A look back at the biggest stories this week

Whether it’s important, depressing or just entertaining, the telecoms industry is always one which attracts attention.

Here are the stories we think are worth a second look at this week:


GSMA cosies up to O-RAN Alliance

The GSMA, the telco industry lobby group, has announced a new partnership with the O-RAN Alliance to accelerate the adoption of Open Radio Access Network (RAN) technologies.

Full story here


Europe backtracks on market consolidation opposition

The General Court of the European Court of Justice has annulled a decision made in 2016 to block the merger between O2 and Three in the UK, potentially opening the door for consolidation.

Full story here


Huawei CFO loses first legal battle in extradition case

Huawei CFO Wanzhou Meng, the daughter of Ren Zhengfei, has lost her first legal battle in Canada and will now have to face an extradition case.

Full story here


Data privacy is in the same position as cybersecurity five years ago

It has taken years for the technology and telecoms industry to take security seriously, and now we are at the beginning of the same story arc with privacy.

Full story here


Indian telco association pushes for ‘floor tariffs’ on data pricing

In an open letter to India’s telecoms regulator, the Cellular Operators Association of India (COAI) has pressed for quicker decision making on pricing restriction rules.

Full story here


UK’s National Cyber Security Centre launches another Huawei probe

The National Cyber Security Centre (NCSC) has confirmed it is attempting to understand what impact potential US sanction directed towards Huawei would have on UK networks.

Full story here


 

Google looking at Vodafone Idea investment – report

Google is rumoured to be considering an investment in struggling Indian telco Vodafone Idea as Facebook positions itself for an assault on the market.

India has long been held in high regard for the potential of its economy, but this promise has often failed to translate into profits. Hope has been renewed with Reliance Jio democratising connectivity across the country, and it seems to be getting US investors excited.

According to reports in the Financial Times, Google is looking at an investment in the struggling Vodafone Idea, as much as 5%, as a pathway to Indian riches.

Some have suggested Google’s parent company was considering an investment in Reliance Jio, though these rumours are highly unlikely to progress any further with Facebook’s investment in the disruptive telco. That said, an investment in Vodafone Idea would be a very interesting transaction.

Firstly, Google would like to enter the Indian market. Reliance Jio has forced rivals to re-evaluate tariffs, opening-up connectivity to the masses. Democratised connectivity is a remarkable opportunity for Silicon Valley, one which is not being ignored by anyone else. Google has numerous business units which would benefit; balloons to offer connectivity in rural environments, a cloud computing unit and mobile-native applications from search to video and payments.

Secondly, Vodafone Idea needs input, both financially and operationally. It is facing a considerable spectrum bill from the Government and parent company Vodafone has said it would not be contributing anymore funds. Operationally, something has to change if it is to compete with Reliance Jio and bringing in one of the worlds’ most innovative companies would certainly be a step forward.

This could be a cut-price opportunity for Google to get a solid foot through India’s front door at a time where the market potential is looking very attractive.


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How do you feel about market consolidation in Europe?

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Indian telco association pushes for ‘floor tariffs’ on data pricing

In an open letter to India’s telecoms regulator, the Cellular Operators Association of India (COAI) has pressed for quicker decision making on pricing restriction rules.

The COAI is in a very interesting position currently. As an association representing the telecoms industry, it is tasked with responsibilities to lobby government authorities for favourable rules. But the question is what are favourable rules?

The association has three core members; Bharti Airtel, Vodafone Idea and Reliance Jio. Two of these members would like more stringent rules on pricing to protect their interests from the disruptive pricing strategies of the third, Reliance Jio.

Jio entered the market at the end of 2015 with data plans to undermine the traditional telcos and free phone calls for new customers. Bharti Airtel and Vodafone Idea suffered because of it and have been calling for more stringent rules to prevent the disruptive Jio from causing even more chaos and continuing to erode profits.

This is a painful position for a telco-neutral association to be in, though it is in favour of floor pricing.

“We expected an early decision by the Authority, on having the Floor Tariffs for the Data services,” Rajan Mathews, Director General of the COAI said in the letter to the Telecom Regulatory Authority of India (TRAI).

“While, we acknowledge that the recent situation on account of COVID-19 might have caused some constraints, however the Authority has started conducting the OHD through online process on various other topics. Accordingly, we request the Authority to kindly hold an OHD on this issue at the earliest.

“The industry is looking forward to an early conclusion on this important matter with great interest and we therefore request the Authority for an early decision on the same.”

The longer this consultation from the TRAI continues, uncertainty prevails. Uncertainty is the enemy of progress and investment in the telecoms industry. A speedy decision would be the biggest net gain for the industry, though it is questionable whether anything can be done quickly in the telecoms industry.


Telecoms.com Daily Poll:

Should privacy rules be re-evaluated in light of a new type of society?

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Jio carves out space for yet another US investor

It seems the US moneymen have a taste for Indian connectivity as General Atlantic becomes the fourth third-party firm to invest in the money-making machine which is Jio Platforms.

New York-based private equity firm General Atlantic has become the latest company to write a handsome $860 million cheque as table stakes for a 1.34% stake in Reliance Industries’ digital venture. Reliance Jio Platforms is looking like a very popular focal point for US investors attempting to tap into the rapidly developing Indian digital ecosystem.

In a matter of four weeks, Reliance Industries has managed to convince Facebook, Silver Lake, Vista Equity Partners and General Atlantic to part with almost $9 billion.

“I am thrilled to welcome General Atlantic, a marquee global investor, as a valued partner,” said Mukesh Ambani, Chairman of Reliance Industries. “I have known General Atlantic for several decades and greatly admired it for its belief in India’s growth potential.

“General Atlantic shares our vision of a Digital Society for India and strongly believes in the transformative power of digitization in enriching the lives of 1.3 billion Indians. We are excited to leverage General Atlantic’s proven global expertise and strategic insights across 40 years of technology investing for the benefit of Jio.”

While such warm words are usually offered irrelevant as to who the new investor is, General Atlantic is a useful company to have looped into the equation.

In the existing investment portfolio is NoBroker.com, an Indian consumer-to-consumer real estate transaction platform, Doctolib, digital healthcare platform in Europe to connect health professionals and patients, and Quizlet, an online learning platform. This is a company which has experience in the technology world, but also a number of bets which would be very complementary for the existing ventures in Reliance Jio Platforms.

“As long-term backers of global technology leaders and visionary entrepreneurs, we could not be more excited about investing in Jio,” said Bill Ford, CEO of General Atlantic.

“We share Mukesh’s conviction that digital connectivity has the potential to significantly accelerate the Indian economy and drive growth across the country. General Atlantic has a long track record working alongside founders to scale disruptive businesses, as Jio is doing at the forefront of the digital revolution in India.”

To call Jio disruptive is somewhat of an understatement, and the business model does seem to be drawing more attention from some very interesting organisations around the world. With the telco business unit as the tip of the spear, there is a clear opportunity to drive forward a secondary wave of digital businesses as connectivity get democratised through the country.

Doctolib, one of General Atlantic’s investments, is a very interesting platform for a country where traditional healthcare infrastructure is sporadic. The Jio digital ecosystem could act as a springboard for the app in the market, while Jio is then invested in another venture. Its collaboration and differentiation.

Reliance Jio, the telecoms business, is a powerful force, but the most interesting ideas are the ventures emerging today. The businesses which are enabled by the connectivity revolution which is sweeping the country. This is why the likes of General Atlantic are interested in invested in Reliance Jio Platforms now, not two years ago; the vision is much bigger than phone calls and streaming cat videos.


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Reliance Jio signs a third deal to add another $1.5bn to its bank account

Vista Equity Partners has become the third-largest investor in Reliance Platforms, purchasing a 2.32% equity stake in the disruptive business for $1.5 billion.

Following similar transactions with Facebook and Silver Lake, Vista will be become the third-largest investor in a business which is driving digital transformation and evolution in one of the worlds’ most attractive economies. Reliance Platforms, the business unit of Reliance Industries which incorporates all telecoms and digital ventures, is quickly becoming one of the worlds’ most interesting digital investments.

“We believe in the potential of the Digital Society that Jio is building for India,” said Robert Smith, CEO of Vista. “Mukesh’s vision as a global pioneer, alongside Jio’s world-class leadership team, have built a platform to scale and advance the data revolution it started.

“We are thrilled to join Jio Platforms to deliver exponential growth in connectivity across India, providing modern consumer, small business and enterprise software to fuel the future of one of the world’s fastest growing digital economies.”

As Smith highlights, Reliance Platforms is more than a telco. Jio, the telecoms business unit, might be the disruptive force in India being used to democratise connectivity, but this is only one branch of the business. Following behind the telecom revolution, Reliance Platforms is attempting to encourage digital transformation programmes in SMEs, healthcare and entertainment, through digital currencies, streaming platforms and big data.

This is perhaps what is exciting international investors; Jio is so much more than a telecoms giant. The team has the vision to appreciate that telecoms is simply the foundation on which to build bigger things atop. This is the difference between a telco which will be relevant into the future, and one which is at risk of falling into the commoditised connectivity business model.

For example, with low-cost connectivity tariffs, more Indian consumers and SMEs are encouraged into the digital economy. A telco will make money by enabling this, but it is a utility with limited potential. Reliance Platforms is using this as a vehicle to enable alternative digital payment platforms in a joint venture with Facebook, to create growth revenue streams not just sustainable ones. The profits will be realised through the second wave of disruption.

It is realising connectivity is only the first step, a nuance which is not evident through the communications of other telcos. This vision is perhaps what is most interesting to investors.

“Like our other partners, Vista also shares with us the same vision of continuing to grow and transform the Indian digital ecosystem for the benefit of all Indians,” said Mukesh Ambani, MD of Reliance Industries. “They believe in the transformative power of technology to be the key to an even better future for everyone.”

The business model which is slowly emerging out of Reliance Platforms is starting to look very exciting. Cut price and free voice tariffs might not make that much money, but they don’t have to if there is success in the secondary business models which are being enabled through the democratisation of connectivity.

This is the sort of business evolution which should be evident throughout the telecommunications industry but isn’t.

A look back at the biggest stories this week

Whether it’s important, depressing or just entertaining, the telecoms industry is always one which attracts attention.

Here are the stories we think are worth a second look at this week:


O2 and Virgin Media are merging to form BT-busting connectivity giant

Telefonica and Liberty Global have confirmed plans to merge UK operations, O2 and Virgin Media, to challenge the connectivity market leader BT.

Full story here.


privacyHalf of Americans approve of using smartphones to track infected individuals

Pew Research Center asked thousands of US adults what they thought about how personal data should be used to help tackle the COVID-19 pandemic.

Full story here.


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.

Full story here.


Streaming venture leads Disney to 29% revenue surge

The Walt Disney company has reported a 29% increase for year-on-year revenues thanks to its streaming bet, but COVID-19 has forced the team to withhold dividend payments.

Full story here.


Silver Lake pays a premium for a chunk of Jio Platforms

Private equity firm Silver Lake has shelled out $750 million for a 1.15% stake in the Indian telco, which represents a 12.5% premium on the price Facebook recently paid.

Full story here.


Online gaming seems coronavirus proof, but is it recession proof?

Online entertainment and gaming companies are seeing COVID-19 surges in revenues, but are these businesses in a position to resist the pressures of a global recession?

Full story here.

Cost of data in China drops 93% as US still looks overly expensive

China telcos have slashed the average price of data over the last twelve months, though the US, South Korea, New Zealand and Canada are still look incredibly expensive.

While there is no perfect price for data tariffs as the nuances of each market vary quite considerably, looking at the data provided by Cable.co.uk, it is becoming clear that some markets are better at managing the cost of connectivity than others.

It is always worth remembering that despite telcos stating they would like to give consumers as much as possible, they will charge as much as deemed tolerable for wallets. Consumers are only valuable to telcos when they pay enough money.

Average Price per GB – select countries (USD, $)
Country Global ranking Price per GB Year-on-year
India 1 0.09 -65.4%
Italy 4 0.43 -52.3%
China 12 0.61 -93.9%
Australia 16 0.68 -62.5%
France 30 0.81 -62.9%
Thailand 51 1.23 -55.8%
UK 59 1.39 -79.1%
Spain 75 1.81 -52.2%
New Zealand 180 6.06 -38.2%
USA 188 8.00 -35.4%
South Korea 202 10.94 -27.7
Canada 209 12.55 +4.3%
Cuba 212 13.33 +5.7%

Source: Cable.co.uk

“Many of the cheapest countries in which to buy mobile data fall roughly into one of two categories,” said Dan Howdle of Cable.co.uk.

“Some have excellent mobile and fixed broadband infrastructure and so providers are able to offer large amounts of data, which brings down the price per gigabyte. Others with less advanced broadband networks are heavily reliant on mobile data and the economy dictates that prices must be low, as that’s what people can afford.

“At the more expensive end of the list, we have countries where often the infrastructure isn’t great but also where consumption is very small.”

This explanation from Howdle is reasonable, but it begs the question as to why some countries are at the north end of the scale, the US, Canada and South Korea for example.

The US is of course a significantly larger country than some which are further up on the list, but the small number of major MNOs allow for scaled economics with larger subscriber bases. Canada is a very large country, but the population is concentrated into smaller regions. South Korea is another unusual one, considering roughly 20% of the population is located in the capital, Seoul.

There will of course be numerous explanations and incremental contributing factors, such as wealth of the nation or cost of spectrum licenses, but then again there will also be nations with similar demands who are offering significantly cheaper data.

One reason data is more expensive in some places might simply be because these telcos are able to charge more. In the absence of a rival offering a disruptive pricing plan to bring down the cost of data, the telcos will charge as much as they can to be as profitable as possible.

Silver Lake pays a premium for a chunk of Jio Platforms

Private equity firm Silver Lake has shelled out $750 million for a 1.15% stake in the Indian telco, which represents a 12.5% premium on the price Facebook recently paid.

In the baffling Indian numbers, Silver Lake is handing over ₹5,655.75 crore at an equity value of ₹4.90 lakh crore (~$65 billion). When Facebook bought 10% of the company a fortnight ago, the valuation was more like $57 billion. While we don’t doubt Jio has had a cracking couple of weeks, something else must be going on for the price to shoot up so.

“I am delighted to welcome Silver Lake as a valued partner in continuing to grow and transform the Indian digital ecosystem for the benefit of all Indians,” said India’s richest man Mukesh Ambani, Chairman of Reliance Industries, Jio’s parent. “Silver Lake has an outstanding record of being a valuable partner for leading technology companies globally. Silver Lake is one of the most respected voices in technology and finance. We are excited to leverage insights from their global technology relationships for the Indian Digital Society’s transformation.”

“Jio Platforms is one of the world’s most remarkable companies, led by an incredibly strong and entrepreneurial management team who are driving and actualizing a courageous vision,” said Egon Durban, Silver Lake Co-CEO. “They have brought extraordinary engineering capabilities to bear on bringing the power of low-cost digital services to a mass consumer and small businesses population. The market potential they are addressing is enormous, and we are honored and pleased to have been invited to partner with Mukesh Ambani and the team at Reliance and Jio to help further the Jio mission.”

The reason for the premium remains unclear. It could be that the mere fact Facebook got involved made Jio Platforms 12.5% more attractive as an investment. Then again, as Tech Crunch speculates, Silver Lake could have bought a lower class of share, or is anticipating an imminent IPO. From Jio’s perspective, these infusions of cash could be contingencies against the depressed global economy or could be a war chest for further investment.

Nokia lands $1 billion RAN deal with Bharti Airtel

Finnish kit vendor has signed a multi-year deal with Indian operator Bharti Airtel to deploy a bunch of its SRAN gear all over the country.

Nokia Single RAN consists of multipurpose hardware and common software for 2G, 3G, for TD- and FD 4G and 5G technologies, according to the Nokia site. It’s all about reducing complexity, increasing cost efficiency and future-proofing your RAN, apparently. While this isn’t specifically a 5G deal, Nokia apparently reckons it could turn into one fairly easily.

It wasn’t specified in the press release, but we are advised that the value of the deal is close to a billion bucks, which is a nice win for the cash-strapped vendor. Around 300,000 radio units will be deployed across nine of the 22 telecoms circles in India over the next three years, assuming anyone is allowed to leave the house in that time. So it looks like an SRAN unit sets you back around three grand.

“This is an important agreement for the future of connectivity in one of the world’s largest telecoms markets and solidifies our position in India,” said Nokia CEO Rajeev Suri. “We have worked closely with Bharti Airtel for many years and are delighted to extend this long-standing partnership further. This project will enhance their current networks and deliver best-in-class connectivity to Airtel customers but also lay the foundations for 5G services in the future.”

“We are committed to continuously invest in emerging network technologies to provide a best-in-class experience to our customers,” said Gopal Vittal, CEO (India and South Asia) at Bharti Airtel. “This initiative with Nokia is a major step in this direction. We have been working with Nokia for more than a decade now and are delighted to use Nokia’s SRAN products in further improving the capacity and coverage of our network as we prepare for the 5G era.”

This is especially welcome news for Nokia in the light of it completely missing out on any of the 5G RAN action in China. While it’s still a distant third behind Huawei and Ericsson in the 5G deal race, massive wins like this may not only give it some 5G action by stealth, they could also increase the confidence of other operators to give Nokia a go.