Still with added video!
Unperturbed by its rubbish M&A track record, US operator Verizon thinks this is a good time to be in the video conferencing game.
BlueJeans Network focuses on B2B video conferencing, but is a relatively small player compared to the likes of Zoom. This is reflected in a reported selling price of around $400 million, which is a hundredth of Zoom’s current market cap. Having said that, with all the fresh challenges its sudden surge in popularity have created, that valuation is proving volatile.
The plan is to merge the BlueJeans cloud platform with Verizon’s unified communications as-a-service offering as soon as the deal is complete. This would appear to represent a pivot towards B2B by Verizon, following its disastrous acquisitions of AOL and Yahoo. It also seems to mark the end of Verizon’s bizarre fetish for antiquated internet companies.
“As the way we work continues to change, it is absolutely critical for businesses and public sector customers to have access to a comprehensive suite of offerings that are enterprise ready, secure, frictionless and that integrate with existing tools,” said Tami Erwin, CEO of Verizon Business. “Collaboration and communications have become top of the agenda for businesses of all sizes and in all sectors in recent months. We are excited to combine the power of BlueJeans’ video platform with Verizon Business’ connectivity networks, platforms and solutions to meet our customers’ needs.”
“The combination of BlueJeans’ world class enterprise video collaboration platform and trusted brand with Verizon Business’ next generation edge computing innovation will deliver highly differentiated and compelling solutions to our joint customers,” said Quentin Gallivan, CEO of BlueJeans Network. “We are very excited about joining the Verizon team and we truly believe the future of business communications starts today!”
Not everyone is quite as excited about the move however, as the following selection of commentator tweets shows.
When a telco buys something, it becomes immediately uncool. They’ll probably change the name to MomJeans. https://t.co/6IlCgzQWs5
— Phil Harvey (@futurephil) April 16, 2020
It is entirely more likely that Verizon will simply crush BlueJeans to death, but the nightmare of Verizon throttling Zoom and giving faster access to its own product is staring us right in the face. https://t.co/tHC1VjRFRo
— nilay patel (@reckless) April 16, 2020
Getting acquired in the middle of a boom in videoconferencing for sub $500m when Zoom is worth $40bn means BlueJeans must really have some problems going on. https://t.co/MwEBsc35HA
— Laurie Voss (@seldo) April 16, 2020
It’s hard to be too down on Verizon for buying into an ultra-hot sector at a relatively low price. The chances of the move succeeding are significantly improved by the fact that it will be absorbed into a larger package rather than maintained as a standalone service. There is a strong chance that the move towards remote working forced by the coronavirus pandemic will become permanent, which should make unified comms a more valuable resource. If so, Verizon seems to have put itself in a stronger position to exploit that trend with this move.
Ambitious Spanish tower specialist Cellnex is going to drop at least €375 million to the towering operations of operator NOS.
That will buy it around 2,000 sites, including standalone towers and rooftop antennas. There’s also some kind of optional spend of up to €175 million to buy up to 400 new sites and general ‘perimeter increase’ activities over the next six years. NOS is signing a 15-year agreement to use the sites in the time-honoured buy-and-lease-back fashion.
“The agreement reached with NOS reinforces the nature and the neutral and independent operator profile that characterises the Cellnex model,” said Cellnex CEO Tobias Martinez. “Following the very recent agreement to acquire OMTEL, also in Portugal, this transaction exemplifies the sense of being an operator which, precisely due to its neutral and independent nature, can consolidate long-term collaboration projects with the various MNOs and telecom operators who access our infrastructures to roll out their telecommunications networks.”
Cellnex is on a bit of a tear at the moment, with an aggressive acquisition strategy apparently vindicated by some pretty decent recent earnings. For companies with cash to spare, the coronavirus pandemic may well be presenting some exceptional bargains as the resulting economic freeze will be making a lot of companies prioritise short-term cash flow.
US software giant Microsoft has made one its most aggressive moves into the telecoms sector with the acquisition of virtualization specialist Affirmed Networks.
Affirmed is all about virtualized mobile network solutions and Microsoft seems to have decided it’s time it got more involved in that sort of things too. It’s already a datacentre and cloud giant, of course, so as telecoms increasingly moves in that direction it make perfect strategic sense for Microsoft to do so too.
“At Microsoft, we intend to empower the telecommunications industry as it continues its move to 5G and support both network equipment manufacturers and operators in their efforts to find solutions that are faster, easier and cost effective,” blogged Yousef Khalidi Corporate Vice President of Azure Networking at Microsoft.
“Today, I am pleased to announce that we have signed a definitive agreement to acquire Affirmed Networks. Affirmed Networks’ fully virtualized, cloud-native mobile network solutions enable operators to simplify network operations, reduce costs and rapidly create and launch new revenue-generating services.
“This acquisition will allow us to evolve our work with the telecommunications industry, building on our secure and trusted cloud platform for operators. With Affirmed Networks, we will be able to offer new and innovative solutions tailored to the unique needs of operators, including managing their network workloads in the cloud.”
We don’t know what Microsoft paid because Affirmed is private, but it will be in the hundreds of millions. If traditional telecoms vendors aren’t alarmed by this acquisition then they should be. It seems like a classic example of the IT sector taking advantage of the new opportunities presented by NFV and virtualization in general and if Microsoft starts sniffing around things like OpenRAN then outright panic would seem appropriate.
Norwegian operator group Telenor has decided it makes sense to have all its Asian interests looked after by one big boss.
Jørgen C. Arentz Rostrup will assume the Head of Asia position for Telenor in May of this year, assuming he’s allowed to go into the Singapore office. The usually efficiencies and economies of scale that are usually trotted out to justify corporate moves such as this seem to have the more specific purpose of allowing Telenor to do a bit more M&A in the region if it feels like it.
“I see great potential in bringing the Asian clusters together as one strong team with a mandate to explore the potential across our markets, and to actively engage with the business environments in the region,” said Rostrup. “I am eager to join forces with the teams in Asia to continue this journey of creating value and driving growth.”
“Asia continues to be a growth engine for Telenor Group,” said Sigve Brekke, President & CEO of Telenor Group. “The development of the region has led to increasingly similar maturity levels across the markets, which has diminished many of the differences between our two clusters. By uniting these markets into a single, Asia unit and building a stronger Asia presence, we are well-equipped to fully realise the potential across the region and seize opportunities for growth.
“Jørgen has been invaluable to the work we have done over the past years to setting us on a solid course of growth and modernisation. Through Telenor’s operational excellence measures, a sharper focus on what creates value, and a dedication to uncovering efficiencies over time, the company is one of the best-positioned global telcos. With him at the helm in Asia, we will enable an even tighter focus on growth, modernisation, and new opportunities in the region.”
Just over half of Telenor group revenues come from Asia, with operations in Bangladesh, Pakistan, Malaysia, Myanmar and Thailand accounting for 176 million subscribers. Moves like this do make you wonder why they weren’t done sooner, if they’re such a great idea. In this case it seems to have something to do with cluster harmonization, but Telenor presumably spends every day celebrating its decision to pull out of India.
Swedish kit vendor Ericsson has dug up enough loose change to buy Spanish firm Genaker, which does Mission Critical Push-to-talk (MC-PTT) stuff.
In its simplest form this is old-school ‘walkie-talkie’ technology, as has been used by emergency services, security workers, etc for decades. For ‘mission critical’ networks, in which the most important thing is to always be able to communicate with everyone else on that network immediately, there is still no better model, it seems, until we’re all assimilated into some kind of hive mind.
The reason Ericsson is keen on it is that the 5G era has made mission-critical communications, private networks and bespoke comms services in general all the fashion in the industrial world. Since B2B is where most of the new cash from 5G is expected to come, if kit vendors aren’t all over it then they risk being overtaken by specialists and new entrants to that market.
“We have worked with Genaker as a partner in Mission Critical Applications for many years and we are now taking this step to further strengthen our end-to-end offering,” said Monica Zethzon, Head of Solution Area Communication Services, Ericsson. “We’re really excited that the Genaker team is joining us and that we can bring the value of their expertise to our customers.“
“It is an honour that Genaker becomes the base of Ericsson’s global MC-PTT offering,” said Miquel Teixidor, Co-founder and CEO of Genaker. “Together we will leverage the best of the two companies, and we’re excited about this opportunity to offer customers around the world our next-generation MC-PTT solution.”
Genaker only has a head-count of 30, so this isn’t a major acquisition in terms of size. But it takes on additional significance as a strategic statement of intent. When network slicing properly kicks in there is expected to be a lot of demand for bespoke networks tailored to specific use-cases. Ericsson is wise to be trying to skate to where the puck will be with moves like this.
Finnish kit vendor Nokia is mulling new ways of improving its bottom line according to a report.
Bloomberg spoke to those ‘people familiar with the matter’ who reckon Nokia is having to explore strategic options in an apparent bid to improve its margins. It’s all a bit vague and generic at this stage, with everything from balance-sheet adjustments to full-blown mergers and acquisitions on the table.
Nokia’s M&A options would appear to be limited. The only company it could realistically merge with is Ericsson, but the obstacles to such a move are so great and numerous that it feels absurd to even contemplate it. Yes, there would be plenty of those cherished synergies but even if Ericsson fancied the idea, surely regulators would have none of it, especially with the Huawei situation developing as it has.
Flogging some non-core business units would raise a few euros, but Nokia has already done a fair bit of that, so there may not be a lot of fat left to trim. Creative accounting might flatter the numbers for a couple of quarters, but would do nothing to address the underlying causes of the situation that has brought about this rethink.
This feels like a trial balloon exercise from Nokia, designed to see what the market thinks of such an idea. They answer seems to be indifference, as Nokia’s share price hasn’t really reacted at all. Alternatively it could be a bit of light flirting with the US state, which has previously mulled the prospect of investing in Nokia and Ericsson in the name of securing its telecoms infrastructure supply.
The New York Federal District Court has ruled T-Mobile US and Sprint can finally go ahead and merge if they can still be bothered.
“Today was a huge victory for this merger and now we are finally able to focus on the last steps to get this merger done!,” exclaimed T-Mobile CEO John Legere. “We want to thank the Court for its thorough review of the facts we presented in our case. We’ve said it all along: the New T-Mobile will be a supercharged Un-carrier that is great for consumers and great for competition.
“The broad and deep 5G network that only our combined companies will be able to bring to life is going to change wireless … and beyond. Look out Dumb and Dumber and Big Cable – we are coming for you … and you haven’t seen anything yet!”
“This is a big win and a big day for the New T-Mobile!” exclaimed Mike Sievert, COO of T-Mobile. “Now we can get to work finishing what we set out to do – bringing a new standard for value, speed, coverage, quality and customer service to U.S. consumers everywhere and truly changing wireless for good. Now we’re laser-focused on finishing the few open items that remain but our eye is on the prize: finally bringing this long-awaited merger and all the goodness it will deliver to a close as early as April 1, 2020. We are so ready to bring the New T-Mobile to life!”
“Judge Marrero’s decision validates our view that this merger is in the best interests of the U.S. economy and American consumers,” said a calmer Sprint Executive Chairman Marcelo Claure. “Today brings us a big step closer to creating a combined company that will provide nationwide 5G, lower costs, and a high-performing network that will invigorate competition to the benefit of all mobile wireless and in-home broadband consumers.
With the support of federal regulators and now this Court, we will focus on quickly completing the few remaining necessary steps to close this transaction. I am proud of my Sprint team’s dedication, passion and resilience throughout the merger review process, and we are ready to make the vision of a New T-Mobile a reality.”
A group of Latin American oligarchs seem to have had a whip-round to buy a majority stake in all Telefónica operations in the continent, bar Brazil.
The rumour comes courtesy of Spanish newspaper El Mundo, which claims the fattest cats in each of the Spanish-speaking Latin American countries Telefónica currently operates in have clubbed together to bid for a controlling stake in Telefónica Hispanoamérica for €10 billion, which they would then distribute among themselves. It looks like the plan then would be to IPO another quarter of it to claw back some of the cash.
We’re told the bid originated from Colombia, but covers Argentina, Chile, Venezuela, Ecuador, México, Perú and Uruguay too. It should be stressed that when El Mundo approached Telefónica about the story, it denied there is evidence of the offer, which seems a tad slippery. It’s certainly no secret that Telefónica wants to flog its Hispanoamérica unit, since it formally announced the plan late last year.
If any of this is accurate it values Telefónica Hispanoamérica at around €20 billion, which is serious money. But even if it sold all of it for cash, that would still only halve the epic debt pile it has managed to accumulate over the years. On the flip side it would then have the liquidity to double down on its European and Brazilian operations, which should make things interesting in those markets.
CityFibre has announced it will acquire FibreNation from TalkTalk for £200 million, as the latter has struggled to source funds to help it meet the three million FTTH connections it targeted.
As part of the deal, TalkTalk will become a wholesale customer across both consumer and business markets. Work has already begun on the full-fibre network, offering services to more than 100,000 premises in York and Dewsbury, and even with projects set to break ground in Harrogate, Knaresborough and Ripon, reaching the 3 million objective was becoming more difficult to imagine.
With cash-rich backers in the form of Goldman Sachs, CityFibre can more realistically deliver on these promises. The firm has upped its target to 8 million FTTH homes-passed by 2025, up from 5 million.
“Today’s announcement establishes CityFibre as the UK’s third national digital infrastructure platform allowing millions more consumers and businesses to benefit from access to faster, more reliable services,” said CityFibre CEO Greg Mesch.
“The UK is a service-based economy, and this runs best on full fibre. Ensuring national coverage is critical and this can only be achieved by driving infrastructure competition at scale. This deal demonstrates the appetite from industry to see it established.”
Rumours of this transaction has been swirling through the industry for some time now, though it appears the talks were put on hold following the free-broadband-for-all pledge made by the Labour party ahead of last months’ General Election. Nationalisation of Openreach would certainly undermine investment decisions, though the duo now believe the deal should be complete by March.
For CityFibre, this is a page from the playbook of old. This is a firm which was founded after purchasing and merging several, independent distressed financial assets.
FibreNation was founded in 2018 as an independent company to deliver the TalkTalk fibre rollout strategy. Under the leadership of CEO Tristia Harrison, TalkTalk has evolved into a much more combative telco, attempting to disrupt the connectivity status quo and regularly criticising its more established rivals. Harrison’s management and PR approach seems very similar to CityFibre CEO Greg Mesch.
Taking advantage of the enthusiasm in fibre-connectivity, TalkTalk set out an ambitious target of reaching 3 million homes with full-fibre broadband by 2025. However, attracting investment from third-parties soon appeared to be the only means by which this could be done. This is where TalkTalk has struggled in recent months.
Infrastructure investor InfraCaptial, part of the M&G Group, looked to be the most likely candidate to foot the £1.5 billion bill, though talks fell through. Reports suggest InfraCaptial did not value an 80% stake in FibreNation in the same way as TalkTalk. Since that point, TalkTalk has been in discussions with the likes of iCon and Macquarie, though it seems CityFibre was the best option.
While TalkTalk will become the anchor tenant for the network as it is being deployed, this is far from best-case scenario. TalkTalk has said the funds will be used to ‘strengthen the balance sheet’, which could mean numerous things, though as the team reported net debt of £1.041 billion during the last earnings call, it would be fair to assume it will be used to reduce the burden.
For CityFibre, this is a win. The company was founded by collecting distressed fibre assets and merging into a single entity, and it has spoken about doing the same to fuel growth in the future.
CityFibre has ambitions to challenge the likes of Openreach and Virgin Media on a nationwide, scaled basis, though the number of ‘alt-nets’ is creating a fragmented competitive landscape. This is good for the consumer, as price wars will emerge, though it is not sustainable for the industry. However, if you have a cash-rich parent-company like CityFibre, it is a waiting game; smaller fibre companies will become financially stressed, presenting good value for network growth by acquisition.
Adding FibreNation’s assets into the mix, CityFibre will soon have a fibre footprint in more than 100 towns and cities outside of London. It is quickly achieving the scaled vision the management team have often spoken about and will soon become a much more viable rival to the Openreach wholesale business.
As a result of the agreement with TalkTalk, CityFibre has also had to restructure its partnership with Vodafone. The original agreement offered exclusivity for Vodafone to deliver fibre services for the time which networks were being deployed in each city, though the new agreement offers Vodafone 12-month exclusive basis as homes become available for service in each of the 12 towns and cities covered in phase one of the deployment. CityFibre will now be free to discuss terms with other ISPs.
With Vodafone and TalkTalk confirmed customers of CityFibre, and rumours swirling that it might be about to poach Sky from Openreach, the firm is adding commercial credibility to an extensive bank account. It does appear CityFibre is evolving from the moany, thorn in the side it was a few years back, to a genuine, nationwide alternative to Openreach.