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    Beware the seven deadliest customer experiences – Foundever

    Nick Booth
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    Beware the seven deadliest customer experiences – Foundever

    Repetition, ratings and rude robots

    You can tell a CEO who’s spent too much time ‘in the cloud’. They believe their own customer satisfaction surveys. Either that or they are deliberately gas-lighting us. To improve customer experience, Mobile Europe sought simple ‘people pleasing’ advice for telcos from people who really know the customer. In the first of an occasional series, Maria Harju, Foundever’s Chief Revenue Officer for Europe, the Middle East and Africa, describes The Seven Deadliest Customer Experiences and how mobile network operators can avoid them.

    Repetition.

    Repeating your story to multiple people is enough to make 57% of Europeans hang up. Yes, some problems demand escalation, but if you’re moving your customer across an omnichannel platform it’s omni stupid not to move the information from channel to channel too. A CX should systematically do that. This averts another massive frustration, disregard for the customer’s history. How can you pretend to care about the customer experience when you show you are demonstrably oblivious to it? All the information across all channels is captured and should be correctly stored and retrieved so that your agents can do their best jobs.

    Rate your experience.

    OK, we need performance feedback, but customers are suffering from survey overload. Every trip to the toilet now involves an invitation to rate the experience. There are better ways to learn how customers feel about service and how they perceive your brand. Speech and text analytics are instant, less obtrusive and more accurate.

    Chatnots.

    If you don’t acknowledge your chatbot’s limitations, you’re setting your brand up for a CX failure. If your customer knows it’s an automated system, they’ll treat it as such and adjust their expectations accordingly. But when the bot goes beyond its domain intelligence it must hand off to a live representative and pass on the information shared up to that point.

    Chats …. with delayed response. 
    Chat’s rationale is about immediacy and accuracy but long wait times and vague unfocused responses will demolish that advantage. Immediate contextual support can help a customer take action or make a decision. Avoid the temptation to set high chat concurrency targets for agents. The more conversations they handle the less likely they are to resolve complex issues or satisfy each customer. Use your best pre-scripted responses in early conversational stages so that agents have more time to find a resolution. Cross train your CX staff so that they can work across channels based on peaks in demand.

    Undervaluing CX

    If each interaction doesn’t meet expectations it will damage your brand. So stress its value in your proposition. A superior customer experience should be reflected in the price of a product or service. If you’re cheap very hard to hold on to customers, especially in the current economic environment. Here is the value of CX. Three in four consumers will walk after a single disappointing customer experience, yet 42% would pay more for an identical product or service if it were supported by a superior CX. Being in the latter camp starts with understanding who your customers are, their wants, needs and expectations.

    Treating vocal interaction like a necessary evil.

    Test yourself before you test their patience. Voice is about people not managing processes, so IVR should solve customers’ problems, not stress test their patience and short-term memory on the altar of your management processes, said Harju. Most consumers are frustrated by complicated menus then agitated by the agent that takes over. A happy resolution is an uphill battle. An IVR should minimise menu options, as part of the identification or authentication process so that more of the conversation is focused on the customer and their issue, and use it to coach the customer. Rather than playing a message saying the call is important, a message asking if a person has the reference number or other relevant information to hand is going to make everyone’s life easier.

    Network resilience is fundamental to Ukraine’s fight for survival

    Michelle Donegan
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    Network resilience is fundamental to Ukraine’s fight for survival

    Kyivstar’s CEO and CTO talk about the power of grit and operators pulling together

    In a small, quiet meeting room on the sidelines of Mobile World Congress with executives from Ukraine’s largest operator Kyivstar, the discussion was in stark contrast to what was going on at the show. While other European operators talked about fair-share politics and future immersive experiences, Kyivstar provided an update on how it has kept people safe and its network up and running after one year of war. 

    Oleksandr Komarov, Chief Executive of Kyivstar, acknowledged having a somewhat “alien” feeling here as the operator has “very different challenges and priorities” compared to the rest of the industry.

    In an interview with Mobile Europe, Komarov and Volodymyr Lutchenko, Chief Technology Officer at Kyivstar, shared how network resilience challenges have changed dramatically over the last year and how people have pulled together to preserve communications services. (Also see Telecoms in time of war)

    National roaming

    Cooperation among the country’s three operators – Kyivstar, Vodafone Ukraine, and Lifecell – has been “essential” for overall network resilience, and they have been “exchanging capacity and providing equipment to one another,” said Komarov.

    Indeed, one of the first and most important steps the operators took after Russia invaded a year ago was to implement national roaming, so that if network services are down on one network, users are automatically switched to another. National roaming is unusual and difficult, but the Ukrainian operators were able to launch it in about three weeks with support from the national regulator.

    The service is “working well to keep services going,” said Lutchenko. When the country suffered power blackouts in November last year, he said more than 2 million people per day used the national roaming service.

    When the war started, the government also issued additional frequencies free of charge to the operators to give them extra network capacity. Meanwhile, equipment suppliers and local businesses have also rallied to help keep the networks going.

    Komarov cited an example where Ericsson stepped up to support a “very big ambitious project to roll out a national core site in the western part of Ukraine … to mitigate the risks related to the potential loss” of other sites, he said. In peace time, such a project would take 12 to 18 months. But with everyone cooperating, he said they started the project at the start of 2022 and it was completed in early May, taking less than five months for a major deployment.

    Moving targets for resilience

    As the months of war have dragged on, the network resilience challenges have changed. In the first few months, Lutchenko said Kyivstar was engaged in “urgent activities” to keep the network going when the infrastructure was physically damaged by rockets, bombs, mines, and tanks, because the biggest problem is that it is often too dangerous to get to the sites to repair damages.

    “[The sites] could be in occupied territory or on the front line. The area could be under fire or the fields can be mined so that without supervision from the military, you cannot get there … That’s why your network should be very reliable and still work with multiple damages like ours,” said Lutchenko.

    Later in the summer, the resiliency work shifted to “stabilisation” projects. By September, Kyivstar’s network performance KPIs remarkably were “almost on a pre-war level.” Apart from occupied areas where Kyivstar had no access to sites, “the network was really good,” he said. 

    Attacks on energy pose new threats

    The communications resiliency landscape changed in October when Russia started attacking the country’s energy infrastructure. Lutchenko said the challenge is now “really huge” and the “new reality.” In late October, about 20% of Kyivstar’s base stations were affected by power outages. Lutchenko said the worst day was November 24, 2022, when 65% of Kyivstar’s network was without electricity.

    In response, Kyivstar has strengthened energy resilience by adding longer-life backup batteries and diesel-powered generators.

    Here again, cooperation has been vital. In Kyivstar has “crowd-sourced” access to power generators from local businesses, such as a petrol station located near one of the operator’s cell sites. “We asked businesses and invited people to help us with keeping the network up and running,” said Lutchenko, and now more than 600 sites are connected to diesel generators.

    But this is one area where Komarov feels help from the government has been “limited”. Of Kyivstar’s 1500 generators, he said about 40 were provided by the government and the rest were either procured by the operator or acquired from third parties that have “extra power capacity on hand located nearby our sites.” Kyivstar said it has invested around US$5 million just on generators and diesel fuel. 

    Fighting on two fronts

    Kyivstar’s network is under threat from cyberattacks as well as physical attacks. “The Russians want to destroy us not only physically, but virtually as well, so that means we have to fight on two front lines,” said Lutchenko.

    The operator took measures to protect its network by relocating certain equipment away from areas that were likely to come under Russian control. Komarov explained that in occupied territories there was a cyber defense effort underway to ensure that despite not having control of all its network, the operator was not “vulnerable to extra threats.”

    “We streamlined the architecture of our core infrastructure to minimise the number of potential vulnerabilities,” he said. In Kherson, for example, Kyivstar had “just a media gateway and RAN network” and this “decreased the risk of penetration,” he said.

    Restoring liberated areas

    As territories are liberated, Kyivstar works on repairing the destruction to its network. Lutchenko said that about 18% to 20% of the telecom infrastructure in formerly occupied regions is “totally destroyed,” meaning “there is nothing from an equipment or infrastructure point of view.” About 30% to 35% is “heavily damaged” and about 40% has “minor damages.” Kyivstar says it can repair nearly 90% of the network in those areas.

    “We’re waiting for our military to liberate more territory and we are ready to restore everything,” said Lutchenko.

    Losing more than infrastructure

    Kyvistar is worried about losing more county’s critical communications infrastructure: it is also working to keep its 3,800 employees and their families safe. In the initial months of the war, the operator provided instructions for where people could go for safety and converted regional offices into temporary homes with showers and washing machines for displaced families.   

    Around 140 Kyivstar employees have been drafted into the army and thousands volunteer to help the army in various roles. The operator has lost three of its employees in the war and two are missing.

    Kyivstar relies on maintenance and construction suppliers, but their situation is “very much worse” because they cannot protect employees “with the same efficiency as Kyivstar” due to its critical infrastructure status, explained Komarov.

    Lutchenko joined Kyivstar in November 2021 and has been in the telecom industry in Ukraine for more than 25 years. “I don’t think anyone can plan for stuff like this. The most important thing is we have the greatest team in the world.”

    Asked how the war has affected the operator’s business, Komarov said the operator was “in the green” and there is “extremely high pressure on our networks.”

    “But let’s face it, it’s less about business and much more about survival,” he said.

    More techcos step up to support Ukraine

    Annie Turner
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    More techcos step up to support Ukraine

    Microsoft, VMware, Intel, AMD and OneWeb are the latest to stop trading with Russia – and some with Belarus too

    Last week Google blocked Russians’ access to Google Pay and Apple did likewise with its wallet product and product sales in Russia.

    Some have criticised Apple’s move, pointing out it could push people towards using Android phones made in China that are more susceptible to hacking and surveillance.

    However, Apple made the moves after a direct appeal to its CEO, Tim Cook, by the Vice Prime Minister of Ukraine Vice

    Now more big tech firms are following their lead.

    Microsoft has suspended all new sales of Microsoft products and services in Russia.

    The chips are down

    Chip giant Intel said in a statement that it, “condemns the invasion of Ukraine by Russia and we have suspended all shipments to customers in both Russia and Belarus.

    “Our thoughts are with everyone who has been impacted by this war, including the people of Ukraine and the surrounding countries and all those around the world with family, friends and loved ones in the region.”

    Another chip giant, AMD has also stopped shipments to Russia and Belarus.

    VMWare is suspending all its business activities in Russia and Belarus due to the unprovoked attack by Russia. It published a statement that read, “We stand with Ukraine, and we commend the bravery of the Ukrainian people. The human toll is devastating and like other global businesses, we are committed to supporting our Ukrainian team members, customers and partners.”

    It added, “We are also seeking to support non-Ukraine-based employees with family members located in Ukraine with information to access available resources. We continue to support our employees in Russia, as they are adversely impacted by the consequences of their government’s actions.

    “The suspension of operations includes suspension of all sales, support, and professional services in both countries in line with VMware’s commitment to comply with sanctions and restrictions.”

    The board of directors at satellite operator OneWeb has voted to suspend all launches from Baikonur, the Russian cosmodrome in Kazakhstan.

    Social media battles

    Meanwhile social media sites are continuing their battle with Russian authorities, which are keen to control the flow of information and the narrative surrounding the war.

    Facebook, Twitter and YouTube have acted to prevent Russia’s state media making money from ads on their sites. In response, Moscow has said will restrict access to Facebook after its parent company Meta refused to stop fact-checking some Russian media companies’ output.

    TikTok has limited access to Russian state-controlled media accounts in the EU and Reddit has stopped users posting links to Russian state-sponsored media.

    Expect yet more big techcos to act soon.

    Germany is catching up fast in gigabit connectivity, but could DT scupper progress?

    Annie Turner
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    Germany is catching up fast in gigabit connectivity, but could DT scupper progress?

    Some 78.6% of premises have access to gigabit connectivity mostly thanks to altnets but they want a more certain regulatory and political environment to protect their investment

    A new study by DIALOG CONSULT and the VATM found that by mid 2024, 45.9 million households in Germany will have access to Gigabit connectivity via fibre optic and/or hybrid fibre-coaxial (HFC) networks.

    This equates to 78.6% of homes and buildings, and is an increase of more than 2 million premises passed since the end of 2023. Fourth-fifths (80%) of the increase is due to alternative network providers or altnets that compete against the former incumbent, Deutsche Telekom (which uses the Telekom Deutschland brand within Germany).

    Further, altnets have a fibre take-up rate of 35.1% versus the Telekom Deutschland’s adoption rate of just 13% “despite its great marketing strength”.

    The report says this is due to the former incumbent’s strategy of squeezing as much profit as it can out of the sunk cost of its copper local loop using vector technology to boost transmission speeds instead of prioritising fibre build-out and take-up. 

    Note that the VATM represents more than 160 telecoms and multimedia companies active in the German market, all of which compete against the former monopoly, Deutsche Telekom.

    Altnets supply and meet 90% of demand
    Now 35.9 million out of 45.7 million households and small- and medium-sized enterprises (SMEs) have access to gigabit connectivity. As in previous years, the increase over the last 12 months is around 2 percentage points, so there is still a way to go, but where gigabit connectivity is available, it is proving popular.

    In the first half of 2024, the volume of data generated via gigabit-capable connections grew by 7% per connection per month, averaging out at 435 gigabytes. “We certainly see a gigabit effect: high capacity connections are very popular with customers despite higher prices,” says Walter. More than half of the altnets’ customers opt for bandwidths of 250Mbps or higher. More than 42% of SMEs request bandwidth of at least 500 Mbps.

    Overall, more than 90% of the homes with an activated Gigabit connection source the service from a competitor to Telekom Deutschland, with cable/HFC networks increasingly building or converting to FTTB/H connections.

    The fibre ratio in the first half of 2024 increased by 1.1% to 17.7% compared to the previous year, with the proportion of altnets accounting for 70.4% share of this, and in rural areas, they account for more than 72%.

    Fibre last except to undermine rivals?

    Despite their success, altnets face some serious challenges. Study leader Andreas Walter notes [translated from the German], “Deutsche Telekom has thrown in the towel regarding investment displacement, [preferring] a more lucrative continuation of copper DSL…Therefore, it mainly focuses on passing properties and connects much fewer customers. This has a significant impact on the expansion of fibre optic networks, on digitalisation and our business locations.”

    Dr. Frederic Ufer, Managing Director at VTAM, elaborates, “Even Deutsche Telekom’s latest expansion activities would be inconceivable without the investment emanating from the competitors…the Federal Network Agency [the telecom regulator] must look more at Deutsche Telekom’s regulation because its fibre network shows a fatal trend towards re-monopolisation.

    “The overall picture shows that Deutsche Telekom is expanding its market share via faster DSL by 100,000 connections and thus is financing a dominant, strategic superstructure through cherry picking.”

    In other words, Deutsche Telekom’s rivals need the commitment from politicians, regulators and behemoth itself that it will not choose to build and market infrastructure and services in areas that already have access to gigabit connectivity to undermine its smaller rivals.

    The report concludes that to remain in the fast lane for gigabit expansion and to strengthen competition, the country needs clear rules for Deutsche Telekom’s migration from copper to glass, rather than deregulating the former monopoly.

    The full results of the gigabit study 2024 are available HERE in German.

    Digi doubles Q1 profit, plans to expand into Portugal and Belgium

    Annie Turner
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    Digi doubles Q1 profit, plans to expand into Portugal and Belgium

    The group’s share price rose 63% in the last year and it has lined up credit of €167.5 million to invest in networks in the Iberian peninsular

    The Romanian headquartered Digi Communications announced its net profit more than doubled to €33 million in Q1, up from €14.3 million for the same period last year. Digi reported consolidated revenues in Q1 2024 of €447 million, a 12% increase versus Q1 2023. The adjusted EBITDA for Q1 2024 amounted to €163.1 million, a rise of 21.9% year on year.

    The adjusted EBITDA, excluding the IFRS 16 impact, was €139.9 million, an increase of 23.4% over the time the previous year. The company’s market capitalisation is now RON5.9 billion (€1.2 billion) after its shares rose 63% over the last year.

    The company says its performance aligns with the management’s projections for 2024, underpinned by solid growth in strategic markets.

    Success in Spain

    Serghei Bulgac (pictured), CEO of Digi Communications, stated, “Following a year of remarkable expansion in 2023, we are thrilled to report a robust first quarter of 2024. Our key markets, Romania and Spain, have maintained strong performance and allowed us to reach a historical milestone of 25 million clients served, across all three markets of activity.

    “This important growth from the first three months of the year was driven by our mobile segment in Spain, which grew by 23.6%, reaching 5 million customers. In parallel, Spain’s broadband segment experienced accelerated growth of 56.7%, now serving 1.5 million users. Romanian mobile users exceeded 6 million with an increase of 16.3% year on year.

    “These figures indicate another year of anticipated growth, aligning with our expectations and capability to meet evolving consumer needs in a competitive landscape. We are committed to continue to deliver superior quality at affordable prices across vibrant European markets, including established regions and new markets in Belgium and Portugal, where we are gearing up for the service launch.”

    Digi is Spain’s largest MVNO and benefited from the tie-up between MasMovil and Orange earlier this year. The European Union was keen to preserve competition in Spain and insisted on remedies to bolster Digi as a condition for the merger to go ahead.

    Credit facilities for networks

    According to Romania-Insider, Digi Communications has signed three loans totalling €167.15 million to develop telecoms networks in Romania, Spain and Portugal. It cited a note to investors as its source.

    It has in place two export credit facility agreements for a total of €117 million with Citibank Europe that is intended to finance the purchase of goods and services for the development of telecommunications networks in Romania and Portugal.

    Digi plans to launch telecommunications services in Portugal towards the end of the year.

    In addition, this week Digi Spain Telecom agreed a non-committal bridge credit facility for €50 million from Banco Santander to finance working capital.

    Odido dumps legacy to build B2B marketplace services with partners 

    Simon Dux
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    Odido dumps legacy to build B2B marketplace services with partners 

    The Dutch telco has big aspirations but first must undertake big perspirations to sort out its back-office systems

    Dutch telco Odido is taking action to overcome its back office integration woes by choosing BSS and ecosystem orchestration company Beyond Now to help it achieve large scale digital transformation, at least in the B2B space initially. 

    With approximately eight million customers, Odido is one of the big three telecom providers in the Netherlands, serving both individuals and businesses. It wants to be the largest provider of 100 percent fiber-optic internet in the country, aiming to offer internet and TV services via fiber optic to more than six million households.  

    However, since the merger between Tele2 Mobile and T-Mobile Netherlands – and subsequent new brand launch last September – Odido has been dogged by internet connections issues and poorly functioning customer service. Dutch consumer TV show Radar has received more than 1,000 complaints about Odido. According to Emerce, a third of people with an internet connection at home have had problems with the quality of this connection in the past 12 months. Odido scored the worst: customers experience the most problems and these are also solved the least often. 

    In addition, Odido has the highest percentage of unresolved complaints at 49%, while for the other providers this is between 32% (VodafoneZiggo) and 43% (KPN). Of this group of Odido customers, 80 percent have been experiencing these problems for more than a month.  

    Sorting out enterprise services first 

    Beyond Now will now underpin the telco’s B2B expansion strategy. The adoption of Beyond Now’s platform will enable the Dutch operator to partner with third parties, offer “enriched B2B solutions” to its SMB and enterprise customers, and replace its legacy BSS. The operator is fast tracking its monetisation and orchestration of partner offerings at scale, helping to drive new revenues from the growth in demand for B2B2X solutions. For those wondering, B2B2X is a business model that allows business one to use technology to sell its products through business two – a marketplace.  

    Beyond Now’s Digital Business Platform is a cloud native solution built on a microservices architecture with Open APIs and it’s delivered through containers. Those containers are orchestrated by Kubernetes with a PostgreSQL database backend, delivering high performance data access through Elasticsearch and Redis.  

    The new platform covers more than just billing; it also covers charging, order fulfilment, product lifecycle management, and product catalogue, as well as partner orchestration. Odido aims to replace what it inherited from Tele2. This will focus on replacing the legacy manual partner management processes and product databases. 

    Orchestrating enterprise service partners 

    Initially, Odido will use Beyond Now’s platform to facilitate the rapid onboarding of its 40 partners to seamlessly co-create and co-sell their solutions, benefiting from faster time to market and improved ability to scale operations. The 40 providers will be migrated onto Beyond Now’s digital business platform, which critically, will support ecosystem management and orchestration.  

    Essentially, the platform supports a model for creating multi-partner solutions which will be key to Odido expanding its range of offerings for business customers. It improves partner management capabilities which will enable Odido to experiment, test, launch and monetise new offerings quickly – across multiple technologies and services (e.g. OTT, TV, 5G or IoT), from its entire partner ecosystem. Beyond Now’s platform will also help to facilitate Odido to launch new services including fixed internet, partner products, mobile and SD-WAN. 

    “We aim to deliver the best customer experience and service. Since Odido’s rebranding last year, we have been on a fast track towards digital transformation, driving efficiency improvements that enable us to focus resources on developing partner-led solutions that meet our business customers’ needs,” said Odido chief commercial officer enterprise Martijn Teekens. “We’re delighted to have Beyond Now at our side, supporting us with proven expertise that will enable us to rapidly introduce these new offerings and grow our business.” 

    “Odido recognises that improving operational agility and time-to-market is fundamental to addressing the significant growth opportunity available to CSPs in the B2B sector,” said Beyond Now CEO Angus Ward. “Ecosystem orchestration is a growing priority for CSPs that want to maximise partner synergies, especially if they are to capitalise on new revenues coming from B2B2X offerings.” 

    He added: “Our platform ensures that Odido will be well positioned to monetise new technologies and orchestrate complex use cases involving multiple partners, suppliers and industry specialists. Slotting in this final piece to the partner puzzle will provide Odido’s tech savvy SMB and Enterprise customers with the complete solutions they need.” 

    Watching Telekom’s experience 

    No doubt Odido has been watching Telekom Deutschland – the domestic subsidiary of Telekom – and its progress in building its Infonova Digital Business Platform, which underpins the customer support and service portal for a central marketplace for customers in Germany, allowing them to orchestrate the sale, ordering and fulfilment of this B2B2X offering – with Beyond Now at its heart.  

    Last year, Deutsche Telekom launched a new digital unit aimed at Germany’s enterprise market under Telekom Deutschland (TD) which is responsible for the group’s domestic market operations. This will make digital services from Deutsche Telekom and partner companies more accessible to enterprise customers in Germany, and to the customers of those organisations (B2B2X), delivered through a B2B2X digital marketplace.  

    Beyond Now’s platform underpins the customer support and service portal for a central marketplace for customers in Germany, allowing them to orchestrate the sale, ordering and fulfilment of this B2B2X offering. Through its multi-tenancy capabilities, every partner or reseller will have their own tenant, so that they can not only sell the TD services catalogue to their customers, but also integrate their own products and services and manage them through the platform. 

    Romania sees solid fixed line broadband speed increases 

    Simon Dux
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    Romania sees solid fixed line broadband speed increases 

    Regulator ANCOM says fixed wireless access is increasing across the country

    Internet users in Romania last year recorded an average download speed of 587Mbps for fixed line internet in 2023, up by around 10% compared to 2022, and an average upload speed of 548Mbps, up by an impressive 20%, according to Romanian regulator ANCOM based on tests it carried out using its Netograf platform, which offers access to detailed statistics on several broadband quality parameters. In all the regulator carried out 85,000 fixed line tests.  

    One of the more striking findings from ANCOM is the big jump in wi-fi speeds connecting to fixed line networks. In 2023, the average download speed for wi-fi was 156Mbps which was up 15% compared to 2022, while the average upload speed was 126Mbps (up 13%). 

    “From the analysis of statistics for 2023 for fixed internet, there is generally a consolidation of a trend of balancing average download and upload speeds in fixed networks (cable and wi-fi) for large providers on the Romanian market (depending on the number of connections), which suggests adapting electronic communications services to users’ needs,” stated the regulator. 

    According to think tank, Blue Europe, Romania’s internet penetration rate is one of the highest in Europe, surpassing even some of the continent’s wealthiest countries like France, Belgium, Finland, and Austria. In January 2023, Romania had 17.82 million internet users, indicating an 88.9% internet penetration rate of the total population. 

    Blue Europe points out that Romania stands out in the European Union and globally for offering some of the most affordable fixed internet services. Climbing three positions in the global ranking, Romania now boasts an average monthly broadband cost of RON 35 (USD 7.57), marking a decrease from the previous year. The range of internet packages varies significantly, with the cheapest subscription at RON 6 (USD 1.30) and the most expensive at RON 45 (USD 9.73).  

    Mobile only sees mixed results  

    In terms of mobile internet access, statistics obtained from tests conducted by users within the Netograf platform in 2023 revealed an average download speed of 39Mbps (compared to 38 Mbps in 2022) and an average upload speed of 12Mbps (compared to 15Mbps in 2022). ANCOM said around 31,000 valid tests were conducted on mobile internet providers. 

    In January, Opensignal reported that Orange won its Download Speed Experience speed test with a score of 37.8Mbps and a lead of 4.5Mbps over runner-up Digi Mobil; Orange wins Upload Speed with a score of 11.8Mbps, 0.9Mbps above the closest competitor — Vodafone. These measures are obviously not just 5G.  

    Market in flux 

    While a lot of focus goes on Digi Romania or RCS&RDS, the other operators in Romania and ramping up their own strategies. In January, Orange Romania agreed to a full merger of its mobile and fixed operations, with the Romanian Government owning a 20% stake in the combined operator. The government approved the merger in December between Orange Romania, the largest telecom group in the country, and Orange Romania Communications, the former state telecom company Romtelecom, in which Orange owns 54% of the shares and the Romanian state holds the remaining 46% through the Ministry of Research, Innovation and Digitalisation. 

    Meanwhile in February, Vodafone announced it was installing new Open RAN sites in 20 cities across Romania, following successful tests it started with Samsung and other partners last year in the country. That was in addition to signing a six-year deal with Ericsson to replace mostly Huawei kit with the Swedish vendor’s 5G RAN portfolio including Massive MIMO, Antenna System and latest generation of radios and basebands in the country. 

    The EU recently reported that compared to the pre-pandemic levels in 2019 (91%), 2023 saw an increase of 2.9 percentage points (pp) in fixed broadband connection among enterprises across EU countries. The most notable increases were seen in Greece (15.8 pp), Romania (15.6 pp), and Bulgaria (8.7 pp). In fact, Romania is only behind Denmark on EU enterprise fixed line connectivity – well above the EU average.  

    Acquisition of Vodafone Spain to Zegona gets green light from country’s regulator

    Annie Turner
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    Acquisition of Vodafone Spain to Zegona gets green light from country’s regulator

    The sale is expected to complete at the end of May 2024

    Spanish authorities have granted the final approvals needed for the sale of Vodafone Spain to the British investment house Zegona Communications. The transaction is expected to complete at the end of May 2024.

    At that point Vodafone will receive €4.1 billion in cash (subject to customary closing adjustments) and €0.9 billion in the form of Redeemable Preference Shares.

    Consequently, Vodafone intends to commence an initial €500 million share buyback programme on 15 May 2024, as part of its plans to return €2 billion over 12 months.

    According to Vodafone Group’s annual earnings report announced earlier today, the group’s net debt stands at €33.2 billion. The deal will not involve the transfer any debts associated with Vodafone Spain to the new owner.

    The Spanish market

    Zegona was established in 2015 with the objective of investing in businesses in the European Telecommunications, Media and Technology sector and improving their performance to deliver better shareholder returns. Zegona is led by former Virgin Media executives Eamonn O’Hare and Robert Samuelson. 

    Zegona Communications is in negotiations to acquire Avatel Telecom, which specialises in rural broadband and is the fifth largest fixed broadband provider in Spain.

    The Spanish market is undergoing major upheavals, having proved fiercely competitive market. This spurred the €18.6 billion merger between Orange (the second largest operator in Spain behind Telefonica) and Másmóvil (the fourth largest) announced in summer 2022. It gained all the necessary approvals in Spain and from the European Union in March and renamed itself MasOrange.

    MasOrange is now Spain’s largest converged operator, overtaking incumbent Telefonica.

    Vodafone Group is also divesting itself of its Italian opco to Swisscom, via Swisscom’s Italian subsidiary Fastweb, for €8 billion. The two have a binding agreement, but are awaiting the necessary approvals to complete the transaction.

    Vodafone rises in Africa, despite currency falls

    Annie Turner
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    Vodafone rises in Africa, despite currency falls

    Group profit rises 2.2% despite tough conditions and CEO claims transformation plan is working

    Vodafone Group reported its annual results broadly in line with expectations, posting core earnings of €11.02 billion from revenues of €36.7 billion. The group’s service revenue dropped 1.3 percent, but on an organic basis, increased by 6.3%, with opcos in Europe and Africa, and its Business division all growing. With the exception of Turkey, the Group had service revenue growth of 3.7% (to €29.9 billion) on an organic basis. (Our analysis of Vodafone Group’s results in other regions can be found here.)

    The operator group announced that total revenue in Africa declined by 8.1% to €7.4 billion due to the depreciation of local currencies against the euro. Hence service revenue decreased by 9.2% but organic growth in service revenue grew by 9.2%, with growth in South Africa, Egypt and Vodacom’s international markets.

    In South Africa, service revenue growth was supported by consumers taking up contracts for mobile and price rises to those contracts in the first quarter. Also there was good fixed line growth in Consumer and Business. Growth slowed in Q4 due to a strong prior year comparative, reflecting an acceleration in customer data usage during widespread power outages, and pressure on wholesale revenue. Financial services revenue grew by 7.9% to €156.9 million on an organic basis, supported by growth in our insurance services. 

    Service revenue in Egypt grew strongly during the year and accelerated in Q4, above inflation. The acceleration was supported by sustained customer base growth, price increases in mobile and fixed, robust demand for data and strong growth in our financial services product, ‘Vodafone Cash’. Vodafone Cash revenue more than doubled in FY24 to €95.8 million. 

    In Vodacom’s international markets, service revenue growth was supported by a higher customer base and strong M-Pesa and data revenue growth. M-Pesa revenue grew by 13.4% on an organic basis and now represents 26.8% of service revenue. 

    Adjusted EBITDAaL declined by 11.8% during the year. On an organic basis, adjusted EBITDAaL increased by 6.4%, supported by service revenue growth and cost initiatives, partially offset by an increase in technology operating expenses associated with higher energy costs. The Adjusted EBITDAaL margin decreased by 1.5 percentage points year-on-year (organic: -1.1 percentage points) to 34.2%. 

    Customers 

    In South Africa, Vodafone added 125,000 contract customers in the year, and now has a mobile contract base of 6.8 million. It added 5.7 million mobile prepaid SIMs in the year, supported by our big data led customer value management capabilities which offer personalised bundles to customers. Across its active customer base, 81.5% of mobile customers now use data services, an increase of 3.3 million year-on-year. The VodaPay super-app continued to gain traction with 5.8 million registered users. 

    In Egypt, Vodafone added 437,000 contract customers and 2.4 million prepaid mobile customers during the year, bringing the total to 48.3 million customers. ‘Vodafone Cash’ now has 8.2 million active users with 2.8 million users added during the year. 

    In Vodacom’s international markets, the operator added 4 million mobile customers and its mobile customer base is now 54.2 million, with 63.5% of active customers using data services.

    Vodafone’s annual profits up 2%, CEO says recovery on track

    Annie Turner
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    Vodafone’s annual profits up 2%, CEO says recovery on track

    Is progress fast enough to keep investors happy with dividend halved from next year?

    Vodafone Group reported its annual results broadly in line with expectations, posting core earnings of €11.02 billion from revenues of €36.7 billion. The group’s service revenue dropped 1.3 percent, but on an organic basis, increased by 6.3%, with opcos in Europe and Africa, and its Business division all growing. With the exception of Turkey, the Group had service revenue growth of 3.7% (to €29.9 billion) on an organic basis.

    Vodafone’s operating profit decreased by 74.6% to €3.7 billion, but the fall was largely due to business disposals over the 2023 financial year, most notably, the €8.6 billion it gained from divesting Vantage Towers.

    Undervalued?

    Shares in Vodafone have fallen 22% in the last 12 months and by 44% since 2019. It only rose slightly after the earnings announcement, propelled by the promise of a €2 billion share buyback by the company. Vodafone said it would pay ¢9 dividend per share for 2024, but would halve this going forward to invest in its networks.

    Net debt, not taking into account the sales of opcos in Spain and Italy, remained flat at €33.2 billion.

    James Beard at the Motley Fool makes an interesting case for why the share price should be 87% higher here. He also writes, “With regards to profitability, selling Spain and Italy is likely to improve the company’s ROCE [return on capital employed] by ‘at least’ one percentage point. This might not sound very much. But in FY23 it would have been worth another €1.1bn (7.7%) of operating profit.”

    Good news and bad

    Top-line growth in the final quarter was boosted by gains in Germany – its biggest European market – and the UK. Over the year, Vodafone’s service revenues from Germany grew by 0.2% but accelerated to achieve 0.6% in the fourth quarter. However, adjusted core earnings fell 5.8% due to higher energy costs and other inflationary factors.

    It is also braced to lose 4 million customers in Germany, at an estimated cost of €400 million, when a regulatory change comes into force in July. Until now, people in multi-tenancy buildings had to accept the TV and broadband service provider their chosen by the owner. Now each unit within the building will have the right to choose their own.  

    Vodafone acquired about 8.5 million customers within multi-tenancy buildings when it bought Liberty Global’s German operating company, along with those in the Czech Republic, Hungary and Romania for €18.4 billion in August 2019.

    Della Valle said that business in Germany was expected to improve and by 2026 “will come back to being an important growth engine for the group”.

    The UK remains a strong market for Vodafone, but the question of whether the £15 billion (€17.44 billion) proposed joint venture with Three UK is allowed to proceed hangs in the balance. In the last financial year, mobile service revenues rose 5.4%, boosted by double-digit price hikes. 

    A better place?

    Vodafone seems to be in a better place than it was a year ago when it reported earnings of €14.9 billion and the CEO laid out her recovery plan.

    Della Valle said in a statement, “A year ago, I set out my plans to transform Vodafone, including the need to right-size Europe for growth. Since then, we have announced a series of transactions and we are now delivering growth in all of our markets across Europe and Africa.

    “We performed slightly ahead of expectations in the financial year, with good organic service revenue growth of 6.3% and organic EBITDAaL [earnings before interest, taxes, depreciation, amortisation, and adjusted loss] of 2.2%.

    “Our Business division – a key growth driver – achieved 5.4% revenue growth in the fourth quarter. Much more still needs to be done in the year ahead. We will step-up investment in our customer experience, improve our underlying performance in Germany and accelerate our momentum in Business, whilst also continuing to simplify our operations thshare

    roughout the group. We are fundamentally transforming Vodafone for growth.”

    Focus on customer service

    Vodafone said it is working to transform customer experience, having reallocated €140 million in new incentives and plans to develop talent. It has started processing customer insights using real-time AI models, feeding into detailed action plans on a weekly basis in all markets.

    Vodafone says frontline tools and improved processes have benefited 70,000 team members, although it also reduced headcount by 5,000 in line with the three-year recovery plan announced by Della Valle at the annual earnings announcement last year. Another 2,000 jobs are due to follow, to reach an overall target of shedding 11,000 jobs by 2026 and cutting operating costs by €1 billion.

    Vodafone’s recovery plan appears to be progressing. Whether it will ultimately succeed remains to be seen.

    UK’s CityFibre acquires Lit Fibre to extend footprint, explore ISP possibilities

    Annie Turner
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    UK’s CityFibre acquires Lit Fibre to extend footprint, explore ISP possibilities

    Lit is a vertically integrated altnet – both a network builder and ISP with a footprint of over 220,000 premises across more than 20 towns

    CityFibre, the UK’s largest independent, full-fibre broadband provider, has completed its acquisition of Lit Fibre from Newlight Partners. The share-based acquisition, announced two months ago, is intended to accelerate CityFibre’s nationwide roll out by up to 300,000 premises.

    CityFibre’s plan is to pass 8 million premises. Newlight Partners join CityFibre as minority shareholders.

    Lit is a vertically integrated altnet – both a network builder and ISP with a footprint of over 220,000 premises across more than 20 towns in Wiltshire, Gloucestershire, Hertfordshire, Worcestershire, Essex and Suffolk. It serves a subscriber base of about 10,000 retail customers.

    CityFibre has worked with Lit’s management team over the last two months to begin the integration of Lit’s 10Gbps XGS-PON network infrastructure into CityFibre’s wholesale network. They expect the integration to be completed later this year, enabling CityFibre’s ISP partners to access the same products, pricing and service experience across the extended footprint.

    As a wholesale-only operator, CityFibre will explore options for the Lit ISP after the integration.

    CityFibre intends to complete Lit’s work-in-progress deployment as well as most of its planned network implementations. In total, the network is expected to reach up to 300,000 premises by early 2025. Lit’s network is built exclusively using existing poles and ducts and so has “a highly attractive build cost per premises”. 

    Lit’s swift network integration will be prioritised: customers’ broadband services will not be affected by it. As a wholesale-only operator, CityFibre will explore options for the Lit ISP after the integration.

    The acquisition of Lit is the first of several deals CityFibre says it expects to close over the next two years. It follows CityFibre’s decision to pursue altnet acquisitions as a strategic growth driver towards and potentially beyond its 8 million premises target. It wants to cement its position as the UK’s third digital infrastructure platform of scale, behind BT and Virgin Media 02.

    Earlier this month, CityFibre reported its own customer connections exceeded 400,000, growing 77% year-on-year and with installations regularly exceeding 1,000 a day. Also, that quarterly revenues are increasing over 30% year-on-year, with a positive EBITDA performance for the first quarter of 2024. It continues to progress towards it 8 million premises passed target, with 6 million already built, in progress, acquired or underpinned by the government’s Project Gigabit contract awards.

    German regulator imposes new conditions on spectrum extensions 

    Simon Dux
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    German regulator imposes new conditions on spectrum extensions 

    BNetzA’s consultation shows it has listened to newcomer 1&1’s complaints around extending existing frequency usage rights for Deutsche Telekom, Vodafone and Telefónica

    German regulator, Bundesnetzagentur (BNetzA), published a new draft consultation on the extension of frequencies in the 800MHz, 1,800MHz and 2,600MHz ranges, which has added new remedies to overcome 1&1’s complaints that extending existing frequency usage rights for Deutsche Telekom, Vodafone and Telefónica was unfair.  

    Germany’s fourth mobile network 1&1 – since December – published a report in January, slamming BNetzA’s September consultation to consider extending existing licences, suggesting it amounted to “an action tantamount to subsidisation in the billions of euros of the three established network operators.” 

    In the new consultation, BNetzA is still minded to extend the licences by five years which it said would align the terms of these rights of use with rights of use that expire later. This will allow more frequencies to be allocated further, and it believes regulation-induced shortages will be avoided. “In addition, market developments can be included in a later procedure. This also applies to the fourth network operator 1&1. A larger procurement framework offers companies more opportunities to gain access to spectrum,” stated the regulator.  

    The frequency spectrum at 800MHz, 1,800MHz and 2,600MHz is to be made available for mobile communications at a later date, together with the rights of use from the 700MHz, 900MHz, 1,500MHz and 1,800MHz ranges, which expire in 2033. 

    Crucial concession to 1&1 

    However, this time the regulator said the extension will be linked to a commitment by Telefónica to continue the transfer of 2x10MHz mid-band spectrum to 1&1. In addition, the three incumbent network operators will be obliged to make at least 2x5MHz of their low-band (sub 1GHz) spectrum available to 1&1 for co-operative, joint use. The agency is calling for corresponding offers on fair terms. 

    “We are open to a co-operative solution. It is important that we can utilise a sufficiently large amount of frequency at market conditions in order to adequately supply our more than 12 million customers,” said 1&1 CEO Ralph Dommermuth (above). “Only then can we fully leverage the advantages of our innovative Open RAN technology and ensure the competitiveness of our daily expanding 5G network.” 

    The regulator said that if 1&1 Mobilfunk is not granted national roaming by a nationwide network operator from 2026 onwards, it reserves the right to order national roaming. 

    Rural emphasis  

    Like its September consultation BNetzA has added several conditions to stimulate rural rollouts. Each of the three incumbent mobile network operators is to have at least: 

    > from 2030, 99.5 percent of the licensed area provided with 50Mbps  

    > from 2029, 99 percent of households in municipalities in rural areas provided with 100Mbps in each federal state 

    > from 2029 all federal highways provided with 100Mbps, 

    > from 2029 all state roads as well as inland waterways provided with 50Mbps 

    > from 2030 district roads provided with 50Mbps 

    Regarding gigabit coverage along railway lines, the BNetzA considers: “a joint approach to the expansion of public mobile communications and the new railway radio to be expedient. To this end, mobile phone and rail network operators are to be obliged to cooperate.” 

    “Our primary goals are to improve the supply for all consumers and to further promote competition. The extension of frequencies is to be linked to ambitious coverage requirements,” said BNetzA president Klaus Müller. “A specific coverage requirement for rural areas and a land requirement can promote equivalent living conditions in urban and rural areas.” 

    He added: “We want to further strengthen competition in the mobile communications market. To this end, the extension is to be combined with special regulations for the fourth network operator and a negotiation requirement for service providers.” 

    Comments on the draft consultation can be submitted until 8 July 2024. 

    Microsoft and Amazon to invest billions in cloud, AI in France 

    Simon Dux
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    Microsoft and Amazon to invest billions in cloud, AI in France 

    Hyperscalers commit to splash the cash on cloud and AI infrastructure at the annual “Choose France” summit

    Microsoft said it will invest €4 billion in cloud and AI infrastructure, AI skilling, and French tech acceleration, aiming to train one million people and support 2,500 AI startups by 2027. The announcement came as President Macron hosted business leaders for the annual “Choose France” summit at Versailles Palace.  

    The announcement follows the news over the weekend that Amazon would invest €1.2 billion to boost its logistics as well as AWS cloud infrastructure in France, home of AI startup Mistral AI.  

    The man with the biggest wallet in Microsoft, vice chair & president Brad Smith (above, right) said the investment was the company’s largest in France in Microsoft’s history.  

    Microsoft will invest €4bn to expand its next generation Cloud and AI infrastructure in France and bringing up to 25,000 advanced GPUs to the country by end of 2025. The company will expand its data centre footprint across existing sites in Paris and Marseille regions and will also invest in planning a new data centre campus in the Grand Est Region, in Mulhouse Alsace Agglomération. Microsoft’s Cloud and AI infrastructure in France will operate under the company’s recently published AI Access Principles. 

    These investments will help to meet the growing demand for efficient, scalable and sustainable AI specific compute power and the needs of private and public organisations, according to the company. Microsoft’s computational infrastructure and AI platform services will enable organisations to develop, deploy, and use proprietary and open-source AI models and applications. It will also make Microsoft’s own AI-infused services like Microsoft 365 and Microsoft Dynamics more broadly and locally accessible to French customers. 

    Microsoft said it would couple its capital investment by investing in renewable energy and is now pursuing its first renewable energy contracts in France. The company has executed its first PPA this month and it expects to have approximately 100MW of new renewable energy projects online in France by the end of 2024.  

    Training commitment 

    Microsoft will support skilling for 1 million people to help the country embrace the new AI era, with a specific focus on job seekers, students, SMBs and professionals. Microsoft and its partners – government institutions, training services partners, non-profit organisations, universities and higher-education organization – will launch new training programmes focused on building AI fluency for everyone, developing AI technical skills, supporting AI business transformation and “promoting safe and responsible AI development”.  

    The company will expand its “A Vous l’IA” initiative, launched in March 2024, and partner with France Travail to train job seekers with the skills they need to use AI technologies. The programme, accessible through the Emploi Store, will enable job seekers to learn the core concepts of artificial intelligence and generative AI functionality and how to apply it in their job search. Microsoft is also partnering with Kokoroe, a French Ed-Tech company specialized in micro-learning to build this new exclusive content, based on short and easy-to-consume modules, with no technical background required – accessible on the “A Vous l’IA” platform.  

    The company is partnering with higher-education organisations, such as Skema Business School, Rennes School of Business, EDHEC and Efrei, to provide students with the right skillset. To upskill AI professionals Microsoft is collaborating with its professional network of selected Training Services partners, in France – Cellenza Training, ENI, Fastlane, IB Cegos and Skillsoft Global Knowledge, to accelerate the readiness of French organisations through dedicated activations online and in Microsoft Experiences Labs in the regions.  

    More inclusive programmes 

    Microsoft is also launching a pioneering module with Simplon – plus extend joint programmes for 3 further years – aiming at training developers of all backgrounds to better use GenAI, select models and deploy them with state-of-the-art tools, ensuring proficiency across platforms. Microsoft and Simplon will first accelerate on “GenIAles”, their three-day in-person workshop aiming at supporting women’s access to digital tech job roles. They will also keep growing their network of Microsoft AI Schools by Simplon across the country, an initiative launched in 2018 to train jobseekers to become AI developers, a newly recognised job by France Competences in 2020. 

    Finally, Microsoft will set the pace in accelerating AI startups, aiming to engage over 2,500 startups by 2027 through its new flagship programme: Microsoft GenAI Studio. This initiative is designed with a comprehensive package of AI expertise, cloud credits, and support activities, including collaboration with customers and partners. 

    Microsoft GenAI Studio will first translate into a tailored 4-month programme at STATION F that will be run twice a year over three years, aiming at accelerating the adoption of AI by select French startups with technical workshops and technical, access to AI experts at Microsoft and among the programme’s partners. During the programme, the selected startups will also have access to Microsoft’s collaborative workspaces at Station F. Each batch will welcome 15 startups. The first batch will begin next September. 

    “This major investment demonstrates a steadfast commitment to supporting digital innovation and economic growth in France,” said Smith. “We are building state-of-the-art Cloud and AI infrastructure, training people with AI skills, and supporting French startups as they use our technology with confidence to grow in a fair and responsible way.” 

    Amazon to add 3,000 jobs in France 

    While Amazon’s announcement was more about its logistics operations the company’s investment includes increased Amazon Web Services cloud infrastructure in the Paris area to support France’s generative AI endeavours and logistics infrastructure in the Auvergne-Rhône-Alpes to increase delivery speeds and improve sustainable deliveries for customers. 

    The 3000-staff increase is in addition to the 2,000 new permanent jobs already announced for 2024 and takes Amazon to more than 22,000 permanent employees in its offices, across Amazon Web Services’ (AWS) infrastructure in France and in more than 35 logistics sites across the country. 

    The investment in AWS cloud infrastructure aims to meet the escalating demand for AWS services in France, driven by the immense potential of cloud computing and artificial intelligence (AI). According to a report by Strand Partners commissioned by AWS, the number of French companies adopting AI increased by 35% between 2022 and 2023, from 20% to 27%. If France maintains this pace of AI adoption, it could bring €99 billion in additional gross value added (GVA) to the French economy by 2030, according to the commissioned report. 

     “Companies across industries recognize AI’s immense benefits for unlocking growth and boosting productivity,” said VP AWS France & Southern Europe Julien Groues. “With this commitment to expand our cloud capacity, we are empowering organizations in France to fully harness the potential of transformative AI technologies to spur innovation, enhance competitiveness, and create new business value.”  

    This investment by AWS is part of a €6 billion, 15-year investment plan for the period 2017-2031 to develop its cloud infrastructure in France. An AWS economic impact study estimates that this investment plan will contribute €16.8 billion to France’s GDP over this period, while supporting an average of 5,271 full-time jobs annually in the local supply chain. 

    AWS said it also offers several education, training, and certification programmes to help people in France develop their digital skills and use cloud technologies. AWS has trained more than 900,000 people in the EU, and more than 200,000 people in France, in cloud skills since 2017, as part of its commitment to provide free cloud skills training to 29 million people by 2025.  

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