Could get even better once Covid constraint is lifted
Pan African mobile operator MTN Group has reported a 37% growth in data revenue in the quarter ending on March 31. Fintech revenue was up by 21.2% too, but the overall average was dragged down to 15% growth by voice revenue, which increased by just 2.6%. MTN Group now has 274 million customers in 19 markets and it has delivered a solid first quarter performance, said Group President and CEO Ralph Mupita in South African daily IOL.
Double-digit service revenue growth and expanded earnings margins are a good enough endorsement of the company’s execution of its Ambition 2025 strategy, said Mpita. Earnings before interest, taxes, depreciation and amortization (Ebitda) were up 21.1%, following an improvement in its margin from 44.2% to 46.4%. Group service revenue exceeded expectations for the medium-term targets and grew by 15.9%.
Covid interruption
Many of the group’s markets are still navigating Covid-19, said Mupita. Consumer spending on mobiles will be affected by rising inflation and interest rates as food and energy prices vary. National prosperity in each region is affected by currency weakness against the US dollar, a variable that is out of the control of the telcos. By the same token, supply chains experienced disruptions, and to mitigate the risks of network rollout, capital expenditure was accelerated in the quarter by each different country’s local operator.
“This environment has contributed to a notable shift in customer spending patterns and greater competition for share of the consumer’s wallet,” said Mupita. MTN Nigeria had an outstanding quarter in an economy that is growing faster than most in Africa. The regional telco’s service revenue was up by 22%, with a rising Ebitda margin – from 53.1 to 54.6%. Subscriber numbers swelled 3.2% to 276.2 million, partly as a consequence of new SIM registration regulations in Nigeria. This meant it added 1.7 million subscribers in the quarter, after adding 1 million in the fourth quarter of 2021.
Subscribers up
Active data subscribers increased by 13.1% to 125.6m. Active Mobile Money (MoMo) customers increased 25.9% to 58.7m and the value of the average MoMo transaction was up by 12.6%, with the total reaching $59.9 billion. In Ghana the fintech business saw new commission-earning rules implemented in the third quarter of 2021, which impacted transaction value. Adjusting for this, the transaction value grew by 34% in constant currency terms. The number of active merchants accepting MoMo payments increased by 46.8% year-on-year to 765, 211 and the total value of MoMo merchant payments rose by 125.2 % year on year to $4.3bn.
Service charging
The deleveraging of the balance sheet was progressing well. Strong liquidity was maintained with headroom of R53.2bn ($3.27bn) in cash, and R32.6bn ($2 billion) in committed undrawn facilities, as of March 31. MTN SA recorded a “healthy” 4.6% increase in service revenue line with the group’s medium-term guidance. “This performance shows the resilience of the business, against the backdrop of a challenging macroeconomic environment, with a rapidly rising unemployment rate, and increased pressure on consumer disposable income,” said Mupita.
TIM opens its fibre to Open Fiber for €200m a year
Telecom Italia (TIM) has signed an agreement with Open Fiber to grant its rival broadband network company access to its infrastructure. The labour saving pact could speed up the rollout of fibre in the more remote parts of Italy by saving on duplication of effort. Open Fiber will pay €200 million to use TIM’s network infrastructure in Italy’s remotest regions or difficult terrains to cable (AKA ‘white areas’).
The pact comes not long after TIM started formal talks with a state-owned bank Cassa Depositi e Prestiti (CDP) about its plan to create a single network project. They had missed their original deadline, on April 30, for creating a preliminary agreement.
No more white outages
CDP owns 10% of TIM and 60% of Open Fiber. TIM CEO Pietro Labriola has always confidently asserted that an accord was within reach. However another stakeholder, private equity giant KKR, complicated the matter by asking for guarantees over the economic returns of any single network deal before giving its backing.
KKR has a 37.5% stake in Fiber Cop which it bought for €1.8 billion ($1.9 billion) in 2020. It has the power to veto any deal that is doesn’t add to the value of FiberCop, which would be included in any combined network entity with Open Fiber.
UAE-based telco group takes a tenth of UK’s no 3 operator
Emirates Telecommunications Group (Etisalat now known as e&) has bought a 9.8% stake in Vodafone for €4.22 billion (£3.6bn). They plan to consolidate their efforts by cutting waste and jointly launching new products and services, according to Etisalat Group CEO Hatem Dowidar, a former Vodafone chief of staff in London.
“It’s a unique opportunity to acquire a significant stake in one of the leading and strongest global telecom brands, and a company that we know well,” said Dowidar. The state-controlled United Arab Emirates (UAE)-based firm is known to be seeking new markets, including Africa and Europe. Buying Vodafone is not part of its plan but Dowidar said he was looking forward to “building a mutually beneficial strategic partnership” and supporting the board.
Shock share swoop
This heaps more pressure on Vodafone chief Nick Read to expedite his plan for market consolidation, according to telecoms analyst Paolo Pescatore at PP Foresight. “The move may lead to tension with other shareholders who are keen to see Vodafone Vodafone to work more consolidate in key markets,” Pescatore told Leah Montebello at CityAM.
Last week it was reported that Vodafone is continuing merger talks with rival Three. The union of the UK’s third and fourth biggest players has been dogged by a failure to reach an agreement. The UK’ s competition regulation and in the UK presenting significant hurdles for the companies. Three UK chief Robert Finnegan is reportedly keen for market consolidation after its last disappointing financial statement on revenue growth, despite hitting its strongest services contract deals since 2012.
Dilemma for merger
Karen Egan at Enders Analysis Karen Egan said scale is crucial for mobile operators and described the potential mergees as “‘sub-scalers” who are finding life increasingly difficult. Read, formerly Vodafone’s chief financial officer, has argued for consolidation in the telecoms industry and says UK firms would attract more investment if their combined efforts made them more profitable.
Read is under even more pressure to overhaul Vodafone activist investor Cevian Capital made its presence felt in the boardroom after acquiring a stake in the firm.
However, Vodafone rejected an approach from Italy’s Iliad and private equity Apax Partners. Though Read is driving for deals and Cevian is shouting directions from the passenger seat, The Vodafone CEO has insisted that he is resisting temptation to seek any port in the storm. “The deal has to be right,” Read said.
MOU for more hook-ups, wholesaling and hauling back
Telefónica is teaming up with satellite service OneWeb’s to reach the darkest corners of its territories and hook up more customers, wholesale more accounts and haul back more stat from its masts. The extension of comprehensive coverage means mobile operators can provide the comms for future events and emergencies as they arise.
In a statement it explained how the arrangement will be handled through Telefónica Global Solutions (TGS). So far TGS, which manages Telefónica’s wholesale, global roaming, multinationals and USA businesses, has signed a Memorandum of Understanding (MoU) with OneWeb to improve connectivity with Europe and Latin America.
The collaboration arrangement between OneWeb and TGS comes as the need to expand modern, digital infrastructure has become a priority for governments, businesses and communities across Europe and Latin America. “OneWeb’s unique network has a crucial role to play in providing connectivity for the hardest-to-reach areas globally,” said its CEO Neil Masterson.
TGS will promote and supply OneWeb’s low latency cellular backhaul services to the 4G/5G sector. It will also provide backhaul backup for critical sites and plug capacity gaps for special events. Where backhaul does not exist, OneWeb’s service will expand Telefónica’s mobile and enterprise coverage.
According to Telefónica there are many governments, telcos and Internet Service Providers in rural and remote parts of Europe and Latin America who could use Telefónica’s fibre network and OneWeb’s low-latency broadband service.
“Partnering with OneWeb augments our portfolio by offering solutions that require with low latency systems,” said TGS CEO Julio Beamonte, “Our experience will be essential when adapting the OneWeb solution to provide corporate, B2B and cellular backhaul services and help fuel adoption of critical business applications in the hardest-to-connect areas. We are focused on helping our B2B and Wholesale customers to drive transformational change in their business, and we believe our partnership with OneWeb will help us do that.”
Sponsored: Michael Gebretsadik, Solutions Architect for SS8, writes that in general, 5G networks make gathering intelligence from digital communications more difficult.
This is due to factors such as encryption, increased traffic, and more diverse types of data.However, location-based services are a notable exception. The 5G Location Management Function (LMF) enables lawful mediation platforms to attach precise location information to devices used in intercepted communications in real time. Denser cell deployment and beamforming – or the use of radio frequency management to direct wireless signals toward a specific device – at the base station produces a very narrow beam-target area, within which any given device served by that cell can be located. This capability can even provide location data for the z-axis, allowing analysts to identify the specific floor a device is on within a building, for example.
This represents a dramatic improvement over network-based location data in legacy (i.e., 3G, or even 4G) networks, which provide only approximate positioning along an x- and y-axis. In addition, GPS or device-based positioning is usually restricted by the user or device itself outside of emergency call situations, which makes precise network-based positioning all the more important. A 5G LMF offers several precise, device-agnostic, network-based positioning methods that improve law enforcement agencies’ (LEAs) ability to find persons of interest.
SS8 is building on its long-standing leadership in location services with the acquisition of Creativity Software. The transaction enhances SS8’s solutions with real time location capabilities that significantly improve lawful intelligence insights and enable public safety answering points (PSAPs) to provide more complete information to first responders. This functionality supports more efficient criminal and intelligence investigations and protects society against threats to life and property.
Integrate Location Services into Lawful Intelligence
SS8’s improved platform now encompasses the gateway mobile location center (GMLC) and LMF, as well as the serving mobile location center (SMLC) for 4G and prior networks. That breadth of capabilities extends our location-based services to include the more precise 5G functionalities available within the updated 3GPP standards framework, such as direct querying of the GMLC.
The GMLC provides the interface for the mediation platform to access location data, handling authentication and authorization tasks for those requests to protect privacy. It interconnects with the LMF or SMLC to provide more precise network-based location, which can be incorporated into the handover of lawful intercept data to make it more robust. 5G LI mediation platforms like SS8’s Xcipio, thanks to 3GPP/ETSI 33.107 Rel 16, now have access to the Leinterface using the Open Mobile Alliance (OMA) Mobile Location Protocol (MLP).
The compliant integration of such services into lawful intelligence workflows makes location a first-order data type. Since it is obtained directly from the network for a specific purpose, it can be accurately correlated with intercepted communication data in real time.
Real Time and Asynchronous Location Intelligence
The ability to query the location of a target in real time (synchronously) using the LMF in 5G networks has clear tactical advantages. It can be instrumental in analyzing a target’s movements to assess evolving threats, as well as in the pursuit and apprehension of suspects.
By combining this type of analysis with asynchronous location data like historical positioning information, LEAs gain new insights into investigations. Often, real time monitoring provides the evidence necessary to obtain a warrant, and it can also help analysts determine what historical information to pursue once the proper legal authorization is obtained.
Together, synchronous and asynchronous capabilities help investigators establish a target’s pattern of life, such as whom they are talking to or meeting with. The enhanced location-based services in 5G networks can also provide a greater understanding of events in a specific area or behaviors of specific individuals.
Flexibility Across Both Active and Passive Measures
Successful investigations often require both active and passive location data collection. For example, geofencing – or the monitoring of a geographic area rather than an individual subject, sometimes yields just a few targets, making it feasible for the LMF to actively query the GMLC for their location on a regular basis.
SS8’s platform, however, can provision as many as 10,000 targets. Querying against this many devices is impractical and places an excessive load on the network. Passive lawful interception methods are therefore needed if an LEA must monitor a crowded or highly trafficked area of interest, for example.
If an individual within such an area makes a call or generates IP data, passive measures alert authorities. Repeated alerts from the same device can help investigators narrow the number of targets to actively query on a regular basis.
Conclusion
Rich location-based services give law enforcement better visibility into the behaviors of subjects of interest. Combining real-time and historic location data pairs tactical insight into events as they unfold with the ability to analyze target behaviors over time. Likewise, the ability to actively query and passively monitor a target’s location increases investigators’ ability to tailor lawful interception activities to the needs of a specific situation.
Offering the full range of such capabilities, SS8 delivers precise location information that satisfies even the most stringent regulatory mandates. More importantly, it helps fulfill the shared mission of SS8 and law enforcement officials to protect society and promote public safety and security.
Michael Gebretsadik, Solutions Architect for SS8 Networks, is a 20 year veteran of telco engineering.
About Michael Gebretsadik
Michael has worked in the telecommunication industry for the better part of two decades, in roles ranging from engineering to product management, and business development. He has been involved with location technology since 2003, when he joined SnapTrack (a Qualcomm subsidiary). Prior to joining SS8 in 2020, Michael was responsible for growing the global Location-Based Services business for Comtech Telecommunications through channel partners and IoT OEMs. You can learn more about Michael on his LinkedIn profile
Is Cevian Capital happy to pay CK Hutchison’s hefty price?
UK mobile operators Vodafone and Three UK, the third and fourth biggest players in the market, could be struggling over major differences in structure expectations over there proposed merger, according to reports. The union of the two telcos has been speculated on since details of their ‘secret talks’ were first leaked in February and progress has been slow.
One of the biggest sticking points may be the structure of the new company. While the UK mobile market gets a consolidation, what would be in it for stakeholders such as Three’s owner, Hong Kong infrastructure conglomerate CK Hutchison and Vodafone stakeholder Cevian Capital, Europe’s largest activist investor?
Cevian had demanded new blood in the board of Vodafone and it has since made three new appointments. In the first week of May Vodafone appointed former ARM chief Simon Segars. Delphine Ernotte Cunic, president of France Television, followed. This week a chair has been found for Stephen A. Carter, once Prime Minister Gordon Brown’s chief of strategy and also a former CEO of regular Ofcom.
Can they simplify business, pursue deals in national markets and improve returns? A reduction in competitors could trigger scrutiny from competition authorities, with Ofcom and the UK’s Competition and Markets Authority. The consolidators are hoping that regulators’ have become aware of the need to invest in network infrastructure and how increasingly difficult this is under current circumstances. A new government consultation on street works provides provision for an infrastructure building, sponsoring collaboration between utility and technology companies.
Vodafone’s share price has lost 44% of its value over the past five years, although it it has risen 3% since the start of 2022. Three has gained customers since 2020 but failed in its stated ambition to double its size. Those gains have not been translated into significant revenue growth, says the FT, which last week lamented ‘flat’ quarter-on-quarter revenues of £582 million pounds (€683 million).
Vodafone chief executive Nick Read not hidden his desire to pursue deals in countries he believes suffer from an excess of market competition, including Spain, Italy and the UK. Analysts at Enders Analysis say Vodafone’s “lack of funding capacity” mean that it would be desperate to form a joint venture that could contribute additional debt or receive cash equalisation payments to assist with “leverage reduction.”
CK Hutchison’s price expectations are described as ‘hefty’ and it could smell Vodafone’s desperation.
Mo-banking is subscriber magnet and economic multiplier
Airtel Africa’s pre-tax profits nearly doubled in a year, according to its declaration for fiscal year 2022.
As a telecom and mobile money-services provider to Africa it enjoyed a double-digit underlying revenue growth in all its regions thanks to an 8.7% growth in its customer base. It posted a pre-tax profit of $1.22 billion for the year ended March 31, up from $697 million a year before and beyond the market expectations of $1.14 billion.
The London-listed African subsidiary of Indian giant Bharti Airtel met the income expectations of City analysts, with takings of $4.71 billion compared with $3.91 billion in fiscal year ending April 2021. Underlying earnings before interest, taxes, depreciation and amortization – the company’s preferred metric – rose from 2021’s total of from $1.79 billion to $2.31 billion in 2022. The Airtel Africa board declared a final dividend of 3 cents a share, bringing the total for the year up to 5 cents, from 4 cents in fiscal 2021.
Long-term opportunities remain attractive, said a company statement. Though currency devaluation and repatriation present risks, the success of Airtel Africa’s mobile banking and credit applications will mitigate any reducing circumstances, because the vast unbanked population of Africa (estimated at 460 million) leaves plenty of scope for growth, especially in the developing economies in Tanzania, Rwanda, Kenya, Senegal and The Ivory Coast.
“There are increasing challenges from global inflationary pressures, but we continue to target revenue growth ahead of the market and moderate margin expansion,” said chief executive Segun Ogunsanya.
EBITDA trellis outgrown by DT’s towering green shoots
Deutsche Telekom’s (DT’s) chief financial officer has praised the company’s strong organic growth in the run up to spring as the latest quarterly statement was released for the German telco.
“This was a strong start to the new year,” said CFO Christian Illek said in a company statement. “We are continuing to grow on an organic basis and are therefore in a position to raise our guidance for 2022.”
The organics include the dead-heading of the Dutch business T-Mobile Netherlands, which was used to fertilise US division T-Mobile. Meanwhile, the new tower business is blooming, with a profit rise of 6.4% on last year, to €284 million.
Reuters reported that DT’s quarterly core profit and revenue surpassed analyst’s estimates. The German giant’s success was led by the performance of its US division, T-Mobile. This quarter DT has embarked on a strategy to buy its back shares in DT and beefing up its stake in this profitable unit. The sap is rising in its European business too and this organic growth has encouraged DT to revise its full-year outlook.
Adjusted earnings before interest, tax, depreciation and amortisation after leases (EBITDA AL) were €9.87 billion ($10.26 billion), shooting over the trellis created by a poll of analyst expectations, which was set at just €9.55 billion. The telco’s first-quarter revenue increased by 6.2% to €28 billion, which again outgrew the consensus of €27.87 billion that came from the greenhouses of Frankfurt, Wall Street and the City of London.
The company now expects to post adjusted EBITDA AL of more than €36.6 billion in 2022, up from the previous guidance of around €36.5 billion.
Last month, Deutsche Telekom bought additional shares in T-Mobile from SoftBank for €2.3 billion ($2.4 billion), raising its stake in the U.S. company to 48.4% and within touching distance of a majority stake. The US mobile operator T-Mobile contributes three-fifths of its group revenue and netted all of a rival’s subscribers in a merger with Sprint. With that added momentum of scale it is rolling out its 5G service.
In the latest quarter, T-Mobile added 1.3 million customers who pay their bills monthly, lifting its subscriber base to 109.5 million customers. Deutsche Telekom reported 54 million mobile customers in Germany and 45.6 million in the rest of Europe.
The sale of T-Mobile Netherlands was completed on March 31. This means that the Dutch business is included in the group’s figures for the last time. In the first quarter, T-Mobile Netherlands added 47,000 new mobile contract customers, generated revenue of €536 million and adjusted EBITDA AL of €190 million.
In the radio tower business, there was an organic increase in sales compared to the same period of the previous year of 6.4 percent to €284 million. At the same time, adjusted EBITDA AL grew organically by 10.2 percent to €173 million. On a comparable basis, the number of locations was 40,500, 1,000 more than a year earlier.
Operators need mmWave like base stations need backhaul
This has been a good week for the millimeter wave (mmWave) camp, with three major developments adding momentum to the movement. On Monday UK regulator Ofcomannounced that it had started the process towards an auction of mmWave spectrum to be used in private 5G networks as well as wide area public mobile networks. On Wednesday chip maker Qualcomm Technologies announced, at its 5G Summit, that its Snapdragon X70 5G chipset for phones and Internet-able devices (IoTs) will include a connection to a Standalone 5G network built with mmWaves.
Pharrowtech
On Thursday mmWave system maker Pharrowtech closed a €15 million Series A funding round to expand on its ideas for developing 60 GHz wireless RF transceivers and antenna technology. The capital raised will go on customer support, strengthening Pharrowtech’s operations in the United States and growing its engineering and business teams.
Netherlands-based tech investor Innovation Industries led the funding and was joined by Seed Round investors imec.xpand, Bloc Ventures, and KBC Focus Fund. Pharrowtech needs the money to push on with its recently launched 60 GHz CMOS Radio-Frequency Integrated Circuit (RFIC) PTR1060 and phased array antenna Radio-Frequency Module (RFM) PTM1060.these will all create 5G unlicensed fixed wireless access, wireless infra-structure and consumer applications.
No Hertz, no headway
Pharrowtech designs sub-systems for 60GHz licence-free operations. This frequency range is becoming increasingly important for applications such as remote working and learning, augmented and virtual reality, and entertainment and gaming, because of its high capacity and short latency.
Network operators see fixed wireless access (FWA) system as the most effective and economical solution to deliver the required gigabit-per-second speeds link to consumers. In parallel, due to the increasing powers of 5G radio base stations, mobile operators are using millimeter wave system to meet the increasing demand of backhaul network architectures for macro and high-density small cell deployments.
FWA or the highway
Pharrowtech recently announced the availability of the PTR1060, an IEEE complaint RF chip for indoor and outdoor wireless use cases that supports the full 57 to 71 GHz bandwidth. The company has also launched phased array antenna modules to provide third party equipment makers (OEMs) with a ready-to-use 60GHz solution. The programming interfaces and tune-able features of the chip and antenna allow for optimal integration by equipment makers, according to Pharrowtech founder Wim Van Thillo, the company CEO.
“This year has started on a great note for Pharrowtech and this investment is another significant milestone in our journey. Despite the global pandemic, Pharrowtech moved from prototypes in 2019 to scaling up production of an exceptionally advanced 60 GHz RF solution by 2022.”
Was the training bill an unexpected item in the OPEX area?
Swedish operator group Telia has brought in Amazon Web Services (AWS) to train its workers to use cloud technologies. Ten per cent will get training over the next 3 years, reveals Andrew Wooden in Telecoms. That means Telia is going have to pay for 2000 training courses.
There is an urgent need for artificial intelligence and machine learning to be pressed into service and Telia’s machines need to be trained to learn, so someone needs to train the trainers. Since Telia has 800 software developers on its payroll, all creating applications for a culture that puts the cloud first, there is an urgent need for algorithms that can regulate these liberated assets. Otherwise the ebbs and flows, created by the new liquidity of these disaggregated computing resources, could create unmanageable swells.
The madness of clouds
Machines can learn, but in the early days they need some foundations and boundaries, or they can get spoilt. The AWS programme is designed to expedite the production of machine teachers who will underpin the firm’s ‘cloud first strategy’, according to Rainer Deutschmann, Telias group chief operating officer.
Telia has embarked on one of the telecom industry’s most ambitious digital transformation journeys, Deutschmann claimed. The cloud, big data, analytics and AI were at the heart of this transformation, but they are all useless without some genuinely intelligent guidance from humans. The constant elevation of AI has made people forget that these systems are only as good as the people who created them.
Rising cost of collaboration
“We now extend our collaboration with AWS to launch the Nordic region’s largest in-house AWS training program to date,” said Deutschmann. That means that 10 percent of Telia’s total workforce on AWS and cloud technologies must achieve cloud fluency. Around 2,000 staff must attend AWS training courses in the next three years. Is that an expense that was accounted for when Telia embraced the cloud? Productive decisions have many parents, but wastages are aways orphans.
Not so, according to Deutschmann. “This initiative complements our ongoing wider product and technology skills augmentation with currently 4,000 active learners. I am very excited to see our talents grow and develop, which is a critical foundation for sustainable delivery of our transformation,” said Deutschmann.
A basket of instances
Naturally, Fabio Cerone, the MD of AWS’s EMEA Telecom Industry Business Unit, saw it as a demonstration of a ‘commitment to pursuing modern and innovative strategies to optimize its business’ and better serve its customers. Everything from serverless data to SAP migration is an investment in ‘upskilling’, according to Cerone. “Telia proves they are embracing the future and that AWS cloud technology sits at the core of their way forward,” said the AWS business unit beneficiary. “We look forward to continue working with Telia to support their digital transformation and their ambition to be one of the best tech employers in the Nordics,” said Cerone.
