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Despite record investment, future remains uncertain for European telcos

Risk of missing gigabit connectivity for all target by 2030, leaving tens of millions of people behind

Europe has reached record levels of telecom investment, progressing on both 5G and FTTH coverage. New estimates show the European Union looks likely to miss its gigabit-for-all-by-2030 target by 10%.

Those new estimates are some of the findings of ETNO’s report, the State of Digital Communications, which is based on research by Analysys Mason, published just as the European Commission is expected to launch a public consultation on the future of the telecom sector and its ability to invest in new networks.




Gigabit targets, global competitiveness

Despite the highest level of investment in telecoms infrastructure since 2016, Europe risks missing the Digital Decade target of gigabit connectivity for all, even if operators can keep up current record levels of investment in the face of high interest rates and possible economic downturn.

Projections suggest that very high-speed networks are on track to reach about 90% of EU citizens by 2030, potentially leaving tens of millions of Europeans behind.

In 2021, the total telecom CapEx reached a whopping €56.3 billion in Europe compared with around €1 billion invested by Big Tech, for instance in international and undersea routes, peering, transit and caching, and €16 billion in data centres.

At the end of 2022, 55.6% of the European population had access to FTTH networks, up from 50% in 2021. Similarly, 5G is now available to 73% of Europeans, up from 62% the previous year.

Lagging global peers

Yet Europe lags global peers: at the end of 2022, 5G coverage of the population reached 96% in the US, 95% in South Korea, 90% in Japan and 86% in China.

Europe is also behind all global peers on investment per capita adjusted to GDP: Europe invested €104.4 per capita in 2021, compared to €259.7 in Japan, €149.6 in the US and €110.2 in China (see graph at top of article).

Whereas Europe was formerly much more in harmony with other regions on its investment per capita, interesting, as shown below, it has remained the lowest spend as a proporation of GDP since 2017. Presumably the two are related.

Source: Analysys Mason

Jury out on edge cloud, 5GSA , Open RAN

According to the research, Europe counted 18 edge cloud offers in 2022, second only to Asia-Pacific with 19 offers, and performing better than North America, with five.


When it comes to Open RAN Europe had six trials underway in 2022, the same number as China, followed by the US and South Korea with three each, and Japan with two.

However, on the implementation side, the most significant Open RAN deployments are Japan’s Rakuten Mobile and in the US’s DISH Networks.



By the end of 2022, Europe had increased the number of 5G Standalone networks to four, compared to three the previous year but the Asia-Pacific region had 15 networks and North America three.




Fundamentally weak

Europe’s telecom shares consistently underperform peers on the stock market, as they have since 2018: the Stoxx Europe 600 index has performed worse than the Global 1900 for telecoms, but also than the shares of major tech companies.



At the same time, the European telecom sector is in a phase of very high capital investment and its debt is also rising. In 2021, the share of revenues re-invested was nearing 20%, while the debt/EBITDA ratio of ETNO members was at 2.53, the highest level since 2014.




Sustainability

Telcos are greening their own networks and enabling other sectors to achieve green targets through digital networks and services. Some 83% of the energy used by telecom companies in 2021 derived from renewable sources, up from 71% in 2018.

European operators’ scope 1 and 2 greenhouse gas emissions per revenue have more than halved over time: from 5.11 CO2e in 2017 to 2.18 CO2e in 2021.



The transition to more efficient networks like FTTH and 5G is bringing about plans to decommission less green legacy networks: between 2023 and 2024, ETNO expects 10 fixed networks to be decommissioned per year and 36 2G and 3G networks to be decommissioned in 2023 and 41 in 2024.




Rupert Wood, Research Director, Analysys Mason commented, “The continuing poor health of the telecoms sector works against Europeans’ interest. Poor returns make the infrastructure investment needed to achieve the 2030 Digital Decade targets more challenging, and they dent hopes of a renaissance of innovation and skills in new digital communications technologies”.

BT looks to Kyndryl to digitise mainframe apps running access net

Should save £17 million a year, plus support AIOps and automation

BT has signed new deal with Kyndryl, which specialises in managed infrastructure services and was spun out of IBM in 2021. At the moment Kyndryl services BT’s mainframe applications that run its consumer broadband and copper local loop.

Under the new contract, it willwell h help BT’s Digital unit as move “critical legacy applications that cannot be shut down in the short term to the cloud” under the terms of the new 10-year partnership, although moving the unspecified applications to the cloud should be completed by 2026.

This should enable BT to reduce operating costs and energy consumption by 70%.

The projected savings from the latest move with Kyndryl are £17 million (€19.32 million) annually in operating expenditure.

Some applications will be retired – BT’s target is to have fewer than 500 strategic systems by 2027 to simplifying its technology estate – others refactored, that is, redeveloped to fit into BT Group’s strategic systems and architecture. Still others are to be rehosted, that is, repackaged to operate in a cloud environment.

In all cases, the idea is to digitalise applications and increasingly use APIs and microservices to help integrate data across wider BT Group systems, and support innovation through automation as well as lower costs.

Applications “will be hooked into BT Group’s service management platform, and support its AIOps self-healing IT estate model, reducing the risk of downtime and accelerating and automating fixes,” the press statement reckons. The model involves ServiceNow running on Google Cloud Platform.

This should mean applications can call on data and capabilities from across other mainframe applications for better customer experience, and in particular, eventually help migrate customers to fibre from the copper local loop.

Harmeen Mehta, Chief Digital and Innovation Officer at BT Group (pictured) said, “We like thinking out of the box to solve complex problems – like how to move off mainframes given the prohibitive increase in legacy infrastructure cost – without rewriting decades-old applications.

“With that mindset, working with Kyndryl, we figured out how to turn legacy mainframes into modern digital apps and run them at a fraction of the cost.” 

There are no details about how many or which specific applications are involved, or which cloud platform(s) will be involved, but BT did sign up AWS last year as its preferred cloud provider in May last year to help it save £2 billion a year.

Wider movement to save

Last November, BT announced its pre-tax profits had fallen by 18% to £831 million year on year for the H1. BT Group’s CEO Philip Jansen said he wanted to find a further £500 million in savings by 2025. This is a 20% increase on the target he’d set of £2.5 billion when he assumed the role in early 2019.

The savings are to be invested in building out FTTH. BT was very late to the fibre broadband party as along with other major European operators, most notably Deutsche Telekom, it preferred to stick to squeezing every penny out of its copper local loop.

With the pandemic adding impetus, this resulted in a frantic effort across much of Europe to catch up countries with more advanced fibre infrastructure, with Spain leading the pack in the larger countries.

TelcoDR bags BSS bargains as STL sells software tools

Skyvera spots gems in clearance sale

Telecoms transformation specialist TelcoDR has acquired an unwanted suite of telecom software tools from Indian vendor Sterlite Technologies Ltd (STL) through its acquisition arm Skyvera. STL’s business support systems (BSS), merchandising and analysis systems are used by 60 customers across the globe from Vodafone Idea in India, du in the United Arab Emirates, and YTL Communications in Malaysia. 

STL had recently announced it would stop developing wireless and open-source software and concentrate on optical networking. The newly acquired software tool set arms the TelcoDR group with an extra range of problem solving options, in its billion dollar mission to create a behemoth that can turn clunky telecoms hardware into a cloud of coded telecoms functions that can run on any computer. The eponymously named TelcoDR group, founded by Danielle Royston, also includes a cloud-based BSS startup Totogi, for which Royston is acting CEO.    

Skyvera CEO Jeff Moyer said the product suite and customer base is a great fit. “Its long-term customer relationships and software products will complement our telco software ecosystem,” said Moyer, “we look forward to welcoming STL’s customers to the Skyvera family and serving them as they transition towards the public cloud.”

Royston’s mission is to create a telecom software systems business that is run entirely on the cloud and TelcoDR is backed by an anonymously funded Telco Transformation Fund of $1bn. Like a canny football manager, Royston has a talent for spotting under-valued telecom software assets and assembling these wasted talents into a powerful team and transfiguring the software core of telecoms organisations. This, Royston argues, will be the critical differentiator for telcos, creating infinitely more impact than the slow hardware race of laying optical fibre, interconnecting infrastructure limbs and appointing network construction services. 

“As we accelerate our focused growth in this decade of network creation, our efforts and capital allocation will be fully aligned towards boosting growth in Optical and Global Services businesses,” said STL managing director Ankit Agarwal, “we will continue to rebalance our portfolio to enhance profitability, increase shareholder value, and drive toward our purpose of transforming billions of lives by connecting the world. We are proud of the value that we have created and wish TelcoDR and Skyvera the best for the future.”

Elliott’s holding in Vantage Towers could disrupt delisting plan

Elliott Management acquired 5.6% of the voting rights and 3.5% of the shares

Paul Singer’s New York-based investment company, Elliott Management, has become Vantage Tower’s biggest shareholder. Vantage was spun out of Vodafone two years ago and is listed on the Frankfurt stock market.

In November, Vodafone transferred its 82% holding in the towerco to a new vehicle that it will control in conjunction with private investor groups including KKR, Global Infrastructure Partners and Saudi’s Public Investment Fund. The plan is for Vodafone to sell up to 50% of the towerco to the partners in that consortium.

Enter Elliott

According to the Financial Times, Elliott disclosed its new holding after Vantage Towers’ majority owners tried to acquire the outstanding shares with the aim of delisting the towerco. Elliott’s move could delay or prevent them; it has a track record of acquiring a foothold in takeover targets with the aim of forcing the majority owners pay more.

Vantage on Tuesday reported a 4.8% rise in revenue to €263.7 million for Q3, giving inflation and an increase in tenancies as the reason for the increase.

A new phase

Rising interest rates and inflation have brought to an end the period of debt-fuelled acquisitions of thousands of towers across Europe from cash-strapped operators, and the towercos’ share prices are suffering.

Tobias Martinez, founder and CEO of the Spanish towerco Cellnex resigned in January, noting the firm needed to move to period of consolidation.

Fallacher is new Orange France CEO – transfer news latest

Dulac moves on after eight years at top

Jean-François Fallacher will be the new CEO of Orange France from April 3, after running the Orange business units in Romania, Poland and Spain. Fallacher takes over from Fabienne Dulac, who has steered Orange France for eight years and has chosen to take on new challenges within the Group. Dulac will remain on the Executive Committee and will contribute strategic planning for the future.

Jean-François Fallacher is currently CEO of Orange Spain, where Ludovic Pech is now looking for a new house. Pech has impressed as the chief financial officer of Orange Middle East & Africa. French CEO elect Jean-François Fallacher will remain a board member at Orange Spain.

Christel Heydemann, CEO of Orange, explained the management shuffle: “As head of Orange France Fabienne Dulac has strengthened the network leadership and customer excellence of [the operator]. During this time, Orange played an essential role in the success of the deployment of Fiber in France. Thanks to her work and that of her teams, France can today boast of having the most extensive Fiber network in Europe. We will continue to work together in the coming months. 

The outgoing and incoming CEOs of Orange France have contrasting backgrounds, which may reflect in their managerial styles. Fabienne Dulac holds a master’s in Political Sociology from the Paris Institute of Political Sciences and began her career at the French Interior Ministry, joining the business world in 1993 in the early stages of internet development as head of communication and marketing multimedia service VTCOM.

By contrast, Fallacher is more of a techie, as a graduate of the Ecole Nationale Supérieure des Télécommunications. Fallacher began his career in the late 90s internet boom, moved to Holland as COO if ISP Wanadoo before joining Orange and working his way across Europe. He revived Orange Polska with a bold fibre investment and convergence strategy and remains President of the board of the French-Polish Chamber of Commerce (CCIFP). In September 2020, Fallacher took on the role of CEO for Orange Spain. He is an associate member of its Executive Committee and is France’s Conseiller du Commerce Extérieur. 

“I am delighted to now welcome Jean-François Fallacher as the new head of Orange France. I know I can count on his very solid international experience and on his operational expertise to continue to develop Orange’s leadership in France in the service of our customers,” said Orange Group CEO Christel Heydemann.

We need to talk about mMIMO’s power abuse and CO2 issues – analyst

ABI Research calls for intervention

While 5G’s Massive Multiple Input Multiple Output (mMIMO) has received adulation from analysts and press, it has a downside that must be addressed, according to ABI Research. The hardware has rampant electricity consumption issue, says the US analyst. The power requirements of the technology compare badly against previous generations of Radio Access Technology (RAT) it says in a report. 

The surge in power consumption and demand for more cell sites mean that equipment manufacturers must make the most sustainable products possible to improve efficiency and reduce energy-related OPEX and related emissions. A new report from global technology intelligence firm ABI Research spotlights how to make mMIMO more sustainable across the whole product lifecycle, from eco-design to product material choices to circular practices to sustainable manufacturing to responsible resource management.

“With the demand for network connectivity showing no signs of slowing down, new generations of radio technology must be energy efficient without compromising network coverage and quality for the end users,” said Megan Young, Sustainable Technologies Industry Analyst at ABI Research.

Granted, 5G is opening the door to connectivity, conceded Young. New bandwidths, low latency, and data transfer speeds up to 10 times that of LTE allow for more applications to be supported and the demand for fast 5G connectivity increases. The next thing that happens is that mMIMO adds a much higher number of antennas to 5G cell sites, which focuses energy for significant improvements in data throughput, coverage and efficiency, Young warned.  

The good news is the condition could be cured with inventive designs and advanced technologies that improve energy efficiency. But these must be implemented to ensure the mMIMO antennas can uphold the network quality and capacity while reducing energy consumption at cell sites. Sustainable practices in design, development, manufacture, and deployment should also be put into operation to enable a more sustainable 5G network,” said Young.

Many equipment makers are coming up with new solutions to the problem and creaticity mMIMO product portfolios are flourishing. There’s a sustainability competition driving the telecom building industry. Ericsson and Nokia are leading on sustainable development of mMIMO technology with energy-saving technologies, in-house silicon chipset creation hosting virtualized Radio Access Network (RAN) features and Industry 4.0 technology-enabled manufacturing plants. Some have been awarded lighthouse status by the World Economic Forum. 

Nokia has implemented liquid cooling in some of its units, claiming that this system exchanges 4000 times more heat than air, cutting the power consumption by cooling by up to 90% and base station CO2 emissions by up to 80%. Huawei has released a wide range of mMIMO units to suit many different deployment scenarios, with an innovative material used in the products’ radomes, and ZTE has launched the world’s lightest mMIMO radio unit, at just 9kg.

The problem remains that mMIMO is a power-hungry technology that need more units around it in a network to provide consistent coverage. Though transfers data more briskly than previous generations of RAN technology, equipment manufacturers must do all they can to reduce power consumption and improve the energy efficiency of the mMIMO units, the analyst insisted. “Responsibly managing resources, employing circular practices in design and manufacture, and implementing innovative technologies that reduce power consumption will all contribute to a more energy efficient product in a more sustainable network,” said Young.

These findings are from ABI Research’s Telco Infrastructure Sustainability mMIMO Technology Review report. This report is part of the company’s Sustainable Technologies research service, which provides actionable research and data designed to help companies go from sustainability pledges to sustainability execution by identifying technologies, vendors, and programs that accelerate sustainability efforts, such as reducing carbon emissions and waste.

e& wants to sell its expertise to other operators worldwide

It is offering telcos its expertise in modelling for AI and machine learning, customer engagement and more

The unit of the operator group formerly known as Etisalat, e& international, is inviting other telcos from around the globe to partner it via a new programme.

e& partner networks will offer support to fellow operators in areas including customer engagement, modelling for AI and machine learning, optimising CapEx and OpEx, and digital and mobile financial services.

Mikhail Gerchuk, Chief Executive Officer of e& International, said, “The scale of the opportunity available to us through the e& partner networks is enormous. With e& international at the forefront of the new strategy, e& partner networks will be able to leverage the privilege of the e& brand and benefit from a value-added engagement with telecoms-related business objectives.

“e& can support these independent partners who currently may be facing challenges in terms of matching the scale and expertise of their competitors, talent recruitment, and high operating costs. Together, we can create a business proposition for consistent growth with value-added benefits from operational savings and uplifting topline revenue growth for our partners”.

A growing trend

A number of other operators are also offering their expertise, services and products to fellow operators, including: SK Telecom, notably but not exclusively with the metaverse; and Rakuten Symphony is leveraging what Japan’s Rakuten Mobile learned in building the world’s first cloud-based network.

e& group owns a 12% stake in Vodafone Group since January and has said it has no intention of mounting a takeover, but wishes to work with the group.

In December, e& enterprise launched public cloud managed services in the Middle East Africa and Pakistan in partnership with Bespin Global. e&’s portfolio of brands is worth more than $14 billion, according to the 2023 Brand Finance Global 500 Report released at the World Economic Forum in Davos, making it the most valuable portfolio of telecom brands in the Middle East and Africa. 

Angola is on a Satellite Control Mission to build out telco networks

Opens Niobium mines to make them too

Angola is to build out its telecoms infrastructure with the construction of more satellites and adding more elements to the framework, president João Lourenço has said. Meanwhile, Chinese owned Sociedade Niobonga is to mine the minerals needed for satellites and batteries in South West Angola, with a target to find and extract 19 million tonnes of Niobium from hundreds of millions of tonnes of Angolan earth. 

After inaugurating a new Satellite Control and Mission Centre in Funda, in Luanda province, Lourenço reaffirmed the “extreme importance” of telecoms projects and guaranteed that “financial capacity will be found” to ensure they go ahead. “This centre can host up to three satellites; the other two will have to be acquired over time, it is a question of programming,” Lourenço told Macao News. “If there is no capacity today, there will be tomorrow. What counts is the intention to complete the project, it is not complete and we have assumed the commitment to complete it no matter how long it takes.”

Lourenço said a fibre optic technology commitment had already been made that could link Angola to the neighbouring Democratic Republic of Congo. The recent launch of Angosat-2 and its entry into operation gives Angola access to all options. “We will improve our telecommunications, the media, voice and imaging will also be improved, and agriculture and science in general and education will benefit from this important project,” said Lourenço.

In October 2022, Angola successfully launched Angosat-2, a satellite manufactured in Russia, from Kazakhstan. It was the second device built for Angola, after the first, Angosat-1, failed in December 2017. The Satellite Control and Mission Centre was built over an area of 6,617 square metres and has 47 compartments equipped with comms and computing resources, with the capacity to ensure satellite tracking, monitoring and exploration, according to Angola’s national news agency Angop. 

Meanwhile a Chinese-owned company is set to extract 19 million tonnes of the rare minerals used in the manufacture of spaceships, missiles and turbines, says Macao News. The project to mine Niobium in Angola is expected to generate 500 jobs in southwestern Angola. Niobium is one of the world’s rarest and most valuable minerals, according to José Grande, deputy director of Sociedade Niobonga – Comércio Geral, the Chinese-owned company that holds the exploration rights. Niobonga invested around $100 million two years ago to start exploration work in Huíla province.

In the initial phase of prospecting, around 200 direct jobs were created and residences were built for 499 workers’ families. The niobium reserve, which is spread over an area of 443.53 square kilometres, is estimated at around 19 million tonnes. At current prices, niobium sells for $45,000 per tonne. Angola exports most of it niobium to China.

Vodafone and Ericsson become cloud RAN makers to Oman with first Standalone 5G

The Sultan natives can get creative

Telco Vodafone and equipment maker Ericsson have made Oman’s first successful test call over a Standalone 5G network. This heralds the introduction of 5G Standalone (5G SA) voice and data services for Vodafone subscribers in the Sultanate, the Times of Oman has reported. Few subscribers will realise the epic significance of this breakthrough because of 5G SA’s non-descript name but Oman’s first successful Voice over New Radio (VoNR) proof of concept call, over a standalone 5G network, is a massive advance in Vodafone and Ericsson’s quest to develop a powerful national standalone network for high-quality, seamless voice and data services.

The proof of concept was built with Ericsson dual-mode 5G Core and Ericsson IP Multimedia Subsystems (IMS), and showed what could be achieved with mobile networks to improve speech quality across the country. It exemplified the power of Vodafone’s network to create 5G-specific voice and communication services for both consumers and enterprises. This vision of the future was created using an experimental terminal, which will subsequently be replaced by commercial terminals made by Vodafone’s partners.

The next job is explaining to the public that Standalone 5G networks are different from their non-standalone forebears, because they no longer need to piggy back on existing 4G networks and technology. Stelios Savvides, Vodafone’s Technology Director in Oman has the job of drawing attention to the difference, so that people realise the radical improvement created when 5G radios can be paired with a cloud-native 5G core network. Few members of the public will get excited about terms like ‘non-standalone’ but they understand the concepts of flexibility and speed and the power to fulfil any demands that customers make.

Savvides is looking forward to fulfilling their dreams: “As we continue to push boundaries as an innovation leader in Oman, this successful VoNR proof of concept call is a milestone in our mission to enhance our 5G capabilities and deliver superior user experiences,” said Savvides. “High-quality and seamless voice calling will soon become a must-have service for residents across Oman, as Vodafone becomes one of an extremely select group of operators around the world to deploy a standalone 5G network.”

These developments are important stepping stones to all manner of futuristic wonders, from real-time virtual reality and augmented reality to driverless cars. This technology will help us live longer thanks to advances in health care and will improve the quality of life in Oman. “Our collaboration with Ericsson can develop this proof of concept further and exploring a range of immersive applications across the country.”

Oman is embarking on a new phase of growth through Vision 2040 said Abdullah Al Balushi, Country Manager of Ericsson Oman. “Cellular technology is set to play a huge role in this journey and we aspire to help Oman realise the advanced digital economy mandated.”

Hello? I’m on the drone! BT 5G boards test flights on Stratospheric Platforms

Broadcast from hydrogen-powered unmanned craft

Scientists funded by Innovate UK are sending 5G and 4G broadcasting equipment on test flights on hydrogen-powered drones. The research will help BT Group and Stratospheric Platforms Ltd (SPL) test the options for delivering mobile coverage from a High-Altitude Platform Station (HAPS) aircraft. The trials are being conducted at BT’s global R&D headquarters at Adastral Park in order to bring coverage to the UK’s least accessible areas.

The project has been funded by Innovate UK as a means of improving coverage for communities in areas where cabling is impractical. It could solve the comms problems of transport, maritime security and search and rescue professional, as well as providing a backup to terrestrial networks in the event of a disaster. Potential applications for remote monitoring across various industrial and agricultural use cases are being mooted too. 

SPL’s phased array antenna can broadcast 150Mbps through 500 individually steerable beams, with a range up to 140km or over 15,000 square km, matching the  footprint of 450 terrestrial masts. In addition to the high performance, wide area connectivity, the HAPS solution is expected to provide significant cost and energy savings. The phased array antenna and the flight platform powered by hydrogen, provides sustainable 4G and 5G connectivity to large areas from the skies, removing the need for extending expensive terrestrial infrastructure in remote areas.

The first step in BT and SPL’s launch is the development of a secure 5G HAPS communications demonstration system. SPL’s phased array antenna will be placed on a high building, simulating a high-altitude platform, to test its interaction with BT’s 5G secure architecture, connecting with its Open RAN testbed. This test will include supporting multiple user groups and different potential use cases, concurrently on the same network. SPL could help BT realise the huge potential of HAPS aircraft to improve its UK 4G and 5G networks, said Tim Whitley, Managing Director Research and Network Strategy at BT Group, who said it is exploring a number of new use cases.

“The SPL and BT Group could build on the achievements of SPL’s world-first 5G demonstration from the stratosphere achieved in 2022,” said SPL CEO Richard Deakin, CEO,  “we’re pleased to continue our journey supporting the UK to become a science super-power.”

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