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Spain gives €150m to tower builders

Nick Booth
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Spain gives €150m to tower builders

Government to profit the rural networkers

The Spanish government has put up €150 million to fund tower companies that extend 5G into coverage black holes. The offer is part of the government’s post-Covid national recovery plan to encourage infrastructure builders such as Cellnex, American Tower, Vodafone’s Vantage Towers and Orange’s Totem as likely candidates. Under the scheme’s terms any builder of towers, masts or backhaul infrastructure could get funding as long as they give access to at least four mobile service providers.

Competition

“That’s really just the government ticking the appropriate competition box,” said analyst Mary Lennighan, in Telecoms.com. The policy should prevent any Spanish telco from manipulating the policy to boost its own coverage at the expense of others, said the analyst. The hard to reach Spanish locations are roads, railways and rural areas, divided up geographically into four zones. The biggest financially is Zone 1 which covers Galicia, Asturias, Cantabria, the Basque Country, and Castilla y León and offers funding of €52.9 million. The rest of the fund, €97.1 million, is split roughly equally between the other three zones.

Qualification

Interested parties must pass through a pre-qualification phase, followed by an evaluation in which bidders must present a detailed report on their plans for the region in question. The plans must describe the financial model through to 2032, detailing the cost of deployment of the passive infrastructure and the cost of running it on a wholesale basis. Proposals will be judged on population and geographic coverage, attention to technical details, the potential for job creation in Spain and the EU and access for disaster recovery and emergency services. The closing date for applications is 29 July 2022. 

UK 5G policy is legislation for stagnation – IEA report

Nick Booth
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UK 5G policy is legislation for stagnation – IEA report

Screwing mast hosts over rent is no long term policy

Short-changing telecom mast hosts has slowed the rollout of 5G and the policy needs to be reversed, says the UK Institute of Economic Affairs (IEA). In a paper the think tank argues that the UK government’s tactics to encourage the growth of 5G infrastructure have been counterproductive. The Electronic Communications Code 2017 updated the rules that allow telecom companies to force landowners to accept equipment installations on their land. As a result, the UK’s mobile network operators have ruthlessly slashed back on the payments they originally promised to pay those who host masts on their property. 

Counter productive

The Code completely changed the basis of land valuation and lowered compensation for farmers and landowners. In its new paper, the Institute of Economic Affairs (IEA) argues that the rules on payments to landowners failed to follow the recommendations of the Law Commission, which would anchor valuations to market prices. When the 2017 reforms lowered compensation it turned former partners against putting equipment on their land. Legal action followed, which then slowed everything down. 

Wrong response

In response, the government has introduced more legislation: the Product Security and Telecommunications Infrastructure Bill, but this only focuses on the symptoms rather than the cause of the 5G rollout slow down, says the IEA. The new legislation compels landowners to accept masts and undermines property while ignoring the issues of landowner for compensation. The money promised to the landowners should be restored, says the IEA. Its paper recommends that the Product Security and Telecommunications Infrastructure Bill, which was debated in the Lords on Monday (6 June), be amended to restore the valuation principles used before 2017, or draft another rule having similar effect.

Trust the price mechanism

“The price mechanism is a fantastically powerful tool. It is baffling that the government seems determined to stop it operating, thereby depriving landowners of a fair return on their land, and slowing down 5G rollout at the same time,” said the paper’s author James Forder, an EA academic.
Desmond Swayne, the member of parliament for New Forest West, welcomed the report and wondered why telcos had used the Electronic Communications Code to tamper with a market that had been working effectively. “The government sought to reduce the market price and predictably created a shortage,” said Swayne. “To address the shortage that it created, the government has now delivered a system that simply bullies landowners into making their sites available at the reduced price. This is a classic example of arbitrary government.”

Helios and Rakiza strike towering deal for Oman

Nick Booth
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Helios and Rakiza strike towering deal for Oman

Towerco and telco will splits OTC Oman fund 70:30

Tower company investor Helios Towers has agreed with Rakiza Telecommunication Infrastructure (RTI), a subsidiary of the Oman Infrastructure Fund, to share ownership of a new holding company, Omantel Telecommunications Company (OTC) in a deal set to expedite the networking of Oman. The formation of OTC will speed the networking of Oman, with the operational expertise of Helios Towers complimented by RTI’s extensive knowledge of the market, said Helios Towers chief executive officer Tom Greenwood.

Omantel sells

On 11 May, Helios Towers and Omantel agreed for Helios Towers to acquire Omantel’s passive tower infrastructure portfolio of 2,890 sites for $575 million (£459.5m) in cash, representing an enterprise value of $615 million, including estimated transaction costs and capitalised ground leases of $40m. The acquisition should close in June, as long as all conditions are met. Helios Towers will have a 70% stake in OTC, with RTI holding the minority 30% share.

Local knowledge and towering assets

“Rakiza offers Helios Towers a wealth of local knowledge as we enter the Omani market and seek to strengthen our foothold in the Middle East,” said Greenwood. “Rakiza not only offers a highly experienced management team through its deep public and private sector expertise, but it is also closely aligned to our goal of driving sustainable value creation through infrastructure and connectivity.” Helios Towers said it would retain operational control of the target assets, which would be consolidated in its financial statements from completion.

Helios wants Middle East presence

Through the transaction, Helios Towers said it would establish its presence in the Middle East region, becoming a “leading independent tower infrastructure provider” in Oman. The target assets were expected to deliver revenues of $59m and adjusted EBITDA of $40m in the first full year of operation, with further growth anticipated through colocation lease-up and 300 build-to-suit sites committed over the next seven years, for which $35m in growth capital expenditure was expected to be invested. The group said it was intending to finance the acquisition through its existing cash and available bank facilities.

Totem puts 5G on the Sud Line

Nick Booth
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Totem puts 5G on the Sud Line

Creating indoor coverage on le subway 

Infrastructure specialist Totem is to use a mobile indoor Distributed Antenna System (DAS) network to broadcast signals to the entire 15 Sud line of the Grand Paris Express subway by 2025. It will then operate the network until at least 2035. 

The network will give passengers 5G access from every point of their journey between the future Pont de Sèvres (92) and Noisy-Champs (93) stations. As a result, the 15 Sud line will be one of the first Paris subway lines to have end-to-end 5G connectivity. Connecting all 16 stations over 33 km to 5G involves 40,000 hours of work. Totem will build a DAS network with 1,000 active antennae placed along the entire 15 Sud line, along with other supporting equipment. 

This is particularly hard in tunnels, where it is crucial to minimise the size of kit and make it coexist with other comms systems. Totem has invented ways to limit equipment size in stations and tunnels, while minimising energy consumption.

According to Orange, the Société du Grand Paris (SGP) chose the Orange Group, via its former subsidiary Totem, to connect the future 15 Sud line. Totem is now an independent and will provide all the investment necessary to create the infrastructure. It will then commercialise the network to mobile telephone operators on the same terms and, it says, with ‘complete transparency’. They may be independent but the delineation is not clear.

Totem, though independent, is Orange’s European TowerCo subsidiary that wants to be market leader in Europe. Operating in France and Spain as of November 1, 2021, it manages 26,000 tower sites, flat roofs and other sites in the two countries. 

This agreement sees Totem staking its claim to be a major player in indoor connectivity in France, according to Thierry Papin, MD of Totem France. “It’s a remarkable collective effort, coming to fruition only seven months after Totem was created,” said Papin.

In a statement Orange has described Totem as ‘a trusted partner’ that can now offer shared access to its mobile sites, provides connectivity to the most difficult locations, such as subways, stadiums, offices and malls, thereby contributing to local economic development.

As the tower division of Orange, which has the biggest infrastructure of all the French mobile operators, Totem was omnipresent across France. Now, as an independent, it aims to extend its connectivity offer across France and in indoor environments, said Totem Group CEO Nicolas Roy.

“Indoor connectivity is a priority not just for companies and real estate actors, but also for the entertainment and transport sectors,” said Roy, “Totem supports its customers from end-to-end, proposing the most suitable connectivity solutions and positioning itself as the essential actor for deploying 5G in the most complex locations.”

e& launches DataRobot service in UAE, Morocco, Egypt

Nick Booth
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e& launches DataRobot service in UAE, Morocco, Egypt

Now AI can be instantly sorted for govs and biz

Etisalat Group (e&)* has launched an instant artificial intelligence (AI) service for anybody in the United Arab Emirates (UAE), Egypt and Morocco, provided they can afford the fees, reports Trade Arabia. The Enterprise AI as a Service (AlaaS) offering is being run by one of e&’s divisions, e& Enterprise and its targets will be corporate customs and government departments. Now the telco can run AI for governments and private enterprises in order to find use cases and business value without spending a fortune learning AI.

The service will be run for three years under contract by US artificial Intelligence (AI) specialist DataRobot which builds, trains and runs Ai and machine learning at a fraction of the cost of doing it in house and on a large scale. “Our common goal is to unlock the full potential of their data,” said DataRobot CEO Dan Wright.

As a convincer DataRobot is building an AI Center of Excellence (AI CoE), a centralised experts group, to reassure customers that e& enterprise has the capacity to oversee projects from start to finish and make sure best practises are followed.

The new service model gives the telco a quick win through ‘faster time to value’ as it runs AI applications for industry verticals. Customers can outsource their AI projects to e& enterprise at a time when skills are in short supply and there is an immediate need for its use, whereas DataRobot has been doing this for years and can execute quickly.

The business division of e& is on for more tech partnerships like this that can add value to both private enterprise and the government as they learn to be more data-driven and create technology-enabled efficiencies said Salvador Anglada, the CEO of e& enterprise.

“We can run advanced AI for them at a fraction of the cost of building and maintaining their own system. Our partnership with DataRobot will influence and accelerate regional markets for AI adoption,” said Anglada, “Our managed services will unlock tremendous value for all industry sectors.”

* Etisalat Group changed its brand identity to e& on 23 February 2022, making it difficult to punctuate. The e& enterprise focuses on cybersecurity, cloud, Internet of Things (IoT), AI and ‘mega projects’. Meanwhile e& capital allows the Group to focus its efforts on driving new mergers and acquisitions.

Zero rated hopes for EU’s Net Neutrality

Nick Booth
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Zero rated hopes for EU’s Net Neutrality

Big Tech wields Berec and will put datacap on our Aas

The EU’s apex telco regulator BEREC is set to issue net neutrality rules that could put technology oligarchs above the law and crush Europe’s application creators before they get a chance to grow. Hopes for small, inventive companies had been raised earlier this year when the European Court of Justice found that discriminatory zero-rating plans such as T-Mobile’s StreamOn and Vodafone’s Pass violate Europe’s net neutrality law. However the hopes for free competition could be abandoned and the regulator maybe be blindsided into creating an outlook of Not Neutrality that favours the Big Tech oligarchs, net analysts have said.

Unholy trinity

The draft guidelines don’t clearly prohibit three harmful practices: that zero-rating put on their own apps and media services; secondly that carriers get paid by dominant app providers to zero rate their app and thirdly that carriers conveniently pick a popular service to zero-rate without striking an official agreement with that service. This leads to absurd results, says analyst Barbara van Schewick at the California-based Center for Internet and Society.

Absurd results

The draft guidelines don’t clearly prohibit some zero-rating plans that are even more harmful than the clearly banned ones, according to Van Schewick, who offers her own alternatives in a manifesto published online Response to BEREC’s Public Consultation. “If BEREC gets it right, will boost how much data people get every month while restoring competition online. Carriers will no longer be able to limit how people can use their data or push them to use apps from the dominant platforms,” said Van Schewick.

Death by Zero rate

In June the EU regulator Berec decides on the new rules for carriers that zero-rate certain applications by exempting them from customers’ monthly data caps. These discriminations currently favour the carrier’s own services or those of Big Tech oligarchs, such as Facebook and YouTube, which spend billions of dollars on lobbying in order to steer US lawmakers. Zero-rating, effectively an exemption on rules for a users’ data cap, is to be subject to an exemption for big companies. A zero rating is effectively like conducting a race in which Facebook is given pole position throughout the race. The Centre for Internet and Society has produced its manifesto to explain to Berec how this is possible. 

Big Tech wins

‘Ratings free’ status has a powerful effect the behaviour of cost-conscious use who don’t want to succeed their limits, according to the analyst. It’s like being able to offer delicious but alcohol-free wine in a nation that imposes massive fines for sobriety. New ‘open’ zero rating plans pretend to let in all vendors, from start-ups to stitch-ups, for a given type of application. In reality, they typically include very few applications from an exclusive group of vendors.

Equal opportunity

These plans disproportionately benefit the biggest platforms because only the largest companies can afford to participate in technical ordeal of trying to join a zero rating plan. Small competitors lack the time and the money for the necessary processes such as traffic identification, which have to be carried out whenever a company makes changes to its service. Big players enjoy the advantage of economies of scale over these otherwise expensive processes.

Not Neutrality

Large carriers rarely even reply to smaller companies that apply. When the makers of AudioMack examined 34 of Europe’s zero-rating plans 25 carriers did not offer a way to apply or did not reply to AudioMack’s application. AudioMack was included in 3 plans but Apple Music was featured in 26, and Spotify was in 23. In 2019 a study found that there were 186 different zero-rating offerings across Europe but only the Big Techs have the resources to take part. The majority of zero-rated apps got to participate three plans at most. Out of the top 20 zero-rated apps in the EU, only three are from Europe. The top zero-rated apps are WhatsApp and Facebook. 

Controlling behaviour

However, the persuasiveness of Big Tech’s money in shaping EU law should not be discounted. The Computer and Communications Industry Association (CCIA) and NetChoice – the two tech industry groups – represent Big Tech companies like Facebook’s parent company, Meta, along with Twitter and Alphabet Inc the parent company of YouTube and Google. BEREC, comprised of the national telecom regulators from across the EU, is under intense pressure from Facebook, Google, and big telecoms to leave in loopholes so discriminatory zero-rating can continue. 
“That’s not just unfair, it cements the market power of the dominant platforms,” said Barbara van Schewick at the Center for Internet and Society.

Truphone sold for less than a SIM

Nick Booth
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Truphone sold for less than a SIM

Sanctions sale sees owner sell for Poundshop price

Truphone, a UK-based mobile virtual network operator once valued at £400 million, is being sold is being sold to two European tech entrepreneurs for a pound (£1),  The Times reported. According to Business Insider, SIM-seller Truphone was valued at $512 million (£410 million) in 2020 and received almost $375 million of investment from Russian Oligarch Roman Abramovich and two business partners, Alexander Abramov and Alexander Frolov. Abramovich owns 23% of the company, says The Times, and following sanctions on him, the former owner of Chelsea FC is under pressure to offload assets.

Rivals concerned

Truphone hired the advisory firm FRP in April to review its “strategic options”. Hakan Koc is one of the two entrepreneurs who has emerged as one of the preferred bidders for Truphone. However, rivals are concerned about Koc’s links to Frolov as his used car marketplace Auto1 has received funds from a firm run by Frolov’s son. Koc would own 90% of Truphone while his business associate, a former telecom executive and private equity investor, Pyrros Koussios, would own 10% of the company, the Financial Times reported.

Deal finalised

 The $5.3 billion deal was finalised last month to a group led by LA Dodgers co-owner Todd Boehly and the investment firm Clearlake. Abramovich had to sell Chelsea FC, among other assets, after being hit by western sanctions amid Russia’s invasion of Ukraine. Abramovich once had an estimated $14 billion, but his wealth was halved by western sanctions, says Forbes. The current owners of Truphone have committed to invest €12 million and will take on certain contractual obligations. There are outstanding one-off payments and debts, including a $660,000 fine from the Federal Communications Commission linked to the company’s misrepresentation of ownership. The existing owners would receive up to a third of the original funds invested, The Times reported. However, Abramovich will not receive the funds while he remains subject sanctions.

China could shoot down Starlink

Nick Booth
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China could shoot down Starlink

Chinese defence journal makes the case

Chinese military scientists have called for the development of anti-satellite (ASAT) technology to neutralise the danger’s presented by western ideas being delivered to its people by SpaceX’s Starlink wireless broadband service. The enthusiasm for counter culture space wars is likely to escalate, according to a report in The Register.   

It cites an article published in April by Chinese journal Modern Defense Technology in which Ren Yuanzhen leads a team of authors from the Beijing Institute of Tracking and Telecommunications Technology who threaten that Starlink satellites can significantly enhance the US military’s operational communications capabilities. In reaction they call for techniques to monitor and track them to be developed and, beyond that, the powers of soft and hard killing methods for some satellites.

The article was translated by David Cowhig, a former US State Department Foreign Service Officer who retired after ten years at the US Embassy in Beijing as a science and technology officer.

“While providing commercial services, this giant constellation of satellites harbours great potential for military applications, posing a great challenge to our existing situational awareness and traditional defence capacity,” said the article.

“Therefore, it is necessary to actively respond in various aspects, especially to develop and build situational awareness equipment and systems in a targeted manner, and vigorously develop various new disposal means, so as to maintain and obtain space advantages in the fierce space game,” it concluded.

Starlink’s constellation of 2,400 low-Earth orbit (LEO) satellites was first launched in 2018 but the broadband services offered by the satellites is increasingly worrying Chinese authorities says the report. In December 2021, Chinese representatives at the United Nations complained that Starlink satellites had two close encounters with the China Space Station on July 1 and October 21, 2021 and reminded the US of its obligations under the 1967 Outer Space Treaty to avoid such dangers.

But Starlink’s significance as conflict-catalyst came to the fore when SpaceX founder and CEO Elon Musk agreed to provide Ukraine with Starlink terminals in response to Russia’s February 24 invasion.

On Twitter cyberspace security expert John Railton described the challenges Russian or Chines forces would face in trying to silence multiple Starlink dishes.

Since 2010, according to the Secure World Foundation, China has conducted at least seven ASAT tests. Russia since 2014 has conducted at least 14 ASAT tests. And India conducted two such tests in 2019. About 3,200 pieces of debris from those tests are still in orbit.

Let’s get TIM split done – Colao

Nick Booth
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Let’s get TIM split done – Colao

We can’t afford free infrastructure market says minister

Telecom Italia (TIM) is splitting its landline network from its service operations to maximise asset value for all shareholders and cut its debt, CEO Pietro Labriola told economic event in Trento in northern Italy on Sunday.

Italy’s former phone monopolist is restructuring its business by isolating its domestic fixed network assets to focus on consumer and commercial activities. While TIM’s network assets are to be combined with those of state-backed broadband rival Open Fiber to create a single national network company majority-owned by Italian national development bank Cassa Depositi e Prestiti (CDP). 

The new network entity would write off a significant portion of TIM’s debt and domestic staff. TIM’s top investor, French media giant Vivendi said it would be ready to evaluate other opportunities if the network value is not recognised in the single broadband plan. Its support is crucial in getting any proposal approved by the board. “The most important thing is to maximise the value of all assets in the interest of all shareholders,” said TIM CEO Pietro Labriola.

Speaking at an economic event in Trento in northern Italy, Labriola declined to say whether TIM was considering a full exit from its landline network business with an outright sale but stressed that any spin-off would be designed to cut TIM’s €23 billion ($25 billion) net debt.

“It seems all parties [involved in the single network project] are interested in understanding quickly enough if the plan is feasible,” Labriola said. The creation of a single fibre network could be completed in 12-18 months.

An infrastructure engineer by trade, Labriola took the helm of the company in January and is due to present an updated version of the original three-year business plan. The new version, presented on July, will be focused on the break-up of TIM’s operations.

The Italian government is keen to create a national wholesale network champion independent from any broadband service provider, as it energises the fibre rollout, by removing obstacles in the road, avoids the duplication of investment and prioritises efforts more effectively.

The success of such a plan will depend on “goodwill of foreign investors”, including Vivendi, and infrastructure funds holding minority stakes in Open Fiber and TIM’s grid, Italy’s Innovation Minister Vittorio Colao said.

Private equity stakeholder KKR has joined the TIM-CDP project after TIM rejected it €10.8 billion proposal to gain control of TIM and delist it before splitting its fixed and services assets. Reuters’ sources say it still has reservations on the deal.

The critical issue is that any combination of TIM’s network assets with those of Open Fiber would need to win regulatory approval as it would recreate a near monopoly. But meeting this criteria might put a spanner in the words for no reason said Colao, a former Vodafone boss, speaking at the same event in Trento: “Ideally, we would love to have infrastructural competition, but at this stage Italy seems not able to afford it,” said Colao.

Telefónica auctions village networks as slices of private equity

Nick Booth
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Telefónica auctions village networks as slices of private equity

That’s show how to monetise rural life

Telefónica has admitted Allianz Global Investors and Canadian pension fund CDPQ to the final stages of its auctioning of a slice of its rural fibre network in Spain, which serves three million homes in small villages. French investment firm Vauban Infrastructure Partners has also been shortlisted to carry out due diligence on the unit, which has been valued at €2 billion ($2.15 billion), Reuters’ has said. Meanwhile, Dutch pension fund PGGM may ally itself with Allianz as part of a consortium, as Vauban seeks a bidding partner, other Reuters sources have divulged.

Funds for fibre

Telefónica, advised by BBVA and AZ Capital, is selling a minority stake of about 45% of the business, which operates in towns with fewer than 20,000 inhabitants. The stake sale will free up much-needed cash for debt-laden Telefónica to fund the rollout of new broadband infrastructure in rural areas in Spain, as well as in Germany and Brazil where the telecoms giant aims to reach a market penetration of up to 97% by 2024. Telefónica is already partnering with Allianz and CDPQ to offer similar fibre services to scarcely populated areas in Germany and Brazil, respectively.

More equity vicario?

Private equity and infrastructure funds have been investing heavily in Spain’s fibre network, with U.S. buyout fund KKR and European rival Ardian clinching deals last year for Spain’s biggest dark fibre operator or Reimtel and fibre player Adamo, respectively. In May, consultancy Axa Partners and Swiss Re bought neutral wholesale fibre operator Lyntia Networks, which controls a 43,000 km fibre network in Spain.

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