Huawei allegedly helps African governments spy on dissidents – WSJ

Huawei has worked with African governments to spy on their political opponents, including surveillance and distributing spyware, which has led to arrests and other crackdowns, the Wall Street Journal reports.

In its report (behind paywall) the newspaper highlighted Uganda and Zambia where the authorities have got direct help from Huawei employees to crack down opposition. These measures include surveillance cameras, phone tapping, and cracking encrypted communications with spyware. In the most extreme case, the report says, the pop singer turned politician Bobi Wine’s supposedly secret meeting was busted by the Ugandan police, and his driver was killed. (More details are included in the video clip included at the bottom of this page.)

In Zambia, Huawei employees were reported to have helped the government crack the password protected phones and private Facebook pages of opposition bloggers critical of the president.  The government was then able to track them down and make arrests. Algeria’s ruling party confirmed to the newspaper that they work with Huawei to monitor the opposition though refused to discuss details.

In response, Huawei rejects the allegations:

“We completely reject the Wall Street Journal’s unfounded and inaccurate allegations against Huawei’s business operations in Algeria, Uganda, and Zambia,” said a Huawei spokesperson in a statement sent to Telecoms.com. “Huawei’s code of business conduct prohibits any employees from undertaking any activities that would compromise the data or privacy of our customers or end users, or that would breach any laws.  Huawei prides itself on its compliance with local laws and regulations in all markets where it operates and we will defend our reputation robustly against such baseless allegations.”

Huawei has exported the surveillance system already common in China’s cities to many African countries. The images captured on camera are then processed by Huawei’s facial recognition and AI technologies to identify suspects, sometimes even before any crimes have been committed. Activists also accuse the governments of abusing the technology. The activist Dorothy Mukasa told WSJ that “we’ve seen the (Ugandan) government target opposition more than the criminals.”

Two Ugandan security officers also told WSJ on anonymous basis that Huawei employees directly help them break the encryption of the applications the opponents use for communication, including WhatsApp, by planting spyware on their phones. Huawei denied the allegation in their statement to WSJ that “our internal investigation shows clearly that Huawei and its employees have not been engaged in any of the activities alleged. We have neither the contracts, nor the capabilities, to do so.”

One thing worth noting is that the WSJ does not establish evidence that the alleged activities in Africa were carried out with approval, or even awareness, from Huawei headquarters.

This is not the first time Huawei has found itself in the centre of controversies in Africa. As was reported earlier, the IT and communication system at the African Union headquarters, supplied and installed by Huawei, was sending data every night from Addis Ababa to Shanghai for over four years before it was uncovered by accident. Huawei’s founder later claimed that the data leaking “had nothing to do with Huawei”, though it was not clear whether he was denying that Huawei was aware of it or claiming Huawei was not playing an active role in it.

Here is the video included in the WSJ report:

KaiOS gains Orange support in African drive

Orange has come out in support of KaiOS Technologies, as the telco contributed to the $50 million raised in total during its Series B funding round led by Cathay Innovation.

The cash itself will be used to fuel expansion of the feature phone operating system into new markets, introducing new features and further expanding the KaiOS developer community. To date, there are currently more than 100 million devices running on KaiOS, with a footprint in 100 countries.

“Our mission is to open up new possibilities for individuals, organizations, and society by bringing mobile connectivity to the billions of people without internet in emerging markets, as well as providing those in established markets with an alternative to smartphones,” said Sebastien Codeville, CEO of KaiOS Technologies.

Aside from fuelling an alternative to Google’s Android OS, the partnership between is also geared towards improving accessibility from a device perspective.

“Today the two main barriers to internet access are the lack of infrastructure, for which Orange is investing one billion euros per year, and the cost of the device,” said Alioune Ndiaye, CEO Orange Middle East & Africa.

“As part of our effort to overcome this second barrier, I am very pleased to have this opportunity to develop our partnership with Kai through a direct investment. Providing our customers with access to affordable devices is a crucial step in our ambition to democratise access to the Internet in Africa.”

During Mobile World Congress this year, Kai and Orange launched Sanza, a smart feature phone which incorporated voice-recognition, extended battery life and popular apps as the main features. However, most importantly, the device is sold for as little as $20.

As Ndiaye points out above, accessibility in terms of infrastructure and devices is an issue across the African continent fuelling the ever-expanding digital divide. Africa is a profitable region for Orange, but to grow these profits the telco will have to ensure the internet is accessible to the millions of people who aren’t surfing the digital highways today.

Ericsson loses another senior exec

Ericsson lifer Rafiah Ibrahim, currently its Head of Market Area Middle East & Africa, is calling it a day after 23 years at the company.

To be precise Ibrahim is going to step down from her current position, which she has held for a couple of years, at the end of August and assume the new role of ‘Advisor to the CEO’. But since all precedent under the current CEO Börje Ekholm is that ‘Advisor’ is just a euphemism for ‘gardening leave’, we’d be surprised if Ibrahim was still with the company in 2020.

“Rafiah has been a very important leader in our sales and delivery organization,” said Ekholm. “In her latest assignment she successfully led the merger of two important markets, Middle East & Africa, increasing customer value and securing scale and efficiency as well as implementing a robust operational structure. In addition, Rafiah has built strong customer relationships across the region not least visible in the recently announced 5G contracts. Rafiah has been a valued member of the Executive Team and I look forward to continuing to work with her in her new role.”

The workload of Ericsson’s executive recruitment team is starting to mount up. We still don’t know who is going to replace Helena Norrman to head up the marketing and there seems to have been a steady trickle of senior departures since Ekholm took over. No doubt this is all part of the grand plan, which seems to be going OK, but it does make you wonder about morale at the top table and we must assume Ibrahim was still happy with everything when this corporate vid was published towards the end of last year.

 

Vodafone blames accounting change for €800mn revenue decline

Vodafone has unveiled its quarterly results for the period ending December 31, and while a year-on-year decline of €800 million might worry some, it’s not as bad as you think.

The team claims it has performed pretty much in-line with expectations and the same period of 2017, however a shift over to the IFRS15 accounting standard, the sale of the Qatar business and FX headwinds caused the decline. In other words, it’s all the fault of the bean counters.

“We have executed at pace this quarter and have improved the consistency of our commercial performance,” said Group CEO Nick Read. “Lower mobile contract churn across our markets and improved customer trends in Italy and Spain are encouraging, however these have not yet translated into our financial results, with a similar revenue trend in Europe to Q2.

“We enjoyed good growth across our emerging markets with the exception of South Africa, which was impacted by our pricing transformation initiatives and a challenging macroeconomic environment. Overall, this performance underpins our confidence in our full year guidance.”

Addressing the elephant in the room, the €800 million decline. While suggesting a change in accounting standards is a primary cause might sound flimsy, it certainly will have contributed. IFRS15 dictates a business cannot recognise all revenues up-front; if a contract has been signed, revenue can only be recognised in the financials when it is collected. For example, if your customer has agreed terms to pay at the end of the contract, once conditions have been fully satisfied, this revenue cannot be reported until that point. In other words, Vodafone cannot claim it has the money until customers have actually paid it.

While this is a perfectly reasonable explanation of why revenues might have declined, it is also important to recognise Vodafone is under pressure in numerous markets. The team have claimed success across the European markets, with improving customer and financial trends in Italy, retail growth in Germany and reduced churn in Spain, but year-on-year revenues were down 1.1%. Again, there will be multiple factors contributing to this decline, but it would be foolish to suggest everything is rosy at Vodafone.

A couple of weeks back, RBC Capital Markets released an investment note suggesting Vodafone is not only in a slightly precarious position because of competition pressures (in Europe, Africa and India), but upcoming auctions as well. Depending on how aggressively spectrum prices continue to inflate, Vodafone could fit itself footing a bill between €4.5 billion and €12 billion.

Looking at the performance in the markets, if you ignore the difficult one’s things are going great. European service revenues declined 2% to €7.496 billion (using a consistent accounting standard), with the Spanish, Italian and UK markets all reporting drops. Germany and the ‘other’ European markets reported year-on-year increases of 1.1% and 4.1% respectively. In Italy, the team has faced the uncomfortable entry of the disruptive Iliad, while the impact of handset financing was the cause in the UK. In Spain, the team restructured various offerings to make the brand more competitive. In theory, all of these markets should stabilise over the coming months.

Across Africa, Vodacom revenues grew by 1.5%, though growth was dampened by the South African market. Here, service revenue declined by 0.9% down to the pricing transformation strategy. The aim here was to reduce exposure to out-of-bundle revenues and improve the performance of more generous promotional summer offers. Over the period, South Africa added 86,000 contract customers, primarily from the business unit.

The other tricky market is India, but we’ll have to wait for a while to see the lay of the land there. Vodafone Idea will report its third quarter results in February, though as the integration of these two businesses is a work-in-progress any results will have to be taken with a pinch of salt. Reliance Jio is running the show in India as it stands, but the Vodafone Idea merger will have to be given time to create a competitive offering.

Overall, these are results which we should have expected. Vodafone is reacting to pressure in various markets, but it is not in the most comfortable position. In the vast majority of its markets, Vodafone would be considered more of a challenger than a leader. There are certainly dominant positions in some of the African markets, but it Europe it is fighting for attention.

The business is not nose-diving, but it certainly isn’t thriving. However, there are proactive measures taking place across the world to cultivate success. The fixed broadband offering in the UK should make an effective convergence business, Vodafone Idea could challenge the momentum of Reliance Jio, while more competitive tariffs in markets such as Spain and Italy should put it is a better position moving forward.

Vodafone is making some interesting, and encouraging, decisions but it is starting to fight bloody battles on a lot of fronts.

Helios Towers expands footprint into South Africa

Helios Towers has entered into a partnership with Vulatel to form a joint venture to build out wireless and fixed line open-access infrastructure in South Africa.

Helios will take a 66% slice of the venture as the firm readies itself for the 5G revolution. While it might seem strange to talk about 5G on a continent which has constantly struggled to bridge the enormous digital divide, South Africa is certainly a different landscape than what would be expected as the norm.

“I am thrilled to announce our entry into South Africa, which delivers against our stated strategy of providing MNOs with open-access infrastructure to meet the growing demands of their customers in Africa for fast, stable and available networks,” said Kash Pandya, CEO of Helios Towers. “We are delighted to be partnering with Vulatel, a business with impeccable telco sector expertise and deep local credentials in South Africa.”

For Helios, expansion into the South African market makes perfect sense and partnering with a local business will provide suitable foundation. Helios’ footprint currently covers four markets across the African continent, while Vulatel came to existence in 2017 on the back of acquiring Dimension Data’s fibre and wireless division. Helios brings the international experience and capital, while Vulatel holds its own with contacts and relationships in the South African market.

“There is a significant infrastructure gap in South Africa today, which means the demand in data services is not being met,” said Tlhabeli Ralebitso, CEO of Vulatel.

“We are convinced this provides an unrivalled opportunity to build a leading open-access infrastructure platform to address that gap. Our vision has always been to establish a nationwide service network before entering into the open-access telecoms infrastructure market on the back of our trusted relationships with the telecoms operators in South Africa.”

Looking at the South African market, this is a country which is expected to lead the 5G euphoria on the African continent proving this is a good time for Helios to make its move. With 6,500 towers in four markets (Tanzania, Democratic Republic of Congo and Congo Brazzaville), contracted revenues of $3.1 billion and average contract life of 8.4 years remaining across the group, it is certainly in a stable position to make such a bet.

Bharti Airtel exploring acquisition of Telkom Kenya – report

Indian telco Bharti Airtel is reportedly in discussions to expand its presence in the Kenyan market through the acquisition of Telkom Kenya.

According to Reuters, the under-pressure Indian telco is meeting with Telkom Kenya executives to acquire the business, merging the number two (its own brand Airtel) and three players in the country. This is not the first time such a transaction has been discussed, though it is claimed London-based Helios Investment, which owns 60% of the business, is attempting to cash-out of the market.

While agriculture still remains the leading sector across the country, Kenya’s growth has been steady and diversifying in recent years. The country is the economic, financial, and transport hub of East Africa, and real GDP growth has averaged over 5% for the last decade, according to statistics from the CIA World Factbook. Mobile growth in the country is growing quickly, while the economy is increasingly looking mobile-first. This could be a very useful acquisition for Bharti Airtel.

In terms of market share, this is a country which is heading the right direction for Bharti Airtel. Safaricom is the market leader with a 67% share but declining, according to Ovum’s WCIS, Airtel has 23% market share and increasing while Telkom Kenya currently has 9% but is also increasing, albeit at a slower rate than Airtel. Supplementing the gathering Airtel momentum in Kenya with the Telkom Kenya footprint would certainly be a sensible business strategy to tackle the dominant Safaricom.

Another interesting factor to this deal would be the fixed line business. As it stands, Airtel does not have a fixed line offering in Kenya while Telkom Kenya does, and this is a segment which has been targeted for growth by the government. The National Broadband Strategy intends to deliver reliable fixed line broadband to as many as 30% of the Kenyan population, though you should always remember this is a mobile-first country. Fixed line might be a useful addition, but with mobile money dominating the economy (48% of Kenya’s GDP was processed over M-PESA between July 2016 and July 2017), this is very much a mobile-first society.

For Bharti Airtel, the team needs a win to report back to investors before too long. The emergence, and continued success, of Reliance Jio has been a nightmare for the former market leader, while an end to the misery seems unforeseeable right now. Profits at the firm have been impacted, subscriptions are going south, and the newly-merged Vodafone Idea business might cause more upset as it readies its own attempt at market disruption. Bharti doesn’t seem to have done much to combat the threat at home, though it does have a successful African business to bolster the numbers.

Looking at the most recent financial results, revenues across the group grew by a miserly 0.5%, though the revenue decline in India (which accounts for roughly 66% of the group total) was 3.6%. Africa on the other hand contributed 10.8% revenue growth and almost three million net additions in subscribers. The consolidated East Africa region brought in an additional 1.2 million customers over the period, while revenues in both voice and data have been steadily increasing over the last year. This is a stark contrast to the failures at home.

Bharti Airtel has lost the number one spot in India thanks to the Vodafone Idea merger, and should trends continue, it won’t hold onto number two for very long either. Catalysing the promising African market is certainly a sensible way forward, but onlookers should not be distracted from the chaos in Bharti’s domestic market.