Verizon Wireless, Free results, BRICs special: Telco 2.0 News Review
- Strategy: Verizon Wireless, No.1 in the world; AT&T reorg downgrades fixed; TMUS yours for $35/share
- BRICs: Telefonica takes out GVT, TI in trouble, Oi looks at TIM Brasil bid; AliBaba.com clones Amazon
- Europe: Free Mobile punches through 9m subs, all other French operators suffer
- Vendors: Qualcomm under EU inquiry; AT&T sues Cox; NXP in your iPhone; LG meets WebOS, with difficulty
- Regulation: Euregulators have a spectrum policy; Netflix pays both Comcast and TWC; "Recast Comcast"
- Emerging World: Microsoft in Namibia; Kenya's finance-focused MVNO starts price war; $33 smartphone
- Apps: Goodbye, MSN Messenger; Hike, India's secret girlfriend; $30m VC for IFTTT; working with gyro data
'Digital Asia 2014' Executive Brainstorm and Innovation Forum, run by STL Partners in collaboration with Telkom Indonesia, is designed to equip 250 specially-invited business leaders from across the region's telecoms, enterprise and technology sectors with new, breakthrough ideas, methods and tools on how to grow significant new revenues in the next 12-18 months leveraging Mobile, Cloud and Big Data.
Verizon Wireless, No.1 in the world; European profits slide; AT&T reorg downgrades fixed; TMUS yours for $35/share
According to ABI Research, Verizon Wireless was the world's most profitable mobile operator, in terms of gross profit, in Q1, ahead of China Mobile and AT&T, and the second most profitable operator on a gross profit per user basis, behind only China Mobile. They estimate that global mobile operator revenue will grow 2.9% this year, pushing it over a trillion dollars, but operators in Western Europe will suffer, with revenues down 5% and gross profitability falling for Vodafone, T-Mobile, Telefonica, and Orange, while it was expected to rise for North American operators, or at least for Verizon Wireless and AT&T. Selling half of VZW to invest in Europe looks like a better deal by the day, doesn't it?
(Our in-depth coverage of Vodafone is available in the Telco 2.0 Transformation Index here)
AT&T, meanwhile, is re-organising to move more of its enterprise operation into the same division as its mobile network. Ralph de la Vega will head a new division that contains both AT&T Mobility and most of Business Solutions, while Glenn Lurie is promoted to head Mobility within this new entity and Business Solutions CEO Andrew Geisse retires after 35 years.
A lot of AT&T's innovation is concentrated in Business Solutions, and integrating it with Mobility might be a way of driving it into the staple mobile business. Mobility is by far the biggest segment and Business is the second biggest, while Mobility is the fastest growing, and although Business Solutions is flat to shrinking overall, it contains the high-growth "Strategic Business Services" segment, as the following chart from the Telco 2.0 Index shows. So De La Vega's new job is much like being the "CEO of Important Stuff"; this may imply that the fixed-line incumbent business is being further downgraded as a priority. Unlike Business or Mobility or the new unit, its head Lori Lee doesn't get a C-level title - perhaps because she's only been with AT&T since 1997, a blink of an eye in their culture? Will they perhaps sell or spin off the copper lines, especially as their filings for the DirecTV deal openly admit that U-Verse has been unsuccessful?
Meanwhile, DTAG management has put a price tag of $35 a share or no deal on T-Mobile USA, although some people think they're hoping for $40 and expecting a bidding war to break out. Sprint's bid would probably have been around $40, while Free's is $33 in cash, although Xavier Niel would say it's more like $36 if you count in the supposed synergies. Rumours are circulating that Free is looking for private-equity partners to put more cash into the bid and get the ratios down to less hairy levels.
Telefonica takes out GVT, TI in trouble, Oi looks at TIM Brasil bid; AliBaba.com clones Amazon
Vivendi has made its mind up; it's selling Brazilian fixed operator GVT to Telefonica, in a deal that values the combination of GVT and a stake in Telecom Italia at €7.45bn. Telefonica is paying €4.7bn in cash and handing over 12 per cent of its Brazilian opco, which can be swapped for 5.7 per cent of Telecom Italia. This is intended to settle the regulatory dispute about the ownership of TIM Brasil; Telefonica is exiting its indirect investment via TI while adding fixed assets to its existing Vivo MNO.
By contrast, TI had offered €1.7bn in cash, 15% of TIM Brasil, and 16% of TI itself for a total of €7bn up front but more exposure to potential future growth. Dealbook argues that Vivendi made the right choice.
TI, meanwhile, now has serious problems. Blocked from turning its Brazilian operation into a quad-play converged operator, it's also heavily in debt, which is why it couldn't offer Vivendi more cash. Telefonica has lost 70% on its TI shares since 2007 and probably wants out, and the group of Italian banks that controls TI is also looking for an exit.
TI is selling its investment in Telecom Argentina, but it's had to extend a deadline again, perhaps because the Mexican financier buying it is struggling to come up with the money.
Oi, meanwhile, is looking at making an offer for TIM Brasil, and has sounded out America Movil and Telefonica as to whether they might consider taking part in a breakup of the company. At the same time, Oi has put its Angolan opco Unitel on the market, as if to raise cash preparatory to a bid.
However, Oi got the Angolan assets as part of its merger with Portugal Telecom, before it lost a fortune in the crash of Banco Espiritu Santo. BES was heavily involved in the Angolan economy, and many of its investments have gone sour, with allegations of fraud rife. Oi may just be trying to ditch anything that might be tainted by the whole BES fiasco. Another rumoured bidder might be Vodafone.
China Telecom's H1 results complain of:
"unprecedented uncertainty" regarding factors such as 4G regulatory policy, the implementation of the VAT reform, the establishment of a tower company and the resale of mobile services (MVNOs).
However, net profit was up 12% in H1 so it can't have been that bad.
Chinese e-commerce giant AliBaba.com is pursuing an Amazon-like strategy, getting into the infrastructure business. This week it opened a fifth data center in Shenzhen. They may be doing it because a formidable new competitor has emerged, an alliance between Chinese Web 2.0 giants Baidu and Tencent and real-estate/retailing/media major Dalian Wandu to create an e-commerce platform.
Free Mobile punches through 9m subs, all other French operators suffer
Free.fr has announced its H1 results, and they are impressive. Free Mobile has achieved another million net-adds in the last six months and has reached 9 million subscribers. Mobile revenue was up 24% and fixed 3.6%, with group-wide EBITDA up 7% at €624m. The company is now the second biggest ISP in France and expects to reach its goal of 15% mobile market share by the end of the year, while installing 2,000 additional base stations during 2014.
The impact on the rest of the sector is clear: Bouyges's H1s are out and they don't make easy reading, with service revenue down 8% in the last six months and net profits down to €22m (compare €140m for Free). Meanwhile, SFR's EBITDA was down 11.4% year-on-year, its revenue from retail was down 7.3%, and that from business customers down 6.5%. Even Orange's sales are down 4.9%.
Ken Wieland in Mobile World Live points out that despite the challenging economy, European operators are beginning to invest serious money in CAPEX. Some of them are also investing in R&D: Orange and Telefonica are taking part in the MiWaves project to develop 60GHz small cells for 5G.
You can see why - where network differentiation works, it really works, as the examples of Verizon Wireless and (maybe) EE show. DTAG is one of the best placed carriers to spend big, and it wants you to know it wants to be Europe's leading telecoms company. Although, as we have seen, this might not be all it's cracked up to be.
Some of the most successful operators seem to have chosen a 2G/4G network strategy rather than a 2G+3G/4G one. Slovakia's new fourth operator, SWAN, is doing that via a contract with ZTE for 1100 node-Bs. If you want to do that it helps to have plenty of 1800MHz spectrum, and the UK regulator has just cleared British operators to up their transmitter power by +3dB in that band.
After TalkTalk complained to OFCOM about BT's wholesale pricing and the so-called margin squeeze, BT has complained right back.
Sky is deep in the price war, meanwhile, offering "free" broadband for the first 12 months with a £15.70/mo line rental, although they give something back from that with a £100 voucher.
Fixed-wireless operator Relish has admitted that it's using so-called carrier grade NAT to share public IPv4 addresses. This breaks quite a few applications. If it worries you, you can pay £10/mo extra for pukka globally routable addresses - which sounds a lot, but maybe less so in the context of a £20/mo business-class ISP service.
Qualcomm under EU inquiry; AT&T sues Cox; NXP in your iPhone; LG meets WebOS, with difficulty
Qualcomm is already facing a Chinese regulatory inquiry. Now, the European Commission is getting involved, following up a complaint from modem maker Icera, now part of Nvidia.
A slightly unusual patent dispute: AT&T is suing Cox, over the cableco's new set-top box, which the telco claims contains technology it patented regarding "network quality".
The new iPhone is going to include technology from NXP, reports the Financial Times, which concludes reasonably enough that this is probably NFC at long last.
Here's an interesting story on the fate of WebOS at its new home, LG. Although the WebOS-based smart TV was a hit at CES, it turns out this was because another version wasn't ready in time, and many of the WebOS team they acquired from HP have quit. And LG managers are paid a bonus for each additional feature that gets into the final product.
Nokia's HERE mapping has a new customer, Samsung, whose smartphones will soon get it. This gives Samsung a bit of distance from Google.
And here's a deep read on the past, present, and future of Motorola.
Euregulators have a spectrum policy; Netflix pays both Comcast and TWC; "Recast Comcast"
The European Commission's spectrum report is back, and former trade commissioner Pascal Lamy is pretty clear: he says the whole of the 700MHz band should be allocated for mobile broadband, with the handover complete by 2020, but in return the broadcasters should keep 470-693MHz, the remaining space in the UHF segment, until at least 2030 and the EU should refuse any effort at next year's WRC to kick them out. The meeting at which the report was presented has also assigned 59MHz of spectrum for wireless microphones and such.
It turns out, from Netflix's filings against the Comcast-TWC merger, that only 1% of ISPs get paid by Netflix, but that 1% includes both Comcast and TWC.
Public Knowledge makes its case against the Comcast-TWC deal, arguing that the FCC's consideration should include the content market and exclude narrowband. They also have a contest for the best remix of a bad Comcast service call.
Here's a good piece on how the cable industry and the Bells fight against the menace of municipal broadband.
Microsoft in Namibia; Kenya's finance-focused MVNO starts price war; $33 smartphone
Microsoft is trialling the world's biggest whitespace network, in Namibia, where they hope to deliver broadband much more cheaply using Adaptrum's mesh networking radios.
In Kenya, Equity Bank recently decided to get in on the mobile money business, by launching an MVNO specifically for it. Pause to think about that: the bank started an MVNO so it could do mobile finance. The result has been a wave of price cuts. Equity's service is much cheaper. M-PESA, the original and best, has responded by slashing its prices on small transactions (about 65% of the total) while shading them up on big tickets.
Here's a review of the $33 smartphone, an Indian Firefox OS device. You get a 1GHz CPU for that money! Mind you, a big part of getting it that cheap has clearly been leaving out the 3G or 4G, or rather, the great slab of patents attached to them, in favour of just 2G plus WLAN.
Ben Evans notes that 3G will rival clean water for coverge by 2019 and argues that this will cause enormous growth in e-commerce.
Goodbye, MSN Messenger; Hike, India's secret girlfriend; $30m VC for IFTTT; working with gyro data
After 15 years, Microsoft is shutting down MSN Messenger, the instant messaging app whose name harks back to when Microsoft thought we'd all be on the "Microsoft Network" not that Internet thing. They would like you to use Skype instead. The Verge remembers.
Hike is a Snapchat-like app sponsored by Bharti Airtel, with a very clear use case: it won't betray your private life to your parents.
FLIR is a thermal imaging camera that clips onto your iPhone.
If This Then That, the web site that lets you create and share simple graphical programs, has raised $30m in venture capital and is positioning itself as an Internet of Things platform.
Interesting; how a dance-themed Android game's developers struggled with gyroscope data.
How Google is trying to make you upgrade your browser, or alternatively, how you can make Google downgrade its website to an older version.
What happened to virtual reality?