What’s up with… AT&T, Telia, Nokia & Oppo
- AT&T cuts its capital investment budget
- Telia linked to sale of TV unit as it takes goodwill hit
- Nokia and Oppo finally kiss and make up
In today’s industry news roundup: A day after Verizon announced it is cutting the amount it plans to invest in its networks, AT&T adds to vendor’s woes by following suit; Telia is reportedly in talks to sell its TV4 unit as it takes a balance sheet hit against the value of its media and Finnish operations; Nokia finally strikes a patent licensing deal with Oppo; and much more!
More bad news for the vendor community…. Following Verizon’s announcement that it has budgeted between $17bn and $17.5bn for its full year capital expenditure (capex) for 2024 – a year-on-year reduction of between 9.6% and 6.9% – AT&T, as part of its fourth quarter and full year 2023 earnings report, has announced that its capital investments (capex plus cash payments for vendor financing) will be in the range of $21bn to $22bn, down by between 11% and 6.8% from the 2023 total of $23.6bn (which comprised $17.9bn in capex and $5.7bn in vendor financing payments). AT&T reported full year revenues of $122.4bn, up by 1.4%, while its adjusted operating profit for last year was $24.7bn, up from $23.5bn in 2022. The company ended last year with 106.3 million mobile customers, of which 87.1 million were postpaid contract subscribers, and 13.7 million fixed broadband subscribers, of which 8.3 million are fibre broadband customers. It also racked up 67,000 customers for its 5G fixed wireless access (FWA) service, Air Internet, which was launched in the autumn. For much more detail on AT&T financial performance and its forecast for the year ahead, see this press release.
Telia, which is set to announce its fourth quarter and full year 2023 financial results this coming Friday, 26 January, says that, following a review of the value of its assets, those numbers will be hit by non-cash impairment charges totalling 4.1bn Swedish krona ($393m), of which SEK2.8bn ($268m) is related to a goodwill writedown of its business in Finland and SEK900m ($86m) is for a goodwill writedown related to its TV and Media unit. (The goodwill value of an asset is the value it carries on the company’s balance sheet above and beyond its identifiable assets.) The charges have been calculated based on “changes to investment plans, market conditions and the regulatory environment.” The announcement comes as speculation swirls in the Swedish media that Telia is in talks to sell its broadcast TV unit, TV4, for less than half the SEK10bn ($960m) it paid for the business in 2019.
Telia has been bitten hard by its historical investments in Champions League soccer rights and the ad-supported broadcast TV sector, investments that are still dragging down the company’s financial performance and valuation to this day. The Swedish telco’s president and CEO Allison Kirky, who is about to become head honcho at UK national operator BT Group and will be replaced by Patrik Hofbauer, noted last year that for many telcos, such as Telia, the foundations for future success need to begin with a refocus on core competencies and strengths, which mainly equates to developing and selling reliable, secure and market-leading connectivity services and steering away from costly adjacent sectors, such as media operations and investments – see For telcos, getting back to basics is key to future growth.
Nokia, which is about to announce its fourth quarter and full year 2023 financial results, has made further progress in securing some troublesome mobile technology patent deals that have been tying up its legal team and impacting its sales and profit margins. At the start of the year, the giant vendor announced that it was on course to miss its 2023 financial targets because several major patent licensing deals had not been concluded before the end of last year. A few days later, it announced a deal with Chinese smartphone vendor Honor and now it has brokered a multi-year patent cross-licence agreement with another Chinese mobile device vendor Oppo (with which it has been engaged in a long legal tussle), for an undisclosed value. According to Nokia, as part of the deal – which “resolves all pending patent litigation between the parties, in all jurisdictions” – Oppo will make royalty payments, as well as “catch-up payments to cover the periods of non-payment” during the companies’ legal battle. “We are delighted to have reached a cross-licence agreement with Oppo that reflects the mutual respect for each other’s intellectual property and Nokia’s investments in R&D and contributions to open standards,” stated Jenni Lukander, the president of Nokia Technologies (the vendor’s intellectual property division). “Oppo is one of the leading companies in the global smartphone market and we look forward to working together to bring further innovation to their users around the world. The new agreement – along with the other major smartphone agreements we have concluded over the past year – will provide long-term financial stability to our licensing business,” she added. Oppo was the fourth-largest smartphone vendor in the world in 2023 with a market share of 8.8%, according to research house IDC. The vendor added that it is “progressing towards the conclusion of the smartphone renewal cycle and is making good progress in its growth areas of automotive, consumer electronics, IoT and multimedia. [Nokia Technologies] remains confident that its annual net sales run-rate will return to €1.4bn to €1.5bn in the mid-term.” But there are still deals to be brokered, not least with Vivo, yet another Chinese smartphone vendor that Nokia has been battling in the courts. All eyes will now be on Nokia’s latest financial results, especially as one of its fiercest rivals, Ericsson, had such a torrid time in 2023.
European towers giant Cellnex, which is trying to better balance its books after a multi-year M&A spree, is reportedly seeking to sell a minority stake in its operations in Poland that are valued at about €3bn, according to Reuters. In September last year, Cellnex agreed the sale of 2,353 sites in France for €631m and later that month agreed to sell a 49% stake in its subsidiaries in Sweden and Denmark (its Nordic operations) to infrastructure investment firm Stonepeak for €730m. Then in November the company’s CEO Marco Patuano told Reuters that it was considering a full disposal of its operations in Ireland and Austria, which were at the time reportedly valued at €1.05bn and €1.41bn respectively. In the same month, it also announced the sale of its private networks unit Edzcom to Boldyn Networks for about €30m. Cellnex is planning to introduce a new strategy in March 2024 that it will keep in place until 2026, and it seems it’s keen to shuffle its asset pack and secure some deals to reduce its debt pile, which currently stands at about €17.6bn, before then.
Vivendi, the French media giant that is the largest single shareholder in Telecom Italia (TIM), has said all along it would fight the Telecom Italia board’s decision to sell its NetCo fixed access network unit to private equity firm KKR for up to €22bn, and it’s sticking to its word. The French firm has already issued a writ against the TIM board, which was dismissed out of hand in late December and now, Reuters reports, Vivendi has asked the European Union’s antitrust regulator to look into the role played by the Italian Treasury in the NetCo sale process, which it branded “unlawful”. Vivendi always said it would not support a NetCo sale deal that valued the Italian operator’s access network assets at less than around €31bn and it is also concerned that, without the anchor of the broadband network assets, the remaining Telecom Italia business might falter. Telecom Italia, meanwhile, needs to take some kind of drastic action to reduce its crippling debt pile of about €26.3bn and expects to reduce that figure by about €14bn if the NetCo sale deal is completed as planned in mid-2024.
Think you’ve got a lot on your plate at work? Meet Akash Palkhiwala, who has just been handed a new role at wireless chip giant Qualcomm. Palkhiwala, who is 48, has been the company’s CFO since late 2019, but it appears he had some spare capacity because he has now been given the expanded role of CFO and chief operating officer. “In addition to his CFO responsibilities, as COO, he will now have oversight for the global go-to-market organisation and operations, and IT.” As you’d expect, Palkhiwala, who has been at Qualcomm since 2001, gets a pay rise to go with the extra responsibilities: His annual base salary thus increases from $750,000 to $900,000 and he gets additional stock options worth $3m to top up his existing options that are worth a great deal more. But is he happy? To be fair, he looks fairly chipper…
It’s been a frenetic start to the year for satellite-to-smartphone specialist AST SpaceMobile, which recently attracted additional funding of up to $206.5m (including cash injections from AT&T, Google and Vodafone) and announced it was raising an additional $100m by issuing new shares – see AT&T, Google join AST SpaceMobile funding round. That all sounds generally positive, but the company’s shareholders are not at all happy, particularly at the dilutive impact of the issuance of new shares: The company’s stock has lost 36% of its value since the start of 2024 and currently stands at $3.12, giving it a market capitalisation of $782m. In an attempt to calm shareholder nerves, the company’s chairman and CEO, Abel Avellan, published a letter, stating that the new fundraising “represents a major leap forward for AST SpaceMobile, not only providing new incremental capital, but perhaps more importantly defining the path forward for the company strategically and commercially.” It also pointed out that the company has agreements with more than 40 mobile operators that collectively have more than 2 billion subscribers who could be reached by communications services direct from AST’s satellite constellation direct to their existing smartphone when they are out of reach of a terrestrial cellular network. Avellan added: “With our first five commercial satellites fully funded, last year we turned our attention to building and launching the next-generation BlueBirds, which are designed for a 10x improvement in throughput. The series of simultaneous deals announced last week reflected our decision that $300m was the right amount of capital to bring all together at once… With our new incremental cash, we continue to maintain momentum and we are also well positioned to finance AST SpaceMobile efficiently for shareholders… I am confident that, over the long term, the value of our technology, our strategy, and our partner ecosystem will be fully recognised and realised. I, along with all of the members of the AST SpaceMobile board of directors and management team, could not be more excited for the future of space-based communications, and we are excited to be the team leading the first and only space-based cellular broadband network. Let’s keep it up to achieve our mission of connecting the unconnected!” So what of the BlueBird satellites? In an earnings report issued last November, the company said it expected to launch the first five into orbit during the first quarter of 2024, but in response to questions from PCMag, it seems likely that deadline will get pushed into the second quarter of this year. Just how much advantage that might hand to AST’s rivals, such as Starlink, the low-earth orbit (LEO) operating unit of Elon Musk’s SpaceX which launched its first direct-to-cell satellites at the start of the year and is now undergoing service tests with T-Mobile US and, Lynk Global is anyone’s guess.
South Korean telco KT is to team up with Kaitus Technology to develop an “anti-drone platform”, which integrates 5G, AI and security elements into a drone that “neutralises illegal drones”, such as those used for “terrorism, crime, and invasion of privacy.” Kaitus is the South Korean partner of US AI-based drone specialist Fortem Technologies. KT noted in this press release (in Korean) that, to date, “hard kill methods, which physically destroy drones, and soft kill methods, which neutralise drones by jamming radio waves, have been mainly used,” but such approaches cause “secondary damage due to falls and explosions, and damage to friendly equipment due to radio wave interference.” As a result, the “AI-linked net capture anti-drone” system approach developed by Fortem – yes, the rogue drones are snared with nets and landed safely – has “been attracting attention”. From Hollywood maybe?
NTT Communications, the enterprise services division of giant Japanese telco NTT Group, has teamed up with Tokyo Metro, Japan’s Railway Technology Research Institute, Hitachi and Mitsubishi Electric to jointly develop 5G technology specifically suited for deployment by train operators. Initial trials using the resulting mobile networking equipment will begin in August this year to test 5G connections between moving trains and systems installed in tunnels and trackside that are part of private as well as public 5G networks. The partners say this will be the first tests of a “train operation system using 5G in Japan,” and that the equipment will be based on Future Railway Mobile Communication System (FRMCS) specifications. FRMCS is a global next-generation railway wireless communication infrastructure standard that is “being considered mainly in Europe,” according to NTT Communications: It is the next step on from the widely deployed GSM-R standard and has been in development for more than five years already. For more on what NTT Communications and its partners are doing, see this press release (in Japanese).
- The staff, TelecomTV
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