Vodafone Business and América Móvil team up to woo IoT customers

The B2B group of Vodafone has entered a partnership agreement with América Móvil to provide IoT operators with international roaming service for things.

The press release does disclose much detail on how Vodafone Business and América Móvil will combine their IoT platforms or share their expertise in IoT connectivity and services with each other, for example if this would involve the two platforms running the same applications or adopting the same protocols. Instead, the statement stays high-level, claiming the partnership between the two companies will “make it easier than ever for customers to connect devices globally.”

“With this agreement we further extend our IoT global footprint by partnering with one of Latin America’s strongest players,” said Vinod Kumar, CEO of Vodafone Business. “América Móvil´s coverage and expertise across Latin America will help us support our global customers in a part of the world where we have seen a surge in IoT adoption.”

“In América Móvil we believe in win-win partnerships that benefit our customers,” added Marco Quatorze, Director of Value Added Service at América Móvil. “We are excited about the partnership with Vodafone Business that provides our joint customers with the best user experience of two leading technology providers.”

Vodafone Business has been actively engaged in improving its IoT offers. The company claimed its IoT platform is connecting 89 million devices worldwide. However, even assuming all these connections on cellular-based, it would still be a small fraction of the global total of 1.0 billion Cellular IoT according to the latest (June 2019) Ericsson Mobility Report.

Therefore, the tie-up with América Móvil may indeed become a win-win partnership. Vodafone Business’ own research has shown that the Americas are the market, and transport and logistics the sectors that IoT has seen the fast growth. These are a natural fit for “roaming service” for things, which would enable tracking, monitoring, and optimising of routes for goods to continue even if the cargo has left the coverage of one operator, and in this case, moving from one continent to another.

For América Móvil, better known for its consumer service (the company says it is connecting 362 million access lines) but also becoming more active in serving business customers, the partnership with Vodafone Business will help it expand the footprint to Vodafone territories in Western and South Europe (in Europe, América Móvil operates in Austria and six Eastern European and Balkan countries). Additionally, it may also enable América Móvil to leverage Vodafone’s technology solutions.

At the beginning of the year, Vodafone Business announced a $550 million joint managed service deal with IBM that also covers 5G, AI, and other advanced technologies. Kone, the Finland-based lift company and existing Vodafone customer, has expressed interest in the IoT capability of that new “joint venture”.

América Móvil strengthens its position in Brazil with Nextel acquisition

The Latin American mobile heavyweight América Móvil has agreed to acquire its competitor Nextel in the Brazilian market for $905 million.

Shortly after the deal was announced by América Móvil on Monday, and the board of NII Holdings, which owns 70% of Nextel, announced that it would propose to the shareholders to accept the offer. The other 30% of Nextel is owned by AI Brazil Holdings, the local operation of Access Industries, an American private company whose portfolio includes natural resources, telecoms, internet services, as well as Warner Music, among other media interests.

The nature of the deal, “cash free / debt free”, will let NII and AI Brazil keep all the cash while América Móvil will not assume Nextel’s debts. Although the total transaction value is less than 1.5 times of Nextel’s annual revenues in 2018 ($621 million), it represents almost four times NII’s market capitalisation on its latest trading day on NASDAQ ($229 million), indicating the buyer’s relatively strong confidence in the business prospect.

Brazil is a highly competitive market. According to research by Ovum, by Q4 2018, Vivo (owned by Telefónica) led with one third of the total mobile market, while TIM and Claro (América Móvil’s existing operation in Brazil) were vying for the second place, each serving about a quarter of the total mobile subscribers. Nextel had slightly over 1% market share. The rest of the market is served by Oi (a JV between Altice Portugal, formerly Portugal Telecom, and Telemar, Brazil’s largest integrated telecom operator).

After the acquisition, América Móvil plans to combine Nextel with Claro to “consolidate its position as one of the leading telecommunication service providers in Brazil, strengthening itsmobile network capacity, spectrum portfolio, subscriber base, coverage and quality, particularly in the cities of São Paulo and Rio de Janeiro, the main markets in Brazil.”

For NII, selling Nextel in Brazil represents the end of an era. The company once operated mobile services in multiple North and Latin American markets, including the eponymous professional radio service in the US, which was later acquired by Sprint. Brazil is its last operation, where it has been struggling in a classic four-operator market. Not only has it not been able to break into the leader group, but also seen business declining fast. The revenues in 2018 were a 29% decline from 2017 ($871 million), which itself was a 12% decline from 2016 ($985 million).

“The announcement of this transaction marks the culmination of an extensive multi-year process to pursue a strategic path for Nextel Brazil and provides our best opportunity to monetize our remaining operating assets in light of the competitive landscape in Brazil and long-term need to raise significant capital to fund business operations, debt service and capital expenditures necessary to remain competitive in the future,” said Dan Freiman, NII’s CFO. Earlier potential buyers included Telefónica Brasil, Access Industries (NII’s JV partner), though the most concrete case was TIM, which, according to Reuters, approved a non-binding offer in November last year. None of these negotiations has come to fruition.

“Management and our Board of Directors believe the transaction is in the best interest of NII’s stockholders,” Freiman added.

Quarterly earnings round-up – AT&T, AMD, Juniper and America Movil

AT&T misplaces quite a lot of customers, AMD warns of a poor Q4, Juniper profitability slides and America Movil feels impact of natural disasters.

AT&T needs to figure out the TV business

Looking at the positives, AT&T’s DirecTV Now proposition, its answer to the cord-cutting trend, brought in 296,000 net adds over the quarter, the most successful period to date, though this number was dwarfed by the 385,000 traditional pay-TV subs who made their way to the exit.

The team warned us in a SEC filing last week this might be the case, but it is now official. The cost of subscriptions are smaller and the number of subscribers are getting smaller as well. The TV space is not treating AT&T as nicely as it had hoped.

Over the course of the third quarter, AT&T brought in total revenues of $39.7 billion (compared to $40.9 billion in the same quarter of 2016) and net income attributable to AT&T totalled $3 billion (compared to $3.3 billion in 2016). The top-line figures are not ideal, though this has primarily been blamed on legacy voice and data services.

“We continued to operate our business efficiently in the quarter,” said CEO Randall Stephenson. “At a time of transformation in our wireless and video businesses, as well as investment in growth opportunities, we’re able to maintain our full-year guidance.”

AMD returns to profit but warns of shaky Q4

Semiconductor business AMD might have put a smile on investors faces by reporting a profit in Q3, but warnings of a weaker Q4 saw share price drop 10% in afterhours trading.

The Ryzen and Epyc series processors, which we both launched earlier this year, proved to be a strong success for the team, as operating profit was reported for the first time in three years. Bringing in $1.64 billion in total revenues, an increase of 26% from 12 months ago, is certainly a positive sign, and so is net income of $71 million. The latter figure actually compares to a loss of $406 million in Q3 2016, so this is certainly heading in the right direction.

“Strong customer adoption of our new high-performance products drove significant revenue growth and improved financial results from a year ago,” said. Lisa Su, AMD CEO. “Our third quarter new product introductions and financial execution mark another important milestone as we establish AMD as a premier growth company in the technology industry.”

Revenues for the quarter were up 34% sequentially, but it appears this isn’t going to be a lasting trend. AMD predicts a 15% decrease in revenues for the next three months, though this can be put down to some levelling off of cryptocurrency demand for GPUs, while seasonally the next quarter is the weakest for some areas of the semiconductor business. This explanation was not enough to save the AMD share price however.

Juniper slides down the profitability slide

Juniper announced a profit for the quarter, though it has lost ground on the same period in 2016. A decline in share price might indicate disappointment from the market, which has seen Juniper demonstrate year-on-year growth for the first two quarters of the year, but the team wasn’t able to repeat the performance a third time.

Net revenues were $1.257.8 billion, a decrease of 2% year-on-year, while net income stood at $174.4 million, an increase of 1%, but this wasn’t enough to save face.

“While we are disappointed in our third quarter revenue results which were impacted by timing of switching deployments, we have made significant progress on executing on our cloud strategy,” said CEO Rami Rahim.

“Despite lower than anticipated revenue growth impacting third quarter results, we have still been able to manage costs effectively,” said CFO Ken Miller.

To maintain revenues amidst a slight repositioning in the market is not a bad effort by the team, though a forecast of $1.23 billion for the final quarter of the year was seemingly not what the market wanted to hear; Juniper shares fell 6.6% during the afterhours trading period.

America Movil spreadsheet shook by natural disasters

The numbers at America Movil look relatively solid for the third quarter of 2017, but that wasn’t enough to prevent billionaire Carlos Slim’s flagship business slipping into a loss.

Postpaid wireless subscribers grew 6% year-on-year, while the broadband subscriptions increased by 5%, but total revenues declined 2.2% to roughly $12.7 billion, making a loss of roughly $500 million. During the same period of 2016, the team brought in a profit of around $110 million.

That said, it might not be the worst news. Revenues and profits were hit by numerous natural disasters in Mexico, Puerto Rico and the US, while a costly Colombian arbitration panel ruling are unlikely to feature again over the next couple of quarters. Without this legal spat, America Movil said it would have registered a profit.

A loss is never good news, but considering these are individual events, the outlook is certainly a bit more positive. The peso’s depreciation might be something to keep an eye on, but keep your hand away from the red button for the moment.