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ETNO warns submarine cables are a risk to EU’s security

Annie Turner
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ETNO warns submarine cables are a risk to EU’s security

It wants better governance and public funding to address the issue, including a public organisation to be responsible for monitoring and repairs on the seabed

The European Telecommunications Network Operators’ Association ETNO) says submarine communication cables are “a significant concern for Europe’s security, resilience, and sovereignty”.

It states this vulnerability is proven by attacks on the Nord Stream undersea gas pipeline in 2022 and undersea cables connecting Estonia and Finland in October 2023.

The European Commission is about to announce its strategy for its telecom sector and internet infrastructure. This includes a Recommendation to strengthen coordination among Member States in the deployment, security, and governance of crucial cable connections.

ETNO thinks there are two strands to securing Europe’s subsea infrastructure.

Resilience through funding

The first requests public funding and preferential treatment to protect European operators’ investment in subsea in a just-published ‘Reflection paper’.

It reads, “We strongly advocate for continued support from the EU’s Connecting Europe Facility (CEF) Digital program to strengthen the EU’s capabilities in submarine cable connectivity.

“The program should be prioritized for refinancing in the next mandate. The goal should be to bolster the competitiveness and relevance of European operators on strategic routes compared to non-EU investors, while adhering to CEF obligations…to avoid diluting private investment from European operators in existing or planned infrastructure.

“The CEF Digital program could also contribute to reinvesting in critical cables at the end of their lifecycle. The implementation of the Global Gateway initiative could also become an efficient lever, should relevant financial tools be developed. Ensuring the robust monitoring and maintenance of submarine cables is essential for their sustained functionality and resilience.”

Public scrutiny, public payment

In particular, according to ETNO operators monitor coastal cables but are struggling to monitor and repair deep-sea cables, which it thinks should receive public funding and be undertaken by public bodies. This would help mitigate “rising costs that operators consistently encounter, such as those associated with securing effective repair and maintenance strategies”.

“EU funding mechanisms” should help monitor the seabed leveraging technologies such as satellite tracking in areas that are inaccessible to operators. Such publicly funded capabilities should be the responsibility of “public authorities, aligned with their financing contributions and jurisdictional powers”.

ETNO argues that alternative approaches, such as operators being obliged to install monitoring tools in cables, would impose “a significant financial burden on operators, exceeding the cost of the cables themselves”.

Governance

ETNO thinks governance is also key to mitigating risks posed to Europe’s subsea cables.

It says that Member States exercise jurisdiction over cables in territorial waters, but no single body has jurisdiction in international waters.

So, to improve regulatory clarity and promote cooperation, Member States should strive to assert as much territorial jurisdiction as possible over subsea cables, ETNO says. In addition, Europe must implement harmonised rules, especially concerning permits, “to ensure a coordinated and consistent approach across jurisdictions”.

The processes for gaining permission are slow and difficult, which hampers installations and timely repair of faults and compromise the security and resilience of submarine cable networks.

EU models

ETNO says, “We strongly advocate…comprehensive reforms in the permitting procedures. This includes clear identification, simplification, and unification of the process for installation, repair, and decommissioning of submarine cables. These processes should be harmonized throughout Member States as much as possible, including the introduction of a one-stop-shop approach in every country.

It envisages this process would establish a single point of contact for operators and public agencies. It cites the example of a recent order from the Portuguese government [document in Portuguese] as a model for best practice in the EU. The order outlines measures to simplify the installation of submarine cables, such as setting up a single licensing portal.

Civil and military

ETNO also highlights the importance of collaboration between civil and military stakeholders is also essential. It explains, “the collaborative effort should extend to the development of contingency and business continuity plans that incorporate diverse perspectives from the private sector, public sector, and defense entities.

“The dialogue should equip submarine cable operators and landing providers with the insights required to appropriately allocate human, financial, and material resources, enabling them to formulate and implement the most effective security and resilience strategies.”

EU Member States vote unanimously to approve AI Act 

Simon Dux
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EU Member States vote unanimously to approve AI Act 

The decision, which big tech thinks may create hurdles for artificial intelligence (AI) was passed unanimously after two years of negotiations

EU Member States have finally approved new laws governing the safety and use of AI, after EU countries endorsed the draft legislation in December. While the final approval was essentially a rubber stamp after December’s move, both Germany and France — which were lobbied hard by tech companies — voiced opposition to the December agreement, suggesting the rules may stymie “EU AI champions” developing. Both countries dropped their opposition this week. 

The EU’s new rules are said to be the most comprehensive on governing the use and safety of AI and will shape global industries in several vertical industry sector including some aspects of military use.  

The European Commission proposed the rules in 2021 and throughout the process, tech association Computer & Communications Industry Association (CCIA) – with members like Google, Meta and Amazon, has been warning of roadblocks with Reuters reporting that French AI start-up Mistral, founded by former Meta and Google researchers, and Germany’s Aleph Alpha have been lobbying their respective governments on the issue. 

The next step for the AI Act to become legislation is a vote by a key committee of EU lawmakers on 13 Feb and the European Parliament vote either in March or April. It will likely enter into force before the European summer and should apply in 2026 although parts of the legislation will reportedly kick in earlier. 

Startups not forgotten 

In a LinkedIn post, EU Commissioner for Internal Market Thierry Breton said the EU had largely addressed tech concerns by adopting a wide range of measures to support Europe’s AI startups, complementing the regulatory framework. He said last week’s agreement now resulted in a “balanced and futureproof text, promoting trust and innovation in trustworthy AI.” 

He added that last week’s package of AI innovation measures supports European AI startups by: giving them access to the key “raw materials” of AI (data, computing power, algorithms and talent); links them with industry; and provide a clear, stable and predictable regulatory environment with harmonised rules in all 27 Member States. 

“Our vision: a thriving European ecosystem of AI start-ups with talented researchers and engineers, developing large language models in all European languages, based on large amounts of easily accessible high-quality data, training them on the world’s fastest supercomputers, and working with industrial partners to turn them into innovative applications, with access to a large Single Market of 450 million people,” he said.  

“And this vision is already becoming reality,” he said. “For example, in Italy, we see an AI startup training its large language model in Italian language on the Leonardo supercomputer (part of the EuroHPC Joint Undertaking). In Finland, another start-up works with leading academics on open and trustworthy large language models, training them on another EuroHPC supercomputer -Lumi- with data in all European languages.” 

He added: “We are giving start-ups (developing trustworthy AI) access to Europe’s high-performance computing infrastructure (EuroHPC). We already have some of the world’s fastest supercomputers (so-called pre-exascale and exascale), but on top of this, together with Member States, we will fund the acquisition and upgrade of AI-dedicated supercomputers.” 

Investment in AI 

Overall, the Commission and Member States will invest an estimated €2.1bn in the AI Factories – a one-stop shop for startup – and AI-dedicated supercomputers until 2027. 

“In addition, thanks to our common European data spaces and our new data legislation (Data Governance Act and Data Act, which entered into force earlier this month), data will be interoperable and easily available to start-ups to develop new AI models,” said Breton.  

Secondly, Europe’s industrial ecosystems, from manufacturing to automotive, will be key drivers of innovation in generative AI, he said. “With the new GenAI4EU initiative (with an estimated 500 million euros of additional funding until 2027), we help European start-ups partner with industrial users to transform their AI models into ground-breaking applications.” 

“In several promising application areas, such as healthcare and smart cities, we recently launched AI Testing and Experimentation Facilities, helping start-ups validate their applications in real-world conditions,” he added.  

4iG and Telecom Egypt kick off subsea cable to Albania and beyond 

Simon Dux
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4iG and Telecom Egypt kick off subsea cable to Albania and beyond 

Italy branch will happen from the start, with other country branch lines in the pipeline

Hungary and the Western Balkans-focused telco 4iG and Telecom Egypt, have signed the terms of cooperation for a joint venture to build a subsea cable between Albania and Egypt, first announced last October. As the first cable to link the two countries, the planned subsea cable’s Mediterranean route will add another layer of diversity to the conventional Mediterranean routes linking Egypt to Italy and France.  

During the original announcement 4iG said it will build a data centre ecosystem and deepen its terrestrial fibre footprint in Albania following its deal with Telecom Egypt to deliver a high-capacity subsea cable.  The cable confirms Telecom Egypt’s ambition to be at the heart of Europe-Asia traffic. In September last year, the telco launched its WeConnect platform which provides a single platform for click-to-order cross-connectivity between the 14 subsea cable systems landing in Egypt’s ten cable stations, linked via the ten terrestrial routes spanning the country. The new Albania cable will link to WeConnect guaranteeing access to this new route from all other landing stations and sea cables in Egypt. 

Two weeks ago, Telecom Egypt joined forces with Jordan telco NaiTel, the telecom arm of Aqaba Digital Hub, to construct a new subsea cable system connecting Egypt and Jordan called Coral Bridge. The cable will extend between Jordan’s Aqaba and Egypt’s Taba and is aimed at fulfilling increasing demand on AI applications and data centres, capitalising on the short distance between its two landing points.  

Branches possible 

4iG and Telecom Egypt said their new cable will have the option to be extended to major Mediterranean destinations such as Libya, Cyprus, and Greece. The initial configuration of the subsea cable will also include a branch to Italy. 

At both ends of the cable, users will benefit from varied extension options with an open point-of-presence concept. Egypt’s end of the cable will provide access to various subsea cables running southeast via the Red Sea to Asia and Africa, in addition to more than 10 terrestrial trans-Egypt routes connecting the Mediterranean cable segment to other cable extension options in the Red Sea. On Albania’s end, the system will provide the shortest path to Frankfurt, as well as other important international traffic destinations in Eastern and Central Europe and the Balkans, such as Sofia, Vienna and Budapest. 

4iG Group chairman Gellért Jászai said the deal was an important step for 4iG Plc to become part of a global data communications network that can accelerate its growth and competitiveness in international markets. “Today’s agreement is an important step for 4iG Plc to become part of a global data communications network that can accelerate our growth and competitiveness in international markets,” he said.  

“This project not only provides business opportunities, but also contributes to strengthening our international digital connections. Our strong market presence in Albania gives us the opportunity to make the additional onshore investments necessary for the success of the project and to open a new data gateway to Europe in cooperation with Telecom Egypt,” he added.  

“We are thrilled to embark on our journey with 4iG to construct this one-of-a-kind cable system that will designate Albania as a new entry point to Europe,” said Telecom Egypt managing director and CEO Mohamed Nasr. “This newly added Mediterranean route will cater for the booming growth in international traffic coming from Asia and Africa to Europe across our diverse terrestrial transit network linking the Red Sea and the Mediterranean.” 

“Egypt is keen to expand its international digital infrastructure, especially given that more than 90% of the international data traffic between the East and the West passes through the country thanks to its distinguished geographical location – with 14 international subsea cables currently in service. Work is underway to establish another 5 international subsea cables through international alliances,” added Egypt’s ICT minister Amr Talaat. 

4iG chairman Gellért Jászai (front, right) and Telecom Egypt managing director and CEO Mohamed Nasr (front, left) signed the agreement in Budapest, Hungary, in the presence of Márton Nagy, minister of the national economy of Hungary (rear, right) and Amr Talaat, ICT minister of Egypt (rear, left), as well as officials from both companies. 

Disaggregation is taking hold in the fixed world

Annie Turner
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Disaggregation is taking hold in the fixed world

STL Partners’ report finds fixed has very different drivers to the mobile world and telco cloud is much less of ‘a thing’

Virtualisation, disaggregation and multivendor solutions are increasingly finding favour in the fixed access network, according to a new report from STL Partners. However, in the fixed arena, the outcome is “a recombining of network elements, rather than softwarisation of network functions”. 

STL continues, “Fixed operators envisage network disaggregation as a means to decrease deployment and operational costs, remove vendor lock-in, and combine residential, business and other type of access into a single infrastructure. This report examines progress so far and learnings from early movers.”

Network operators are looking at network disaggregation as way to reduce deployment and operational costs, escape vendor lock-in and pull residential, enterprise and other kinds of access into one infrastructure.

The table above shows the importance attached to different parts of the network by the various categories of service providers.

It is an implicit recognition of the diversity of the fixed broadband market in terms of scale, different usage sectors and the technologies deployed in the last mile.

STL explains, “The importance of physical wires, switches, local exchanges/central offices, and IP and optical hardware (and human engineers) in fixed access tends to mean more emphasis on disaggregation of large boxes into smaller ones, or into hardware and virtualised software elements, primarily for control. Cloud is, to an extent, a secondary or next-horizon goal in the access network.”

BSS, network transport and the IP core are not much in the current disaggregation picture. Customer premises equipment and OSS are covered by the report, but automation is treated as a separate topic for now.

A big difference (apart from the obvious) between mobile and fixed access is that the concept to telco cloud is less prevalent. STL says, “This conundrum was one of the main catalysts for this report: Why the different emphasis? Is it about architectural differences, underlying problems and cost structures to fix, or simply semantics?”

It concludes that although these issues are important, timing and coordination are critical factors too. Whereas mobile has several large-scale changes underway which are propelling it towards cloud-native capabilities and cloud-orientated software architectures simultaneously. Those changes include the move to 5G Standalone (5GSA), evolution of the RAN, edge compute, APIs and the exposure of capabilities, and the modernisation of BSS to support digital interactions online and via apps with customers.

STL argues that overall, there is a common, broad concept and trajectory of travel in mobile but does not exist in the fixed world. There is no evolutionary force such as the shift to 5G SA to push fixed towards major cloud-native adoption. Here disaggregation is more about hardware issues and virtualisation is more a means to an end rather than an end in itself.

Equinix signs one of France’s largest renewable energy deals 

Simon Dux
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Equinix signs one of France’s largest renewable energy deals 

The Power Purchase Agreements with renewable energy firm wpd will fund seven new wind farms

Global data centre and infrastructure company Equinix and renewable energy developer wpd have signed seven 20-year Power Purchase Agreements (PPAs) that will provide more than 100MW in capacity, and more than 300GWh per year of renewable energy output in France. 

The Power Purchase Agreement, which is one of the largest of its kind signed in France, was facilitated by Schneider Electric and includes four wind projects in Nouvelle-Aquitaine, two in Hauts-de-France and one wind farm in Pays de la Loire. The agreement will see long term financial support to help further the deployment of renewable energy in France and make a major contribution in decarbonising the grid. 

The deal is Equinix’s twentieth Power Purchase Agreement globally, adding to an overall contracted capacity of 912 MW across the US, France, Finland, Spain, Portugal and Sweden and the company continues significantly ramping up its investment in renewable energy across the globe. 

The pressure for data centres to accelerate decarbonisation has never been stronger even as AI threatens to explode energy usage globally. Eco-conscious investors and corporate clients of data centres are all demanding lower emissions. 

In the EU, with the Energy Efficiency Directive (EED) and Corporate Sustainability Reporting Directive (CSRD) coming into force (the latter requires c.50,000 companies to report their direct and indirect emissions from 2024 onwards), data centres (with an installed IT power demand of at least 100 kilowatts) will need to provide detailed public reports of their energy usage and performance. The EU Taxonomy also includes a reference to the European Code of Conduct on Data Centre Energy Efficiency. According to ING Research based on Bloomberg New Energy Finance, Equinix is among the largest corporate purchasers of renewable energy – only behind Meta, Google and Amazon in the tech space.  

Highly impactful  

PPA solutions such as these are highly impactful tools for achieving sustainability targets for companies and demonstrate the maturity of PPAs in France. For wpd, the PPAs allows it to diversify their financing options for wind power projects being developed. This deal also represents a major step forward for wpd France specifically, augmenting its position as a major player in the French and European PPA market. Wpd already has extensive expertise in this field, signing its first PPA with global industrial leaders back in 2013. 

“We are proud to sign one of the biggest PPAs in French history, marking a significant milestone in France and underscoring Equinix’s global dedication to investing in renewable energy solutions,” said Equinix France managing director Régis Castagné. “Through aligning with France’s own renewable energy production goals, we’re delighted to be positively and proactively contributing to the nation’s decarbonisation and renewable investments.” 

“Deals of this value in France are rare and Equinix’s long-term commitment to power purchase agreements in seven locations demonstrates its belief that the expansion of innovative digital infrastructure must go hand in hand with reducing our impact on the planet,” said Schneider Electric Global cleantech and renewables VP John Powers. 

The contracts will come into force in 2025 at latest – supporting renewable energy in France up to the year 2045. The Guarantees of Origin (GOs) generated from the project will be allocated to Equinix’s locations in all eleven of the company’s data centres in France. 

Equinix said it was the first in the data centre industry to commit to becoming climate neutral, aligned to an approved short-term science-based target, for emissions reduction across its global operations and supply chain by 2030. It is also a founding signatory of the EU Climate Neutral Data Centre Operator Pact, which is leading advocacy and steering the development of sustainability requirements for the EU data centre industry to become climate neutral by 2030. 

Telecom operators voice “strong concerns” over Gigabit Act’s direction 

Simon Dux
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Telecom operators voice “strong concerns” over Gigabit Act’s direction 

ECTA, ETNO, GIGAEurope and GSMA release joint statement warning Act will penalise rather than support telecom industry

Four European telco industry associations, ECTA, ETNO, GIGAEurope are warning that the ongoing Gigabit Infrastructure Act (GIA) negotiations, currently grinding their way towards completion, risk turning it into a measure that penalises telecoms operators, without producing any real benefit in terms of administrative simplification. In effect, they say, achieving the opposite of what the legislation was meant to do.  

The four – which represent most of the telecom industry is Europe – voiced “strong concerns” and warned of unintended consequences if proposals are implemented in their current form. 

The Gigabit Infrastructure Act is originally designed to promote the establishment of high-capacity networks by encouraging the shared use of existing physical infrastructure and facilitating the efficient deployment of new infrastructure – accelerating network rollout and reducing costs. The proposal in its original form targets the excessive expenses associated with “electronic communication infrastructure deployment”, particularly due to complex and varied permit-granting procedures across Member States. 

The four state that while the European Commission originally intended for this regulation to provide a way to reduce the cost and time of 5G and gigabit network roll-out, instead, current negotiations risk turning it into a measure that penalises telecoms operators, without producing any real benefit in terms of administrative simplification. 

“Key measures that would help speed up network rollout are now being placed into doubt. These include so-called ‘tacit approvals’, which allow fibre installation when construction permits are not granted within a reasonable timeframe,” state the four. “Furthermore, the historic effort to invest in 5G and fibre across the EU is being met by proposals of aggressive price regulation in competitive markets for intra-EU communications, without any impact assessment or evidence of market failure.” 

Maybe it ain’t broke after all? 

The four associations conclude that in its current form, the Gigabit Infrastructure Act looks worse than current but old legislation. “Unless the original spirit of the European Commission proposal is preserved, the EU telecom industry believes that retaining current rules would be less damaging to network rollout than implementing an ill-conceived Regulation. This risks leaving a damaging legacy on our sector under the remaining EU mandate,” they state.  

“The provision of digital networks is not solely the concern of telecom companies: they are critical for the prosperity of the whole of Europe, providing the backbone of a modern, efficient and sustainable economy for European citizens.” 

Law grinds on  

The Gigabit Infrastructure Act is currently at the last stage of the legislative process, with the EU Commission, Council and Parliament meeting in so-called trilogue formats. Although co-legislators agree on the objective enshrined in the EU’s Digital Decade targets, they disagree on how to achieve them. Still, they are expected to bridge their differences at the next and possibly last trilogue on 5 February. 

Although not mentioned in the latest open letter, last September the four associations called out the European Parliament for confirming it would back new regulations on international call rates within the EU. The associations argued that retail price regulation has no place in the Single Market and that adding these “unjustified” provisions to the GIA were not in spirit of the Act and were a distraction. 

“There is no evidence of any market failure in the provision of intra-EU calls and SMS justifying such an intrusive measure as a direct requirement to equalise prices with domestic calls and SMS, as the Parliament proposes,” the associations stated at the time. 

Euractiv suggests despite the protestations of the telco associations the final text should include provisions on intra-EU communications, including a review clause and a limit in time and conditions to prevent abuses. A glide path should also be incorporated. The so-called tacit approval principle – where no answer by a public authority would mean build work was approved – is still the subject of a lot of horse-trading between MEPs who want this done quickly against Member States who worry that implementation will be problematic to enforce. If watered down, the telcos will rightfully claim the Act isn’t delivering what was originally intended.  

US-EU conclude fifth Trade and Technology Council Ministerial Meeting

Annie Turner
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US-EU conclude fifth Trade and Technology Council Ministerial Meeting

They haven’t yet agreed a trade deal on critical battery minerals, but will collaborate more closely on AI, future mobile network tech and silicon

The fifth EU-US Trade and Technology Council (TTC) was held in Washington DC this week. The TTC was initiated by the President of the European Commission, Ursula von der Leyen, and the US President Joe Biden in June 2021.

Chairing duties were shared by big names including: the European Commission’s (EC) EVPs Margrethe Vestager and Valdis Dombrovskis; US Secretary of State Antony Blinken, US Secretary of Commerce Gina Raimondo, and US trade representative Katherine Tai.

The EC’s Commissioner for the Internal Market, Thierry Breton also attended.

Progress report

A statement from the White House read: “The U.S. co-chairs…noted progress made through the TTC Joint Roadmap on Trustworthy AI and Risk Management and resolved to continue to promote interoperability in our emerging approaches to AI governance. 

“They also noted the quickening pace of technological innovation and the essential role the TTC plays in developing responsible rules of the road for critical and emerging technologies, including creating compatible and interoperable standards that reinforce the work of international standards development organizations.”

Reuters reported that the two sides did not reach agreement on a trade deal for critical battery minerals but are to continue talks to create a transatlantic marketplace for minerals and other components. EVP Dombrovskis told reporters outstanding issues remain, including aspects of the US’ Inflation Reduction Act. This is a law covering green energy subsidies and the EU sees it as discriminatory.

“The EU and the US welcomed the International Guiding Principles on Artificial Intelligence (AI) and the voluntary Code of Conduct for AI developers adopted in the G7 and agreed to continue cooperating on international AI governance. Both parties also welcomed the industry roadmap on 6G,” an EC statement said.

The 6G roadmap was published last December and outlines “guiding principles and next steps to develop this critical technology”.

Security matters

Participants at the TTC also examined progress on collaborative efforts to secure connectivity around the world, particularly for 5G networks and undersea links.

The EC also said in the statement. “The EU and the US are also intensifying their coordination on the availability of critical raw materials, crucial for semiconductor production, having activated the joint TTC early warning mechanism for semiconductor supply chain disruptions, following China’s announced controls on gallium and germanium.

“They continued to exchange information on public support for the investments taking place under the respective EU and US Chips Acts. A roundtable on the semiconductor supply chain took place in the margins of the TTC, focusing on developments and potential cooperation in the legacy semiconductor supply chains. Finally, the EU and the US discussed a report mapping EU and US approaches to digital identity, currently open for comments.” 

Not-so side shows

The United States and EU also hosted two stakeholder events on the margins of the TTC: a Roundtable on the Legacy Semiconductor Supply Chain. US and EU industry leaders discussed the state of the industry, such as how companies can improve supply chain resilience and transparenc, and how governments can help address non-market policies and practices that lead to excessive dependency on any one producing country for legacy semiconductors.

The Transatlantic Initiative for Sustainable Trade (TIST) Stakeholder Event was on Crafting the Transatlantic Green Marketplace. Participants discussed how to strengthen the transatlantic marketplace as a key factor in the development of sustainable and net-zero economies on both sides of the Atlantic.  

See you soon in Brussels

The White House statement announced, “The co-chairs intend to convene the sixth TTC ministerial meeting in Belgium in the spring of 2024 to review progress to inform priorities, identify new areas for collaboration, and further deepen the transatlantic partnership on shared priorities.”

EC approves Zegona’s €5bn acquisition of Vodafone Spain

Annie Turner
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EC approves Zegona’s €5bn acquisition of Vodafone Spain

The deal must still be approved by the Spanish competition authority, but is widely expected to sail through

The Spanish newspaper, El Economista, reports that Europe’s Directorate-General (DG) for Competition has approved Zegona Communications’ proposed acquisition of Vodafone Spain. The acquisition was announced at the end of October by Zegona, a British investment fund, which has offered €5 billion for Vodafone’s assets in Spain.

The DG, part of the European Commission, said it had found “insufficient indications to initiate an in-depth investigation”.

Next Zegona must obtain permission from Spain’s National Commission on Markets and Competition (CNMC) for the transaction.

If it is successful, Vodafone will be paid €4.1 billion in cash and up to €900 million in preferential shares. The CNMC is not expected to obstruct the deal so it is expected the shares will be repaid no later than Q1 2030, that is, no later than six years after the acquisition is complete.

Vodafone has long struggled in the Spanish and Italian markets. CEO Margherita Della Valle set out her inaugural strategy for Vodafone in May 2023. She said she was prepared to look at all options to address the situation in these markets which do not recover the cost of invested capital.

This week Vodafone definitively rebuffed advances from the Iliad Group in Italy, but indicated it is still in talks with others.

The Spanish market is in a period of flux, with Orange in the throes of acquiring MASMOVIL. The European Commission is insisting on remedies to protect competition and consumers in the market before granting approval.

Vivendi proposes to split into four entities 

Simon Dux
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Vivendi proposes to split into four entities 

The sum of the parts is more valuable says company 

French media company Vivendi said its supervisory board approved a plan – first announced in December – to split the group into several entities, but that it now looks to separate into four publicly traded businesses instead of three. The company said it is suffering from a “significantly high conglomerate discount”, substantially reducing its valuation and thereby limiting its ability to carry out external growth transactions for its subsidiaries.  

While Vivendi has divested a lot of its telecom holdings over the past decade or so, it still carries some key investments like its Telecom Italia holding – currently in dispute – and subsidiary dedicated to providing very high-speed Internet access in Africa (GVA). 

Vivendi said three of its entities Canal+, Havas and Lagardère are all currently experiencing strong growth in an international context marked by numerous investment opportunities. The proposed split will separate these three and add an investment entity that would own listed and unlisted financial stakes in the cultural, media and entertainment sectors. This split would provide each of the four listed companies with the human resources and the financial agility necessary for their development. 

Vivendi’s Canal+ Group has experienced significant growth in recent years, reaching a subscriber base of more than 25 million in nearly 50 countries. Following the acquisitions of M7 and SPI, the company has taken strategic stakes in businesses such as MultiChoice, Viu and Viaplay. Advertising and communications group Havas brings together over 23,000 employees spread across more than 100 countries. Lagardère is a worldwide group present in more than 40 countries with over 27,000 employees. It is the third largest book publisher for the general public and educational markets. 

The new investment company would actively support the strategic development of its portfolio companies and would focus on value creation and capital return to its shareholders, through “an effective portfolio rotation and a targeted reinvestment policy”. 

Vivendi said a new update on the study of the split project will be presented to its supervisory board meeting convened on 7 March, coinciding with the Group’s 2023 annual results. The company’s original plan suggested three entities, but it has now settled on four.  

According to Reuters, Vivendi said at the time that the break-up plans aim to boost the valuation of the spun-off units and narrow the discount at which the market values the combined group, which analysts at JPMorgan estimate at around 50% to Vivendi’s sum-of-the-parts valuation. The move could also open up M&A opportunities for Vivendi’s units, the analysts argued, flagging Havas as an attractive acquisition target. 

TIM’s Sparkle sale saga takes new twist 

Simon Dux
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TIM’s Sparkle sale saga takes new twist 

Italian Government’s new offer to purchase 100% of Sparkle allows TIM to choose a “different option” 

Telecom Italia (TIM) said it has received an offer from the Ministry of Economy and Finance (MEF) to acquire its international infrastructure arm Sparkle. The offer, issued in a statement comes with the caveat referring to the possibility of negotiating a different option, with possible adjustments to the contractual terms, in the event TIM retains a minority stake for a certain period and: “supports the implementation of the strategic plan”. MEF’s offer will be effective for 15 days and will now be scrutinised by TIM’s board of directors – scheduled for 7 February. 

The deadline for KKR’s new offer on Sparkle expired on 31 January. TIM’s media statement appeared in response to a Reuters story suggesting Italy’s Treasury and KKR had agreed the terms of the bid to be presented by KKR for Sparkle, citing three sources familiar with the matter. One of the sources, who comes from the Treasury, said the ministry “is ready” as it has finalised all the preparatory work for the bid, which requires the Italian Government’s backing. 

Separate sources have previously said that KKR was working to submit a bid between €700m ($758.38 million) and €800m ($866.72 million) after TIM billed a €600m offer as too low. The Treasury will be able to take full ownership of Sparkle from KKR “at a later stage”, under a decree adopted last year by Meloni’s government.  

The 7 February board meeting will be pivotal for TIM with CorCom reporting CEO Pietro Labriola (above) is pushing for a female chair to replace outgoing chair Salvatore Rossi, with media speculation pointing to Patrizia Grieco, former chair of Enel and current chair of Assonime and Anima, and Claudia Parzani , chair of Borsa Italiana. The board will also be discussing replacement for up to six directors with several terms expiring in April. Following the Netco sale the directors may even decide to reduce their total to nine from 15.  

Meanwhile, Vivendi has asked the European Union’s anti-trust authority to investigate TIM’s sale of NetCo. Vivendi, which owns a stake of just under 24% and 17% of the voting rights stake in TIM, has fiercely opposed the plan to sell NetCo KKR for up to €22 billion. 

CorCom said the approval of TIM’s preliminary 2023 results is scheduled for 14 February, which will then be definitively approved in March. “We expect a very encouraging closing, with the exceeding of the annual objectives for the second year in a row, confirming the quality and effectiveness of the current management’s strategy,” Intemonte analysts told the journal. They estimate a Group topline for the fourth quarter to €4.34bn up by 1.8% and an adjusted EBITDA at €1.59bn up by 6%, net debt after leases down to €20.3bn from €21.8bn at the end of September. 

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