Ring! Ring! Hot News, 1st June, 2009
In Today's Issue:: MTN-Bharti back on in complex merger; Spanish regulators see 45% FTTH; layer-zero openness is key; fibre diet very good for Xfone; NBN numbers; Aussies row back on filtering; KCOM - managed services as a managed service; Time Warner gets out of AOL; Nortel gets out of LG-Nortel; Vodafone offers 25MB for £5 but not 5MB for £1; not the best start for Ovi Store; data pressure on at AT&T; AT&T to offer Android, Pre; Spotify for mobile; virtualisation for mobile; Facebook "valued" at "$10bn"; Orascom profits slide; Telfort fined; Vimpelcom loses money, gains subscribers; Zain Iraq fined; Wataniya Palestine appeals to Blair; Viettel buys 2,000 cellsites from Huawei; Renesys on the cybersecurity report; MetaSwitch claims softswitch leadership; decisions coming on UK universal service
The MTN-Bharti emerging-market supermerger is back on, after the two carriers agreed to negotiate exclusively with each other until the end of the year. The combined beast would be the third-biggest operator in the world after Vodafone and China Mobile; in a deal which could be fairly described as complicated, Bharti would increase its stake in MTN to 49%, while MTN took a 36% stake in Bharti.
However, just in case this might be suspected of simplicity, 11% of Bharti would then be passed on to MTN shareholders as part of the payment, in a mixture of cash and shares, for Bharti's new stake in MTN. And MTN, meanwhile, would pay for its stake in Bharti with a mixture of cash and MTN shares. Clearly.
No wonder the big question in the talks will be who gets to control the combined company.
In Spain, and in fixed, meanwhile, the regulator, CMT, reckons almost half of Spanish subscribers will be on FTTH by 2023 - to be precise, 43 to 46 per cent of subscribers. There is interesting stuff in the report; CMT estimates that there may be as many as three alternative fibre operators competing with Telefonica by then, probably concentrated in Barcelona and Madrid, with at least one alternative operator pushing into smaller towns. They reckon that such operators would recoup their investment in 9 years in the cities.
The secret sauce is layer zero openness; the report's authors worked from the assumption that all the alternative operators would use Telefonica's ducts and poles. Accordingly, the CMT has decided to keep an existing obligation to provide duct access at a price equal to that charged for Telefonica's own fibre deployment in place.
Fibre in your diet is good for you; Tim Poulus points to Xfone's results, which show monthly ARPU of $75 for DSL and $175 for FTTH customers, with a churn rate of 1.7%.
In Australia, there are numbers from telecoms minister Stephen Conroy on the National Broadband Network; in a parliamentary committee hearing, he said that the government expects the NBN to have a 50/50 split between debt and equity, that the central government would hold 51% of the equity, and that this would mean an upfront investment of A$11bn - so the total bill would come to about A$40bn. He also rowed back on plans to institute mandatory filtering of the Internet.
KCOM, the operator of Hull's municipal phone network and once dotcom darling, is outsourcing its national managed-services infrastructure to BT. Is this the first known case of managed services as a managed service?
In other .com nostalgia news, Time Warner is getting rid of AOL, spinning off the once-famous dialup operator into a standalone company again. It's probably telling that they hired someone from Google to run the division shortly beforehand, although what you would actually do with it is another question. Nortel is also getting out of an old joint venture this week, putting its interest in LG-Nortel on the block.
Vodafone trumpeted its suspension of roaming charges in Europe this summer, but said remarkably little about data roaming. But then, who would? It seems, however, that there is a new tariff for data as well, which divides the world into three parts and superimposes a distinction between phones and dongles/laptops/everything else. £5 gets you 25MB of data; why they didn't say that 5MB costs £1, we don't know...
Anyway, app stores. Again. This week saw the launch of Nokia's Ovi Store, and whilst it didn't quite topple sideways from the pad and explode in a giant cloud of red smoke, it wasn't Apollo 11 either. Reviewers were pleased by the range of software - 3G Skype clients, for example - that Apple would never have accepted, but disappointed by the user experience on some devices and the worryingly frequent website outages. Whoops.
AT&T CEO Randall Stephenson says: the mobile backhaul capacity crunch is coming. In response to the iPhone's demands, they are planning to roll out HSPA rapidly; they are also planning to ship Android devices and the Palm Pre, in order to keep those pipes filled. It's a curious feature of the industry; on the one hand, everyone talks about measuring and throttling and value-based pricing, but on the other, as soon as a new link is installed, the business imperative is to price the service to go.
Here's something to make the backhaul links run hot; mobile Spotify, for Google Android devices. An interesting detail; rather than stream music all the time over a mobile network, this version of the service can cache a playlist locally. Which is sensible, but rather defeats the idea that they could sell you music without letting you have a copy...
Scary tech development: virtualisation for mobile phones. VMWare are working on it; they like the idea of the same gadget being able to run Android, LiMo, S60, or whatever, and corporate sysadmins being able to have their own secret way in to their fleet of devices in order to check the doors are locked.
Meanwhile, Facebook valued at $10bn. Well, that's more like "Facebook" "valued" at "$10bn"; what has actually happened is that a Russian investor has offered $200m for 1.96% of the company. Hence, some quick multiplication sums, and you have your headline.
Telco people who remember the late 90s and early 00s will of course recognise an old trick; you swap a given amount of capacity on your empty or unbuilt cable with a competitor, at a price which is silly but doesn't matter because no cash changes hands. This allows you to value the project based on that price, and why not all the others too? Hallelujah! Riches!
Then, of course, you end up in jail like Bernie Ebbers and the Indian PTT ends up owning your network. It's not exactly the same, but it is the same sort of idea - get a silly valuation for an insignificant percentage of the company and apply it to the whole thing. What's in it for the Russians? Well, Fbook shares aren't easy to come by, unless you do what they are doing and buy them from employees. The company doesn't have to be worth $10bn, after all; they just have to be able to sell the 1.96% for more than $200m to turn a profit.
On that grim note, Orascom saw its profits slide by 66%. They are blaming the dollar exchange rate. KPN's MVNO-farm, Telfort, has been hit with a regulatory fine for not fully using its spectrum allocation. Vimpelcom lost 8.5 billion roubles despite adding 1.7 million subs.
And Iraq has slapped Zain with a $18m fine for what is simply described as "bad service". The other two networks also copped smaller penalties. Imagine that - not only do you have to contend with suicide bombers, day-long power cuts, US electronic warfare, and gun battles between rival gangs of policemen, but you're still subject to ill-defined regulatory fines.
It could be worse, though: you could be Wataniya Palestine, whose financial close is held up by a delay in getting their spectrum allocation sorted out with the Israeli government. Unfortunately, they are appealing to none other than Tony Blair to intervene. Good luck with that one.
In case you were wondering where all the Huawei network rollouts were, here's one: Viettel ordered a 2,000 Node-B UMTS HSPA network from Huawei, but then this comes naturally when the owner is the Vietnamese Army.
Renesys comments on the US Government's new cybersecurity white paper; MetaSwitch claims primacy in IP softswitch deployments, mentions that it provides "core VoIP infrastructure" and "innovative IMS solutions", doesn't say how those numbers break down between them; and a decision is expected on the spectrum implications of universal broadband in the UK.