REVIEW OF THE YEAR 2012 AND PREDICTIONS FOR 2013

Business analysis for telecoms professionals Special edition

clicK Here

to reaD on

your ipHone/ipaD

Gaining weight

Sponsored by:

SingTel buys AmobeeSingTel agreed a cash deal worth US$321 million for US-based mobile advertising solutions firm Amobee.

Batelco sells out of IndiaBahrain’s Batelco agreed to sell its 42.7% stake in Indian mobile operator STel to Sky City Foundation for 65.8 million dinars (€130 million).

Tata circles worldIndia’s Tata Communications completed the final leg of its Tata Global Network–Eurasia cable system, which also constituted the last link in its wholly-owned, round-the-world cable.

UK gets first TD-LTE networkPCCW-owned UK Broadband switched on its 3.5-GHz band, TD-LTE network in London.

Fibre on demandBT’s Openreach division detailed the fibre-to-the-premises (FTTP) on-demand 300-Mbps service it plans to make commercially available from spring 2013.

VoLTE victoryEricsson and Qualcomm announced a successful voice call handover from LTE to WCDMA using Single Radio Voice Call Continuity (SRVCC).

Telus launches LTETelus launched LTE services in 14 cities, making it the third mobile operator in Canada to do so, after Rogers and Bell Canada.

Google sells Clearwire stakeGoogle sold its 29.4 million

areas and to share the terminal segment elsewhere.

Slim gets Net ServicosCarlos Slim’s Embratel was given the green light by Brazilian regulator Anatel to take over cableco Net Servicos.

CEO change at Telecom EgyptTelecom Egypt appointed company insider Tarek Aboualam as its new chief executive, replacing acting CEO and managing director Mohammed Abdel Rehim Hassanein.

India scraps 2G licencesIndia revoked the 122 mobile licences it awarded in 2008 that became the focus of a corruption scandal, affecting a number of major global telcos and some local players. It reauctioned the spectrum in November.

Voda’s Greek merger offVodafone backed away from plans to merge its Greek mobile

JANUARY-MARCH

France gets FreeFree Mobile launched as France’s fourth mobile operator, offering a €19.99 per month unlimited calls, messaging and Internet tariff. Orange immediately responded with price cuts.

Chile merger offAfter being blocked by a Chilean antitrust court, the planned merger between Entel and GTD Manquehue was called off when GTD’s controlling shareholder backed out of the deal.

Zambia privatisation reversedThe Zambian government reversed the 2010 sale of Zamtel to Libya’s LAP Green Networks after an investigation concluded that the telco had been grossly undervalued. LAP Green paid $257 million for a 75% stake.

OTE sells out of SerbiaTelekom Srbija bought back 20% of its own shares from Greek incumbent OTE for €380 million.

New RIM CEOThorsten Heins was named as new chief executive of RIM, replacing under-fire co-CEOs and chairmen Mike Lazaridis and Jim Balsillie. Lazaridis became vice chairman of RIM’s board, while Balsillie left the company in March.

French FTTH dealOrange agreed to allow Bouygues Telecom to use the horizontal network segment of its fibre-to-the-home (FTTH) infrastructure in very densely populated

operations with those of rival player Wind Hellas, blaming market uncertainty.

ALU’s Genesys sale closesPermira’s $1.5 billion acquisition of Genesys from Alcatel-Lucent closed following receipt of regulatory approvals.

Hungary’s new state operatorA consortium led by state-owned electricity wholesaler MVM won spectrum in Hungary’s 900-MHz auction in January. MPVI Mobil planned to launch services in early 2013, but its licence was voided by a Budapest court in September.

LightSquared blockedThe FCC in February blocked LightSquared’s plan to roll out a wholesale LTE network in the US on the grounds it could interfere with GPS signals. CEO Sanjiv Ahuja later resigned and the company filed for Chapter 11 bankruptcy protection in May.

a round-up of the major stories in telecoms in 2012, as reported in our daily news service www.totaltele.com

timeline

Global connections by technology generation

there will be 8.5 billion mobile connections in the world by 2017, half of which will be 3G or 4G connections, split 40% 3G and 10% 4G, Wireless intelligence predicts. today, 26% or 1.7 billion of the 6.5 billion total are 3G/4G; just 1% of all connections are either lte, td-lte or WiMaX. By 2017 the Fdd variant of lte will account for 85% of 4G connections, while td-lte will take a 14% share. 2G connections will decline by more than half a million over the next five years as people migrate to faster services, the firm estimates.

Source: Wireless intelligence

2000 2002 2004 2006 2008 2010 2012 2014 2016

n 2G n 3G n 4G100%

80%

60%

40%

20%

0%

www.totaltele.com december 2012/January 20132

3december 2011/January 2012 www.totaltele.com

timeline

shares in Clearwire for $66.5 million, significantly less than the $500 million it paid for the stake in 2008.

Etisalat pulls India plug...Etisalat ceased operating its Cheers Mobile service in India on 31 March, following the cancellation of its licences.

...forges ahead in AfghanistanThe United Arab Emirates incumbent also became the first telco to offer 3G services in Afghanistan.

Bharti launches in RwandaIndia’s Bharti Airtel launched commercial services in Rwanda, becoming the country’s third mobile network operator.

Hirai takes helm at SonySony announced that its video games and consumer electronics head Kazuo Hirai would take over as president and CEO from 1 April, replacing Howard Stringer, who became chairman.

New China Mobile chairChina Mobile announced Xi Guohua as its new chairman, noting that Wang Jianzhou had retired for “reason of age”.

APRIL-JUNE

Colombian telcos mergeTelefonica brokered a deal with the Colombian government that will see fixed-line firm Colombia Telecomunicaciones merged with Telefonica Moviles Colombia. Telefonica will own 70% of the combined entity.

City Telecom sells telco assetsCity Telecom agreed to sell its telco operations in Hong Kong, Canada and China to Metropolitan Light Co for HK$5.01 billion (US$645 million).

Saudi Telecom CEO change Saud al-Daweesh resigned as chief executive of Saudi Telecom Company. He was replaced by Khaled Al Ghoneim.

Google buys Moto MobilityGoogle completed its $12.5 billion acquisition of Motorola Mobility in May and named one of its own people, Dennis Woodside as the unit’s new chief executive.

Bharti launches LTEBharti Airtel claimed to be India’s first 4G operator when it launched services in Kolkata. The operator also agreed to acquire a 49% stake in Qualcomm’s Indian broadband wireless access businesses for around $165 million.

LION2 goes liveFrance Telecom-backed submarine cable system LION2–connecting parts of Africa with international networks–was switched on.

Facebook shares struggleFacebook’s long awaited IPO came in May. The social network did not maintain its $38 IPO price for long, dropping to below $20 in the subsequent months. There has been a small rebound since.

Competition in IsraelHOT Telecom and Golan Telecom launched mobile services in Israel, both undercutting the market’s established operators with low-cost price plans.

Mozambique newcomerMovitel, majority-owned by Vietnam’s Viettel, became the third mobile operator in Mozambique in May.

America Movil in EuropeHaving launched an €8-per-share offer in May, Mexico’s

America Movil upped its stake in Netherlands-based KPN to 27.7% in June. It also announced a share purchase deal that saw it raise its stake in Telekom Austria to 22.76% in September.

SFR shake-upFrank Esser stepped down as CEO of France’s SFR in March. He was due to be replaced by former Vodafone Europe head Michel Combes, but plans changed after Jean-Bernard Levy, CEO of SFR’s parent Vivendi was ousted in June. Stephane Roussel became SFR’s new chief executive.

JULY-SEPTEMBER

EU roaming caps arriveCaps on the cost of mobile data usage while roaming in the EU came into force on 1 July.

Vodafone buys C&WVodafone’s £1.04 billion purchase of Cable & Wireless Worldwide was completed in July and changes to C&W’s top management immediately followed: Vodafone Global Enterprise CEO Nick Jeffery replaced Gavin Darby at the helm, while other C&W execs made way for Vodafone people.

Verizon buys telematics firmVerizon Communications agreed to pay $612 million in cash for Hughes Telematics. The deal closed in July.

South Africa blocks KT dealThe South African government rejected Telkom SA’s plan to sell a 20% stake to South Korea’s KT Corp for around 268 billion rand ($330 million).

Mayer comes to YahooMarissa Mayer became Yahoo’s sixth CEO in five years in July. She replaced Scott Thompson,

who was let go by the Internet company in May after just four months (see p.20). BCE buys data centre firmCanadian telco BCE and three institutional investors agreed to pay C$1.1 billion for data centre operator Q9 Networks. The acquisition closed in October.

Microsoft $1.2bn Yammer buySoftware giant Microsoft inked a US$1.2 billion deal to acquire business social networking provider Yammer in a bid to boost its cloud services portfolio.

Telefonica sells China stakeTelefonica agreed to sell a 4.56% stake in China Unicom to the latter’s parent for €1.13 billion, reducing its holding to 5.01%.

CGI snaps up LogicaCanadian IT services firm CGI Group agreed to pay £1.7 billion for European rival Logica.

Voda, O2 merge UK networksThe UK units of Vodafone and Telefonica’s O2 announced a network-sharing deal covering 2G and 3G networks, with a view to adding in LTE in future. The 50/50 joint venture will run the network of 18,500 masts.

Sprint closes iDEN networkUS mobile operator Sprint said it will close down its iDEN network, the one remaining legacy from its Nextel acquisition, as soon as June 2013.

China Telecom MVNO launchChina Telecom launched its UK MVNO under the brand name CTExcelbiz and announced it will replicate the business in France in the second half of 2013.

Brazil awards 4G licencesThe four main mobile operators

www.totaltele.com december 2012/January 20134

timeline

in Brazil–Vivo, TIM, Claro and Oi–won 4G licences and have begun rolling out LTE networks.

Shared data at VerizonVerizon Wireless unveiled new tariff plans enabling users to share their data allowance between up to 10 devices.

Microsoft tablet SurfacesSoftware giant Microsoft moved into mobile hardware, unveiling a family of tablets under the brand name Surface. The devices, which run Windows 8, hit the shelves in October. Meanwhile, Google revealed its Nexus 7 tablet, developed with Asustek Computer, that started shipping in mid-July.

BT scores footy rightsUK incumbent BT won the right to show live English Premier League football matches, paying £738 million for 38 games starting in the 2013 season.

YouView goes liveUK TV and video-on-demand service YouView–backed by the country’s major free-to-air broadcasters, BT and TalkTalk–launched in July.

KPN ends Base saleDutch incumbent KPN abandoned plans to sell Belgian unit Base saying the bids it received were not satisfactory.

M2M allianceSeven telecoms operators teamed up to gain scale in the machine-to-machine (M2M) market. The alliance comprises Telefonica, KPN, NTT DoCoMo, Telstra, Vimpelcom, SingTel and Rogers.

Viettel furthers expansionVietnam’s Viettel secured 900-MHz spectrum in Peru, where it holds the country’s fourth mobile licence and announced plans to

start offering mobile voice and data services in East Timor.

Brazil ban hits growthTIM, Claro and Oi were banned from making sales in a number of Brazilian states in late July and early August as punishment for growing complaints over network quality. As a result, Brazil’s mobile net additions slumped to just 280,000 in July.

Chilean ops win LTE spectrumClaro, Entel and Movistar all won 2.6-GHz spectrum in Chile’s LTE auction, which raised a total of just over US$12 million. Entel paid the most for block B with an $8.8 million bid.

Third 3G network in TunisiaQtel-owned Tunisiana launched 3G services in Tunisia. Its network covers 48% of the population; it aims to increase that to 87% early next year.

Italian network movesFastweb revealed it will invest €400 million in its fibre-optic network in Italy. The telco also signed a memorandum of understanding with rival Telecom Italia to jointly develop the country’s fibre infrastructure.

EU OKs UK JVThe European Commission gave the go-ahead to a planned UK m-commerce joint venture between Everything Everywhere, Vodafone and O2, ruling that it poses no threat to competition.

Telkomsel goes bankruptA Jakarta court declared Indonesian mobile operator Telkomsel bankrupt, despite a healthy balance sheet, following a petition from self-proclaimed creditor Prima Jaya Informatika.

Argentina spectrum moveArgentina cancelled its planned

auction of mobile spectrum and handed over 20% of the country’s available 3G airwaves to state company Arsat. The state said the move came following antitrust concerns and because none of the companies that submitted bids met the minimum requirements.

Tech Mahindra buys Comviva India’s Tech Mahindra agreed to buy a 51% stake in Comviva Technologies from Bharti Group and other shareholders for 2.6 billion rupees (US$50 million). The merged entity will be renamed Mahindra Comviva. Earlier BT sold a 14.1% stake in Tech Mahindra for £158.6 million and offloaded its remaining 9.1% holding in December.

Yahoo offloads AlibabaChina’s Alibaba Group completed an initial share repurchase of half of Yahoo’s 40% stake for $7.6 billion.

BT’s new Global Services CEOBT announced that company insider Luiz Alvarez will head up its IT services division from 1 October. He replaces Jeff Kelly, who is returning to the US after almost three years at the helm of Global Services.

NZ Telecom new CEOSimon Moutter took over as the new chief executive of New Zealand’s Telecom Corp.

OCTOBER-DECEMBER

US mobile mergerT-Mobile USA in October announced it will merge with MetroPCS in a $1.5 billion deal. Deutsche Telekom, parent of the former, will hold a 74% stake in the new entity and T-Mobile USA CEO John Legere–in the role since September–will lead it.

Softbank M&A movesJapan’s Softbank agreed to pay $20.1 billion for a 70% stake in US-based Sprint Nextel. Just weeks earlier CEO Masayoshi Son announced Softbank’s acquisition of domestic rival eAccess in a stock swap valued at 180 billion yen ($2.3 billion).

EE launches in UKUK mobile operator EE launched its LTE network in 11 major cities at the end of October.

LTE launches elsewhereTango Telecom launched Luxembourg’s first LTE service having rolled out its network to 60% of the country. Vodacom switched on its LTE network in Johannesburg, with more South African cities set to follow suit. And Telecom Italia also lighted its LTE network.

Qtel takes controlQatar’s Qtel in October increased its stake in Kuwaiti operator Wataniya to 92.1% from 52.5% at a cost of $1.8 billion. It previously announced plans to spend close to $1.5 billion to increase its stake in Iraq’s Asiacell to 60% from 30%.

Voda buys TelstraClearVodafone completed the NZ$840 million acquisition of New Zealand’s TelstraClear, marking former owner Telstra’s exit from the country.

O2 Germany IPOTelefonica will receive around €1.45 billion from the flotation of 23.17% of its German business, which has started trading in Frankfurt.

Telenor’s new India partnerIndia’s Lakshdeep Investments & Finance agreed to buy a stake in Telenor’s new Indian unit Telewings Communications.

5december 2011/January 2012 www.totaltele.com

timeline

frencH reVolutionthe launch of Free in January changed the landscape of the French mobile market, in no small part due to the influence of Xavier niel, founder, majority shareholder and chief strategy officer of Iliad, which owns the Free brand. iliad added Free Mobile into its portfolio of broadband, voice and iptV services as a low-priced mobile offering, immediately putting longer-established rivals under pressure. France telecom’s orange, Bouygues telecom and SFR were forced to cut prices to keep pace with the newcomer. and demand for Free’s service was so strong that orange, which signed a highly lucrative roaming deal with the telco (worth well in excess of €1 billion, according to niel), in March threatened to block Free’s users, noting that heavy usage was causing its network to become clogged, impacting on service for its own customers. despite the three incumbents’ efforts to manage churn, Free is signing up more than its fair share of new customers; it reported 805,000 mobile net additions in Q3, which it estimates accounts for 60% of the total. as a result, its mobile base stands at around 4.5 million customers, which is a share of just over 6% of France’s 72 million mobile subscribers, according to arcep. the latest sign that Free is making its presence felt in France came in late november when Vivendi’s SFR said it will cut as many as 856 jobs as part of a cost-cutting plan to stay competitive.

Telenor earlier bought out former partner Unitech.

Millicom names CEOMillicom International Cellular named Hans-Holger Albrecht as its new CEO as of 31 October. He replaces Mikael Grahne.

MIC acquires Paraguay unitArgentina’s Grupo Clarin completed the sale of its Cablevision Paraguay business to Millicom International Cellular for $150 million.

MTS’ Uzbekistan battleUzbekistan’s court of appeal in November overturned the nationalisation of MTS’ Uzdunrobita, but ordered the Russian telco to pay various fines totalling $600 million.

Huawei, ZTE threat to USA year-long congressional investigation in the US ruled that China’s Huawei and ZTE could be a threat to US security due to their links with Beijing.

NSN sells itselfIn October Accenture acquired Nokia Siemens Networks’ IPTV assets in a deal of undisclosed value. And in December NSN sold its BSS business to Redkneefor €40 million and offloaded its optical networking assets to Marlin Equity.

Thailand auctions 3G licencesAfter years in the planning, Thailand raised 41.63 billion baht (US$1.35 billion) from the sale of 45 MHz of 2.1 GHz spectrum to existing operators AIS, DTAC and True.

Bangladesh gets 3GState-owned Teletalk launched Bangladesh’s first 3G service. The country aims to auction 3G spectrum to private operators in the near future.

KPN sells towersNetherlands-based KPN sold off a portion of its domestic towers portfolio to Indonesia’s Protelindo for €75 million.

BCE’s new dealCanadian telco BCE in November reworked its plan to take over broadcaster Astral Media. A previous iteration of the deal was blocked by regulators.

Romania spectrum saleCosmote, Orange, RCS&RDS, Vodafone and 2K Telecom won spectrum in the 800-MHz, 900-MHz, 1800-MHz and 2.6-GHz bands in Romania, paying a combined €682.14 million.

Voda India tax threat liftsAn Indian government committee recommended against the retroactive application of new tax legislation, a move that looks likely to lift the threat of Vodafone receiving a multi-billion-dollar bill linked to its 2007 acquisition of Hutchison Essar.

Telecom Italia readies spinoffTelecom Italia in November revealed it has appointed advisors to help with the spinoff of its fixed-line network.

India reauctions licencesBharti Airtel, Idea Cellular, Vodafone, Videocon and Telenor’s Telewings won spectrum in India’s 1800-MHz auction. The process raised just 94.07 billion rupees ($1.7bn), well short of the government’s 280 billion rupees target.

Sailfish swims freeJolla introduced Sailfish, the new smartphone operating system created from Nokia’s former MeeGo OS, in late November and announced that Finland’s

DNA will be its first operator partner.

H-P claims fraudHewlett-Packard accused the former management of 2011 acquisition Autonomy of fraud and took an $8.8 billion writedown on the value of the asset.

Cisco buys MerakiCisco Systems agreed to pay $1.2 billion for cloud-controlled WiFi specialist Meraki.

MegaFon lists in LondonRussian operator MegaFon raised $1.7 billion from its London IPO in late November.

Partner deal doneIsrael’s Saban Capital agreed to pay 250 million shekels ($65m) and assume $300 million worth of debt for a controlling stake in mobile operator Partner Communications. A deal that would have seen former owner Hutchison Whampoa buy into the telco was called off in August.

Batelco buys into MonacoCable & Wireless Communications (CWC) agreed to sell its Monaco and Islands division to Bahrain’s Batelco for $680 million. CWC is still in talks with Citic Telecom over the possible sale of its Macau unit.

Hutch bulks up in AustriaHutchison 3G Austria in February agreed to acquire local rival Orange for €1.3 billion. It finally won the approval of EU regulators in December.

DT €30bn capex planDeutsche Telekom cut its dividends for the next two years in order to invest €30 billion over three years, much of which will be ploughed into its networks in Germany and the US.

6 www.totaltele.com december 2012/January 2013

Business & finance

The start of a new year more often than not brings with it a desire for self improvement, and–in the

developed world, at least–that often manifests itself in the form of a diet, as people either look to completely overhaul their lifestyles or simply shed a few extra pounds gained during the festive season.

If you’re a telecoms operator though, the story is slightly different. The telcos are no stranger to shedding flab, some-thing they have been working hard to do in the past year through extensive cost-cutting programmes. But many have been actively seeking to gain weight, with various mergers, acquisitions and alli-ances being the major headline-hitters of 2012. And with the operating environ-ment likely to continue to be challenging, the trend of bulking up will prevail as we move into 2013.

The past year was relatively quiet in terms of telco M&A until October, when a number of deals were announced that will change the landscape of the industry if and when they close next year. The biggest of the bunch was Softbank’s $20.1 billion agreement to acquire a 70% stake in US operator Sprint Nextel, the largest ever foreign acquisition by a Japanese company. Just weeks earlier Softbank had made its growth ambitions known, announcing a $2.3 billion stock swap deal for smaller domestic rival eAccess.

The Softbank announcement came just days before Sprint revealed plans to increase its stake in wireless broadband operator Clearwire–which boasts signifi-cant spectrum holdings in the US, albeit in the 2.5-GHz band–and in December Sprint confirmed that it will take sole control of Clearwire in a deal that will cost it around $2.1 billion in cash. And in November Sprint agreed to pay $480 million for 585,000 customers and spec-trum licences in certain US markets from seventh-largest operator US Cellular.

Pending the usual regulatory and other approvals, the Softbank/Sprint deal is

slated to close in mid-2013. Market leader AT&T voiced its opinion, even before the extent of Sprint’s desire to control Clearwire was known, but chose its words carefully. “Softbank’s acquisition of Sprint and the control it gains over Clearwire will give one of Japan’s largest wireless companies control of signifi-cantly more US wireless spectrum than any other company,” said AT&T vice president Brad Burns. AT&T expects regulators to examine the deal fully, in the context of the “dynamic and competi-tive” US mobile market, he added, leading industry-watchers to draw various conclu-sions as to the telco’s real intentions.

AT&T might simply be seeking to block the tie-up, since it will boost number three US mobile operator Sprint’s competitive position in the market. Equally, AT&T could be making a point to the regulator about its need for more spectrum. The telco in August agreed a $600 million deal for Nextwave Wireless, ostensibly to get hold of the latter’s 2.3-GHz spectrum; the FCC in October approved new rules that will enable it to use that spectrum for LTE. Finally, AT&T’s reminder to the regulators to take into account the dynamic and competitive nature of the US market could indicate that it is not actually objecting to the deal at all. After its failed bid to take over fourth-placed rival T-Mobile USA–the deal was blocked by the FCC in late 2011–it is conceivable that the telco is still considering ways to put on some additional weight itself.

T-Mobile USA, meanwhile, added to its own waistline this year, announcing a $1.5 billion merger with smaller rival MetroPCS. If the deal goes ahead, T-Mobile parent Deutsche Telekom will own 74% of the merged entity, which will be led by new T-Mobile USA CEO John Legere (see ‘People’ p.20). Amongst other things, MetroPCS will bring T-Mobile USA additional spectrum to boost its LTE rollout.

There could be more consolidation in the US next year (‘Looking ahead’, p.8).

changing landscapeEuropean operators also made moves to build scale in 2012. As the year drew to a close, Hutchison 3G Austria finally received EU approval for its €1.3 billion takeover over of Orange’s Austrian unit, a deal it announced back in February. The telco faced an uphill battle to get the go-ahead for the acquisition, with EU Competition Commissioner Joaquin Almunia repeatedly questioning the impact it would have on competition in the market. Hutch made a number of pledges to the EU, including agreeing to sell some of Orange’s spectrum, but what eventually swung it was its commitment to allow MVNOs to use up to 30% of its network capacity at favourable rates and subsequent deal with UPC.

The merger reduces the number of mobile network operators in Austria to three from four, creating a stronger competitor from the two smallest players. The fact that regulators passed such a deal could encourage similar consolida-tion moves in other markets.

We could also see the Spanish mobile market reduced to three players if TeliaSonera sells its Yoigo business. The Nordic telco insists it is in no rush to exit Spain and will only sell at the right price. Spain’s three biggest mobile operators are the most likely buyers, with Orange top of the list as the third-largest player in the market; the company admitted it is interested in the asset, and that it is moni-toring other major European markets for potential acquisitions.

Although it has denied having an immediate interest, America Movil was naturally named as a potential acquirer of Yoigo, in light of its foray into Europe in 2012. The Mexican operator bought stakes of 27.7% in Dutch incumbent KPN and 22.76% in Telekom Austria, and was linked with potential wider European

2012 featured some major acquisitions, partnerships and alliances as telecoms opera-tors looked to bulk up their businesses By mary lennighan

GaininG WeiGHtR E V I E W O F T H E Y E A R

december 2012/January 2013 www.totaltele.com 7

Business & finance

expansion. The complementary European footprints of KPN and Telekom Austria gave rise to some merger talk, although national interests would doubtless put paid to such a move, but their common shareholder will see the pair explore synergies between their businesses.

Consolidation also looms in Russia, where Tele2 has found itself in an unten-able position as the fourth player in the mobile market and has been linked with a number of suitors. It is an obvious fit for Rostelecom, which has a small mobile presence alongside its fixed-line business. There have been reports of talks between the two throughout 2012. Meanwhile, mobile operator MegaFon, which raised $1.7 billion from its London IPO in November, is also reported to be consid-ering a bid for parts of Tele2 Russia.

2012 saw Vodafone bulk up via a couple of key deals. In July it closed the £1.04 billion acquisition of Cable & Wireless Worldwide, adding C&W’s UK fibre network, global fixed networks assets and business customers to its portfolio. Vodafone also brokered a similar deal in New Zealand. It became the country’s second largest telco in October when it completed the NZ$840 million (€535 million) acquisition of TelstraClear, again gaining network assets and corporate clients.

Meanwhile, in Canada BCE sought to beef up its operations by acquiring Astral Media for C$3 billion. The broadcast regulator blocked the deal in October on competition grounds but BCE has since submitted a new deal for its scrutiny. Also in October BCE and a group of investors completed the C$1.1 billion acquisition of data centre operator Q9 Networks.

sharing the wealthM&A is not the only option for telcos who need to reduce costs to maintain profitability, something that has been particularly prevalent in Europe over the past 12 months as the sector struggles against declining revenues.

The European mobile industry could save €20 billion-€40 billion annually over the next five years, with big telcos saving as much as €2 billion each per year, by establishing network-sharing deals, Booz & Company claimed in November. Network-sharing was high on the agenda for Vodafone in 2012. The UK units of Vodafone and Telefonica in June announced plans to combine their mobile infrastructure to create a single 2G and 3G network, with a view to adding LTE in future. They got regulatory approval in October and said they will set up a 50/50 joint venture, Cornerstone Telecomm-unications Infrastructure. Ovum predicts

they will save over £1 billion by 2015. Vodafone also teamed up with 3 Ireland in July, creating another 50/50 JV to manage 2,000 shared cell sites and trans-mission networks.

Network-sharing deals also extended to other markets. In June Telefonica and Iusacell said they will share mobile infra-structure in Mexico in a bid to compete more effectively with America Movil. And in March TeliaSonera and Telenor received approval to merge their radio access networks in Denmark.

There is more to come. In November KPN revealed that it is considering a network-sharing deal with Telefonica in Germany in a bid to cut costs. And the EU is keen for telecoms operators to partner up. In September digital agenda commissioner Neelie Kroes urged regu-latory regimes to foster more efficient use of mobile spectrum and clarify regu-latory frameworks to enable mobile operators to share that scarce resource.

Fixed network operators also came together in 2012 to share the cost of deploying next-generation network infra-structure. To name a few, Orange in January agreed to let Bouyges Telecom share its fibre-to-the-home (FTTH) network in France; Telecom Italia and Fastweb signed an agreement to cooper-ate on the rollout of fibre; and BT introduced the concept of fibre-to-the-premises (FTTP) On Demand, through which its Openreach unit will enable service provider customers to “assist” with the cost of deployment. Progress was also made in the development of non-fibre technologies, such as vectoring, that enable telcos to get the most out of their existing copper.

An announcement from Deutsche Telekom in mid-December summed up the situation for much of the industry. The telco said it will invest €30 billion in networks in Germany and the US over three years, including rolling out fibre-to-the-cabinet (FTTC), vectoring, and LTE. But as always, it’s a balancing act. In order to finance the investment, Deutsche Telekom cut dividends for the next two years, a move Fitch estimates will save it €850 million per year. n

New kids on the block

2012 was not all about established market players seeking to strengthen their existing businesses. there were also some newcomers in certain markets.

the new entrant that made its presence felt the most this year was Free Mobile, the new low-cost mobile subsidiary of France’s iliad, which came to market in January. Free triggered a price war among France’s established players, leaving them seeking new ways to cut cost out of their businesses.

china telecom had less of an impact when it launched its MVno in the UK in May under the brand name ctexcelbiz. it is targeting the 600,000 chinese ex-pats based in the UK, as well as tourists to the country and students. the telco plans to replicate this model in France next year and extend it to other european markets before the end of 2014. one company, although not strictly a newcomer, did make a big splash in the UK this year though. everything everywhere renamed itself as ee in September and in late october launched the country’s first LTE service. Or rather, its first LTE service based on the FDD variant of the technology. pccW-owned UK Broadband switched on its td-lte infrastructure in london in February; initially it said it would offer wholesale services only, but added a retail service, under the brand name now Broadband, in october.

other new launches saw Virgin Mobile take its successful MVno service to poland, where it runs on the networks of orange and play, and commit to expanding elsewhere in eastern europe. Mozambique welcomed its third mobile operator in the shape of Movitel, a joint venture between Vietnam’s Viettel and the country’s ruling Frelimo party. and argentina laid the groundwork for the arrival of a new state-owned operator into the mobile market, by handing 3G spectrum to arsat, which is now seeking partners to build out and operate its network. the company is also likely to have 4G spectrum reserved for it.

8 www.totaltele.com december 2012/January 2013

WHat’s in StoRe?

BUSINESS & FINANCE

European unionsl There will be more cooperation among European incumbents. Full-scale mergers may be out of the question due to government interests, but national telcos will look for other ways to build scale and ease cost pressures.

l We will hear more from ambitious Mexican operator America Movil as it makes its presence felt at both KPN and Telecom Austria, and considers other acquisitions outside its home region.

l TeliaSonera will sell Spanish business Yoigo to one of Spain’s other mobile network operators, but not before the aforementioned America Movil is strongly tipped to get its wallet out.

Da svidaniyal There will be consolidation in Russia that results in the disappearance of Tele2. Both Rostelecom and MegaFon are reported to be interested in acquiring some or all of the Russian mobile market’s fourth-largest player.

US of M&Al Clearwire will disappear from the US market. Sprint is keen to bolster its spectrum holdings to mount a proper attack on AT&T and Verizon, and in December launched a bid for the 49% of Clearwire it doesn’t already own. If it goes ahead, the Clearwire brand will disappear.

next year we predict more consolidation in the US, disappointing spectrum sales, warring equipment makers, and a big data overload. By total telecom staff

T E L E C O M S I N 2 0 1 3

l More consolidation will take place in the US. The T-Mobile USA/MetroPCS and Softbank/Sprint deals will receive regulatory approval next year, leaving other players looking for acquisitions of their own. Leap Wireless will find itself the target for one of the big players.

Patent predicamentl Google will seek to acquire more patents. It learnt the hard way that Motorola Mobility’s patent portfolio lacks the weapons it needs to win the patent war. Its unlikely partnership with Apple to make a $500 million bid for Kodak’s imaging patents is an indication of the lengths it will go to.

MOBILITY

Steve and Stevel Microsoft will consider making a move for Nokia. Admittedly, while an acquisition is not out of the question, provided the price is right, there are a number of potential obstacles that could prevent it. One way or another though, hardware will be higher on the agenda for Microsoft next year as its seeks to create a more integrated experience.

BRICs on the brinkl China Mobile will regain some lost ground in the China 3G race. The world’s largest mobile operator signed up proportionately fewer 3G customers than rivals China Unicom and China Telecom in 2012, but the arrival of a TD-SCDMA iPhone in 1H 2013 will reverse that trend.

l Network quality will come under scrutiny once again in Brazil as operators gear up to launch LTE.

l India will be disappointed with its second attempt to auction off 1800-MHz spectrum. Despite the growth opportunities in the market, the newcomers who had their licences suspended at the start of 2012 had largely failed to establish themselves, leaving others wary of taking the plunge.

Don’t cry for mel Controversy will surround Argentina’s 4G auction as the government reserves a significant amount of spectrum for state firm Arsat.

l The UK LTE auction will raise less than the £3.5 billion the government is hoping for. Reports of a prospective new entrant, such as BT, will come to nothing and the process will be less fiercely contested than it could have been. EE is already running LTE at 1800-MHz spectrum; no doubt it will seek to bolster its spectrum holdings, but it won’t break the bank.

NETWORKS

l We will see a number of commercial deployments of system-level vectoring in Europe as operators seek to augment their less-than-comprehensive fibre-to-the-home (FTTH) rollouts.

l Relations between cash-strapped European equipment

makers and their Chinese rivals will become increasingly frosty. Expect more accusations of unfair state aid. Meanwhile, the likes of Huawei and ZTE will make little progress in their quest to win fans in the US.

l More telcos will come round to the idea of network-sharing in both developed and emerging markets.

l The last bastion of network differentiation falls as telcos accept they will need to share small cells sites in order to manage cost and complexity. Many mobile operators will still insist that they can differentiate on the network though.

AND FINALLY...

l By the end of 2013 it will be physically impossible for any speaker at a telecoms conference to deliver a presentation without using the expression “big data”.

l Marissa Mayer will be the first Yahoo CEO in recent memory to last more than a few months in the job, despite the US press continuing to give her a hard time about being a working mother. Relief all round when the next heir to the throne in the UK is born, shifting the media’s attention.

l Attendees at Mobile World Congress in February will complain bitterly about the new Barcelona venue, but that won’t stop the vast majority booking their accommodation for the 2014 show 11 months in advance.

looKinG aHeaD

10 www.totaltele.com december 2012/January 2013

On the face of it, 2012 should go down as the year when the title of undisputed smartphone OS

champion of the world was awarded to Android. However, new competitors and the fact that few handset vendors are actually profiting from Android suggest the contest is far from over.

“There is a definite threat to Android from Microsoft,” claims Richard Windsor, founder of Radio Free Mobile. The former Nomura analyst concedes that Microsoft’s Windows Phone has got off to a “disap-pointingly slow start” in terms of shipments, but he insists it offers a more complete experience than Android.

“Microsoft can offer an Apple-like experience at a much lower price,” he says. “Android looks good on paper, but in practice it doesn’t work that well. Apple offers a much more genuinely integrated experience...and Microsoft will as well.”

Microsoft took big steps this year towards realising this vision. In June CEO Steve Ballmer unveiled Microsoft’s first foray into tablet hardware, the Surface, and in October launched Windows 8, the operating system he hopes will deliver a coherent user experience across tablets, PCs and smartphones.

However, Windows Phone failed to carve itself a meaningful share of the smartphone market in 2012.

According to IDC, three out of every four smartphones shipped in the third quarter were running on Android. To express it another way, of the 181.1 million smartphones shipped worldwide in the three months ended 30 September, only 45.1 million were not based on Google’s mobile OS. Second-placed Apple saw iOS device shipments reach 26.9 million in Q3, followed by also-rans RIM and Symbian with 7.7 million and 4.1 million respectively. Windows Phone shipments reached 3.6 million.

“I think that the new [Windows-powered Nokia] Lumias, when all the hype and dust has settled, are not

competitive products,” warns Bengt Nordstrom, CEO of consultancy Northstream. “It will take another year and a generation before they can poten-tially challenge.” He expects Microsoft’s OS market share to grow in 2013 as Windows Phone 8 “bridges the gap in terms of major functionalities” between itself and rivals Google and Apple. “Furthermore, if Microsoft is able to leverage its strong position in services such as Office and unified communica-tions, several enterprises will choose Microsoft, even when it comes to mobile solutions,” he predicts.

While there is no denying Android dominated 2012 in unit volume terms, it became clear over the course of the year that not every Android hardware maker benefited equally from its success. In fact, it could be argued that Samsung was the only handset vendor to make meaningful money from Android sales.

The Korean electronics giant saw revenue at its IT and mobile communica-tions division–which as well as its handset arm also includes its infrastructure and IT solutions operations–steadily grow throughout the year to $24.3 billion by Q3 from $17.5 billion in Q1. Operating profit grew to $5.2 billion from $4 billion over the same period. Samsung consist-ently attributed its performance to robust smartphone shipments.

Strategy Analytics claimed that the Samsung Galaxy S3, first unveiled in May, overtook Apple’s iPhone 4S to become the world’s single biggest-selling smart-phone model in Q3, shipping 18 million units. The research firm’s executive director Neil Mawston predicts the iPhone 5 will regain top spot for Apple in Q4–he estimates the device sold 6 million units in the last nine days of September–but there is no denying Samsung’s S3 has proven “wildly popular” in North America, Europe and Asia.

Meanwhile, none of Samsung’s rival Android players came close to matching its financial performance in 2012.

HTC, which four years ago developed the first ever Android handset, the G1, eked out small quarterly operating profits this year, ranging from a high of $282 million in Q2 down to $168 million in Q3. Between February and August, amid revenue warnings over intensifying competition, writedowns and a slumping bottom line, it was reported that 47 of the Taiwan-based company’s foreign institu-tional investors had completely sold off their holdings, while a third-quarter profit warning saw more than $1 billion wiped off its market capitalisation in just two days. To make matters worse, in November HTC agreed to pay unspeci-fied licensing fees to Apple as part of a patent settlement. It is not alone on that score though. In August Samsung was ordered to pay Apple $1.05 billion in damages for violating design patents.

Still, HTC is a success story compared to the likes of Motorola, LG and Sony, which throughout 2012 regularly reported more or less flat revenues and operating losses. Notable recent launches from these companies include the HTC One Series, Motorola’s RAZRi, the LG Optimus G and Sony’s Xperia T.

“If you’re an Android maker, life is quite difficult because it’s a question of ‘how do I differentiate?’,” says Windsor. As far as Nordstrom is concerned, it

android dominated the tumultuous smartphone market in unit volume terms in 2012, but some are adamant its reign is only temporary. By nick Wood

WinDoWs oF oppoRtUnitYO P E R A T I N G S Y S T E M S

moBility

smartphone os trends 2012

1Q 2Q 3QSource: idc

n android n ioS n Windows phone n Blackberry n Symbiann linux n other

Mar

ket s

hare

(%)

80

70

60

50

40

30

20

10

0

december 2012/January 2013 www.totaltele.com 11

requires being at least on a par with the competition in almost all handset features, and then going further to offer something unique. “In the case of Samsung, the ‘something more’ was the design factor, the technical specs, and the integration of services,” he says.

And what of RIM? The Canadian BlackBerry maker has had another diffi-cult year under new CEO Thorsten Heins as it seeks to reverse its ailing fortunes and effectively reboot its smartphone proposition with its new OS, BB10, which is slated for launch on 30 January 2013.

Until this year, RIM was a staunch advocate of vertical integration. Much like Apple, the company insisted it was the best way to ensure end users got the best out of its hardware, software, and services. However, rumours emerged during the first half of 2012 that RIM was changing its tune, and planned to license BB10 to other manufacturers. This drastic change of direction was effectively confirmed by Heins in August, but no licensing deals have been announced.

And sales are sluggish. According to Gartner, which measures device sales to end users, RIM sold 26.9 million BlackBerrys in the first nine months of 2012. By comparison, Samsung sold 20 million-23 million phones per quarter.

RIM should “sell itself to the highest bidder”, advises Windsor. “It doesn’t have the momentum, it doesn’t have the finan-cial resources, and it doesn’t have the developer support to be competitive.”

Heins would doubtless disagree. BB10 is based on the QNX operating system developed by a RIM subsidiary of the same name. “BB10 is not just a smart-phone OS, it’s a new, revolutionary mobile computing platform,” said Heins at BB10’s unveiling in May. “This takes us into a whole new area of mobile computing, way beyond smartphones and tablets.”

RIM’s traditional stronghold was the enterprise segment, but Nordstrom, notes that in the US it has lost “signifi-cant ground” to Apple, while Microsoft “is coming up strong” with its own enter-prise services offering. “The best area to focus on for RIM is developing coun-tries,” he says.

If that is the case then RIM had better get a move on, because 2012 saw some new players arrive to tap into emerging smartphone markets. Mozilla Foundation, maker of the Firefox Web browser, in July revealed its HTML5-based smartphone platform, Firefox OS. The first devices will be made by TCL Communication and ZTE, and will debut in Brazil on Telefonica-owned Vivo’s network.

In the same month a new company set up by former Nokia employees emerged with plans to revive the Finnish handset maker’s moribund MeeGo OS. Called Jolla, it has renamed the platform Sailfish OS, and is establishing R&D facilities in Hong Kong with a view to tapping into China’s fast-growing mobile market. Despite the focus on China, it announced in November that its first operator partner will be Finland’s DNA.

That is no bad thing, says Windsor. Focusing on China is a “dangerous game”, he says. “It is brutally competitive and horrendously cut-throat.” Windsor insists there remains enough growth in Europe and North America to sustain a company like Jolla. “The [smartphone] market is big enough for multiple players. Jolla is a small company...it doesn’t need a lot of volume,” he says.

So what does 2013 have in store for the smartphone OS market?

“Apple and Samsung will have to prove that they can continue leading the market,” says Nordstrom, while “Google and Microsoft will have to prove they can do more than services.” He expects Google to push its Nexus line of products more aggressively, and Microsoft to develop more of its own hardware.

But Windsor disagrees with this last point. “Surface was more of a demonstra-tion product,” he claims. “It’s more of a message to Microsoft’s hardware part-ners, rather than Microsoft saying ‘we are going to be more like Apple’.”

Instead, Microsoft is likely to pitch itself as an alternative for struggling Android players. “Microsoft is keen for the other [vendors] to step up commit-ment and so is unlikely to make it hard for them to make Microsoft phones,” says Windsor. n

moBility

Connected withyour world

■ Wide-reaching international coverage featuring innovative IP, Fiber, Ethernet & Satellite solutions

■ Robust solutions connecting the Middle East, Africa and other emerging markets

■ Full resilient network design and dedicated service management

Contact us Tel: +33 (0)1 84 88 05 88 europe@pccwglobal.com

www.pccwglobal.com

World Communication Awards 2012...

...The Winners

Organised by:

www.worldcommsawards.com

Sponsors: Strategic Partner: Drinks Reception Sponsor: Media Partners:

BEST BRAND CAMPAIGNIdea Cellular Limited

BEST CLOUD SERVICEOrange Business Services

BEST CONTENT SERVICETürk Telekom

BEST CUSTOMER CARERoshan

BEST GLOBAL OPERATOROrange Business Services

BEST MOBILE OPERATORTelstra Corporation Limited

BEST NEW SERVICE: CONSUMERComviva

BEST NEW SERVICE: ENTERPRISESingapore Telecommunications Limited

BEST OPERATOR IN A DEVELOPING MARKETUnitel

BEST SERVICE PROVIDERVirtela Technology Services Inc

BEST WHOLESALE CARRIERTeliaSonera International Carrier

PROJECT OF THE YEARTelstra

SOCIAL CONTRIBUTION AWARDEtisalat

THE ALIREZA MAHMOODSHAHI TECHNOLOGY FORESIGHT AWARDCiena

THE GREEN AWARDVipnet d.oo

BEST PLACE TO WORKZain Jordan

CEO OF THE YEARVittorio Colao: Vodafone

USER’S CHOICEOrange Business Services

2012

World Communication Awards For global communications providers

13th November 2012 Lancaster Hotel, London

To view the full list please visit www.worldcommsawards.com

Congratulations to all the winners,

And a big thank you to our sponsors.

World Communication Awards 2012...

...The Winners

Organised by:

www.worldcommsawards.com

Sponsors: Strategic Partner: Drinks Reception Sponsor: Media Partners:

BEST BRAND CAMPAIGNIdea Cellular Limited

BEST CLOUD SERVICEOrange Business Services

BEST CONTENT SERVICETürk Telekom

BEST CUSTOMER CARERoshan

BEST GLOBAL OPERATOROrange Business Services

BEST MOBILE OPERATORTelstra Corporation Limited

BEST NEW SERVICE: CONSUMERComviva

BEST NEW SERVICE: ENTERPRISESingapore Telecommunications Limited

BEST OPERATOR IN A DEVELOPING MARKETUnitel

BEST SERVICE PROVIDERVirtela Technology Services Inc

BEST WHOLESALE CARRIERTeliaSonera International Carrier

PROJECT OF THE YEARTelstra

SOCIAL CONTRIBUTION AWARDEtisalat

THE ALIREZA MAHMOODSHAHI TECHNOLOGY FORESIGHT AWARDCiena

THE GREEN AWARDVipnet d.oo

BEST PLACE TO WORKZain Jordan

CEO OF THE YEARVittorio Colao: Vodafone

USER’S CHOICEOrange Business Services

2012

World Communication Awards For global communications providers

13th November 2012 Lancaster Hotel, London

To view the full list please visit www.worldcommsawards.com

Congratulations to all the winners,

And a big thank you to our sponsors.

2 – 3 July 2013ETC Venues St Paul’s, London

2 day strategic conference and exhibition with senior decision makers from the largest telecoms brands.

Profiting through the network

Find out how to get involved at:

www.totaltele.com/network

15december 2012/January 2013 www.totaltele.com

analyst VieWpoint

tony lavender ceo

plum consulting

All business faces disruption at various times–it’s a fact of life. The telecommuni-cations sector is no different although

that’s not always the impression industry observ-ers would have on looking at some of the rhetoric of recent months, especially around the open Internet and over-the-top (OTT) players.

There is no doubt the telco sector has its prob-lems and this is most visible in its financial results. It’s inevitable that evidence of macro-economic trends appears, mostly in the form of a lack of revenue growth. New business models and modes of service delivery also have profound implica-tions for future revenue as usage of legacy products declines. Some players have the encumbrance of a legacy of debt to service and reduce and, to a large extent, the maintenance of sector profitability has been achieved through improving the efficiency of operations, mostly through cutting costs.

This is fine in as far as it goes but it does not deal with the disruption to telco business models trig-gered by the growing digital economy and the strategic response required. Investment in broad-

band access (fixed and mobile) and the networks that sit upstream is a key part of the required tran-sition. Regulatory certainty is central to making substantial new capital investments and there are live debates worldwide on how it can be achieved. The other half of the story is in many ways the harder part as it daily bumps against legacy culture inside telcos. Items here include new models for pricing structures (retail and wholesale), product development, go-to-market strategies, changing margin expectations and so on.

In the context of the open Internet there are myths around the end-to-end value chain that often pervade thinking in the telecom sector. A good example is some of the input to and the public rhetoric around the ITU World Conference on International Telecommunications (WCIT-12). At the root of the problem is how telcos get what they see as their share of the Internet pie. This is

Demand is good. Demand supports revenue growth and network investment

certainly not achieved by coding into interna-tional treaty arrangements that reflect the legacy behaviour of the telecom sector, when the reality of the open Internet value chain is that telcos are just a part (albeit a key part) of the story.

The myths start with the notion that demand is bad. In most circumstances this stance would be viewed as nonsensical (other than for exceptional temporary situations). The reality is that demand is good. Demand reflects the desire of consumers to consume and it supports revenue growth and network investment. The real issue here is that the parameters are different from what telcos have been used to in the past.

The next myth is that it costs too much and that costs driven by data growth are increasing. Again, this is not wholly true: fixed access costs are declining on a unit cost basis and for mobile while costs are higher they also will decline on a unit cost basis. The real issue here relates to the invest-ment profile for broadband access networks and the time to extract value, not unit costs.

Another myth concerns application and content providers causing traffic. This is patently not true as consumers create demand based on the attrac-tiveness of the applications and content available to them. The open Internet coupled with technol-ogy and software innovation has lowered barriers to entry enabling demand. Hand in hand with this is the “free ride” myth–the perception that content and application providers get their services for free. Again this is not true for the serious provid-ers of content who invest in infrastructure, purchase network services and are incentivised to seek out bandwidth efficient solutions.

Lastly there is the debate on who should pay. A chorus of voices insists that charging application providers is the way forward. In reality application and content providers do invest and pay in the context of the end-to-end value chain. Creating a regime where they are required to pay more might disincentivise the development of content and applications.

The reality is that the world has moved on from the structures and flows of money telcos enjoyed historically. Trying to make future business models work along the lines of those seen in the past may well amount to telcos shooting them-selves in the foot. n

T E L C O B U S I N E S S M O D E L S

mytH BUSteRStrying to make future business models work along the lines of those seen in the past could amount to telcos shooting themselves in the foot.

16 www.totaltele.com december 2012/January 2013

OPERATORS

M&A OKl In 2013 European regulators will increasingly accept operator consolidation. This will be the catalyst to revitalise the European market, boost network investments moving forward and allow regained competitiveness and sustainability. (Northstream)

Monetising datal The UK will be the first Western European country to generate more revenue from mobile data than voice in early 2013. The pattern will be repeated across Europe in the following two years. (CCS Insight)

NETWORKS

Got it coveredl Despite discussion to the contrary, LTE rollout will actually result in operators requiring fewer small cells than before. The combination of sub-1 GHz spectrum with higher bands enables better delivery of mobile broadband indoors. However, operators will turn to WiFi to fill in gaps in coverage. (Northstream)

Beginning of the endl It will take a long time before we see the end of 2G, but 2012 was the starting point, with AT&T (2017) and Verizon (2021) announcing the switch off of GSM and CDMA networks respectively. The move to refarming will continue in 2013 as operators look to reduce their cost per bit. (Machina Research)

l 2013 will mark the beginning of the end for roaming. Services that allow users to avoid roaming charges already exist for voice and data. Some operators, who do not have a lot of roaming margin to lose, may attack and offer their own multi-IMSI services. The conventions that govern how roaming is handled are already starting to fall apart. (Coleago Consulting)

Mapping it outl Some operators may go all the way and break the link between the mobile number and geography. We are likely to see offerings from mobile operators where the national number can in effect be used across the whole EU as if the customer was in the home country. (Coleago Consulting)

Top dogl Ericsson will be the most successful traditional network infrastructure vendor due to its mobile radio access network (RAN) and core portfolio, as well as its growing software and services offerings. (Ovum)

DEVICES

Power playl China’s ZTE will compete for a position among the world’s top three smartphone makers based on its phenomenal growth rate and strong position in emerging markets. (IDC)

l Apple and Samsung have the power to drive and finance innovation, R&D and standardisation efforts, bringing

resolved and we will start to see the first deployments. (Machina Research)

ENTERPRISE

The business endl Enterprise software vendors will continue to step up their app transformations with social technology acquisitions. Look for Microsoft to beef up its CRM/customer experience offerings by acquiring a community management platform like GetSatisfaction or Lithium. (IDC)

l The impact of the full-scale rollout of unified communications-as-a-service (UCaaS) will begin to be felt in 2013. (Ovum)

l Tier-two players will bid for smaller IT service deals with enterprises, meaning tier-one operators will need to position themselves accordingly. (Ovum)

ENTERTAINMENT

Leisure timel Microsoft will buy Tivo by mid-2014 and integrate its technology in the next generation Xbox. The acquisition is fuelled by Microsoft’s desire to increase its presence in the living room. (CCS Insight)

l Expect a surge in activity within social gaming throughout 2013, both in terms of real money plays and greater gambling app integration with social network platforms. ( Juniper Research)

Key industry analysts look into their crystal balls to predict what’s in store for the world of telecoms in 2013 and beyond.

ones to WatcHA N A LY S T P R E D I C T I O N S

futuroloGy

a risk of less open standards. Operators and infrastructure vendors need to watch out: if they don’t take charge of the wider industry open interface R&D and standardisation efforts someone else will. (Northstream)

Marriage and divorcel Amazon partners with HTC to produce a range of smartphones by the end of 2013. The online retailer selects HTC as a strategic partner and takes a stake in the Taiwanese company to secure long-term commitment. (CCS Insight)

l Device manufacturers will use the same hardware for different operating systems. In 2013 the selection of platform will be made by operators and major channel distribution partners, but by 2015 consumers will be able to select their preferred software at the point of sale. Chinese manufacturers will be the first to offer this approach. (CCS Insight)

Dressing upl 2013 will be the launch year for wearable devices, with device announcements and launches expected from key players such as Apple and Microsoft, following in Google’s footsteps. ( Juniper Research)

Keep it SIMplel Most importantly for M2M, but with potentially massive ramifications for the rest of the mobile industry, 2013 will be the year of the reprogrammable SIM. Many of the issues relating to standardisation will be

www.asiacommsawards.com

Asia Communication Awards 2013Celebrating the success of Asian telecoms, globally

20 June 2013 • Conrad Centennial, Singapore

Talk to us about sponsorship opportunities today!Call Oliver Chandler on +44 (0) 207 608 7023

awards

A T o t a l T e l e c o m P r o d u c t i o n

Sponsored by:

If you’re not receiving your copy of Total Telecom+ each month please email info@totaltele.com

to ensure you’re on our mailing list

ComIng soon! The all new

Business analysis for telecoms professionals, now

optimised for reading on a tablet or smartphone

Themed monThly Issues, sTarTIng wITh

‘lTe’ In FeBruary 2013

news and Trend-drIven analysIs oF

major IndusTry developmenTs

InFographIC-sTyle snapshoTs oF key gloBal TeleComs

markeTs IndusTry evenTs

Calendar

edITorIal CommenT

19

section HeaDer

december 2012/January 2013 www.totaltele.com

sponsoreD VieWpoint

nick ford president, carrier

servicesidt

For many years, the telecommunication industry has been obsessed with bytes and bandwidth. It seems that data has been the

focus of strategy, investment and analysis almost since the sending of the first SMS over 20 years ago. At best, voice appears to be unfashionable, or at worst, in terminal decline.

Yet despite this commonly held outlook, voice still makes up a huge proportion, and usually the vast majority, of operators’ revenues across the world. As Steve Jobs said, “the killer app is making calls!” Moreover, the voice market is still growing, albeit in different and slower ways than it has historically. Yes, still growing despite the global economic climate, the maturity of the market and frequent market entry of disruptive players.

IDT continues to be a leader, innovator and partner of choice in the voice market. We carry over 30 billion of international minutes per year. Our network has private IP, public IP and TDM connectivity with the ability to carry over 450,000 simultaneous calls. Our voice business has grown in both minutes and revenues in the last 12 months.

Regions such as South America, Africa and Asia are proving especially dynamic for both wholesale voice and our newer portfolio of products such as International Mobile Top Up (IMTU).

We’ve been an over-the-top (OTT) operator for over 20 years, ever since we launched the first commercially available VoIP services through our Net2Phone subsidiary. We continue to build on our innovative VoIP heritage. VoiceLine allows our partners to expand their broadband services to include residential and small business VoIP. They can also offer a full suite of unified commu-nications services by adding our SIP trunking services to their portfolio.

Our history shows that by taking a partnership approach, operators can uncover opportunities and grow the market for everyone’s benefit. Sustainable partnerships deliver benefits for all parties. Each partner focusing on what they do

The voice market can provide a robust revenue stream across the globe

best delivers more than they could separately. For IDT that means providing the global reach, rates and quality that our partners rely on to always deliver on promises made to their customers. IDT also has its own large retail business enabling it to bring even more benefit to its partners as we can provide a direct and successful primary source of minutes from large consumer markets.

The voice market is often characterized by a trade-off between price and quality. IDT eases this quandary by offering four service levels: Platinum, Gold, Silver and Bronze. This empowers operators with the control to choose the level of service that is right for their business. Platinum offers only tier-1 quality termination, utilizing our over 500 direct routes. Our online self-manage-ment portal IDT Express gives partners choice and control over their wholesale business in a quick, convenient and customized way.

While the rumours of the death of voice have been greatly exaggerated, like any business with a long record of success, IDT is not oblivious to the need to uncover new revenue for itself and for its customers. By applying our understanding and expertise in marketing to foreign-born communi-ties across the world (a market of over 200 million people) we’re applying innovation for commercial success. Our marketing-leading IMTU service enables those living and working abroad to top up the prepaid mobiles of their loved one back home. This enables them to reach their world better and allows domestic networks to expand their brand and revenues into markets they may have consid-ered beyond their grasp. Our increasing number of banking licences allows us to offer an expand-ing range of bill payment and gift cards that bridge distances in the global village.

Our white label portfolio IDT Beyond enables our partners to uncover revenue using IDT’s expertise, products and platforms with the strength of their own brand. Together we uncover new revenue at home and abroad from a wide range of services, including VoIP, IMTU and, of course, international long distance services.

The voice market can provide a robust, growing revenue stream across the globe and lead into the uncovering of many new opportunities, new markets and new revenue. If you or your company disagrees, let IDT talk to you about it. n

N E T W O R K S E R V I C E S

can We talK aBoUt Voice?the death of voice has been greatly exaggerated, but the telecoms industry still needs to move with the times, according to idt.

20 www.totaltele.com december 2012/January 2013

There is one job in the telecoms industry that noone seems to be able to hold on to: Yahoo CEO.

The current holder of the post Marissa Mayer has been in place since July when she became the US-based Internet compa-ny’s sixth CEO in five years. Mayer joined Yahoo from rival Google, where she spent 13 years, most recently looking after its local, maps and location services busi-ness. She replaced interim CEO Ross Levinsohn, who stepped into the breach following the sudden departure of Scott Thompson earlier in the year.

Thompson was appointed to the top job in January, bringing with him the

promise of some stability for Yahoo after a turbulent period under Carol Bartz. But not everyone was optimistic about his chances of success, with many industry-watchers pointing out that he lacked experience in display advertising. At the same time Yahoo announced the depar-ture of co-founder Jerry Yang, a move many believed would lead to the company being sold.

That did not happen, and neither did Thompson prove to be the firm hand on the tiller that Yahoo needed. Just four months into his tenure Thompson was forced out as it was discovered that Yahoo had misrepresented his academic creden-tials in its SEC filings. Yahoo insisted it was simply a mistake, but the pressure on Thompson mounted and, amid vocal criticism of the company’s management from activist investor Third Point, he became the latest to experience the Yahoo revolving door.

And so, enter Marissa Mayer, who will have to leverage all her years of experi-ence at Google to help Yahoo turn around

its declining revenues and display adver-tising market share. She has already begun to stamp her influence on the company, with a number of top execu-tives having left since she arrived, including Levinsohn and CFO Tim Morse, who also filled the acting CEO post for a time.

Yahoo was not the only company to shuffle its top management in 2012. Next year all eyes will be on John Legere, who was named as T-Mobile USA’s new CEO in September after Philipp Humm defected to Vodafone. His appointment came just weeks before the telco announced plans to merge with rival

MetroPCS; presuming the tie-up receives the required regulatory approvals, former Global Crossing CEO Legere will head up the combined entity. In addition to overseeing the integration of two telcos, Legere is charged with making T-Mobile USA a stronger competitor against giants AT&T and Verizon. It is no easy task.

Neither is it a simple manoeuvre to launch a new mobile operator in the US, as former LightSquared CEO Sanjiv Ahuja found out to his cost this year. Ahuja left his job in February after the FCC blocked LightSquared’s plans to launch a whole-sale LTE network. Douglas Smith is now the company’s chairman and CEO.

High-profile executive changes in Europe were few and far between this year, but there are a couple of names worth mentioning. Frank Esser stepped down as CEO of French mobile operator SFR in March. He was due to be replaced by former Vodafone Europe head Michel Combes, but Combes apparently walked away after Jean-Bernard Levy, CEO of SFR’s parent company Vivendi, was

ousted, reportedly because he disagreed with the company’s strategy. Stephane Roussel became SFR’s new CEO.

Vodafone, meanwhile, split Combes’ role in two, with Philipp Humm taking responsibility for Northern and Central Europe and Paolo Bertoluzzo for Southern Europe. The mobile operator also made a number of management changes follow-ing its £1.04 billion acquisition of Cable & Wireless Worldwide. In July it named Vodafone Global Enterprise CEO Nick Jeffery to the post of C&W chief execu-tive, replacing Gavin Darby, and brought in a number of its own people to the CFO and CTO roles, amongst others.

There was a new CEO for Vodafone Germany this year in Jens Schulte-Bockum; Luiz Alvarez became CEO of BT Global Services; and Svein Aaser took over as Telenor chairman, the Norwegian government expressing a lack of confi-dence in his predecessor Harald Norvik.

Further afield, a number of new CEOs took up their posts, including Hans-Holger Albrecht at Millicom International Cellular, Carl Grivner at Pacnet, Simon Moutter at New Zealand’s Telecom Corp, Tarek Aboualam at Telecom Egypt, and Andrea Mangoni at Telecom Italia’s South American business.

There were also changes for the vendors. The year opened with the news that Thorsten Heins would become the new leader of Canada’s RIM, replacing co-CEOs Mike Lazaridis and Jim Balsillie; Lazaridis became vice chairman of the board, while Balsillie left the company. Sony named insider Kazuo Hirai as its new president and CEO, and later appointed Kunimasa Suzuki as chief executive of Sony Mobile, replacing Bert Nordberg. In July the industry mourned the passing of Tellabs CEO Rob Pullen; Daniel Kelly has since taken on the role on a permanent basis. And in November it emerged that Matt Bross had left his role as CTO at Huawei. We expect to see him reappear in the industry in 2013. n

a round-up of the major management changes in the telecoms industry in 2012, start-ing with Yahoo, where executives continued to come and go. By mary lennighan

reVolVinG dooRE X E C U T I V E C H A N G E S

people

One of the really important things for Yahoo’s strategy moving forward is mobile Marissa Mayer, November 2012 (interview with CNN)

THIS YEAR THE recipient of The Green Award is Croatian telecommunication operator Vipnet, a leading innovator and complete communication services provider in the country.

Vipnet is part of the Telekom Austria Group, and is a strategic partner of Vodafone. Vipnet’s hybrid base station (commercially known as KONCAR Hybrid Box) is powered by an autonomous energy supply system using renewable sources that, besides sun and the wind, for the first time also include fuel cells. This power system autonomously produces 99.9% useable energy. When the station is

not possible to generate energy from wind or sun and if the batteries for energy storage are empty, the installation uses hydrogen as an auxiliary source that, by leaving no by-products other than water, is proposed as a green alternative to the internal combustion engine.

The initiative for the hybrid system came from Vipnet and was further developed into a prototype in cooperation with experts from KONCAR Electrical Engineering Institute in only 10 months. The first hybrid base station in the whole of Southeast Europe was announced and set up in the Croation region of Slavonia in late June 2011. The system consists of 3 separate components which can be modularly arranged according to the conditions and the needs of a given location. An advanced control system ensures optimal utilisation of each renewable energy source depending on its current availability, so this base station is proved useful on remote and inaccessible areas and can be considered a 100% clean energy source that improved the efficiency, reliability and sustainability of Vipnet’s network. Additional value comes from raising both general public and industry

awareness of energy efficiency issues, as well as promoting clean energy and social responsibility in an effort to bring Vipnet’s modern telecommunication services closer to customers.

“I’m thrilled with this recognition as it shows Vipnet is leading the way with the sustainable technologies we are implementing. This is further encouragement to continue our investment in green business, and for investing in innovations in general,” said Mladen Pejkovic, Vipnet CEO

Environmental protection has always been an important component of sustainable development for Vipnet and this hybrid base station is a real example of a solution for both energy and business efficiency. Seeing business through a “green” perspective enables Vipnet to predict future trends and develop adequate business models as well as to enhance its brand values. The awarded eco-friendly base station is the proof of Vipnet’s social and environmental responsibility and trust in domestic scientists’ and engineers’ expertise. In 2013 Vipnet’s goal is to further develop the project and erect new hybrid base stations all over Croatia.

WINNER’S STATEMENT THE GREEN AWARD: Vipnet

WWW.VIPNET.HR

22 www.totaltele.com december 2012/January 2013

prime numBers contacts

eDitorial4th Floor, Welken House, 10-11 charterhouse Square, london ec1M 6eH +44 (0)20 7608 7030; newsdesk@totaltele.com

total telecommary lennighan mary.lennighan@totaltele.com editor +44 (0)20 7608 7069nick Wood nick.wood@totaltele.com assistant editor +44 (0)20 7608 7046michelle young m7chelle@gmail.com art editor

aDVertisinGHead oFFice, londonJessica Gillies jessica.gillies@totaltele.comSales Manager +44 (0)20 7608 7027oliver chandler oliver.chandler@totaltele.comevents Manager +44 (0)20 7608 7041

United StateS and canada KcS international t +1 717 397 7100 F +1 717 397 7800 Karen c smith-Kernc – east KarenKcS@aol.com alan Kernc – West & canada alanKcS@aol.com

Japan Hiroko Kujime kujime-pbi@gol.compacific Business t +81-3-3661-6138 F +81-3-3661-6139

proDuction/ suBscription/customer serVicesplease forward all advertising material directly to: production@totaltele.com aleisha Bryant aleisha.bryant@terrapinn.com customer Services executive +44 (0) 7608 7042 or subscribe free at: www.subscription.co.uk/totaltelecom

marKetinGtally Judge tally.judge@totaltele.com Marketing Manager +44 (0)20 7608 7076ruth clark ruth.clark@totaltele.com Marketing executive +44 (0)20 7608 7047

eVentsmatthew secker matthew.secker@totaltele.com conference director +44 (0)20 7608 7039charles Georgiou charles.georgiou@totaltele.com project Manager +44 (0)20 7608 7071

manaGementrob chambers rob.chambers@totaltele.com publisher +44 (0)20 7608 7077Greg Hitchen greg.hitchen@terrapinn.com chief executive officer

otHer puBlicationsonline: www.totaltele.comtelevision: www.totaltele.tv

total telecom eVentsWorld communication awards www.worldcommsawards.comasia communication awards www.asiacommsawards.comtotal telecom Worldwww.totaltele.com/world total telecom finance summitwww.totaltele.com/financesummitnetwork management showwww.totaltele.com/network

total telecom+ is published by

© 2012. all rights reserved.

Terrapinn Holdings Ltd registered office: 4th Floor Welken House, 10-11 charterhouse Square, london ec1M 6eH

‘Merry Christmas’

The text of the first SMS message sent 20 years ago, in December 1992

iptV cHasinG satellite, caBleThe number of global pay TV customers will reach 719 million this year, up 6% on last year, according to Infonetics Research. While cable still takes the lion’s share – over 60% of all subscriptions in the first half of 2012 – growth is strongest in the telco IPTV sector, which rose by 19% sequentially in 1H 2012. The market, including cable, satellite and IPTV, totalled $137 billion in 1H, up 9.4% year-on-year. Verizon and AT&T are neck-and-neck for revenue share in the telco IPTV market, followed by France Telecom and Deutsche Telekom in Europe, and NTT and CTC in Asia, the analyst firm said.

114 millionactive LTE connections

globally by the end of 2013, rising to 258 million by

end-2014. (Yankee Group)

reVenue potential in menaTelecoms revenue in the Middle East and North Africa (MENA) will grow by 27% between 2012 and 2017 to US$96.4 billion, according to Analysys Mason. However, operators in the region are under pressure to increase the average revenue per user (ARPU) of their high-value customers as new customer additions will come primarily from lower-income groups. They will seek to do this by encouraging greater mobile data usage, the analyst firm predicts. ARPU in the MENA region will continue to decline, but will level off during the forecast period; ARPU will slip to $11 and $10.9 per month in 2016 and 2017 respectively, down from $12.5 in 2011 and $15.3 two years earlier. Mobile will increase its dominance of the voice market; 91% of voice connections in 2017 will be mobile, up from 86% last year. Meanwhile, 87% of voice traffic will originate on a mobile connection by 2017, up from 79% in 2011.

european content reVenues to reacH €10 BillionIncreasing numbers of people in Europe are willing to pay for online content services like music, games and news, and as a result revenue from paid content will grow €10.2 billion by 2017, up 65% on the €6.2 billion figure for 2012, according to Forrester Research. The analyst firm predicts that by 2017 20% of the region’s tablet users will pay for news, while 60% of video purchasing will be digital.

moBile GroWtH in africaMobile penetration in Africa is set to exceed 80% in the first quarter of 2013, up from 76.4% in the third quarter of this year, ABI Research predicts. However, there is still growth potential in the market, given that many people own multiple prepaid SIM cards, the analyst firm points out. Mobile subscriptions in the continent will grow to 1.12 billion by 2017, up from 821 million in Q3 2012.

Source: analysys Mason 2012

telecoms retail reVenue By serVicecateGory, miDDle east anD nortH africa

100

80

60

40

20

02009 2010 2011 2012 2013 2014 2015 2016 2017

Ret

ail r

even

ue (U

S$

billio

ns)

n Mobile voice n Messaging n Mobile broadband n Handset data n Fixed voice n Fixed broadband n dial-up n Business network services

Source: infonetics Research

pay tV serVices to BrinG in $371Bn WorlDWiDe By 2016

$400

02012 2016

Rev

enue

in U

S$

billio

ns

n telco iptVn Satellite video n cable video

$2.1 trillionWorldwide IT

spending in 2013, up 5.7% from 2012

(IDC)