business analysis for telecoms professionals … telecom plus/candy store dec15.pdf · business...
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candy store
december 2015Business analysis for telecoms professionals
Copyright © 2015 Singapore Telecommunications Ltd (CRN:199201624D). All rights reserved. All other trademarks mentioned in this document are the property of their respective owners.
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Business analysis for telecoms professionals
Dates for your diary and details of the must-attend events in the telecoms industry over the coming months
events
Australia, India and Denmark: Highlights from the industry’s most interesting markets in 2015
geography
Candy Store: Telcos and cablecos are racing to become the service providers of choice in a quad-play world
business
The Buck Stops Here: Alleged dodgy dealings and falling foul of regulators triggers management makeovers
technology
A round-up of some of the major stories reported in our daily news service www.totaltele.com
neWs & vieWs
opinion
FoUr pLayBundled services are taking off, but an insistence on network-based competition is blocking M&A
telecoms in 2015 was brought to you by the number four.
Operators the world over are getting into quad-play, shunning their traditional roles as providers of telecoms or TV services and restyling themselves as digital services companies in order to offer consumers the packages of bundled–and increasingly converged–services they are looking for.
The expression ‘kid in a candy store’ seems particu-larly appropriate at this time of year. While the experience of sifting through myriad broadband and TV tariff plans might not feel to the end user like it warrants such a warm and fuzzy metaphor, the fact remains that consumers have more choice than ever when it comes to procuring digital services.
As our cover story shows, some major players are
spending heavily to build the scale and assets they need to compete. That trend will continue in 2016, provided the regulators allow M&A activity to go ahead.
Four is the magic number for European competition commissioner Margrethe Vestager, who stood in the way of Telenor and TeliaSonera’s merger plan in Denmark this year on the grounds that the market needs four mobile network operators in order to remain competitive. That came as a shock, since Danish consum-ers enjoy some of the lowest mobile prices in Europe (see
Geography section), and raised concerns over the future of other planned mergers. Brussels is investi-gating tie-ups between 3UK and O2 in the UK, and 3 Italia and Wind in Italy; both would reduce the number of networks in their respective countries to three.
Regulators further afield also view four as the ideal number for boosting competition. There has been talk of licensing a fourth mobile operator in South Korea and Singapore this year, and the world’s youngest mobile market Myanmar is also working on the introduction of a fourth player. See our News & Views section for more on those stories and the rest of the year’s highlights.
Mary [email protected]@TelecomEditor
the indUstry’s biggest pLayers are bUiLding the scaLe and assets they need to compete
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A round-up of the major stories in telecoms in 2015, as reported in our daily news service www.totaltele.com
headLine hitters
Lap oF the godsBT has returned to the mobile sector, signing up more than 200,000 customers since launching an MVNO service on EE’s network in March. The launch came less than a month after BT finalised a £12.5 billion takeover of the aforementioned operator. Presuming the deal passes all the requisite regula-tory tests–the Competition and Markets Authority (CMA) gave its preliminary blessing in October–the UK incumbent will enter a market in a state of flux.
Hong Kong’s Hutchison agreed a £10.25 billion deal in March to buy Telefonica’s O2 UK and merge it with 3UK, thereby reducing the number of mobile networks to three from four and creating a new market leader with around 33 million customers. However, there are doubts over whether the merger will get the nod from the European Commission. The prognosis is not great, given that staunch regulatory opposition led TeliaSonera and Telenor in September to abandon plans to merge in Denmark. Hutchison has succeed-ed in gaining approval for mergers in other European markets, but that was during the reign of the EU’s previous competition commissioner, Joaquín Almunia. Ofcom’s new chief executive Sharon White did little settle the nerves. In October, White reiterated the UK regulator’s position that “four operators is a competitive number that has delivered good results to consumers and sustainable returns for companies.” She warned that consolidation in the UK could lead to higher prices and reduced choice for consumers.
bye bye c&WLiberty Global announced a $8.2 billion deal for Cable & Wireless Communications in November, potentially signalling the end of the road for one the oldest companies in the industry.
direct deaL done AT&T closed its $48.5 billion acquisition of DirecTV. It plans to launch new integrat-ed products and pricing packages in January.
VeriZon bUys aoL Verizon spent $4.4 billion on the acquisition of AOL, indicating its interest in both its content and advertising assets.
sUbcontinentaL mergersConsolidation came to the Indian subcontinent in November. India’s Reliance Communications agreed to take control of Sistema Shyam Teleservices (SSTL), while in Pakistan Mobilink moved for Warid Telecom.
there are doUbts oVer Whether the merger WiLL get the nod
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big neWs
doWn meXico WayAT&T completed the acquisitions of Iusacell and Nextel in Mexico and has started work integrating the businesses and offering cross-border tariff plans, something its rivals on both sides of the frontier have since emulated. Mexico is also working on a $7 billion shared mobile network project and plans to auction AWS spectrum in January. On the fixed side there was consolidation; conglomerate Alfa inked a deal to combine its Alestra business services operator with fixed-line telco Axtel. 2016 will be an interesting year in Mexico.
4g taKes oFF in chinaChina Unicom and China Telecom received FDD LTE licences this year, enabling them to offer full 4G services. China Telecom had almost 44 million 4G customers by the end of September, but Unicom does not share figures. China Mobile, which had a head start, still leads the way though, with 267.3 million 4G subscribers as of the end of October.
regULatory highLightsoFcom mULLs spLitUK regulator Ofcom is undertaking a strategic market review, its first in 10 years, that could lead to the structural separation of BT’s access arm, Openreach.
staying neUtraL Despite significant opposition, the US Federal Communications Commission’s net neutrality rules came into force in June. Protests continue.
aFtic in controLArgentina’s new telecom regulator AFTIC immediately made its pres-ence felt, blocking Grupo Clarin’s Nextel buy in September and the sale of Telecom Italia’s Telecom Argentina stake a month later.
dropped caLL biLLThe TRAI ordered India’s mobile operators to compensate users for dropped calls to the tune of 1 rupee (€0.01) per call.
bUying and seLLing in canadaIt has been a busy year in Canada. Rogers brokered a C$465 million deal for Mobilicity to finally bring consolidation to the mobile market; the telco also gained a data centre with the acquisition of Internetworking Atlantic. Meanwhile, MTS announced the sale of its Allstream business to US fibre operator Zayo also for C$465 million. The country’s opera-tors have also been spending on spectrum. March’s AWS-3 auction raised C$2.1 billion, while a 2.5-GHz sale in May brought in C$755 million.
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ViVendi is maKing its presence FeLt at teLecom itaLia
big neWs
boardroom bLitZ Vivendi is making its presence felt at Telecom Italia. Having built up a stake of around 20.5% in the Italian incumbent, the French media group is starting to exert pressure at board level. At a shareholder meeting in December, Vivendi won the right to appoint four new members to Telecom Italia’s board. Vivendi also blocked a savings share conversion plan that would have resulted in the dilution of its stake.
Vivendi is not the only new Telecom Italia investor that could potentially have a say in its strategy. French business-man Xavier Niel–who has built up a long optional position of 15.14%–is monitoring the situation and will “review a wide variety of investment considerations,” including Telecom Italia’s operations, assets, prospects and business develop-ment. With mobile consolidation on the horizon due to Wind and 3 Italia’s proposed merger, and with doubt still hanging over Telecom Italia’s continued presence in Brazil, there will be plenty for Vivendi and Niel to think about in 2016.
€1.3tn annUaL reVenUes generated by the
top 100 teLcos (Total Telecom
Global 100 2015)
trendsidentity crisisA number of major players in the telecoms space are ending 2015 with a new identity. For many, the change was driven by a desire to shake off the legacy incumbent brand in favour of something more suited to a mobile and multi-screen future. Belgacom became Proximus early in the year, Telecom Italia adopted the TIM name for all its retail operations in July, and Greece’s OTE announced its intention to bring together its fixed, Internet and mobile operations under the Cosmote name in September. That same month, Ireland’s Eircom relaunched as Eir for similar reasons; the new name better reflects the changing nature of the telecoms industry, it said.
For others, a name change came about as a result of M&A. Orange Switzerland became Salt in April, shortly after it was acquired by Xavier Niel. AT&T is in the process of rebranding its newly-acquired Mexican businesses to AT&T. And a year after it took 100% control of its Indian unit, Telenor dropped the Uninor brand in favour of the group monicker.
It is too early for BT and EE to think about their post-merger brand though. The question of whether the merged entity will continue with a multi-brand strategy or adopt a single name will be decided “in due course,” EE CEO Olaf Swantee said at the Total Telecom Festival in December. “It’s quite an important decision, but it’s not an urgent decision.”
LightsQUared’s comebacKLightSquared finally exited Chapter 11 in December and brokered a deal with GPS providers that should enable it to roll out a wholesale mobile network in the US.
china toWer China’s big three telecoms operators transferred their towers assets into a new joint venture, China Tower.
aLL change For oiOi closed the sale of Portugal Telecom to Altice in June and by the end of the year was closing in on TIM Brasil. It is holding exclusive talks with investment group Letter One on the subject.
project FiGoogle in April launched its WiFi-first Project Fi MVNO service in the US. The service uses Sprint and T-Mobile’s cellular networks where WiFi is unavailable.
5g: it’s oFFiciaLThe ITU chose IMT-2020 as its official designation for what will one day be standardised as 5G.
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actiVe orange Orange became sole owner of Spain’s Jazztel and upped its stakes in Mobinil in Egypt and Morocco’s Meditel. It exited Kenya and Armenia.
aUction issUe Dish won spectrum in the $44.9 billion US AWS-3 spectrum auction, but later handed back some airwaves after the FCC ruled it was ineligible for discounts.
on baseLiberty Global’s merger talks with Vodafone fell apart, but the US group agreed to buy Belgium’s Base from KPN for €1.33 billion and Ireland’s TV3 for €80 million.
eUrasian opsTeliaSonera aims to sell its Eurasia operations–partner Turkcell has made an offer for four of them–and Telenor plans to offload its 33% stake in Vimpelcom.
big neWs
eUrope embraces 700 mhZGermany became the first country in Europe to auction 700-MHz spectrum, raising just over €1 billion from the sale of 30 MHz of bandwidth to Deutsche Telekom, Vodafone and Telefonica. France followed suit, generating €2.8 billion for the same amount of spectrum from Orange, Free Mobile, Bouygues Telecom and SFR. The UK government, mean-while, pledged to spend £550 million over five years to clear the 700-MHz band for mobile broadband. The ITU allocated 700 MHz for LTE use in Region 1 at WRC-15 in November, thereby globally harmonising the band.
FoUr is the magic nUmberFour-player mobile markets are proving a key topic of discussion across Asia. Singapore is due to auction spectrum in various bands in 2016 and regulator the IDA has proposed reserving airwaves for a new entrant. There has also been talk of a fourth player in South Korea, where the government is keen to stimulate additional competition. And Myanmar is working on licensing a fourth mobile operator.
cabLe mega-deaLsNo sooner had Comcast abandoned its $45.2 billion plan to acquire Time Warner Cable (TWC) than Charter swept in with a $56.7 billion deal of its own. It is planning a three-way merger, including Bright House, which it agreed to buy for $10.4 billion earlier in the year. Meanwhile, French cable group Altice is due to arrive in the US, having agreed to acquire Suddenlink and Cablevision. It also has half an eye on Cox Communications.
What the Vendors didthis is not a jVNokia announced a €15.6 billion all-stock deal to acquire Alcatel-Lucent. The merged entity will be led by Nokia CEO Rajeev Suri and much of the top management comes from the Finnish side.
here goes thereNokia completed the sale of its Here mapping business to a group of Ger-man car makers in December, net-ting €2.55 billion in the process.
ericsson, cisco bUddy UpEricsson and Cisco inked a broad partnership deal with a view to creating a one-stop-shop for mobile, data centre, and IP network infra-structure, services and back office solutions.
chip maKer m&aAvago Technologies inked a $37 billion deal for rival Broadcom. Days later, Intel made an offer for Altera, valuing it at $16.7 billion.
pLatForm probLemsMozilla halted development of its Firefox OS, Finland’s Jolla filed for debt restructuring, and BlackBerry launched its first Android smart-phone, the Priv.
no QUaLcomm carVe UpAfter a strategic review, Qualcomm chose not to split its patents busi-ness from its chip maker arm. Sepa-rately, it sold 40 MHz of UK L-band spectrum to Vodafone and 3.
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Telecoms operators and cable companies are racing to become the serviceproviders of choice for consumers in an increasingly quad-play world.
candy storereVieW oF the year
consumers are faced with a dizzying array of telecoms and television
services to choose from, at a price to suit every wallet. And increasingly they are opting to buy all those services from a single provider, triggering a major shift in the telecoms landscape.
The trend towards multi-play services gathered pace this year, leading telecoms providers to spend big to acquire the requisite capabilities. But they are not the only storeholders looking to bundle up their wares. The traditional TV providers are making their presence felt on the digital services high street, giving consum-ers more options than ever.
The world’s biggest telecoms operator by revenues, AT&T, is now competing as much–if not more–with the US cable industry as with its peers in the telecoms space. It closed its $48.5 billion acquisition of satellite TV provider DirecTV in July, giving it the largest TV customer base in the country. It immediately launched its All-in-One converged TV and mobile tariff and set about exploit-ing the cross-selling opportunity that it put at 39
million households, mainly DirecTV customers without an AT&T mobile service or AT&T customers without either U-verse or DirecTV video subscriptions.
Early 2016 will bring new offerings from the merged entity. “Within the next 30 days you’re going to see us announce some new capabilities, some new integrated products and pricing that will bring together a really premium content package with a really premium wireless asset,” AT&T chief executive Randall Stephenson said in December.
But the cablecos are not resting on their laurels, when it comes to both scale and the multi-play opportunity.
Charter Communications this year agreed to pay $10.4 billion for Bright House Networks and $56.7 billion for Time Warner Cable (TWC) and is working on a plan to merge the three into a single entity that will be the second biggest cableco in the US after Comcast. The market leader’s attempted $45.2 billion takeover of TWC fell apart early in 2015 after failing to win regula-tory support. That could also be an issue for Charter, but while it is working hard to
convince competition authorities of the benefits of the deal, Comcast has turned its attention to mobility.
Comcast and satellite provider Dish Network were both linked with T-Mobile US this year, both being keen to add a mobile string to their bow, although takeover talk has come to nothing...so far. Perhaps a more likely route for Comcast would be the virtual one; Comcast has a longstanding mobile virtual network operator (MVNO) agreement with Verizon and towards the end of the year appeared set to trigger it.
An MVNO makes sense for Comcast, said AT&T’s Stephenson, particularly given its ambitions in the enterprise space. “They need it,” he said. But he is uncon-cerned about its potential impact in the consumer sector. “Competing in that market without owners’ economics is a tough pool,” he said. “It’s going to be tough for MVNOs to come into this space.”
The US is still an attractive market for newcomers though. France’s Altice announced its impending arrival with a $9.1 billion agreement to buy regional cable operator
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Suddenlink in May. It followed that up just four months later with a $17.7 billion bid for east coast cableco Cablevision.
Altice has deep pockets and in addition to its cable operations it owns a number of traditional telecoms assets in Europe. It created a strong multi-player in France when it acquired mobile operator SFR late last year and this year picked up Portugal Telecom–which operates in a relatively mature quad-play market–from Brazil’s Oi. All of which means the industry is left wondering how it will seek to leverage that experience in the US.
Altice in September indicated that it will pause its shopping spree, although it noted that it could change its mind if another cable player, Cox Communications, were to become available. It also pointed out that this hiatus could last anywhere from a few months to a few years, so don’t be surprised if it is hitting the headlines stateside again in 2016.
eUropean toUrAltice also made its presence felt on the European side of the Atlantic this year.
Following the creation of Numericable-SFR, Altice made a move for rival player Bouygues Telecom, which is struggling to hang on to third place in France’s four-player mobile market. Bouygues rejected the offer, which reportedly came in at €10 billion, but still finds
itself at the centre of M&A speculation; Orange and Bouygues denied reports that they were holding merger talks in late 2015.
Altice was also linked with Dutch telco KPN this year. It admitted such a deal might make sense–it owns cable operations in Belgium and Luxembourg–but said the pair were not in talks.
Ambitious Altice is not the only cable operator driving industry change in Europe. US-based Liberty Global was once again at the forefront of M&A activity. It hit the headlines mid-year after admitting to asset merger talks with Vodafone, although such a deal was always going to be difficult to structure and the negotia-tions came to nothing.
It had more success elsewhere though. Its Belgian Telenet unit agreed a €1.33 billion deal for KPN’s Base in April, and in November signed two separate deals to sell off some of Base’s mobile customers to Medialaan, turning the Flemish TV and radio station operator into a full MVNO, in a bid to win the backing of competition regulators. The European Commission is conducting an in-depth investigation into the deal, fearing it could harm competition, and is due to make a decision by March.
Meanwhile, Liberty Global’s Irish cable operator UPC–which adopted the Virgin Media brand used by its parent company in the UK this year–agreed to pay
€80 million for free-to-air TV broadcaster TV3, closing the deal in December. “We have some exciting plans in the pipeline to step up competition for consumers,” said Virgin Media CEO Tom Mockridge, alongside the rebrand.
Competition is certainly building in Ireland. Incumbent operator Eir, which ditched the Eircom brand to signal the start of its digital future, announced the acquisition of sports broadcaster Setanta Sports Ireland, a deal CEO Richard Moat described as an “important first step for us in television content ownership.” Meanwhile, Vodafone’s Irish unit said it would enter the quad-play market with the launch of a TV service this year, but at the time of writing it had yet to materialise. However, the telco did launch Siro, a fibre-to-the-premises (FTTP) network developed with electricity provider ESB, in November.
Across the Irish sea, the British arm of quad-player Virgin Media embarked upon its £3 billion network infill plan, known as Project Lightning. Vodafone rolled out a fixed broadband and home phone service across the UK. And satellite TV and broadband provider Sky announced it will start offering mobile services in 2016 via an MVNO agree-ment with Telefonica.
UK incumbent BT has been building up its presence
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QUad-pLay m&aspain heats UpOrange became the sole owner of Spain’s Jazztel this summer, enabling it to compete against multi-service operators Telefonica and Vodafone.
teLeKom aUstria adds assetsTelekom Austria acquired Amis, a provider of fixed-line telephony, broad-band and IPTV services in Slovenia and Croatia, giving its Slovenian mobile operator Si.mobil a fixed-line arm, and boosting its fixed and mobile opera-tions in Croatia. It also bought cable operator Blizoo Bulgaria to bulk up its Mobiltel business.
caribbean cabLe consoLidationCable & Wireless paid $1.85 billion for Barbados-based Columbus Inter-national in April and started work integrating the two businesses. But just six months later, C&W itself agreed to an $8.2 billion takeover offer from Liberty Global.
shaW shores UpCanadian cable operator Shaw Communications is diversifying. The firm announced a C$1.6 billion (€1 billion) takeover deal for mobile network operator Wind Mobile in December.
in the television space for a couple of years and this year picked up additional premium sports rights, including Premier League football and cricket’s Ashes tournament, and launched a range of new sports channels.
BT has now turned its attention to mobility. It agreed to pay £12.5 billion for the UK’s biggest mobile operator EE in February and is currently working through the practical and regulatory hurdles to closing that deal. The Communications and Markets Authority (CMA) gave its preliminary approval in October, noting that it does not believe the tie-up will impact on competition. BT also launched an MVNO using EE’s network in March, enabling it to bundle low-cost mobile services with its TV and broadband offerings and to push its content to the small screen.
m&a meLeeWhile the BT/EE merger seems to be ticking the right regulatory boxes, the path might not be as smooth for Hong Kong’s Hutchison, which hopes to acquire Telefonica’s UK mobile operation O2 and merge it with 3UK. If it gets the go-ahead for its £10.25 billion deal, the tie-up will create the largest mobile operator in the UK. However, the merged entity will still lack a fixed-line presence, which could leave it at a serious disadvantage going forward.
It is by no means certain that the deal will be ap-proved though. The European Commission’s competition arm is conduct-ing an investigation and has until 18 April to rule on the case. The parties directly involved in the deal are doubtless hoping that competition commissioner Margrethe Vestager meant what she said earlier this year when she insisted that “every case has to be assessed on its own facts and merits.”
That comment came after the Commission refused to back TeliaSonera and Telenor’s plan to merge their mobile operators in Denmark, famously causing the pair to abandon the deal in September. It remains to be seen if there will be a
knock-on effect for other ongoing M&A deals.
Hutchison is involved in more than one. In August it inked a deal with Vimpelcom that will see the pair merge their Italian operations–3 Italia and Wind respectively–into a 50:50 joint venture valued at €21.8 billion. The resulting entity will be “a convergent player that will accelerate the ability to invest in the network, services and digital innova-tions,” said Vimpelcom CEO Jean-Yves Charlier.
Wind is the second largest fixed-line player in Italy, behind Telecom Italia, whose market share has fallen below 60%, according to the latest figures from regulator Agcom. Wind and 3 Italia together served 33.5% of the
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Italian mobile market as of mid-year, putting them just over a percentage point ahead of Telecom Italia.
Telecom Italia is also re-orienting itself as a multi-player. It adopted the TIM mobile brand across all its retail operations in July to simplify its relationship with the consumer.
The Italian incumbent welcomed a new major shareholder this year in French media group Vivendi, which pledged “to support [it] over the long term and to develop its activities in southern Europe.” As the year progressed and new Telecom Italia shareholders emerged–Xavier Niel and JP Morgan have built up
positions of just over 15% and 10% respectively–it became clear that Vivendi intends to have some say in the telco’s strategy. At a shareholder meeting in December it won the right to appoint four new members to the operator’s board, including three of its own top management, and blocked a savings share conversion plan that would have resulted in the dilution of its stake in the company. Vivendi holds around 20.5% of Telecom Italia.
braZiLian standoFFAnalysts for the most part agree that Vivendi has no
real desire to fundamentally change Telecom Italia’s domestic strategy, but its operations in Brazil could be a different matter. Vivendi acquired its initial Telecom Italia stake as part of a deal to sell its Brazilian broad-band operator GVT to Telefonica.
Merging GVT with its Vivo mobile operation gave Telefonica a multi-play position in Brazil and left Telecom Italia’s TIM Brasil as the only one of the country’s big four mobile operators without a fixed-line presence. Thus specula-tion over TIM’s ability to survive as a standalone entity continued in 2015. Local player Oi in October revealed
it will hold exclusive talks with investment group Letter One over the possi-bilty of merging with TIM, but TIM is not involved in the discussions and Telecom Italia has repeatedly insisted it sees its Brazilian business as core.
TIM is the second largest mobile operator in Brazil. But with America Movil controlling 52% of Brazil’s pay TV market and 32% of its broadband sector, and Oi and Telefonica having big broadband presences and some pay TV share, it is difficult to see TIM surviv-ing in its current form for much longer.
a conVergent pLayer WiLL acceLerate the abiLity to inVest
America Movil is still desperately seeking a licence to provide television services in its home market, but it is having difficulty convincing the regulator. In its third quarter results announce-ment it pointed out that it is facing intense competitive pressure from two big players–AT&T and Telefonica–and should therefore be relieved of asymmetric regulation and approved to offer pay TV.
AT&T is a newcomer to Mexico, having closed the acquisitions of mobile operators Iuscell and Nextel in the first half of this year. It immediately set about launching cross-border plans to tempt in new customers and is also in the process of introducing the AT&T brand to Mexico on a market-by-market basis alongside its LTE network rollout.
To bring things full circle, AT&T also gained a presence elsewhere in Latin America through the DirecTV deal, which brought extensive pay TV businesses in markets including Brazil, Mexico, Argentina and others. It seems unlikely that AT&T will hold on to those operations in the long term, although there will be no quick sale due to the economic climate, CEO Stephenson explained recently. “They are single product companies and that’s not terribly exciting to us.”
Mary [email protected]@TelecomEditor
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if management changes have taught us anything in 2015, it’s that not every
senior telecoms executive gets to bow out gracefully.
Just ask Telenor, which bid a fond farewell to long-serving CEO Jon Fredrik Baksaas in August. The Norwegian telco kept Baksaas on in an advisory capacity while his replace-ment Sigve Brekke got to grips with his new role, but was forced to sever all ties with him just four months later as the corruption investigation in Uzbekistan made his position untenable. Vimpelcom–in which Telenor holds 33%–is being probed by US and Dutch authorities over bribery allegations linked with its Uzbekistan business partner Takilant.
“The situation [is] very unfortunate, complex and sad for the company,” said Baksaas. “It is vital that Telenor’s management and board of directors now have room to handle the situation effectively.” The scandal also saw off Telenor’s chairman Svein Aaser–he was replaced by banker Gunn Wærsted–and brought about the temporary suspension of CFO Richard Olav Aa and general counsel Pål Wien
Espen. Two former nominees to Vimpelcom’s supervisory board–Fridtjof Rusten and Ole Bjørn Sjulstad–were also suspended. The suspensions will stand “until the facts have been established” Telenor said.
Amidst the fallout, Telenor put its Vimpelcom stake up for sale, valuing it at €2.1 billion. “The sales process has been initiated,” but it will be an orderly process “that will take some time,” Brekke said in October. “[Telenor is] not going to do any fire sale.”
Vimpelcom executives have by no means escaped unscathed. Former CEO Jo Lunder, who left the Russian telco in April, was arrested and charged with corruption. He was also one of several executives named in a class action lawsuit filed by Vimpelcom shareholders in the US; current CEO Jean-Yves Charlier and CFO Andrew Davies were also on the list.
Depending on the outcome of the various investigations, 2016 could well see more senior figures at Telenor and Vimpelcom bow out.
South Africa-based MTN was forced into a hasty management makeover this year when its Nigerian unit was slapped with a $5.2 billion fine for failing to disconnect 5.1 million unregistered SIM cards in accordance with the Nigerian Communications Commission’s (NCC’s) timeline. The fallout brought a premature end to the tenure of MTN chief executive Sifiso Dabengwa, who had been in the top job since late 2010. His interim replacement, former CEO Phuthuma Nhleko, negoti-ated a reduction in the fine to $3.9 billion, but towards the end of the year the telco revealed it is taking legal action to challenge the authority of the NCC in imposing the penalty.
Alleged dodgy dealings and falling foul of regulators prompted some hasty management makeovers in 2015
the bUcK stops herepeopLe
the saLes process has been initiated...it WiLL taKe some time. there WiLL be no Fire saLe
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Unsurprisingly, MTN Nigeria CEO Michael Ikpoki, and regulatory head Akinwale Goodluck, also waved goodbye.
Hoping to turn things around at another scandal-hit telco is Ahmad Farroukh, who took the helm at Mobily in July. His predecessor Khalid Omar Al Kaf was suspended by the Saudi Arabian operator in November 2014 amidst an investigation into its accounting practices, and was formally removed from his position in February.
Not everyone who left their job in 2015 left under a cloud though.
David Thodey retired as Telstra CEO in August to be replaced by CFO Andrew Penn. During his tenure, Thodey negotiated two definitive agreements with NBN, both of which had significant consequences for Telstra’s copper network, and oversaw the deployment of the operator’s LTE networks. Thodey’s achievements were recognised at Total Telecom’s Asia Communication Awards in June, where he scooped the coveted CEO of the year award.
Penn got straight to work. His early achievements
include upping spending on Telstra’s mobile network by A$500 million (€329 million) and reorganising senior management. “Over three years to June 2017, we expect to have invested more than A$5 billion into Telstra’s mobile network,” he said.
A number of other big players welcomed new leaders this year. China Mobile named a new chairman in Shang Bing, a former vice minister at the Ministry of Industry and Information Technology (MIIT), replacing Xi Guohua. Meanwhile, its domestic rivals played a round of executive musical chairs; Wang Xiaochu stepped down as chairman and CEO of China Telecom, taking the helm at China Unicom, while China Unicom chairman and CEO Chang Xiaobing went the opposite way.
Elsewhere, Turkcell named Kaan Terzioglu as permanent replacement to Sureyya Ciliv, who resigned in January; Ooredoo CEO Nasser Marafih was appoint-ed to the board, naming company insider Saud bin Nasser al Thani as his successor; and in the Philippines, PLDT and Smart CEO Napoleon Nazareno
announced his retirement. Telekom Austria also got a new CEO in America Movil-backed Alejandro Plater, as Hannes Ametsreiter hopped across the border to become CEO of Vodafone Germany.
In the vendor space, the biggest change came at Cisco in May, when John Chambers retired after a 20-year stint as CEO. Chambers and his replacement Chuck Robbins both had a hand in the strategic partnership struck by Cisco and Ericsson in November. Meanwhile, Nokia’s €15.6 billion acquisi-tion of Alcatel-Lucent signalled the end of Michel Combes’ tenure as CEO of the latter. He was snapped up by acquisitive cable conglom-erate Altice, which appointed him chief operating officer and chairman of its French mobile arm SFR.
Finally, there were also a couple of noteworthy re-hires this year. In February, Charlie Ergen announced he would once again take the top job at US satellite TV provider Dish, the company he co-founded, while Canada’s Telus reappointed Darren Entwistle as CEO in August. He replaced Joe Natale, who left after 18 months after declining to ship his family across the country. It’s hard to believe, but it seems that for some people, there is more to life than telecoms.
Nick [email protected]@Telecolumnist
oVer three years...We eXpect to haVe inVested oVer a$5 biLLion into teLstra’s mobiLe netWorK
WorldCommunicationAwards
CONGRATULATIONS TO THE WINNERS…
For information on the World Communication Awards 2016, visit www.worldcommsawards.com or email [email protected]
BEST BRAND CAMPAIGNOoredoo - Simply Do Wonders
BEST BROADBAND ACCESS SERVICEHKT - FTTH on Demand
BEST CUSTOMER CARETeliaSonera International Carrier
BEST ENTERPRISE SERVICESingtel - Managed Hybrid Network
BEST MOBILE PRODUCTSingtel - Dash
BEST NETWORK OPERATIONS INITIATIVEEirteic - Eircom project
BEST OPERATOR IN AN EMERGING MARKETTelemor
BEST SMALL BUSINESS SERVICEAT&T - SMB product portfolio
SOCIAL CONTRIBUTION AWARDOoredoo - mobile health clinics
CLOUD INFRASTRUCTURE AWARDCITIC Telecom CPC - SmartCLOUD
THE CONNECTED WORLD INITIATIVEJasper - Control Center
DIGITAL EXPERIENCE AWARDOoredoo Qatar - Mozaic GO App
INNOVATION AWARDS: OPERATORPCCW Global - Threat Management Service
INNOVATION AWARD: VENDORGENBAND - Kandy
THE USERS’ CHOICEOrange Business Services
BEST WHOLESALE CARRIERNTT Communications
BEST MOBILE OPERATORSmart Communications
BEST GLOBAL OPERATORAT&T
CTO OF THE YEARMatthew Finnie - Interoute
CEO OF THE YEARTimotheus Hottges - Deutsche Telekom
17
www.totaltele.com
geography: aUstraLia
A$56bn reQUired to bUiLd oUt the nationaL broad-
band netWorK(Australian government)
The national broadband network re-mains a political football in Australia
heading For orbitSatellite will play a big role in NBN’s multi-technology mix plan, extend-ing coverage to the hardest-to-reach parts of Australia. The first satellite launched in October, and from April 2016 will provide broadband coverage to up to 400,000 rural users.
As of mid-2015, the network passed 1.15 million premises, with just over 485,000 activations. Under the corporate plan, NBN aims to cover 9.1 million premises by mid-2018.
progress oF nbn
debate doWn Under
t he debate about the future of Australia’s NBN raged on in 2015,
and remains strongly divided along political lines.
Malcolm Turnbull, who began the year as communi-cations minister for the ruling Liberal Party and ended it as prime minister of the whole country, pushed on with his multi-technolo-gy-mix (MTM) strategy, which, as the name suggests, favours a pragmatic approach to infrastructure technology, encompassing fibre-to-the-x (FTTx), HFC, fixed wireless,
satellite, and in future, G.fast.
However, the opposition Labor Party has its own interpretation of MTM: ‘Malcolm Turnbull’s Mess’. The reworked network is running behind schedule. It was forecast to cost A$41 billion (€26.1 billion)–com-pared to the previous government’s estimate of A$43 billion for its FTTP-led network–A$29.5 billion of which would come from the public purse and the rest from the private sector. However, this summer the
Source: NBNjune 2013 june 2014 june 2015
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
prem
ises
n homes activated n homes passed
government revealed that the total spend to build the network will come in at A$46 billion-A$56 billion. In addition, according to shadow communications minister Jason Clare, anecdotal evidence suggests that engineers are having to replace more of Telstra’s aging copper network than first thought. Clare summed it up thusly: “Massively over budget, behind schedule, a raft of broken promises, an unrealistic rollout plan...and dodgy copper that needs to be fixed.”
18
www.totaltele.com
geography: india
997m mobiLe Users
in india at end-september
2015(TRAI)
the [deaL] WiLL generate signiFi-cant capeX and opeX synergiesgurdeep singh, rcom
t he events of 2015 will lead to a dramatic reshaping of India’s
telecoms sector over the coming years. The introduc-tion of regulations permit-ting spectrum trading and sharing will help mobile operators to improve network quality and for some will provide an escape route out of the market altogether. Indeed, in November, Reliance Communications
agreed to acquire smaller rival Sistema, while Idea Cellular struck a deal to buy spectrum from Videocon.
India’s authorities have also wielded the stick though, announcing a dropped-call compensation scheme. Telcos have com-plained that the scheme will punish them for problems that are often out of their control but so far regulators have been unmoved.
India’s telecom regulators continued to make their presence felt in 2015carrot and sticK
no saLeDespite intense competition and high demand for spectrum among privately-owned mobile operators, India’s government still has no plans to sell off loss-making state-run players BSNL and MTNL. Local press reported in December that the government is seeing positive signs from the telcos’ turnaround plan, and that a sale is off the table.
mobiLe marKet shares
Source: TRAI
bharti airtel 24%Vodafone 19%
idea cellular 17%reliance comms 11%
tata 6%aircel 8%bsnL 8%
telenor 5%others 2%
2%
17%
24%
11%
5%8%
8%
6%
19%
19
www.totaltele.com
geography: denmarK
Denmark could set the tone for the European Commission’s stance on consolidation
setting a precedent
What the parties oFFered Was not sUFFicient to aVoid harm to competition Margrethe vestager
t eliaSonera and Telenor abandoned plans to merge their Danish
operations due to staunch regulatory opposition, sending shockwaves through the industry, throwing other proposed M&As in Europe into doubt. European competition commissioner Margrethe Vestager insists that deals will be judged on their own merits, and that
the remedies offered by Telia and Telenor, whose merger would have reduced the number of big operators to three from four, were not sufficient to avoid harming competition. With the Commission due to issue a decision on O2/3UK by 18 April, the industry won’t have long to wait before it learns if Denmark is a blip or a portentous precedent.
68% decLine in mobiLe prices oVer the past 10 years(Danish Energy
Agency)
Under pressUreDenmark has some of the lowest prices available on the continent. According to Danish telecoms consultant John Strand, unlimited voice, SMS and data can be had for as little as €13-€15 per month. With such low ARPUs and a population of just 5.6 million, it is unclear how much longer the market can sustain four players.
mobiLe marKet shares
Source: Danish Energy Agency
bharti airtel 24%Vodafone 19%
idea cellular 17%reliance coms 11%
tata 6%aircel 8%bsnL 8%
telenor 5%others 2%
13%8%
6%
3 denmark 13%telia 17%
telenor 24%tdc 38%
others 8%
38%
17%
24%
www.totaltele.com
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