China responsible for one in seven attacks on UK business – report

Cybersecurity attacks directed towards businesses in the UK are on the up and it appears the source of these nefarious activities can be quite often traced back to China.

After years of being ignored or swept aside for another day, security professionals are finally being taken seriously in the world of IT. It might be considerably overdue, but it is at a very apt time; according to research from enterprise ISP Beaming, the number of cybersecurity attacks directed towards UK businesses increased by 179% year-on-year for the second quarter of 2019.

“The rate at which UK businesses are attacked online has soared over the last year and companies large and small are under sustained attack from hackers around the world,” said Sonia Blizzard, MD of Beaming.

“The majority of cyber-attacks on businesses are indiscriminate, malicious code that trawls the web seeking to exploit any weak point in cyber security systems. A single breach can be catastrophic to those involved.”

Unfortunately for those who would like international tensions to simmer-down, Beaming is also pointing the finger towards China as the source of many threats. China is seemingly the source of one in seven of these attacks, though Taiwan, Brazil, Egypt and the US are some of most persistent offenders.

Amazingly, on average UK businesses are under-threat from a cyber-criminal every 50 seconds, totalling 146,491 over the period in question. It might sound ridiculous, but it demonstrates the simplistic nature of some of these attacks. For the most part, large businesses will be able to avoid any serious damage by simply investing in basic security principles and systems, though you have to wonder how many SMEs are underprepared to resist the suspect fingers of the dark web.

According to Beaming, 63% of small businesses suffered a cyber-attack last year, with the average cost to the business being £63,000. The total cost of cybercrime for small businesses was £13.6 billion. The under-preparedness of SMEs is perhaps best indicated by its proportion of the total; £13.6 billion of the £17 billion total.

Although there is likely to be a fair bit of fear-mongering from Beaming here, security is considered to be one of the selling points of the business, the threat of cybercrime should not be undervalued.

One trend which presents as much of a threat as it does opportunity is IOT. This is a technology which has the potential to revolutionise business models but also give rise to new services and products. However, the threat is just as prominent. The more a company relies of IOT, the bigger the perimeter of its network and the more points of exposure. The number of gateways increases, increasing complexity of cybersecurity.

For those companies which are struggling to cope in the embryonic version of digital which we live in today, tomorrow could be a disaster.

The research has been released at a very intelligent time when you consider the number of GDPR fines which are potentially on the horizon. Earlier today, July 8, the Information Commissioner’s Office (ICO) announced its intention to fine British Airways £184 million for a data breach which occurred in September 2018.

This is the biggest fine handed out by the ICO, but it is worth remembering this is only one of the first examples of the watchdog swinging the GDPR stick. The number of ‘contacts’ the ICO has had with businesses, organizations and individuals has increased 66% since GDPR was introduced in May 2018. In terms of workforce, 200 additional employees have been drafted in since GDPR with plans to hire another 100 to take the total north of 800.

These numbers suggest the ICO is getting more serious about investigation and enforcement, though another consideration for the importance of security is the buying preferences of UK consumers.

If the number of complaints about personal data breaches are increasing, up to 14,000 for the 12 months to May 1 from 3,300 in the prior year period, consumers are clearly more aware about security and data protection. With more products incorporating connectivity, and consumers becoming more away of the dangers of the internet, the security credentials of an organization will become a factor in the purchasing decision-making process.

If start-ups are going to challenge the status quo in the digital world, they will need to sort out security systems and processes. It might surprise some that SMEs account for such a large proportion of the cost of cybersecurity to UK businesses, but such statistics will start to become more prominent as digital increasingly becomes the norm.

Theoretically, the digital world levels the playing field, affording the opportunity for start-ups to challenge the status quo, but if they aren’t up-to-speed when it comes to security, it might well turn out to be a non-starter.

NTT invests in the UK by combining several companies into NTT Ltd

Japanese telecoms and IT giant apparently didn’t get the memo that the UK isn’t worth investing in anymore because it’s basing an $11 billion business here.

NTT Ltd has been formed by combining networking and data centre company NTT Communications, South African IT services firm Dimension Data and the self-explanatory NTT Security into one great big IT firm. It actually brings together 28 different sub-brands in an act of consolidation that was clearly overdue and will employ 40,000 people in 70 countries.

The choice of London as the location of NTT Ltd’s headquarters is a timely endorsement of the continuing economic vibrancy of the UK. For the last few years UK politics has been dominated by Brexit and the insistence by those who want to remain part of the European Union that the UK is useless without it. This development will presumably be lamented, or at the very least ignored, by them.

“Going forward, we will accelerate our execution as one NTT in order to contribute to a smarter and better world through digital transformation,” said Jun Sawada CEO of NTT Corporation. “We are also excited to confirm that our global headquarters for NTT Ltd will be in London and that our commitment to the UK remains extremely strong.

“We considered several locations as the headquarters for NTT Ltd and made a deliberate decision to choose London. It has many benefits, including a stable economy, wealth of skills and talent, diversity in population and thinking, strong infrastructure, schools and housing for global talent moving to the city. In short, it’s a great city to live and work in, and we’re excited that we are making it the home for our new business.”

The broader significance of such a strong endorsement of the UK economy was not lost on the government. “Britain has a long standing and proud reputation as a global tech leader and it’s fantastic that NTT Ltd. has chosen London for its global headquarters,” said Prime Minister Theresa May. “A key part of our modern Industrial Strategy is to put the UK at the forefront of the tech and data revolution, and they will join many other world-leading companies who call Britain home.”

This move first been announced last year, with NTT Ltd to be run by the former CEO of Dimension Data Jason Goodall, perhaps indicating a particular focus on Africa. The broader narrative, however, is the tried and tested ‘end-to-end solution provider’ one, emphasising the increased blurring of the line between telecoms and IT. Here’s a vid to show how serious they are about it.

 

AT&T + HPE = edgy TLC

AT&T has announced a new partnership with HPE to drive the benefits of edge computing in enterprise services.

The duo has agreed a go-to-market strategy to accelerate business adoption of edge connections and edge computing, seen by some as one of the most interesting areas of the up-coming 5G economy.

“AT&T’s software-defined network, including our 5G network, combined with HPE’s intelligent edge infrastructure can give businesses a flexible tool to better analyze data and process low-latency, high-bandwidth applications,” said Mo Katibeh, CMO of AT&T Business. “Bringing compute power closer to our network helps businesses push the boundaries of what is possible and create innovative new solutions.”

“HPE believes that the enterprise of the future will need to be edge-centric, cloud-enabled and data-driven to turn all of its data into action and value,” said Jim Jackson, CMO of HPE. “Our go-to-market alliance with AT&T, using HPE Edgeline Converged Edge Systems, will help deliver AT&T MEC services at scale to help our customers more quickly convert data into actionable intelligence, enabling unique digital experiences and smarter operations.”

There are of course many benefits to edge computing, though one of the areas AT&T will be hoping to address through this tie-up will be the security concerns which will emerge. This looks like it could be one of the key marketing plugs of the AT&T proposition, as its Multi-access Edge Compute (MEC) Services will hope to drive the benefits of mobility to enterprise customers.

From HPE’s perspective, the team will be contributing on the low-latency side of the 5G euphoria. HPE suggests its Edgeline Converged Edge Systems could help create use cases where applications can reside on premises for lower latency processing.

It might not be as ‘sexy’ as plugging ridiculous download speeds, but the greatest benefits of 5G to the telcos would appear to be diversification as opposed to increased squeeze on the wallets of consumers. With more data being created each day, the edge will become increasingly important to activate products, services and business models in a faster and more operationally efficient manner. Enterprise organizations will largely be unaware of how to reap the greatest benefits, a pleasant niche the telcos could certainly profit from.

Enterprise market will depend on communications skills – 5G World

The soft skills are often over looked, especially in an industry which is so dominated by engineering smarts, but the success of enterprise 5G could be as simple as talking the right language.

“If we carry on talking about remote surgery 5G is going to fail,” said Gilad Garon, CEO of software vendor ASOCS. “Need to start talking to people in a language which they understand.”

Remote surgery certainly has taken a bit of a bashing at the show this week, though Garon is just using it as a bit of an example. Not only are we talking about usecases which seem ridiculous to most, we’re not talking in a language potential customers will understand.

“If you are going to be successful in enterprise, you have to think about DevOps, IT and simplistic language,” said Garon. “Enterprise don’t understand what a slice is, but they know about value.”

This has been one of the more obvious themes of the conference, but it does seem to be a message which is finally hitting home with the telcos. Enhanced mobile broadband is what 5G delivers now, but this will not deliver the financial promise many are expecting.

“As an industry, it is a new field to build mobile solutions for industry,” said Antje Williams, SVP of 5G Campus Networks at Deutsche Telekom. “What have we done so far, we have put up infrastructure, we have sold SIM cards to the employees of the companies we are working with, but this [5G] is much more.

“There was a notion about 5G was going to be for the verticals for years, but we have no idea what we were talking about.”

Unfortunately, Williams is pointing to a wide-spread problem in the industry but there is no easy solution. Over the last five years, few telcos have been spending time with the potential enterprise customers to understand the nuances of the specific verticals. There are efforts to correct this now, but these initiatives should have been started years ago.

Because the telcos have not been spending enough time with vertical customers or partnering with organizations which can help them create new products, they are largely shooting in the dark. They don’t know the demands of the customers or the nuanced differences in delivering connectivity solutions between the different verticals.

The solution is to talk to potential customers and develop the specific solutions, but this will be a slow and painstaking task. Work is being done, but the timetables will frustrate the bean-counters. If 5G is to be a commercial success for the telcos, enterprise customers are critical; eMBB will not deliver on the potential.

Google cloud dives deeper into the data dreamland

Google’s cloud business unit has announced the acquisition of data analytics firm Looker for $2.6 billion, further expanding products available in the ever-growing world of cloud.

While another acquisition at Google is nothing out of the ordinary, this happens to be the first under the tenure of Thomas Kurian, the newest CEO of the cloud business. Kurian took the reigns from Diane Greene at the beginning of this year, after Greene failed to deliver on the hype which surrounded her appointment.

“A fundamental requirement for organizations wanting to transform themselves digitally is the need to store, manage, and analyse large quantities of data from a variety of sources,” said Kurian in a blog announcement. “Google Cloud offers customers a broad and integrated suite of cloud services to ingest data in real time, cleanse it, process it, aggregate it in a highly scalable data warehouse and analyse it.

“Looker extends our business analytics offering with two important capabilities—first, the ability to define business metrics once in a consistent way across data sources. This makes it easy for anyone to query data while maintaining consistent definitions in their calculations, ensuring teams get accurate results.

“Second, Looker also provides users with a powerful analytics platform that delivers applications for business intelligence and use-case specific solutions such as Sales Analytics, as well as a flexible, embedded analytics product to collaborate on business decisions.”

With Looker being integrated into the Google proposition, the cloud team will have something more interesting to talk about. Kurian has discussed a more complete analytics solution, including visualisation of results and integration into daily workflows, as well as the ability to make more customisable solutions for the verticals.

Another interesting benefit of this acquisition is building Google’s ability to work in a multi-cloud landscape. Although any cloud company will want to pigeon hole enterprises into their own products, bleeding customers is of course more profitable, it is not realistic in today’s world. If you do not have a proposition which is interoperable with other cloud providers, you are not going to be attractive to customers.

There are numerous examples of this being an important factor of the cloud world of tomorrow. The Data Transfer Project is an initiative to build a common framework with open-source code that can connect any two online service providers, while Vodafone Business and IBM came together to create a joint-venture aiming to solve the problem presented by multi-cloud interoperability.

As part this acquisition, Google is also inheriting the ability to play in this world, bumping its ability to bring together data from SaaS applications like Salesforce, Marketo, and Zendesk, as well as traditional data sources.

Google Cloud has seemingly been losing out to the likes of Microsoft Azure and AWS in recent years, a factor which reportedly contributed to Greene’s downfall. This is not to say the cloud business is not successful, but it is not tearing up trees at the same rate as the two market leaders.

Perhaps this is only one of the first announcements we should expect from Kurian over the next couple of months. This is a man who needs to make his mark on the business, but also close the gap Microsoft and Amazon have created at the top of the cloud rankings.

HTC debuts eye-tracking with enterprise VR launch

HTC has announced it is bringing its enterprise VR product to North America, after teasing executives at CES in January.

The product itself, Vive Pro Eye, is not cheap, $1,599, but features the latest in eye tracking technology with HTC claiming it is ‘setting a new standard’ for VR in the enterprise market. While the consumer VR segment has been relatively sluggish, despite the incredible promises made by technologists, though there does seem to be a bigger focus on enterprise in recent months.

The Vive Pro Eye follows up HTC’s Vive Pro which is already in the hands of various different enterprise customers throughout the world, introducing new features such as precision eye tracking software, deeper data analysis, new training environments and more intuitive user experiences.

And while some of the features might be considered excessive at the moment, there is always the potential to influence mainstream adoption.

“We’ve invested in VR technology to connect our fans to our game and deliver a new level of engagement through VR game competitions and in-ballpark attractions,” said Jamie Leece, SVP of Games and VR for Major League Baseball.

“By integrating eye tracking technology into Home Run Derby VR, we are able to transport this immersive baseball experience to any location without additional controllers needed. Our fans can simply operate menus by using their eyes.”

This is perhaps where the VR industry has fallen short of expectations over the first few years; cash conscious consumers do not have the funds to fulfil the promise. These are after all individuals who have been stung by various difference financial potholes over the last decade and might be hesitant to invest so handsomely in such an unproven technology.

The focus on enterprise is a much more sensible bet for many of the VR enthusiasts to follow. Firstly, in working with organizations like Major League Baseball, new applications can be created, and experiential experiences can be offered to consumers at the games. This might have a normalising impact for the technology on the mass market.

Secondly, there is a lot more money in the enterprise world than in the individual’s wallet, with decision makers much more enthusiastic about investments when it isn’t linked directly to their bank accounts.

Finally, there are more usecases in the enterprise world. Some of them might be boring, but they are realistic and important for the companies involved. Training exercises are an excellent example.

What this product also bringing into the equation is eye-tracking software, offering an entirely new element for developers to consider.

“Our virtual venues come to life as individual audience members can react with various animations when a user makes direct eye contact with them,” said Jeff Marshall, CEO of Ovation, a company which uses VR to help media train customers in public speaking environments.

“As a developer, there’s just no going back once you’ve seen all that eye tracking makes possible.”

From an experience perspective, the eye-tracking software can also add to the gaming world. Foveated rendering is a graphics-rendering technique which uses an eye tracker integrated which helps reduce rendering workload by reducing the image quality in the peripheral vision. By focusing processing power where it is needed most, the strain placed on the device and experience is lessened.

Many have suggested this technology could be at the forefront of the next generation of VR devices, both in the consumer and enterprise world. Whether this is enough to force the potential of VR from promise to reality remains to be seen, but something needs to be done.

The reality of mobile SD-WAN – the missing link for enterprise 5G?

Telecoms.com periodically invites third parties to share their views on the industry’s most pressing issues. This is the second of a two piece series in which Simon Pamplin, EMEA Technical Sales Director for Silver Peak, looks at some of the enterprise benefits of the latest generations of wireless networking technology.

This is the second of a two-part article series that explores SD-WAN and the future of networking in the 5G era. The first looked at how established 4G LTE connectivity, partnered with software-defined WANs (SD-WANs), have contributed to changing the way users connect to applications, particularly for ‘on-the-go’ requirements and in hard to reach locations.

5G: forging the new ultra-high speed, hyperconnected world

Following the 5G spectrum auction in the UK back in April of 2018, telecommunications providers are now racing to roll out the fifth generation of mobile wireless technology to meet today’s explosive bandwidth and network connectivity demands. 5G is poised to revolutionise several industries by bringing significantly faster connections, shorter delays and increased connectivity for users. It will aid the expansion of IoT, creating a virtual network of ultra-high-speed connections across multiple devices.

According to Gartner, two thirds of large organisations have plans to deploy 5G by 2020. However, a full end-to-end deployment will take many more years. The firm also projects that the lack of readiness of communications service providers to meet enterprise demands in time will be a major issue.

Looking at the near term, service providers have to provide means to enable use cases – such us IoT communications, enhanced mobile broadband, fixed wireless access along with high-performance edge analytics – without having the benefit of an end-to-end 5G network. This is all while contending with sky high user expectations.

SD-WAN is one of those enabling technologies that will help service providers to deliver a higher quality of network experience that is tailored to the customer’s needs, while managing the transition to a complete end-to-end 5G infrastructure for delivery.

5G: on the edge

According to Gartner, the number of IoT devices is set to rise to more than 20 billion by 2020. IoT connectivity across more and more devices will drive the processing of high volumes of data at high speed – one of the core promises of 5G. This influx of data must be ingested and processed both in real time, and as close to the source as possible, ultimately driving the need for edge computing.

While 5G provides higher bandwidth, it is more limited in range. It is anticipated that 5G networks will be powered by hundreds of thousands of small cells. Denser networks of cells will make it more difficult for operators to operate, manage and maintain. As such, the optimisation of these networks will be key to deliver the best possible network performance and maintain the highest quality of experience to end users.

The emergence of 5G will not only change end users’ expectations when it comes to always-on connectivity and low latency, it will also transform the way enterprises manage their networks. Strong demands on real-time network monitoring across transport connectivity and traffic management optimisation will drive the need for automation.

SD-WAN can hold the 5G ends together but what features will be most valuable?

SD-WAN connects users to applications securely and directly using any combination of underlying transport, including MPLS, 4G LTE and internet. As companies roll out 5G in the UK, businesses with SD-WANs deployed on the network will have the ability to transition key parts or locations over to the latest high-speed, high-performance connectivity.

An SD-WAN platform that enables automation will help service providers to easily connect to and integrate across all the different compute edges required to optimise the traffic and management of 5G cells. This will enable a seamless transition towards a full 5G infrastructure by managing any transport available across the edge, leveraging 5G transport for those critical applications that require zero latency and higher speeds.

To guarantee the highest quality of experience for users, service providers need to evaluate SD-WAN vendors. The best vendors and solutions will be those that are able to offer advanced features. One of these is granular, intelligent application-driven routing. In Layman’s terms, this means the SD-WAN can automatically prioritise high-bandwidth, or business critical, traffic (like video streaming) to a 5G cell and manage failovers, while lower bandwidth traffic is routed to another transport available (such as LTE or broadband internet).

Moreover, centralised orchestration and management capabilities can facilitate easier operation, management and maintenance of edges and 5G cells by intelligently rerouting traffic during cell provisioning or upgrades. It also enables faster policy-based provisioning of WAN services to support any device – a must for IoT.

With business around the world ramping up cyber defences, an SD-WAN that also unifies security features with business intent networking is more favourable. These enable the centralised enforcement of granular, application-driven security policies by identifying, classifying and automatically steering traffic to the right security services without compromising either performance or cost.

Enterprises expect the best quality of service (QoS) that applications demand and SD-WAN solutions with virtual WAN overlays can allow for a more efficient and flexible allocation of network resources. Similarly, 5G networks rely on network slicing, where each slice receives a unique set of optimised resources and network topology. By using both technologies together, service providers can steer mission-critical traffic to the 5G network, where it can be isolated to a particular slice depending on the specific application requirements.

Lastly, as SD-WAN continues to evolve, emerging technologies will be incorporated to further enhance the user experience. Today, SD-WAN solutions that utilise machine learning separate themselves from the crowd. These can automatically adapt to varying network conditions in real time and provide optimal routing to the edges and the 5G small cells.

5G & SD-WAN: powering forward-thinking businesses

The adoption of 5G and edge computing will drive higher expectations from end users and enterprises for an always-on, high performing network and applications. The initial success of 5G deployments will demand an automated, self-driving wide area network foundation with underlay intelligence that delivers the highest quality of experience for users, such as the one offered by SD-WAN. Additionally, advanced business-driven SD-WAN platforms will empower service providers with ways to accelerate new revenue streams from 5G-enabled managed services rather than just as a transport connection.

 

100508_Simon Pamplin_v1Simon Pamplin is the EMEA Technical Sales Director for Silver Peak and a regular speaker at events on topics ranging from the latest storage technologies and server virtualisation to the current shift in data networking towards SD-WAN, as well as the latest developments in the technology. With over 20 years’ experience in enterprise IT, Simon has worked for IP, SAN and hyper-convergent companies and is driven by new technology and the business benefits it can bring.

Google has another run at the AR world

Google is taking another crack at the growing augmented reality segment with the launch of Glass Enterprise Edition 2.

While the first enterprise product has seemingly trundled along without fanfare, Google will be hoping the segment is ripe enough to make the desired millions. Although this is a technology area which promises huge prospects in the future, sceptics will suggest society, networks and the supporting ecosystem isn’t quite ready to make this dream a reality.

“Over the past two years at X, Alphabet’s moonshot factory, we’ve collaborated with our partners to provide solutions that improve workplace productivity for a growing number of customers – including AGCO, Deutsche Post DHL Group, Sutter Health, and H.B. Fuller,” said Jay Kothari Project, Lead for Glass. “We’ve been inspired by the ways businesses like these have been using Glass Enterprise Edition.

“X, which is designed to be a protected space for long-term thinking and experimentation, has been a great environment in which to learn and refine the Glass product. Now, in order to meet the demands of the growing market for wearables in the workplace and to better scale our enterprise efforts, the Glass team has moved from X to Google.”

This is a massive step for any Google idea. Graduating from the moonshot labs to be listed as a genuine brand in the Google family is a sign executives think there are profits to be made now, not in the future. Over the last couple of months, we’ve seen the likes of Loon and Fi make their way into the real world, and now it is time for Glass to hit the big time.

Google Glass was first brought to the market in 2013, though this wasn’t exactly a riveting success. Perhaps it was just a sign of the ecosystem and society at the time; people just weren’t ready for this type of innovation. However, Google is a company which often demonstrates innovation leadership and it was never going to completely give up on this idea. The products were taken back to the labs and refined.

What you have now is an enterprise orientated product which has the potential to run into the mass market. This makes sense for two reasons; firstly, there are more immediate usecases for the enterprise world, and secondly, businesses have more money to spend on these types of products than the consumer.

What remains to be seen is whether Google has any long-term interest in the hardware space or whether this is a game-plan to generate momentum in an embryonic segment.

When you look at the smart speaker segment, Google was always set to make more money in software and services than the hardware space. As soon as the traditional audio brands got the idea, its products were going to come up short. However, selling the hardware cheap to gain consumer buy-in while simultaneously demonstrating market appetite to the traditional brands was an excellent move.

Now there are more mainstream brands starting to develop their own smart speakers, Google can create partnerships to ensure its virtual assistance is exposed to the consumer and make money through means which are embedded in its corporate DNA; third-party relationships and online advertising.

Google might well have ambitions to take a leadership position in the AR glasses space, but you can also guarantee it has bigger plans to make profits through the supporting software and services ecosystem.

Huawei powered Chinese operators trial 5G for industry verticals

China Mobile, the world’s largest mobile operator by subscribers, has just trialled 5G for business vertical use on a standalone (SA) architecture. Huawei and Baidu provided the technologies.

The trial was carried out in Beijing, China, and the use case was a corporate video conference. It used 8K cameras to capture live video, which was then sent to the 5G SA core network through China Mobile’s 5G gNodeBs base stations. The data was then processed (encoded and decoded) by Baidu servers on the same network, then sent to the conference room for the 8K live video broadcast.

The trial was using the technology called “5G Vertical LAN” defined in 3GPP R16, which in essence is an insulated “slice” of the mobile network dedicated to a single business user, i.e. becoming a private cloud for an enterprise. The enterprise cloud can be provided by the mobile operator, or the enterprise can choose to provide its own customized 5G vertical LAN. This cloudified enterprise environment “enables terminals to directly communicate with each other, and allows them to access enterprise clouds” without going through the public cloud, therefore increasing the communication security.

However, to realise such a virtual enterprise setup it needs the 5G network to be in SA mode, because insulating and managing the virtual network is all done with software and hard to implement on non-standalone (NSA) mode. This China Mobile trial was conducted on such an SA architecture.

Huawei did not disclose details of the distance between the two ends, or the latency. The company put up a live video demonstration in the last Mobile World Congress in Barcelona. In that case the distance between the video capturing point and the broadcasting point was about 2km, and the latency was 11ms. But that trial was carried over Vodafone’s hybrid network.

This is not the only network slicing trial Huawei has carried out recently. The day before, the company worked with China Telecom, the world’s largest integrated operator, and China’s State Grid, to carry out a network slicing trial to manage a live power grid. China Telecom has been vocal in promoting 5G for other vertical industries.

The commercial 5G networks launched so far, in the US and in Korea, are all on NSA architecture, which limits the use cases to primarily enhanced mobile broadband access, therefore are mainly consumer focused. When Colin Wilcock, chairman of the European Union-backed 5G Industry Association (5G-IA), dismissed the 5G leadership of North America and Korea as not real 5G but beefed up LTE, though not entirely devoid of sourgraping, he got a point. Speaking at the Smart to Future Cities conference recently, he stressed that “the 5G we (Europe) need has to support the other vertical industries”, though also he conceded it is not going to happen now, but will be deployed in two to five years’ time, reported by Compelo.

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.