Making Sense of the Telco Cloud

In recent years the cloudification of communication networks, or “telco cloud” has become a byword for telecom modernisation. This Telecoms.com Intelligence Monthly Briefing aims to analyse what telcos’ transition to cloud means to the stakeholders in the telecom and cloud ecosystems. Before exploring the nooks and crannies of telco cloud, however, it is worthwhile first taking an elevated view of cloud native in general. On one hand, telco cloud is a subset of the overall cloud native landscape, on the other, telco cloud almost sounds an oxymoron. Telecom operator’s monolithic networks and cloud architecture are often seen as two different species, but such impressions are wrong.

(Here we are sharing the opening section of this Telecoms.com Intelligence special briefing to look into how telco cloud has changing both the industry landscape and operator strategies.

The full version of the report is available for free to download here.)

What cloud native is, and why we need it

“Cloud native” have been buzz words for a couple of years though often, like with many other buzz words, different people mean many different things when they use the same term. As the authors of a recently published Microsoft ebook quipped, ask ten colleagues to define cloud native, and there’s good chance you’ll get eight different answers. (Rob Vettor, Steve “ardalis” Smith: Architecting Cloud Native .NET Applications for Azure, preview edition, April 2020)

Here are a couple of “cloud native” definitions that more or less agree with each other, though with different stresses.

The Cloud Native Computing Foundation (CNCF), an industry organisation with over 500 member organisations from different sectors of the industry, defines cloud native as “computing (that) uses an open source software stack to deploy applications as microservices, packaging each part into its own container, and dynamically orchestrating those containers to optimize resource utilization.”

Gabriel Brown, an analyst from Heavy Reading, has a largely similar definition for cloud native, though he puts it more succinctly. For him, cloud native means “containerized micro-services deployed on bare metal and managed by Kubernetes”, the de facto standard of container management.

Although cloud native has a strong inclination towards containers, or containerised services, it is not just about containers. An important element of cloud native computing is in its deployment mode using DevOps. This is duly stressed by Omdia, a research firm, which prescribes cloud native as “the first foundation is to use agile methodologies in development, building on this with DevOps adoption across IT and, ideally, in the organization as well, and using microservices software architecture, with deployment on the cloud (wherever it is, on-premises or public).”

Some would argue the continuous nature of DevOps is as important to cloud native as the infrastructure and containerised services. Red Hat, an IBM subsidiary and one of the leading cloud native vendors and champions for DevOps practices, sees cloud native in a number of common themes including “heavily virtualized, software-defined, highly resilient infrastructure, allowing telcos to add services more quickly and centrally manage their resources.”

These themes are aligned with the understanding of cloud native by Telecoms.com Intelligence, and this report will discuss cloud native and telco cloud along this line. (A full Q&A with Azhar Sayeed, Chief Architect, Service Provider at Red Hat can be found at the end of this report).

The main benefits of cloud native computing are speed, agility, and scalability. As CNCF spells it out, “cloud native technologies empower organizations to build and run scalable applications in modern, dynamic environments such as public, private, and hybrid clouds. Containers, service meshes, microservices, immutable infrastructure, and declarative APIs exemplify this approach. These techniques enable loosely coupled systems that are resilient, manageable, and observable. Combined with robust automation, they allow engineers to make high-impact changes frequently and predictably with minimal toil.”

To adapt such thinking to the telecom industry, the gains from migrating to cloud native are primarily a reflection of, and driven by, the increasing convergence between network and IT domains. The first candidate domain that cloud technology can vastly improve on, and to a certain degree replace the heavy infrastructure, is the support for the telcos’ own IT systems, including the network facing Operational Support Systems and customer facing Business Support System (OSS and BSS).

But IT cloud alone is far from what telcos can benefit from the migration to cloud native. The rest of this report will discuss how telcos can and do embark on the journey to cloud native, as a means to deliver true business benefits through improved speed, agility, and scalability to their own networks and their customers.

The rest of the report include these sections:

  • The many stratifications of telco cloud
  • Clouds gathering on telcos
  • What we can expect to see on the telco cloud skyline
  • Telco cloud openness leads to agility and savings — Q&A with Azhar Sayeed, Chief Architect, Service Provider, Red Hat
  • Additional Resources

The full version of the report is available for free to download here.

Will COVID-19 be a catalyst for the digital transformation of enterprise communications?

Telecoms.com periodically invites expert third parties to share their views on the industry’s most pressing issues. In this piece Patrick Joggerst, CMO and EVP Business Development at Ribbon Communications, looks at how the current crisis may transform the way businesses communicate.

The Covid-19 pandemic is affecting people and industries around the world at an unprecedented velocity. While this situation is unprecedented and scary, we are seeing touching acts of kindness and a determination to keep going.

This is particularly true in our industry of telecommunications, which is fundamental to keeping society online and informed, as well as ensuring critical aspects of the economy can continue to function. For the majority of us who are currently not sick, maintaining our productivity at work in the face of this adversity is critical. It will support the economy both now and as things recover, and it will also help us to keep morale high during this period of prolonged isolation from our regular day-to-day life.

Countries around the world are now thinking about how to safely restart their economies, and telecommunications has a massive role to play. Businesses which had not been used to having remote employees have suddenly turned to our systems of communication and connectivity. We expect that many gains in comfort with these tools will be made soon, and smart providers are already seeing asking how they can  improve on what exists currently. Achieving this when there is so much uncertainty in the world will not be easy, but we are already seeing changes that will have a tremendous impact both now and in the future.

One obvious change, driven by the huge number of people now working from home or remotely, is an increase in awareness of the crucial role that communications technology can play in keeping employees engaged, customers served, and businesses running. Many businesses are now realising that they already have a solution that enables employees to seamlessly switch on and do their job wherever they have an internet connection. Others are quickly playing catch up. As a result, usage of platforms such as Microsoft Teams has risen rapidly in the effort to get as much the global workforce as possible online.

This shift in attitudes is especially apparent in the events industry – particularly in the tech and telecoms sectors – where there are questions around the future of major tech conferences in light of the cancellation of this year’s Mobile World Congress and many others. The cancellation of mass gatherings and face-to-face meetings is already forcing companies to ask whether we need to practice what we preach – ourselves included – and make significantly better use of the digital technologies that we produce.

We are realising that, at present, too many companies have no function to set up their employees from home, and those that do have too many different tools for communicating internally and with their customers. Be it email, chat or a video conference bridge, presently these tools are rarely connected through one, internet-based platform. The problem with this is that it makes communication clunky and it puts users off when things go wrong, thus preventing them from making the most of the technology at their disposal. With so many different applications being used by employees – which means numerous passwords, or in many cases the same password used many times – this also poses a significant security risk.

This need not be the case. Among the gamut of real-time communications technologies available to business in the 21st century – unified communications and Communications Platform-as-a-Service to name a few – there is the option connect all of the many tools that we currently use for communications and to organise them within one, centralised platform. This facility enables companies to embed real-time contextual communications capabilities, such as voice, video and chat, directly into their applications and websites, meaning a more seamless experience when interacting both internally and externally. This technology ensures that communication and the sharing of information can take place across multiple mediums wherever you are in the world with an internet connection.

This is not new technology, but right now we are seeing a catalysation of uptake in digital transformation of communications across many businesses – largely in the professional services sectors – as they are forced to find workarounds to stay online during the Covid-19 crisis. In ordinary times, these companies may not have invested in such technologies and while the catalyst for this investment is tremendously sad, we do believe that this shift to digital will have a tremendous and lasting benefit to business globally. When we emerge from this crisis, many businesses can and will be better for it, and that is something we can hold onto over the coming weeks.

 

Patrick Joggerst is the Chief Marketing Officer and Executive Vice President of Business Development for Ribbon Communications, a secure real time communications company. Previously, Patrick was EVP of Global Sales & Marketing for GENBAND. He has an accomplished career in communications spanning three decades, having managed sales and marketing organisations for both telecommunications service providers and technology suppliers. Prior to GENBAND, Patrick served as Vice President of Global Sales for BroadSoft. Patrick is a graduate of Georgetown University’s School of Foreign Service.

Facebook reignites the fires of its Workplace unit

Facebook has announced its challenge to the video-conferencing segment and a reignition of its venture into the world of collaboration and productivity.

Back in 2016, Workplace by Facebook was announced, an attempt to diversify the Silicon Valley giants output and create a starting point to work with enterprise organisations in way outside of advertising. Much was made of the launch at the time, but it effectively dwindled away into irrelevance over the years as profits failed to materialise.

While none of the senior executives have paid much attention to the business unit, Workplace is very rarely mentioned by the likes of Mark Zuckerberg, it has been bundling along in the background. After starting to charge customers for the service in October 2017, Workplace now has more than 5 million paid users, a fraction of rivals but it is admirable for a business unit which has not been given much attention or praise.

Last night would appear to be the relaunch of efforts to crack into a new market, capitalising on remote working trends being forced onto companies of all sizes around the world.

“The coronavirus crisis has forced us to rethink how we work,” said Julien Codorniou, VP of Workplace at Facebook. “Changes expected to happen over several years have happened in just a couple of months. And what many companies have realised is that it’s not about where your people are, but whether they are connected and informed.

“At Workplace we believe strongly that video will be central to the future of work – enabling companies to maintain community, while exploring the opportunities and diversity that flexible working can offer.”

This is of course a very relevant trend for today and could be even more so moving forward. 84% of Telecoms.com readers believed the work from home trend would continue following the relaxation of societal lockdowns, meaning at least some elements of the coerced digital transformation projects which have been sprint through today will remain in place.

Facebook might not be getting in on the ground floor of this trend, but the prior existence of Workplace and the power of the Facebook brand should be enough for it to muscle some benefits and business of the likes of Microsoft Teams, Slack, Zoom and various other businesses which are so richly benefitting from today’s adverse conditions.

As part of this latest push into the enterprise space, ‘Rooms’ has been introduced as a video conferencing feature, Live Video Improvements allows for Town Hall style engagements, Workplace on Portal likes the enterprise push with its consumer IOT gamble, Oculus for Business ties VR into the mix and Work Groups is a productivity and management toolset.

Overall, it is a solid effort to bring a broad set of functionality and features into a single offering, with the opportunity to tie into other emerging elements of the Facebook business. The first attempt to muscle into this market in 2016 might not have been very successful, but this one should certainly be taken more seriously by rivals.


Telecoms.com Daily Poll:

Can the sharing economy (ride-sharing, short-stay accommodation etc.) survive COVID-19?

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Verizon starts toying around with mid-band spectrum

With 5G falling flat in the US, it appears Verizon is taking matters into its own hands with an application to the FCC to experiment with mid-band spectrum, specifically, 3.7-3.8 GHz.

In fairness to the US telcos, there hasn’t been much opportunity to deliver 5G over the airwaves which are proving critical to the rest of the world. The ‘C-band’ spectrum is congested, though the FCC is currently in the process of clearing it and creating a dynamic spectrum sharing initiative which could be the envy of the world. Better late than never.

According to the application made to the FCC, Verizon is planning on running trials over the 3.7-3.8 GHz spectrum in several locations in three states, namely:

  • Basking Ridge, New Jersey
  • Westlake, Texas
  • Williamston, Michigan
  • Okemos, Michigan
  • Jenison, Michigan
  • Hudsonville, Michigan
  • Ada, Michigan
  • Lowell, Michigan
  • Sunnyvale, California

Many telcos around the world have been bragging of the benefits of mid-band spectrum, benefiting from a more palatable compromise between increased download speeds and coverage, the US telcos have been struggling with mmWave or low-band airwaves, neither of which can deliver on the much-hyped 5G promise.

The status quo of disappointment was fine as long as all the telcos are underwhelming, but there has been a recent development which should worry the likes of Verizon and AT&T.

As part of the merger agreement between T-Mobile US and Sprint, the new company will have access to all three tiers of spectrum. T-Mobile had been offering 5G over 600 MHz and mmWave already, which was not satisfactory, however it now has access to Sprint’s 2.5 GHz assets. A blend of low-, mid- and high-band spectrum licences should see a very effective delivery of 5G. This is already being delivered in Philadelphia, though it won’t be long until it is scaled by the ambitious challenger.

Looking at the 5G subscriber forecasts by analyst firm Omdia, this could have a very material impact on the balance of power in the US telco industry.

Forecast of 5G subscriptions in US (2020-2022)
Telco 2020 2021 2022
AT&T 5,581,572 14,416,872 29,301,757
Verizon 2,520,867 16,560,150 35,020,621
T-Mobile and Sprint 5,560,802 18,560,447 36,266,014

Source: Omdia World Information Series

Alone, T-Mobile would erode the subscription lead AT&T and Verizon hold over it today, but it would still be in third place. When you combine the T-Mobile and Sprint figures, you have a market leading firm.

Some might suggest the figures are incorrect as the merger would mean Sprint disappears, but this will not happen overnight. Legacy deals might well be kept in play for the short-term under the Sprint brand as integration projects and campaigns run, but they will be delivered over the same network. The very network which will have the most comprehensive and attractive blend of spectrum.

“Mid-band spectrum provides the sweet spot combination of capacity and coverage for modern 5G networks that the rest of the world is coalescing behind,” Chris Pearson, President of 5G Americas, recently wrote on a blog post championing 5G as a catalyst for recovery from the current global pandemic.

“The international standards forum 3GPP identified the spectrum range 3.3-4.2 GHz as the core 5G band for countries around the world. But the US has yet to auction any exclusive use licensed spectrum in that global mid-band range for 5G.”

Pearson has pointed to regulatory restrictions slowing progress in accessing mid-band spectrum, a critical component in ensuring 5G meets the promises being made by the telecoms industry. A lack of mid-band spectrum is problematic for numerous reasons.

Firstly, coverage can only be delivered only low-band airwaves, but this does not deliver speed upgrades as T-Mobile customers are finding out. Over mmWave means coverage is very limited, which AT&T and Verizon customers are discovering, while it means network deployment is also a lot more expensive as densification projects are very costly and time consuming. Latency is also falling short of all standards by all telcos.

Pearson is of course a champion for the telecoms industry, but the necessity of mid-band spectrum is also replicated at regulatory level.

“For America to be a global leader and win the race to 5G technologies, which we must do for both economic and national security reasons, we must actively identify and make available a key ingredient necessary for 5G networks and systems: mid-band spectrum,” FCC Commissioner Mike O’Reilly said in a letter to President Donald Trump in April.

“Yet, the pipeline is nearly empty, and our wireless providers lack sufficient mid-band spectrum to meet the exponential growth enabled by 5G networks and expected by users. I believe that only you personally, with your unique ability to cut through the bureaucratic stonewalling, can free the necessary spectrum bands to provide our wireless providers the means to succeed.”

If the US is to deliver the 5G promise it needs access to mid-band spectrum. Not only will this benefit consumers, but it will allow enterprise customers to deliver on the newly emerging 5G-powered business models. Without it, US corporations might fall behind international rivals who exist in countries where the mid-band airwaves are available. This is a mid- to long-term consequence, but one which would be much more damaging to the US economy on the whole.

As it stands, only T-Mobile is in an adequate position. This should be a concern for AT&T and Verizon.

T-Mobile is a company which has been very successful in recent years, growing from a position of irrelevance to a genuine threat. The comfortable spectrum position could act as another catalyst for growth, potentially creating a new leader in the US telecoms industry.


Telecoms.com Daily Poll:

How critical is mid-band spectrum in delivering 5G services?

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Taste of remote working whets employee appetites for more – O2

Research from O2’s enterprise business unit suggests the UK’s eyes have been opened to the benefits of working from home and employees want the temporary measures to remain, post-coronavirus.

With the coronavirus pandemic coercing companies through a digital transformation programme to enable remote working and the continuation of business operations, one question which has been asked is how many of these evolutions will be long-term. According to the research, 45% of Brits predict a permanent change to their employers’ approach to flexible working when lockdown lifts.

“With more of us working flexibly than ever before, for most businesses, digital infrastructure has become more important than physical infrastructure,” said Katy Liddell, Director Business Sales & Service at O2. “In the face of this, businesses must continue to evolve to meet the changing needs of their workforce to ensure they continue to attract and retain talent.”

Mobility has been a promised benefit of the digital economy, and while there are some companies embracing the concept, more traditional organisations have resisted. With COVID-19 forcing society into lockdown, these firms are being driven through a transformation programme at rapid speed, but there are notable benefits.

63% of the respondents to the survey would be prepared to live further away from the office should commuting commitments be reduced. The majority would be prepared to live up to an hour away, doubling the amount which currently do so. This is of course a significant benefit to organisations as well as employees, as talent retention might be increased, and it broadens the scope of recruitment to a wider region.

It also means less money would have to be allocated to physical infrastructure, as an office would not need to be as big if only a portion of the workforce will be in at any one time. These savings can be allocated to reinforcing digital infrastructure, but also investing in new projects.

Should flexible working be adopted by urban firms, 41% of city-dwellers would be tempted to move to more rural locations with seaside towns more than doubling their appeal, 16% of respondents.

But what is the potential for COVID-19 working conditions being adopted in the long run?

“It will be difficult to go back to normal ways of working after lockdown, as we’ve now proven that most of us can work from home – despite many companies previously telling employees that it wouldn’t be possible,” said Dr Heejung Chung, Reader in Sociology and Social Policy Director at the University of Kent.

“The UK has a huge challenge with the geographic distribution of wealth, and this exaggerates the problem of overpopulation in cities. If people could work from wherever they want to, without any fear of career penalty, this would create a huge opportunity for everyone.

“Even though the findings highlight that people will be willing to live up to one hour away from work in the future – that’s still constrained by what people feel they currently need to do. If we completely opened this up with consistent flexible working, and we had the right digital infrastructure in place, that time could be significantly increased.”

We suspect that while there will be some return to pre-COVID-19 activities, but for the majority the work from home trend will persist. This does not mean the end of the traditional office, but death to the idea that you have to be sat next to your boss every day. The myth that some industries cannot operate from home at all has now been officially debunked. Interestingly enough, some employees would want a hybrid situation to maintain sanity.

26% miss informal socialising with colleagues, while 30% have admitted working from home can be lonely. The wider social lockdown during the coronavirus pandemic does not help the situation, as a traditional social life does not currently exist. It is also worth noting that digital cannot replace some of the benefits of working face-to-face. We are social beings, albeit some are very miserable, so it would be very immature to suggest the extinction of traditional office spaces.

That said, for numerous digital industries, from cloud computing infrastructure to office virtualisation products and telecoms services, this is a very positive trend.

CSPs are being cut out of enterprise 5G projects – study

A new bit of research conducted by Omdia and BearingPoint//Beyond has found that only a small proportion of B2B 5G deals are being done by operators.

This finding is somewhat counter-intuitive when you consider that most CSPs also expect most of their 5G revenues to come from sources other than consumers. You’d think they would be putting a bit more effort into getting chummy with the enterprise sector in that case, but maybe they are and they’re just rubbish at it.

“Only one in five early enterprise 5G deals are CSP-led, proving that the way CSPs want to sell is at odds with the way in which businesses want to buy,” said Angus Ward, CEO of BearingPoint//Beyond. “What’s deeply concerning is that some of these early deals, such as the ones we see in automotive, cut out CSPs entirely – even connectivity is being provided by other suppliers.

“Businesses want to buy complete solutions that fit their needs and help them solve business problems, rather than individual technology assets. This is a multi-billion-dollar opportunity that CSPs need to address fast and requires CSPs to collaborate with enterprises and SMBs to better understand their reality.”

“CSPs will only realize value from 5G if they can identify, partner, codevelop, implement, and run a proposition with application-specific and industry-specific specialists,” said Evan Kirchheimer, Research VP, Service Provider & Communications at Omdia. “CSPs that can orchestrate such a complex web of relationships will be capable of capturing a greater share of the market and will not be relegated to being one of many connectivity providers competing solely on price.”

That’s the thing they seem to be especially rubbish at. Even now operators are selling on features and benefits rather than solutions, even though the rest of the world got that memo a decade or two ago. The report urges them to focus on applications and vertical-specific solutions rather than just banging on about how great 5G is.

According to Omdia almost 80% of early enterprise 5G deals involve the manufacturing, transport, utilities and energy/mining sectors, so that seems to be where the smart money is. Furthermore the COVID-19 pandemic seems to be making industry keener than ever to digitise and automate, presumably to minimise disruption when none of their employees are allowed to leave the house. As ever a culture change at CSPs is required, which they’ve shown little historical inclination towards.

IBM still searching for its place as it targets the edge

IBM’s struggle over the last decade has been well documented, but with a pivot following a pivot, the $34 billion Red Hat acquisition is beginning to make waves.

Today marks the launch of IBM’s Think Digital event, a virtual conference to discuss everything and anything IBM. There will of course be numerous announcements across the extravaganza, but the Red Hat focused boasts are some of the most interesting.

“In today’s uncertain environment, our clients are looking to differentiate themselves by creating more innovative, responsive user experiences that are adaptive and continuously available – from the data centre all the way out to the edge,” said Denis Kennelly, GM of IBM Hybrid Cloud.

“IBM is helping clients unlock the full potential of edge computing and 5G with hybrid multi-cloud offerings that bring together Red Hat OpenShift and our industry expertise to address enterprise needs in a way no other company can.”

Multi-cloud is a term which will become increasingly important over the next few years, as enterprise organisations aim to realise the power of cloud computing, marrying the benefits of ‘best in breed’ with rationalisation projects to improve operational efficiencies. On top of these complex operational challenges, the edge is becoming a much more prominent proposition for all in the ecosystem.

Built on Red Hat OpenShift, IBM will now offer several new services and products to enable companies in this new digital environment. The Edge Application Manager or Network Cloud Manager, for example, take IBM into new segments in the on-going pursuit of relevance.

“IBM’s new version of Edge Application Manager and introduction of Telco Cloud Manager is part of IBM’s hybrid cloud strategy which is now extending through telcos to the edge,” said Nick McQuire, VP of Enterprise Research. “The moves essentially put IBM’s marker down on edge computing which represents a new era of computing outside the data centre and the public cloud.

“With the emergence of 5G and low-latency applications which are acting as accelerators, telcos too must transform so IBM is hoping that its relationships with telcos globally, though Red Hat and its services and arm, will make it better placed than the hyper-scalers to take advantage of this shift.”

As McQuire points out, this is an effort to further differentiate the business, but also evolve the company to ensure it is operating in more sustainable markets in the future. The issue over the last few decades has not only been IBM’s relevance to market trends, but also its ability to compete in the new segments.

In January 2018, IBM reversed a trend which had been haunting the management team. This earnings call offered investors the first period of year-on-year revenue growth for almost six years. Big Blue had been on the decline, but it seemed to be turning around the business with its cloud computing unit and AI proposition Watson leading the charge.

However, the business failed to accelerate around the turned corner.

In the cloud computing segment, IBM failed to keep pace with market leaders, falling off as Amazon Web Services, Microsoft Azure and Google Cloud proved they were in a different league to the rest. And in AI, the segment has not boomed as some might have anticipated, though IBM still has one of the worlds’ leading technologies in Watson.

With these two ventures failing to live up to the lofty promise, although they did push the IBM business back into growth, Red Hat is supposed to offer an alternative play at the enterprise connectivity and IT markets.

What is worth noting is that AWS, Microsoft and Google, as well as other cloud competitors, have made moves into the enterprise edge market as well. With the emergence of 5G, the cloud industry could well be ready to move into the next phase of development, but the question is where does IBM fit in?

IBM has dipped its fingers in numerous pies, but Red Hat is a definitive move ahead of a new surge in the cloud market. Companies don’t spend $34 billion on organisations which are going to supplement offerings, this is another material shift in the IBM operations as it continues to search for its place in the digital ecosystem.

Jio is running riot again, but more synergies (sigh) are on the horizon

The Indian telecommunications industry might be crumbling around it, but Reliance Jio is still reaping the rewards of disruption and chaos, and there is much more to come.

Although the telco is now considered a staple of the Indian connectivity diet, it is easy to forget this is a company which is only five years old. This was not the first firm to emerge as a disruptive influence on the telco industry, but few could say they have enjoyed the rip-roaring success of Reliance Jio.

But most importantly, this might only be the tip of the iceberg, after all, this is only one business unit of a wider corporation.

“Our consumer businesses further strengthened their leadership positions and recorded robust growth on all operating and financial parameters during the year,” said Mukesh Ambani, Chairman and Managing Director of Reliance Industries.

“Both Retail and Jio, continue to work towards providing superior products and services to Indian consumers. We are fully committed on our investment plans in our consumer businesses and new initiatives.

“We are at the doorsteps of a huge opportunity and our rights issue and all other equity transactions will strengthen Reliance and position us to create substantial value for all our stakeholders.”

Reliance Jio results for financial year ending March 31 (USD ($), millions)
  Total Year-on-year
Total revenue 9,038 +40.7%
Profit 1,896 +63.5%
Subscribers 387.5 +26.3%

Source: Reliance Industries Investor Relations

With all the numbers heading in the right direction, you can see why Reliance Jio is an exciting business. Interestingly enough, not only are the total subscriber numbers shooting north, the team is also maintaining ARPU at roughly $1.73, while data usage is also increasing. There has been a surge of traffic on the network during the COVID-19 crisis as Indians are placed under lockdown orders, as much as a 50% increase on normality, but the network is holding steady.

These numbers are impressive, especially compared to the woes of competitors during this period, but Reliance Jio is still primarily a wireless business. Now it has established dominance in the mobile arena, the potential to lean into other areas is exciting. This means broadband and content, but also ventures into parallel industries.

It is a dreaded word, but there are synergies throughout the Reliance Industries portfolio.

The Reliance Industries business brought in revenues of roughly $87 billion through the last 12 months, with the business growing 5% year-on-year. The group has access to markets in 108 countries with operations in energy, petrochemicals, textiles, natural resources and retail, as well as telecoms.

Split of revenues by business unit for Reliance Industries (USD ($), millions)
Business unit Total revenue Year-on-year
Telecoms 9,038 +40.7%
Retail 21,510 +24.8%
Refining 51,159 -1.6%
Petrochemicals 19,177 -15.6%
Oil and Gas 423 -35.8%
Media 707 +4.7%

Every telco in the world wants to develop new products and services for enterprise customers and co-create new business ventures to marry connectivity and traditional business, while forward-looking enterprise organisations want to embrace connectivity. Cross-pollination within an existing corporation to meet these objectives creates a very exciting opportunity to Reliance Industries to become an industrial giant with connectivity at the core.

Part of this expansion into the novel and unknown is already being demonstrated with Reliance Jio’s partnership with Facebook.

In recent weeks, Facebook was announced a new investor in the digital business unit, taking a 9.9% stake for $5.7 billion. As part of this transaction, Facebook entered into a partnership with the digital and retail business units to create a digital payments platform, with WhatsApp playing a significant role, for a society which largely lacks traditional banking infrastructure.

This is a new venture for Reliance Industries, bringing in a third-party to help bridge the gap between two already successful business units. Many people talk about innovation, but this is a genuine example, creating new revenues without cannibalising existing units with the help of an industry partner. It is a case of 1+1+1=4.

As you can see from the image above, Reliance Jio is much more than a telecoms company nowadays. It is spreading its wings to various different technologies, segments and concepts, all of which can be developed into different revenue streams. This creates a significant amount of diversification in the TMT segments, but when combined with the different units of the Reliance Industries parent company it creates almost countless new opportunities.

Reliance Jio has been a very interesting company to keep an eye on over the last few years, but with the gaps between business units being bridged, and the eclectic mix of existing ventures, the opportunities for the wider Reliance Industries are very exciting.

Microsoft gets a bump-up in numbers thanks to COVID-19

The coronavirus outbreak is causing chaos in the financial markets, but with every crisis there are those who will benefit financially; Microsoft appears to be one.

The Redmond-based internet giant has reported its latest quarterly results, and it appears the lockdown is becoming a catalyst for profits. Total revenues increased 15% over the three-month period ending March 31, operating income was up 25% to $13 billion and net income jumped 22% to $10.8 billion.

With share price growing 4.5% in the final hours of trading, and a further 2.6% during the pre-market hours, Microsoft’s market capitalisation is more than $1.35 trillion, making it the most valuable corporation worldwide.

“We’ve seen two years’ worth of digital transformation in two months,” said Microsoft CEO Satya Nadella.

“From remote teamwork and learning, to sales and customer service, to critical cloud infrastructure and security – we are working alongside customers every day to help them adapt and stay open for business in a world of remote everything.”

The coronavirus pandemic has forced families behind closed doors and employees to work from home. With lockdowns still in place in many of the worlds developed markets, new norms are bedding in and Microsoft is certainly one of those companies who will benefit.

Breakdown of Microsoft financial performance by business unit
Business unit Revenues Year-on-year
Productivity and Business Processes $11.7 billion 15%
Intelligent Cloud $12.3 billion 27%
More Personal Computing $11 billion 3%

Source: Microsoft Investor Relations

With more people working remotely, more businesses are being forced through a digital transformation process, and much more aggressively than most would have liked. To enable efficient work process, more cloud resources will have to be consumed by enterprise customers, though it is likely additional products will also be taken on in areas such as security.

For a company which has pivoted over the course of the last decade to position cloud front and centre of the business, current trends are incredibly beneficial.

For Microsoft, the revenues for the Azure cloud computing products surged 59% over the three months, while Teams now has more than 75 million daily active users, tripling over the last two months. 20 organizations with more than 100,000 employees are now using Teams, with new features being introduced each week. Live events for up to 100,000 attendees can now be streamed across the platform. Office 365 now has 258 million paid seats, while usage of Windows virtual desktop tripled this quarter.

But it is not just the enterprise-focused business units who are profiting.

Microsoft 365 Personal and Family now has more than 39 million subscribers, while Teams has been opened to consumer users for the first time. Windows 10 now has more than 1 billion monthly active devices, up 30% year-over-year, and Xbox has seen a boost also.

With children not being allowed to play outside in the garden and adults not allowed to play inside pubs, an obvious beneficiary was going to be the online entertainment segment. Netflix has already demonstrated financial gain with 27% uplift in revenues and a 22% boost in subscribers during its own earnings call, and Xbox has seen a similar lift.

Xbox Live currently has 19 million active users, while the Xbox Game Pass has more than 10 million subscribers. Although the team did not offer specifics when it came to the cloud gaming venture, Nadella said Project xCloud has “hundreds of thousands of users” in the beta stages in seven markets, with eight more launching over the next few weeks.

One question which does remain is whether this boost in revenues will be sustained?

“In our consumer business, we expect continued demand across Windows OEM, Surface and Gaming from the shift to remote work, play and learn from home,” said Microsoft CFO Amy Hood. “Our outlook assumes this benefit remains through much of Q4, though growth rates may be impacted as stay-at-home guidelines ease.

“In our commercial business, our strong position in durable growth markets means we expect consistent execution on a large annuity base, with continued usage and consumption growth across our cloud offerings.”

The risk of this benefit is that everything returns to the pre-COVID-19 way of life. Offices gradually become re-populated and the lessons from remote working are forgotten by traditional organisations. This would mean the bump in revenues would not be sustained by the cloud companies.

Although we suspect some traditional organisations might return to pre-COVID-19 working practises, many will adopt at least a portion of the newly transformed way of life. The extremity of the current bounty for the cloud companies will not be sustained, but there should be a shift in mentality over the long-term.

We tend to agree with the cloud companies that this enforced digital transformation programme will bed-in, though perhaps not as enthusiastically as the cloud companies believe. These are salespeople let’s not forget, selling the potential of Microsoft to investors. There will be sustained benefits, but some in society will be intolerant of evolution, so will returns to the ways of old.

Telia Finland is doing its bit to help combat coronavirus

The Finnish branch of Telia is supporting government policy making with real-time, but anonymised, user movement data and helping SMEs  with ad minutes giveaways.

To prevent government policies becoming knee-jerk reactions, precise data is critical. In countries where the population takes privacy rights seriously, there needs to be a fine balance between what the government should know and what should be kept out of its reach.

Telia Finland recently announced it is providing the Finnish government with anonymised data of user movement between cities and regions. The government can evaluate the effectiveness of its policies as well as use the data as basis for new measures to contain and supress the spread of the coronavirus.

Called ‘Telia Crowd Insights’, the data is drawn from Telia’s network, then anonymised and analysed on an aggregated basis. Theoretically, data cannot be traced back to individual customers.

“We collect the information from a large geographical area, which makes it impossible to identify individuals. After this, the fully anonymized and aggregated data can be expanded into views with which decision-makers can draw accurate conclusions on the movements of the masses from,” said Petri Seppänen, Head of Business Development at Telia.

“With our service, we can contribute to controlling the situation with the coronavirus and support authorities with knowledge-based management. We have rapidly tailored a report on top of our standard Crowd Insights product, specifically suitable for this exceptional situation,” Seppänen added. He also suggested that if the current initiative proves useful for the Finnish Government Telia may provide similar support to governments in other Nordic countries

Since the beginning of March, the Finnish government has adopted a phased approached to restraining social contact as a means to break the chain of virus spread. The Telia data will prove useful to test the effectiveness of the most recently policy to put under strict control the transport connection between Uusimaa, the region in south Finland where the capital area is located and where the COVID-19 cases are most concentrated, and the rest of the country.

So far Finland has coped better than her Nordic neighbours. The total number of 28 deaths, at the time of writing, puts the mortality rate per million population at 5, compared with 9 in Norway and 29 in Denmark, both of which have much stricter lockdowns in place for longer. The highest mortality rate per million population among the Nordic countries is seen in Sweden at 36.

Meanwhile it is apparent that the onslaught of COVID-19 and the government policies to lock down social life, has made the small- and medium-sized enterprises (SMEs) particularly vulnerable. This is bad news for countries like Finland where there are only a small number of big, multinational enterprises while over 90% of all the registered companies employ fewer than 10 people.

To help these small business survive, Telia Finland started giving away their national advertising space in Finland, including ad minutes on national television as well as ad space in big newspapers, social media, and online, which would be beyond the financial means of most of these small businesses. Telia aims to help 100 selected companies each week when the campaign is running, including local restaurants, car repair shops, craftsmen, and others. The campaign started in the last week of March.

“We believe that those who can help, should help. This situation affects us all. As a responsible company we want to do our part to ensure that businesses and people in Finland are able to get through this devastating situation,” said Jari Rapo, Vice President and the Head of Enterprise Business at Telia Finland. “As a big ICT and media corporation we have the possibility to offer our platforms and channels to those in need. Situations like this usually force businesses to cut costs from marketing and this is where we can offer our helping hand.”

Telia is calling on other big enterprises to join them in the endeavour to help save the SMEs in the biggest crisis the country’s economy has seen since the early 1990s, when Finland’s biggest trading partner, the Soviet Union, collapsed.

“We try to help as many companies as possible but we cannot do this alone. We believe that by working together and leading with an example we can help hundreds of small businesses stay afloat,” said Kaisa Pajari, Senior Communications Advisor of Enterprise Business at Telia Finland. “This is why we invite other big companies to join our cause by offering their expertise and platforms to those in need. It is not only Finland where small businesses are affected and we hope our example leads to a global movement. Big companies for example offer their advertising space or digital services.”