What’s up with… Telefónica, Nokia and CityFibre, Vodafone
- Telefónica forms rural FTTH joint venture with investment partners
- Nokia lands next-gen FTTP tech deal with CityFibre
- Vodafone Group is still actively engaged in M&A talks, says CEO
In today’s industry news roundup: Telefónica creates rural wholesale FTTP business with investment partners; Nokia secures a significant fibre broadband kit deal in the UK; Vodafone’s still hunting for M&A deals, says CEO; and more!
Telefónica has teamed up with insurance giant Crédit Agricole Assurances and investor Vauban Infrastructure Partners to create Bluevia Fibre, a wholesale open access network operator that will focus on fibre broadband network rollouts in rural Spain, mainly in areas with no existing network coverage. Telefónica, which is contributing network assets that already pass 3.5 million premises with fibre to the company, will own a 55% stake in the operation, while its partners are paying the Spanish telco just more than €1bn for their jointly held 45% stake. Bluevia Fibre aims to invest further to increase its coverage to five million premises by 2024. Spinning out fibre broadband assets to create wholesale, jointly owned operations is an increasing trend in the network operator world. Belgium’s Telenet has just announced a similar move as part of a broader revamp of its fixed line operations that will also see it migrate much of its network from a cable broadband technology base to fibre. Read more.
Nokia has landed a major, 10-year deal with CityFibre to provide the UK wholesale fibre access network operator with XGS-PON equipment that will enable very high-speed connectivity (up to 10Gbit/s downstream and upstream) for CityFibre’s internet service provider, enterprise and mobile backhaul customers. The optical line terminal (OLT) systems housed in CityFibre’s network will also enable an upgrade to 25Gbit/s connectivity if needed in the future, according to the vendor. CityFibre has been attracting significant investment over the past year to underpin its £4bn investment plan that will see its network pass 8 million UK premises by 2025. Read more.
Vodafone Group has reported solid fiscal first-quarter financials, with service revenues of €9.5bn, a 2.5% year-on-year increase on a like-for-like basis for the three months to the end of June and with business in its largest single market, Germany, stabilising. But those that follow the company are itching to find out how Vodafone might restructure its operating assets, as it’s been talking about meaningful M&A plans for quite some time now yet, so far, has not been involved in the consolidation and joint venture developments that are reshaping the European telecom landscape (a case in point being Spain, where Vodafone lost out to Orange when MásMóvil chose its bedfellow). Vodafone CEO Nick Read, though, says “a lot is going on behind the scenes and we're making good progress… we have had, and continue to have, extensive conversations with a number of players” in relation to a business combination or investment in Vantage Towers, the towers infrastructure offshoot that is currently wholly owned by Vodafone and that the operator would like to “partially monetise”. In terms of in-market consolidation, he said: “I really can't go into any details. We are active across the four markets that we said were a priority,” with those markets being Italy, Portugal, Spain and the UK. While Vodafone has long been linked with a potential acquisition with Three in the UK, options are becoming limited. In Spain, Vodafone really only has fixed line consolidation options available now that MásMóvil is off the table, and Vodafone has already spurned an offer to merge its business in Italy with that of Iliad. But Read has said he will only entertain moves that make sense and pointed out that portfolio moves, while being a strategic priority, are not “urgent”, so there will be no rush to strike a deal for the sake of it. For Read’s sake, you have to hope that sensible caution doesn’t leave Vodafone jilted each time a new telecom wedding is announced. For more on Vodafone’s fiscal first quarter, see this announcement.
With a recession in the US now a distinct possibility either later this year or in 2023, and with consumers spending less as prices and inflation continue to soar, this week will see the release of a welter of financial updates from big tech companies including Amazon, Apple, Meta (Facebook), Alphabet (Google) and Microsoft. Analysts and investors have got so used to the relentless onward march of big tech that even where companies have, for several months past, been “managing down” expectations as America’s economic woes have deepened, the results will still cause market disquiet. Corporate strategies, including widespread job losses and spending cutbacks, will become public knowledge and will dent confidence and have a marked effect on Wall Street. Amazon, Apple and the rest have been signalling that the times are a’changing. Indeed, Amazon was the first of the tech giants to announce that it had taken on too many workers for its enormous warehouses in anticipation of higher consumer demand as Covid-19 waned. Apple, with a 17% share of the smartphone market, has suffered supply chain problems in the aftermath of the pandemic, deteriorating relations with China and rising costs, and will cut back on the recruitment of new employees. Meta, Facebook’s parent company, is also reducing new hiring and pledging to save $3bn this year, and more next. Meanwhile, Google will take on fewer new staff than planned “for the remainder of the year and into next”. Sundar Pichai, CEO of Google’s parent, Alphabet, says the company will have to “be more entrepreneurial” and that staff will have to show “greater urgency, sharper focus, and more hunger than we’ve shown on sunnier days”. He did not say how such a state of affairs is to be achieved – no doubt there’ll be a series of committees constituted to determine that. Meanwhile, Microsoft is realigning its business units and will cut jobs, but stresses that “headcount will grow overall by the year ahead”. Well, maybe. And we know that the doodah is about to hit whirling blades when the Nostradamus de nos jours, Elon Musk, has “a super bad feeling” about the US economy. Of course, the outlook for the startup community – the nursery and proving ground of new technology, many of whom are snapped up by big tech firms constantly on the lookout for new bits to bolt-on to their massive superstructures and thus keep their share prices rising – is even tougher. Access to venture capital is getting more and more difficult and layoffs are at a high level. Worries are that many new companies with great ideas and potential will simply go to the wall, to the eventual detriment of us all. The overall outlook is deeply gloomy but a few analysts believe the US tech sector is in for a “long-necessary correction” that will make companies bloated with cash and hubris more disciplined and less profligate. We shall see.
T-Mobile US has agreed to pay $350m to settle a class action lawsuit brought against the operator by customers affected by a 2021 cybersecurity breach, the operator has announced in a filing with the Securities Exchange Commission (SEC). The settlement offer has to be agreed by the court that was due to hear the case. T-Mobile says: “Court approval of the terms of the settlement is expected as early as December 2022 but could be delayed by appeals or other proceedings.” The security breach affected 54 million existing and former customers, T-Mobile admitted last summer, and resulted in an apologetic blog from the operator’s CEO, Mike Sievert.
Alphabet, the parent company of Google, came a cropper last week when its much-vaunted 20:1 share split landed with a soggy thump at the feet of a disinterested market. The exercise in financial gimmickry announced back on February 1 this year was designed to bring the price of an Alphabet share down from the giddy heights of $2,000 to just $100. Of course, Alphabet was hoping that the stunt would make it easier for the little people – retail investors with little ready cash but no real clout – to play the market. And, of course, with the split, Alphabet’s equity is spread over a much greater number of shares, making it more difficult for anyone to mount a takeover bid (as if). However, with the world in turmoil, recessions looming, inflation booming, costs rising and markets jittery and more bearlike every day, big investors are pulling out, selling when and where they can and are more than happy to see amateurs and small fry spend a few hundred bucks on the sort of scheme whose attraction seems to be fading. It was a shame then that Alphabet’s shares fell by 2.5% last week on the first day of post-split trading. Alphabet is also sliding down the Nasdaq 100 Stock Index where its value has actually fallen by a fifth since the scheme was first ballyhoo’d across the fairground by the blowhards with the bullhorns. Tell it not in Gath, nor whisper it on Wall Street, but Alphabet’s poor showing could well be the harbinger that the days of the quick-fix stock split are almost over. Two years ago, Apple shares went ballistic when CEO Tim Cook announced the exercise. In 2021, there were five more such stock-split exercises conducted by companies from within the S&P 500. Now though, the gilt is peeling off and even Amazon’s share price fell by 10 per cent after its last stock was split.
Singapore, the island city-state of 728.6 km², which is home to four communications services providers, plus MVNOs, now has blanket 5G coverage via Singtel’s 5G network. The operator, which lost its domestic monopoly in 2000 when the Singaporean government deregulated the telecoms industry, has completed the task more than three years ahead of schedule – and despite the immense disruption caused by the Covid-19 pandemic. Singtel is the country’s biggest mobile provider with some 4.1 million subscribers and now, should any 5G subscriber feel a bit lost in and around the primary and secondary rainforests and lakes that remain untouched in the centre of the island and cover 21.96% of Singapore’s land mass, well, they won’t need to worry because, when their phone is on, Singtel will know where they are and the appropriate app will guide them back to the nearest air-conditioned shopping mall. The 5G network now covers more than 1,300 outdoor locations and provides signal in more than 400 buildings in addition to the Mass Rapid Transit (MRT) underground/overground rail system. Not to be outdone, two of Singtel’s biggest rivals, M1 and Starhub, are also deploying “island-wide” 5G. Talk about an embarrassment of riches.
- The staff, TelecomTV
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