What’s up with… Ericsson and Vonage, Rakuten Symphony, AT&T

TelecomTV Staff
By TelecomTV Staff

Jul 21, 2022

  • Ericsson seals Vonage deal
  • Rakuten Symphony boosts its presence in India
  • AT&T’s stock tanks as it reports its second quarter earnings 

In today’s industry news roundup: Ericsson completes an important acquisition; Rakuten Symphony adds to its Open RAN lab facilities in India and preps 6G R&D; AT&T frightens investors with its revised cash flow forecast; and much more!

Ericsson has completed the $6.2bn acquisition of Vonage, a vital part of its strategy to become a major player in the next-generation enterprise digital services sector. The deal gives the Swedish vendor “access to powerful building blocks to offer a full suite of communications solutions including, Communications Platform as a Service (CPaaS), UCaaS and CCaaS. By leveraging the Vonage CPaaS offering, Ericsson aims to transform the way advanced 5G network capabilities are exposed, consumed and paid for. This will provide the global developer community, including Vonage’s more than one million registered developers, with easy access to 4G and 5G network capabilities via open Application Program Interfaces (APIs),” noted the vendor in this announcement. It added: “For communications service providers (CSPs), global network APIs - such as location and quality of service APIs - provide new opportunities to expand their profit pools to monetize 5G network capabilities. For Ericsson, global APIs provide a new material growth opportunity. The existing market for communications APIs – such as video, voice and SMS – is currently growing at 30% annually and is projected to reach US$22 billion by 2025.” See Ericsson restructures, creates Enterprise division and Ericsson has its eyes on the enterprise prize.

Rakuten Symphony, the Open RAN technology vendor subsidiary of Rakuten Mobile, is looking to ensure its Symworld portfolio of technologies and associated services play a role in India’s growing market, where 5G spectrum is about to be auctioned, by opening a Global Innovation Lab in Bengaluru. The facility, which is expected to open in early 2023, will “support the Indian government’s mission to develop home-grown telco solutions built in India for the world” and “complement and expand upon Rakuten Symphony’s existing RAN lab in Bengaluru and the Rakuten Cloud Innovation Lab in Tokyo, allowing for global end-to-end testing of apps across the Symworld portfolio. Going forward, there are plans to set up facilities for 6G infrastructure R&D in the lab.” Read more

US operator AT&T reported a 17.1% year-over-year slump in revenue in the second quarter to $29.6bn compared to $35.7bn in Q2 2021, a decline it explained with the separation of its video services (which were transferred in August 2021 into a new entity) and other divested businesses. It made gains in the Mobility unit (revenue up 5.2% to $19.9bn) and on that note, the telco highlighted “record levels of customer additions”, reaching “the best second-quarter post-paid phone net adds in more than a decade” (they were more than 1 million for the quarter). These positives, however, were “partially offset” by a 7.6% drop in Business Wireless services revenue. Going forward, the company has increased its full-year guidance for its Mobility service revenue and is now expecting a 4.5-5% growth for 2022, while it is lowering its free cash flow guidance by $2bn to the $14bn range, reflecting “heavy investment in growth and working capital impacts related to timing of collection” as inflationary pressures hit consumer spending. Investors didn’t like the news as AT&T’s share price took a 7.7% hit to $18.90 in morning trading on Thursday. More on AT&T’s results for the second quarter can be found here.

MásMóvil has agreed to sell its stake in EKT Cable, a fixed network owned by MásMóvil’s subsidiary Euskaltel for €580 million, to Bidasoa Aggregator, which is a consortium of investors including Asúa Inversiones, Beraunberri, Inveready and Onchena. Majority of the proceeds (€500 million) will be used by MásMóvil to repay debt. Following the agreement, the consortium will control a newly established company called Netco which will work on expanding the availability of fibre optic services for customers of the Euskaltel, R and Telecable brands. Euskaltel will hold a minority stake of 49% in Netco. The new owner, Bidasoa Aggregator, has pledged to deploy a new fibre network to 1.2 million homes in three autonomous regions of Spain. As a result, MásMóvil stated that the entire Euskaltel network (of 2.3 million homes) will have access to fibre-to-the-home (FTTH) services. Find out more from MásMóvil’s press release (in Spanish).

Back in 2020, after facing an onslaught of accounting and corruption scandals and demands by investors for the wholesale removal of the senior management team together with members of the board of directors, the Japanese nuclear and electronics conglomerate, Toshiba, announced that it would split into three parts. A couple of millennia earlier, Julius Caesar tried the same thing with Gaul: that exercise lasted for 500 years – Toshiba’s was an ignominious failure from the start. Thus, in April 2021, the company announced that it wanted to go private, having been offered a tentative buyout bid of ¥2tn (US$18bn) by Luxembourg-based CVC Capital Partners. Toshiba’s languishing share price rose even as the company abandoned its long involvement with the global telecoms industry and eventually the company found itself fielding 10 acquisition offers: Eight of these would take the company private and two were based on it remaining publicly listed. Reuters reported that the value of the offers on the table varied greatly and were hedged with punitive clauses and conditions – unsurprising, really, since 3D Investment Partners of Singapore had denounced Toshiba as “a corporate governance embarrassment for Japan”. Subsequently, the offers have been whittled down to a shortlist of three or four as-yet-unnamed potential purchasers. In a brief public statement last night, Toshiba announced: “After a comprehensive review of those proposals, including a thorough engagement with potential partners, the board of directors today selected multiple potential partners to be invited to the second bid process.” The Japanese media is reporting that the leading contenders are Bain, of Boston in the US, Brookfield Asset Management, of Toronto, Canada, CVC Capital Partners, Japan Industrial Partners, of Tokyo, and Nikkei Asia. Interested parties now must “submit legally binding proposals” together with a comprehensive checklist of their assets, corporate business interests, financial figures and accounts and tax liabilities. All of this data will take a considerable time to marshal, winnow and publish, so no further movement on an acquisition is expected for months. Further complicating matters is the fact that Toshiba still owns, and has responsibility for, big and expensive assets in the nuclear industry. These bring its potential acquisition into the orbit of the Japanese government and national security and competition legislation, including the Foreign Exchange and Foreign Trade Act. Toshiba also retains residual responsibilities for the decommissioning of the Fukushima Daiichi nuclear plant following the reactor meltdowns that occurred on 11 March 2011 when, after an earthquake, the plant was hit by a 15-metre tsunami. According to media gossip, any final deal could be contingent on parts of Toshiba being spun-out of the parent body. Word has it that the deal currently being considered would value Toshiba at ¥3tn (US$22bn).

In the US, the Department of Justice and the FBI have seized bitcoin valued at $500m from a gang of North Korean hackers who had targeted several major healthcare companies with Maui, a new ransomware variation that very quickly encrypted files and servers and successfully extorted millions of dollars from victims to have their prime data released. It seems, in this case, the US authorities were able to take rapid action against the blackmailers because one of the victims of the attack, an as-yet-unnamed hospital in Kansas, did its duty and, rather than concealing the extortion as is often the unfortunate norm, immediately reported it to the FBI. Speaking yesterday at the ninth International Conference on Cyber Security (ICCS), held in Manhattan, New York City, the US deputy attorney general Lisa Monaco, reported that the extorted funds had already been repaid to the Kansas hospital and to a health centre in Colorado. She warned that whilst criminal hackers, that are often state sponsored as in the cases centred on North Korea, Russia, Iran and China, are “becoming more aggressive, more sophisticated, and more belligerent and brazen”, co-operation between those attacked and the authorities “will help in the fight for justice”. In the Kansas case, the investigating team tracked laundered cryptocurrency payments through the blockchain, intercepted the payments as they were being washed and transferred to “traditional” currencies (in this case US dollars) seized them and, in due course and after further investigation, repaid them to the hospital. Cryptocurrency exchange platforms are regulated entities that can be compelled to seize their customer’s funds on demand by a variety of law-enforcement agencies. A US cybersecurity advisory confirms that Maui has been used by “North Korean state-sponsored cyberattackers since at least May 2021” and is used to target healthcare organisations.

Musk’s crypto U-turn…  He shouted going in, he shouted while he was there, and he shouted as he left. Staying with cryptocurrencies, Elon Musk, allegedly either the richest man in the world or the second richest, depending on the news outlet you are reading and the day of the week it is, has reneged on another pledge after backing out of the deal to buy Twitter. Musk has long been a fairground-barker shrill for bitcoin. As was revealed in February 2021, his electric car firm Tesla made an investment of at least $1.5bn in the ephemeral currency, which he eulogised, declaring that he would never sell “the currency of the future”. Initially, Musk’s bullish pronouncements helped boost bitcoin’s market value and drove some frantic trading but, when the future didn’t pan out quite that way the great soothsayer had foretold, Tesla started to sell off most of its bitcoin hoard. To date, it has raised $936m from the sale of three-quarters of its bitcoin, which was worth $2bn at the start of this year. In its stead, Tesla has bought “traditional currencies”, that is to say, the good old American greenback. Last year, a bitcoin traded at upwards of $70,000; today it trades at less than $25,000. What’s more, Tesla long-ago stopped accepting bitcoin as a form of payment for its electric vehicles. The reason for the volte face? Because the ever-increasing energy needed to mine bitcoin is not worth the global environmental cost. You couldn’t make it up. Never mind though, for Elon there’s always Mars and the environmental cost to get Mr. Musk to the red planet will be chicken feed, paid for in traditional currencies, of course.

- The staff, TelecomTV

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