- Singtel reportedly on brink of cybersecurity unit sale
- Samsung pumps more cash into chip R&D
- T-Mobile US is the darling of the hedge funds
In today’s industry news roundup: Singtel looks set to offload its cybersecurity problem child; Samsung is ploughing more funds into chip production R&D; hedge funds have jumped on T-Mobile US’s stock, with good reason; and more!
Singtel is on the verge of selling its cybersecurity unit Trustwave for up to $300m, according to Bloomberg, more than a year after the operator reported a massive balance sheet impairment charge against the value of the business, which it initially acquired in 2015 for $810 million. In May 2021, Singtel initiated a “strategic review” of Trustwave and another unit, digital marketing specialist Amobee, noting that the businesses were struggling to grow. At that time, security sector analyst Patrick Donegan, founder and principal analyst at HardenStance, told TelecomTV that Trustwave was not a good fit for the telco and that it should offload it and focus on a cybersecurity better suited to its corporate strategy. Late last month, Singtel announced the sale of Amobee, and now, it seems, Trustwave will follow it through the corporate asset exit door.
Samsung is set to further boost its already strong presence in the critical semiconductor manufacturing production sector with plans to unveiling intentions to invest about KRW20 trillion ($14.8bn) during the next six years in a new R&D centre. The facility will be based in Giheung, South Korea, and will focus on researching “next-generation devices and processes for memory and system semiconductors”, as well as developing new technologies based on “a long-term roadmap”. The tech giant is aiming to tackle “the limits of semiconductor scaling” and to also boost its “competitive edge” in the chipmaking market. “We expect this new beginning will lay the foundation for sustainable growth of our semiconductor business”, commented Kye Hyun Kyung, head of Samsung Electronics Device Solutions Division. The vendor’s commitment comes as the Covid-19 pandemic-fuelled global chip supply chain crisis, which caused severe shortages that impacted many industries, looks to be easing and as international competition in the chip production sector is intensifying. Many big-name players and nations are looking for ways to ensure any future challenges do not create a similar supply chain crunch by investing in new facilities, with recent moves including a pledge by Intel to invest $80bn in chipmaking efforts across Europe and a series of moves by the US government to boost the nation’s stance in the sector, including $52bn of funding and support as part of the recent Chips Act and a collaboration with Japan on a joint research centre for next-generation semiconductors – see Never again: The US takes action to avoid future chip shortages.
Inflation is running amok, interest rates are soaring, cryptocurrencies are crashing and burning and the war in Ukraine is grinding itself into an apparent stalemate and war of attrition, while the global economic outlook gets worse and a bear market turns against technology companies. However, amidst all the gloom, one technology company is bucking the trend and its stock has quietly been rising for several months now. T-Mobile US, the self-styled “uncarrier”, has attracted the attention of a coterie of hedge funds, and its share price is up almost 30% since the start of the year, and is currently trading at $145.48. Bloomberg, the hugely influential business and markets analysis company, has looked in detail at this year’s mandatory quarterly Form 13F filings with the US Securities and Exchange Commission (SEC) and has calculated that a minimum of 25 different hedge funds now hold 5% or more of their equity investments in T-Mobile US shares. Form 13F is a quarterly report that must be submitted to the SEC by all hedge funds where institutional investment managers control over US$100m in equity assets: They must list them within 45 days after the last day of the calendar quarter. Their publication is eagerly awaited because they are regarded as a barometer of where so-called ‘smart money’ is going. That’s why almost all hedge funds wait until the very last minute to file the figures because, in doing so, they reveal their investment strategies. And it’s not just hedge funds that are buying T-Mobile US stock: Deutsche Telekom’s strategy is eventually to become the majority shareholder in the US operator and, in pursuance of that aim, spent $2.4 billion in April on buying another tranche of T-Mobile US shares from Softbank. It’s a measure of how well T-Mobile US is doing that, although its stock is now very expensive compared to that of AT&T and Verizon, it is up by more than a quarter even as the Nasdaq 100 has fallen by 15% and the S&P 500 by 11%. T-Mobile US stock is, it seems, attractive not just for a single reason but for a variety of them. The operator has undercut rivals AT&T and Verizon that have been slow to react to the inflation that is quickly reducing the discretionary spend of an increasing number of subscribers to mobile services. In the US, a nation where the costs of cellular subscriptions remain stubbornly high, T-Mobile’s cheapest tariff is $10 per month (plus tax) and the deal includes 1,000 minutes of voice calls, 1,000 texts and 1Gbyte of high-speed data. Furthermore, after years of consistently trailing a poor third behind AT&T and Verizon, T-Mobile has also invested heavily in spectrum and is now reaping the rewards in greatly improved network quality. Meanwhile, the difficult and initially distracting acquisition of Sprint is now complete, has bedded-in and settled down, and is now a synergistic asset rather than an encumbrance. What’s more, T-Mobile’s 5G strategy has given it competitive network advantages over its rivals even as subscribers continue to see T-Mobile as good value for money. Finally, T-Mobile US doesn’t pay a dividend (AT&T and Verizon do) and has forecast it will double its profits in 2023 as subscriber numbers continue to rise. It will have a fat cushion of cash to sit on and a share buyback scheme is promised for either later this year or early in 2023. Little wonder the hedge fund folks are piling in.
The Spanish government has allocated €116m towards 5G-Advanced and 6G R&D during the course of the next two years. As part of the country’s Digital Spain plans, €86m will be awarded in 2022 and a further €30m in 2023 to recipients needing between €300,000 and €2m for R&D work focused on two areas: 6G research infrastructures and the acquisition of scientific-technical equipment; and the development of 5G-Advanced R&D projects led by Spanish companies. The majority of the funding (€93m) will go towards the 5G-Advanced projects. The funding will be provided through the country’s UNICO I & D program, which allocated €90m to 113 R&D projects in 2021. To find out more, see this announcement (in Spanish) from La Moncloa, the official site for the President of the Government of Spain and the Council of Ministers.
And there’s more from Digital Spain… The Spanish government also has €90.7m to award to companies undertaking research into the use of 5G in vertical sectors such as health, tourism, agriculture, connected vehicles and more, whether on private, hybrid or public networks. The funding will be awarded to projects with budgets of between €3m and €15m: Recipients must have their main operations in Spain and create jobs in the country as a result of the funding. For further details, see this announcement from La Moncloa.
In the US, rural electricity grid utility companies are joining together in co-operatives and have now become serious providers of broadband connectivity. Back in May, 1936, as part of President Franklin D. Roosevelt's massive ‘New Deal’ (the huge programme of public infrastructure construction that was instrumental in pulling the US out of the Great Depression), the Rural Electrification Act was passed and brought electricity to millions of rural US homes and businesses for the first time. Now the electricity rights of way and physical infrastructure, including pylons and substations that were first deployed more than 80 years ago, are being used to piggy-back fibre lines. The co-operative trend is now so strong that national politicians are taking notice and bi-partisan action. A couple of weeks ago, Senator Maria Cantwel (a Washington-state Democrat) and Senator Shelley Moore Capito (a West Virginia Republican) co-sponsored the Grant to Rapidly Invest and Deploy Broadband Act (GRID), that provides 50:50 dollar-for-dollar federal financing in a cost-sharing initiative with electricity grid co-operatives to increase investment in a US-nationwide “middle-mile backbone” along existing grids. The goal is to help provide affordable high-speed broadband access to the 120 million households that still have either no, or very limited and slow, Internet services. Simultaneously, it is hoped the investment will boost “the resiliency, diversity, and security of America’s electrical grid” and make the key infrastructure more robust and cybersecure via “smart grid” technologies. “Middle-mile” infrastructure connects network hubs with “last mile” retail networks that directly serve homes and businesses: The last mile is dependent on the middle mile network to get fast broadband through to individual users. GRID is supported by a coalition of public and private electricity utilities and public interest groups, and according to a report by Jim Matheson, the CEO of the National Rural Electric Cooperative Association (NRECA), in February of this year 200 co-ops out of a total membership of 900 were either already offering broadband access services, in the process of delivering broadband, or planning to do so soon. Furthermore, two states, Arkansas and Indiana, both of which have large underserved rural areas, are encouraging electricity co-operatives to link up to form state-wide fibre networks.
Indonesia’s Ministry of Communication and Information Technology is investigating state-owned PT Telkom Indonesia over alleged leakage of the personal data of customers signed up for the telco’s internet service, IndiHome. The ministry has started a probe which includes “immediately” summoning PT Telkom Indonesia’s management to find out more about the alleged data breach. The authority has also pledged to come up with technical recommendations on improving the operator’s data protection practices. However, a PT Telkom spokesperson told Reuters there had been no data leak, so someone’s going to end up with egg on their face! More about the probe can be found at the ministry’s statement here (available in Indonesian).
- The staff, TelecomTV
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