What’s up with… VMO2, China Unicom & Tencent, fixed wireless access

  • Virgin Media O2 flatlines in Q3
  • China Unicom and Tencent get the go-ahead for a joint venture
  • 5G boosts the fixed wireless access sector

In today’s industry news roundup: Major UK operator Virgin Media O2 boasts of a resilient quarter in challenging financial times; China Unicom’s planned cloud and edge joint venture with Tencent gets the official nod; ABI research spies major growth in the 5G fixed wireless access services sector: and more! 

UK telco Virgin Media O2 (VMO2) showed resilience in the third quarter of 2022, despite “an increasingly challenging macroeconomic backdrop” as described by CEO Lutz Schüler. Overall, revenue for the company was down 0.6% year on year to £2.59bn, mainly due to declines in revenue from handsets, as well as in the consumer and business-to-business fixed services segments. Despite this, the operator noted an uptick in its fixed and mobile services, bringing in 12,000 fixed net adds and 47,000 mobile contract net adds. The operator ended September with 5.8 million broadband customers and, according to reports earlier this week, has decided it is no longer interested in acquiring fellow UK network operator TalkTalk and adding a few more million broadband users to its customer base. According to Schüler, the period was “one of strong strategic and operational progress, supporting our delivery for the rest of the year and beyond. We have grown our mobile and fixed customer base, improved our product offering, hit a major convergence milestone” and booked transaction-adjusted EBITDA year-on-year growth by 8.6% to £991m. Based on these results, VMO2 is reaffirming its financial guidance for 2022. See more.

Chinese state-owned telco China Unicom has reportedly been given the green light to set up a joint venture (JV) with domestic conglomerate Tencent. Citing information from the State Administration for Market Regulation in China, Reuters has reported that the new entity will focus on datacentres, content delivery networks and edge computing, including the use of augmented reality (AR) and machine learning (ML) for data analysis. China Unicom’s venture arm, Unicom Innovation Venture Capital, will own 48% of the JV, while another 42% will be controlled by Tencent’s subsidiary, Shenzhen Tencent Industry Venture Capital. The remaining 10% is set to be controlled by the new company’s employees, according to Reuters. China Unicom stated that the JV will enable it to enter into the digital economy.

It seems that fixed wireless access (FWA) is not only here to stay but is going to become a much more important part of service provider portfolios. According to a new forecast by ABI Research, the number of 5G FWA connections worldwide will reach 58 million in 2026, paving the way for it to be “a competitive alternative to wired broadband solutions”. In the near term, expansion of the technology is being mainly driven by uptake in the US. “5G FWA in the short term will progress without facing any capacity constraints, and MNOs should launch FWA to expand revenue by exploiting excess network capacity. MNOs considering FWA as a long-term solution should use artificial intelligence (AI) techniques, such as machine learning (ML), to generate in-depth analysis on the network quality and user experience, based on traffic growth, service and network key performance indicators (KPIs), to help improve network resource utilisation”, said Fei Liu, 5G and mobile network infrastructure industry analyst at ABI Research. ABI isn’t the only research house that believes 5G FWA is becoming more popular: According to a recent Juniper Research forecast, service providers are expected to generate an estimated $2.5bn from 5G FWA services in 2023, compared with an expected $515m this year, The predictions for 2027 are even more bullish: 5G FWA deployments are expected to account for $24bn in revenue, depending on telcos’ capabilities to deliver bundled services and lure customers away from fibre broadband services.

Vodafone Group has unveiled a new project by its DreamLab app initiative, aimed at assessing the risk of cyclones. Working with scientists from the Imperial College London, the project is aiming to build “the world’s largest database for cyclone risk” by urging smartphone users to download the DreamLab app, so that researchers can understand more about tropical cyclones and, eventually, prepare for the risk of such natural disasters. Find out more about the initiative here.

Telefónica’s strategic regional entrepreneurship programme, Open Future, is collaborating with Portuguese organisation Startup Madeira and, together, they aim to support and promote the local start-up and entrepreneurial community. The pair will also look to invest in entrepreneurial projects, such as international programmes related to tourism and the promotion of Madeira as a hot-spot for digital nomads. Learn more.

In India, state-owned operators BSNL and MTNL have a lot of catching up to do with the privately owned telco giants Reliance Jio, Bharti Airtel and Vodafone Idea, in pretty much every way it’s possible to imagine. Recognising this and the importance of communications infrastructure and competition, the Indian government has at least been trying to level things up for the state-owned telcos by handing them assets, converting debt to equity and organising financial lifelines, as we have previously reported. Now, according to Reuters, the operators are aiming to raise the equivalent of about $2.3bn in government-backed bonds in the next few weeks to kickstart their much-needed investments, but that will hardly scratch the surface of what needs to be invested if these operators, which should have been merged and revamped years ago, are going to be anything but a drain on government resources in the coming years. It’s going to be very interesting to watch the process and progress, though, given that Jio and Airtel in particular are also scrapping to be seen as India’s 5G leader and BSNL is just launching 4G: Maybe the state-owned operators not only need to be merged but also rebranded, because their names are now synonymous with tired, old services. 

- The staff, TelecomTV

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