What’s up with… Deutsche Telekom, Virgin Media O2, Zegona

  • Deutsche Telekom hails telco cloud milestone
  • Virgin Media O2 creates NetCo to compete with BT’s Openreach
  • Zegona is mulling another acquisition in Spain

In today’s industry news roundup: Deutsche Telekom has completed a massive migration of its IP-based telephony platform to its NIMS cloud platform; UK network operator Virgin Media O2 is creating a NetCo subsidiary that will compete directly in the wholesale fixed broadband sector with BT’s Openreach division; Zegona is reportedly planning a bolt-on acquisition to its planned purchase of Vodafone Spain; and much more! 

Deutsche Telekom says it has successfully migrated the IP-based telephony system that manages voice services for more than 17 million fixed-line subscribers to a multivendor cloud platform dubbed NIMS (Next Generation IP Multimedia Subsystem) that now handles billions of voice minutes annually. According to the giant German telco, the shift to the cloud platform means that new features from multiple application developers can be added quickly and easily thanks to the “near-complete automation of the telco cloud.” Abdu Mudesir, CTO of Deutsche Telekom Deutschland and DT’s group CTO, noted: “This project is a game-changer in the industry. It is the result of excellent cooperation with partners such as Juniper Networks, Mavenir, Microsoft, HPE, Red Hat and Lenovo. Our common goal in this innovation project has always been to set a benchmark for excellence in the industry [and] for our customers. The success has spread – many network operators are now asking us specifically how we managed to achieve this.” Rami Rahim, CEO of Juniper Networks, added: “The cloud isn’t just a technology but rather an entirely new operating model that can yield tremendous agility, cost efficiencies and better user experiences. I am so proud that Juniper was able to play a role in bringing Deutsche Telekom’s visionary strategy for NIMS to life and even more thrilled to see this project, which I consider a blueprint for the rest of the telecom industry, now complete.” DT says it has now established follow-up projects to “consistently implement the successful model of cloudification, disaggregation and complete automation in other voice applications, 5G core and the access networks.” Read more

Still with Deutsche Telekom… The telco says that, in partnership with chip giant Qualcomm and developer Brain.ai, it will unveil a “visionary AI phone concept” at the upcoming MWC24 trade jamboree in Barcelona. The aim is to replace countless smartphone apps with an AI assistant that can be controlled by voice or text: “Like a concierge, the assistant understands your goals and takes care of the details,” according to DT. Jon Abrahamson, chief product and digital officer at Deutsche Telekom, noted: “Artificial intelligence and large language models (LLM) will soon be an integral part of mobile devices. We will use them to improve and simplify the lives of our customers. Our vision is a magenta concierge for an app-free smartphone. A real everyday companion that fulfils needs and simplifies digital life.” Read more

UK network operator Virgin Media O2, (VMO2) in collaboration with its joint parent companies, Liberty Global and Telefónica, is to create a separate wholesale national fixed network company, dubbed NetCo. The new entity will deploy and manage the operator’s fibre access network infrastructure; provide “new financing optionality and a platform for potential altnet consolidation opportunities”; and “establish the biggest dedicated fixed network challenger in the country, offering clear wholesale choice at scale for other providers as a major alternative to BT’s Openreach,” while also, of course, competing with CityFibre. According to VMO2, “the entity, which will be a fully consolidated subsidiary of Virgin Media O2 and have a neutral impact on the company’s leverage and credit structure, will comprise the operator’s cable and fibre network assets covering 16.2 million premises across the UK today, with all upgraded to full fibre in the coming years”. “Aligned with Virgin Media O2’s current network strategy, NetCo will focus on completing the company’s ongoing fibre upgrade programme, which sees the existing cable network overlayed with full fibre. The structure also gives optionality and flexibility for the future in terms of financing and playing a role in potential altnet consolidation, alongside pursuing wholesale opportunities as a scaled network alternative.” CCS Insight analyst Kester Mann noted that by creating NetCo with a dedicated team, VMO2 could “pursue merger and acquisition opportunities in the fixed-line broadband market. With dozens of alternative providers, the UK is ripe for consolidation and such a move would bring Virgin Media O2 crucial scale benefits. Attention will now turn to which providers would consider signing up with the new entity, how it could be regulated and whether there will be any response from Openreach. The move should be considered as a positive for UK broadband customers as it creates fresh opportunities for new and existing service providers and long overdue competition to Openreach,” added the analyst. 

The move came only hours after VMO2 reported a 5.2% increase in revenues to £10.92bn for the full year but a net loss of more than £3.6bn due to rising rollout and financial costs (interest payments on its debts). The company also anticipates that, in 2024, revenues will be flat or even slightly down. Read more

Zegona Communications is reportedly negotiating an option to acquire Spanish rural connectivity provider Avatel Telecom, as part of plans to boost the overall market position of Vodafone Spain, which the UK capital fund agreed to acquire last year in a €5bn deal that looks set to be completed in the next few months. According to Spanish newspaper El Economista, Zegona is working on the possibility of incorporating Avatel and adding some 400,000 customers to Vodafone Spain once that deal is completed, but financial terms about the potential takeover of Avatel Telecom remain unknown. The report also suggested that Avatel is the fifth operator in Spain by number of subscribers, and that its addition to Vodafone Spain could be seen as a significant move to boost Zegona’s play in the increasingly competitive market, following the merger between Orange and MásMóvil. You can read more in the newspaper’s report, available here in Spanish.

Japan’s Rakuten Mobile says it’s on course to offer satellite-to-mobile services in the country starting in 2026 in partnership with AST SpaceMobile, in which it is an investor, and that the services on offer will include “broadband communications, such as voice and video calls on commercially available smartphones” as well as text services. Mickey Mikitani, chairman and CEO of Rakuten Group and chairman of Rakuten Mobile which, according to its 2023 financial report, is growing (albeit slowly), stated: “Rakuten Mobile is committed to expanding mobile connectivity across Japan. Remote islands and mountainous regions present unique challenges that require innovative solutions, while the threat of natural disasters, coupled with the effects of climate change, has also heightened public awareness of the importance of mobile connectivity for daily life. We are proud to partner with AST SpaceMobile to bring their cutting-edge solutions to Japan by realising satellite-to-mobile services, ensuring our customers would potentially enjoy mobile connectivity across Japan.” Read more

Liberty Global, which has a number of service provider operations across Europe, has reported full year results in line with expectations – it’s just that those expectations weren’t very positive, it seems. The company reported a 1.5% year-on-year decrease (on a rebased/like-for-like basis) in revenues to almost $7.5bn for the full year 2023, a 10.8% decrease (rebased) in adjusted EBITDA to $2.37bn, and an operating loss for the year of $3.87bn, with nearly all of those losses coming in the final quarter of last year. Those financials cover the operations in Switzerland (Sunrise), Belgium (Telenet) and Ireland (Virgin Media Ireland) and a few other smaller operating units, such as UPC Slovakia, but not the financial results of its joint venture operations in the UK (Virgin Media O2) and the Netherlands (VodafoneZiggo). Across Europe, Liberty Global’s operating units lost customers – 114,500 on aggregate. Yet Liberty Global CEO Mike Fries described the full year financial performance as “strong”. Read more.  

InterDigital, which develops and then licenses wireless and video technology to device and systems vendors, has reported a massive increase in sales and profits. For the full year 2023, the company reported revenues of $549.6m, up by 20% year on year, and a net profit of $214.1m, up by 128%. 

As mentioned in our article about NTT’s international expansion plans, the global datacentre market is enjoying a boom that could last a decade or longer and AI is set to become the catalyst for the continued development and deployment of datacentre technologies as the focus turns to the hyperscale model. Hyperscale datacentres are the enormous business-critical facilities housing at least 5,000 servers in an area of 10,000 square feet and more and are able to provide at least 40 MW (megawatts) of capacity for data processing. Hitherto, such solutions have been designed, built and managed by enormous corporations such as Amazon Web Services, Microsoft and Google and they are under intense pressure from sustainability lobbies and via legislation and regulation to rein-in and minimise the power required to meet green commitments. It’s all to do with size. Hyperscale datacentres are immense, hence the general perception that they are profligate consumers of power. However, the reality is that, despite their size, such facilities are considerably more efficient in terms of power usage than any other type of current datacentre, not least because of their capability to scale up or scale down at any time to accommodate the highly dynamic data loads they both carry and service. Nonetheless, there is always room for improvement, particularly as AI-enabled datacentres require much more processing power than is needed by other models such as onsite/enterprise, co-located, or edge-based or edge-enabled facilities. Digital Realty is a datacentre construction company headquartered in Austin, Texas in the US. The CTO, Chris Sharp, provided some perspective on the difference between AI-enabled and an ‘ordinary’ datacentre. He said, “A normal datacentre needs 32 MW of power flowing into the building. For an AI datacentre it’s 80 MW.” That’s because AI-enabled datacentres process so much more data so much more quickly than is possible with standard computing. This inevitably pushes up power consumption and as hyperscale datacentres proliferate, another source of power will be needed for them. Sharp says there is only one choice – nuclear power. He envisages the time, “in the not too distant future”, when hyperscale datacentres will have their own dedicated, built-in SMR nuclear reactors. (SMR stands for small modular reactors, which can provide about 33% of the power output of a traditional, and massive, nuclear plant.) In recent years, an impressive head of steamy hype has built up around the notion of the SMR but, as yet, the number of them deployed in commercial operation is exactly zero. China claims to be building one, and similar technology to that of the SMR has been used in nuclear-powered submarines since 1955 when the USS Nautilus was commissioned. Elsewhere, quite a few universities operate their own small nuclear reactors for R&D and teaching purposes, and some municipalities and city authorities are working on a design of SMRs that would power street lighting grids. However, there is no agreement on the design of SMRs, and about 50 different commercial models are under consideration. Currently, it seems to be a classic case of too many cooks spoiling the broth and there is no standardised approach to building SMRs to a set template and on production-line principles. What’s more, when (or if) a set of designs is eventually agreed upon, they will still have to go through stringent and time-consuming standardisation and licensing processes. SMR optimists say that the first commercial deployment in a hyperscale datacentre will happen in 2028, whereas the glass-half-empty pessimists, who are in the majority, incline to the ‘this year, next year, sometime, never’ school of thought.

- The staff, TelecomTV

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