Tom Krause, who was president of the Broadcom Software Group (and prior to that the CFO of Broadcom), has been named as the CEO of the giant software company soon to be formed by the merger of Citrix and Tibco. In February this year, Vista Equity Partners and Evergreen Coast Capital announced they were acquiring digital work platform specialist Citrix in a deal valued at $16.5bn and were then planning to combine it with Tibco to create “one of the world’s largest software providers… with over 100 million users in over 100 countries.” That merger is set to close in the coming weeks and Krause will be at the helm. Meanwhile, Broadcom continues to forge ahead with its planned $61bn acquisition of VMware, a move that has put pressure on its share price since the official announcement of the move on 25 May – since then, Broadcom’s stock has lost almost 8% of its value and currently stands at $487.33.  

Ericsson, Qualcomm and French aerospace company Thales have teamed up to validate a satellite-based 5G network that could deliver 5G services from low-earth orbit (LEO) satellites to regular smartphones. Erik Ekudden, chief technology officer at Ericsson, noted: “This testing and validation cooperation between Ericsson, Thales and Qualcomm Technologies will be a major milestone in the history of communications as the ultimate result could effectively mean that no matter where you are on Earth – in the middle of an ocean or the remotest forest – high-end, secure and cost-effective connectivity will be available through collaborative 5G satellite and terrestrial connectivity.” Indeed, but it's also worth noting that the quest to do this is already underway by AST SpaceMobile, which is backed by Vodafone and Rakuten among others. For more on what Ericsson, Qualcomm and Thales are up to, see this announcement. For more on AST SpaceMobile, see A broadband satellite system built especially for mobiles

Nokia has been selected to lead 6G-ANNA, a German national-funded 6G “lighthouse project” that started on 1 July 2022. The Finnish vendor will collaborate with the 29 partners in 6G-ANNA to “lead and drive 6G research and standardisation.” Funding for the project comes from the German Federal Ministry of Education and Research (Bundesministerium für Bildung und Forschung, BMBF) with the “aim of strengthening and pushing German and European 6G agenda and driving global pre-standardisation activities from a German and European perspective.” Read more, here.  

- The staff, TelecomTV

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