Apple said to be sniffing around Intel’s modem business

Having recently ditched Intel’s modem business like a bad habit, gadget giant Apple is reportedly now thinking of buying it.

The rumour comes courtesy of The Information, which says it got the scoop from no less than four unnamed people who we’re told have been briefed on the discussions between Apple and Intel. Specifically Apple is said to be interested in Intel’s German modem operations, which is where much of the 5G R7D will have taken place.

Intel found itself as an unwitting pawn in Apple’s legal battle of will with mobile chip giant Qualcomm. Apple wasn’t happy with what Qualcomm was charging for its modems and took to the courts to do something about it. This was always just a form of negotiation, a crucial part of which was Apple’s insistence that it could just walk away from Qualcomm if it didn’t lower its prices.

The problem with this is that there are very few 5G modem players in town and even fewer that aren’t affiliated to a smartphone competitor of Apple’s. One of those was supposed to Intel, which found itself constantly defending its ability to deliver a competitive 5G modem in the face of understandable scepticism from the industry and, increasingly, from Apple itself.

Eventually the Emperor was revealed to be naked and Apple was forced to settle with Qualcomm once it became clear Intel wasn’t able to deliver. Intel wasted little time in throwing in the towel entirely on 5G modems once their only customer had ditched them and promptly retreated into the shadows, vaguely muttering about IoT.

But that doesn’t mean its efforts to deliver a 5G modem were entirely wasted. Through acquisition and organic R&D Intel must have picked up a thing or two about delivering 5G radio over the years. While Apple is forced in the mid term to rely on the loathed Qualcomm, it ultimately aspires to modem self-reliance. Since Intel’s 5G unit is presumably available at a knock-down price following its public humiliation it wouldn’t be at all surprising to see Apple snap it up, if only for a laugh.

Sprint/T-Mobile US merger set for a $3 billion boost

It looks like Sprint could trouser up to three billion bucks when it flogs its prepaid subsidiary Boost in a bid to placate antitrust authorities.

The Sprint/T-Mobile US merger saga has been going on for so long that people are starting to not care, but a recent set of negotiated concessions were enough to convince the head of the FCC to wave the deal though. The DoJ isn’t so sure, but they might as well go ahead with the placatory measures in the hope that it comes around eventually.

One of the biggest concessions will be selling Boost, a wholly-owned subsidiary of Sprint that specialises in prepaid contracts. TMUS is pretty hot on prepaid, so regulators concluded their combined efforts would take too much choice out of the prepaid market. Since this public commitment doesn’t put Sprint in the strongest negotiating position, the challenge is to get a decent price for Boost.

According to a Reuters report a company called Q Link Wireless is prepared to shell out somewhere between $1.8 billion to $3 billion for Boost. This is coming from the Q Link CEO, apparently, so we must assume it’s legit, but it also seems like a pretty broad range. What would make him pay almost double his lower figure? Some kind of bidding war presumably, so maybe he’s trying to scare off anyone not prepared to go to three bil.

The official line is that it depends on what he sees once he looks under the hood, with Sprint not yet having publicly disclosed key metrics such as churn, popular tariffs, etc. But FreedomPop is reportedly talking to private equity about getting involved and they would apparently be prepared to go up to four bil, so this has the feel of an auction carried out via the media.

Portfolio Agreement with IHS Markit

Continued Portfolio Management through exchange of Agribusiness Portfolio for further scale and capability in Informa Tech.

London: Informa (LSE: INF.L), the International Exhibitions, Events, Information Services and Scholarly Publishing Group, today announces further Progressive Portfolio Management (“PPM”) through an agreement with information services group, IHS Markit, that sees Informa’s Agribusiness Intelligence Portfolio exchanged for IHS Markit’s leading portfolio of TMT brands, further enhancing Informa Tech.

“This agreement is very positive for both IHS Markit and Informa, increasing the focus of each company on core markets where it has particular strengths and a long-term commitment to invest and grow” said Lance Uggla, CEO IHS Markit and Stephen A. Carter, Group Chief Executive, Informa PLC.

The agreement forms part of Informa’s PPM programme designed to focus the Group on brands and customer markets with the greatest opportunities for growth and expansion. It significantly strengthens Informa’s market position in Telecoms Media & Technology, whilst providing an attractive new home for the Group’s specialist information brands within the Agribusiness Intelligence Portfolio, with an owner committed to investing and expanding in this market over the long-term.

The expansion of Informa Tech includes a portfolio of B2B brands providing specialist research and data to customers through a range of subscription products and consulting. It extends and enhances Informa’s international reach through its strong presence in Asia and North America, and further strengthens its position in key sub-sectors of the TMT market, most notably in Information Technology, Communications Technology, Security Technology and Emerging Transformational Technology.

The enlarged Informa Tech will have annual revenues of around $350m and offer a wide range of B2B services, making it an attractive international partner for informing, educating and connecting Technology businesses and professionals.

Stephen A. Carter, Group Chief Executive, Informa PLC, said: “At Informa, we are focused on improving our depth and specialisation around attractive customer markets. Our ambitions for Informa Tech will be further enhanced by the addition of IHS Markit’s TMT portfolio, extending our customer and international reach, creating a strong platform for future growth.”

Lance Uggla, CEO, IHS Markit, said: “The Informa Agribusiness Intelligence portfolio is a clear extension of our Chemical and Downstream businesses and builds our existing data, pricing, insights, forecasting and news services within our Resources segment. Agriculture is the largest end chemical market in the world and this transaction expands our capabilities into fertilizers and chemical crop protection while substantively expanding our capabilities in biofuels.”

Transaction Details

The portfolio agreement is structured as two separate transactions that value the two businesses at equivalent EBITDA multiples, with Informa contributing an additional $30m in cash to IHS Markit to reflect the larger EBITDA contribution from the IHS Markit business. The transactions are expected to close in July 2019 and are subject to customary closing conditions, including US regulatory approval.

Europe wants another look at Telia’s move into broadcasting

Swedish telecoms group Telia wants to buy Bonnier Broadcasting but the European Commission reckons that might be bad for telly in Sweden and Finland.

Last summer Telia announced it was getting its cheque book out once more to buy Swedish company Bonnier Broadcasting, which runs TV channels in Sweden and Finland. At the time this seemed like a classic multiplay move, in which operators get into content in order to offer more complete communications bundles to their customers.

This sort of thing has taken place all over Europe for years, but the European Commission’s current mood seems to be hostile to such moves. “The in-depth investigation we are opening today aims to ensure that Telia’s proposed acquisition of Bonnier Broadcasting will not lead to higher prices for or less choice of TV channels for consumers in Finland and Sweden,” said Commissioner Margrethe Vestager.

The niggle is that Telia already licenses TV channels from broadcasters to put into bundles. “The proposed acquisition of Bonnier Broadcasting by Telia Company would create a vertically integrated player in the audio-visual industry in Denmark, Finland, Norway, and Sweden,” said the EC press release.

This could mean that Telia won’t let its telco competitors license Bonnier stuff, won’t let them advertise against Bonnier stuff and could even deny access to streaming applications to customers of its competitors. Those are all reasonable concerns but surely they apply to most M&A. Furthermore you’d think anti-competitive behaviour by a telco would be a matter for national regulators.

Telia has responded by saying it figured this would happen. In a press release headlined ‘Investigation into acquisition of Bonnier Broadcasting moves into phase 2 in line with expectations’, Telia indicated it had been in the loo-p with the EC’s concerns from the start and will use this phase to put its concerns to rest. It will presumably promise to be really, really nice to its competitors if the EC let it have this one tiny little acquisition.

“A phase 2 investigation into the acquisition of Bonnier Broadcasting is fully in line with our expectations and we now look forward to continuing the constructive dialogue with the European Commission,” said Jonas Bengtsson, General Counsel at Telia. We’re confident that any concerns following the in-depth investigation will be resolved.”

Orange drops €515 million on yet another cybersecurity acquisition

French telecoms group Orange is buying Dutch cybersecurity services outfit SecureLink as it looks to become a major security player.

Orange’s security division already brings in around €300 million a year and this acquisition will almost double that. It comes just a few months after Orange spent an undisclosed amount to buy Securedata, which put €50 million more revenue into the pot, so probably cost in the region of €100 million.

SecureLink seems to be more about cybersecurity services and consulting than the actual software, but that includes a fair bit of value-added reseller work. It employs 660 people and has 2,100 customers. The total headcount for the whole of Orange’s cybersecurity division will be around 1,800 so this is a pretty major boost.

“Cybersecurity is a growing priority for companies of all sizes, and we believe the two most important success factors are Scale and Proximity,” said Hugues Foulon, Executive Director of Cybersecurity at Orange. “Scale because today’s threats are global, complex, and require matching protection capabilities. Proximity because in the global IT world, you want a trusted local partner to secure your most strategic assets.

“With the acquisition of SecureData and SecureLink, Orange has the highest scale to anticipate and fend off attacks, as well as local defense teams in all the main European markets, positioning the combined organisation as the go-to defense specialist. I am looking forward to building the integrated organisation with Michel Van Den Berghe, CEO of Orange Cyberdefense, Thomas Fetten and all the teams”.

“We have been very impressed by the ambition and successful development of Orange Cyberdefense over the past few years, and are very excited to build a pan-European leader of cybersecurity together,” said Thomas Fetten, CEO at SecureLink. “Orange Cyberdefense, SecureData and SecureLink are highly complementary and share a common vision for the sector, and the combined organisation will be in a phenomenal position to address the needs of our customers, partners and employees.”

Merger of Vodafone Australia and TPG blocked

The Australian competition authority has decided that the telco merger of Vodafone and TPG amounts to excessive consolidation and has blocked it.

This decision comes after months of agonising by the Australian Competition and Consumer Commission (ACCC), which started looking into the deal last December, several months after it was first proposed. Vodafone is one of three major MNOs over there, while TPG is one of three major fixed-line players.

“Broadband services are of critical importance to Australian consumers and businesses, across both fixed and mobile channels,” ACCC Chair Rod Sims said. “Given the longer term industry trends, TPG has a commercial imperative to roll out its own mobile network giving it the flexibility to deliver both fixed and mobile services at competitive prices. It has previously stated this and invested accordingly.

“Vodafone has likewise felt the need to enter the market for fixed broadband services. These moves by TPG and Vodafone are likely to improve competition and future market contestability. TPG is the best prospect Australia has for a new mobile network operator to enter the market, and this is likely the last chance we have for stronger competition in the supply of mobile services.

“Wherever possible, market structures should be settled by the competitive process, not by a merger which results in a market structure that would be subject to little challenge in the future. This is particularly the case in concentrated sectors, such as mobile services in Australia.

“TPG has a proven track record of disrupting the telecommunications sector and establishing itself as a successful competitor to the benefit of consumers. TPG is likely to be a vigorous and innovative supplier of mobile services in Australia, offering cheaper mobile plans with large data allowances, and competing strongly against incumbents Telstra, Optus and Vodafone.

“TPG has the capability and commercial incentive to resolve the technical and commercial challenges it is facing, as it already has in other markets. TPG already has mobile spectrum, an extensive fibre transmission network which is essential for a mobile network, a large customer base and well-established telecommunications brands.

“TPG is also facing reducing margins in fixed home broadband due to the NBN rollout. Further, there is the growing take-up of mobile broadband services in place of fixed home broadband services which is expected to increase especially after the rollout of 5G technology. After thorough examination, we have concluded that, if this proposed merger does not proceed, there is a real chance TPG will roll out a mobile network.”

It’s great that Sims offered such a detailed rationale, but he could have just said “We want to force Vodafone and TPG to diversify through organic investment rather than M&A.” He doesn’t seem to buy TPG’s line that the Huawei ban makes it impossible for it to build its own mobile network, but it seems to be a big leap of faith to conclude that blocking this merger will automatically result in a change of heart.

It’s Red Hat, but not as we know it

Software vendor Red Hat is celebrating the launch of Enterprise Linux 8 and the approval of its acquisition by IBM with a change of wardrobe.

As arguably the best known company to be named after an item of clothing, the hat itself is central to Red Hat’s brand and image, so any decision to muck about with it, therefore, is not to be taken lightly. But when incoming CMO Tim Yeaton chatted to people about the logo he was distressed to hear they found the dude wearing the hat to be sinister and even evil.

Showing some of the qualities that presumably lead to his promotion Yeaton quickly concluded that having an ‘evil’ logo was a potential marketing liability and dedicated the next year and a half to resolving the matter in an appropriately open source way. This exhaustive process apparently came to a simple conclusion: ditch the dude, resulting in the dude-less logo you see above.

The evolution of the Red Hat logo coincides with a couple of other pretty significant milestones for the company. Tech giant IBM was recently advised that the US Department of Justice has concluded its review of the Red Hat acquisition and said it’s got no problem with it and as far as the US is concerned this is an unconditional green light. IBM apparently reckons the whole thing will be wrapped up later this year.

Lastly Red Hat recently announced the first major new version of its Enterprise Linux platform – RHEL 8. As a platform designed with datacenters in mind, RHEL is of increasing relevance to telcos as they move ever more of their stuff into the cloud and the edge. Red Hat is positioning RHEL 8 as the platform for the hybrid cloud era and name-dropped lots of other associated buzzwords like containers and devops. We wouldn’t even know which end of the box to open with this stuff, so hopefully this vid as well as some canned quotes will help you understand what the big deal is.

 

Stefanie Chiras, vice president and general manager, Red Hat Enterprise Linux, Red Hat

“Red Hat Enterprise Linux 8 embraces the role of Linux as IT’s innovation engine, crystallizing it into an accessible, trusted and more secure platform. Spanning the entirety of the hybrid cloud, the world’s leading enterprise Linux platform provides a catalyst for IT organizations to do more than simply meet today’s challenges; it gives them the foundation and tools to launch their own future, wherever they want it to be.”

Tibor Incze, technical lead, Red Hat Enterprise Linux, Datacom Systems

“The capacity for Red Hat Enterprise Linux 8 to not only run multiple versions of the same application or database on a specific operating system but to also have a clear and efficient way to manage them is a significant benefit to Datacom and our customers. As we continue to execute on our internal DevOps strategy, we’re also pleased to see improved container capabilities in the operating system and extensive automation, all factors that will help us bring differentiated services to our end users.”

John Gossman, distinguished engineer, Microsoft Azure

“We have seen growth in applications being deployed using Red Hat Enterprise Linux on Azure, including Microsoft SQL Server, for cloud-native, hybrid, and cloud migration scenarios. We’re excited to see what customers will create with Red Hat Enterprise Linux 8 on Azure with continued integrated support from Microsoft and Red Hat, as well as the operating system’s new capabilities to build applications for workloads like AI.”

Arlen Shenkman, executive vice president, Global Business Development and Ecosystems, SAP

“Red Hat Enterprise Linux 8 for SAP Solutions offers high availability capabilities, which are important for SAP workloads, and downtime is unacceptable for business critical applications such as S/4HANA. For more than two decades, we’ve worked with Red Hat on maintaining a stable, open foundation for SAP applications, helping our customers make smarter decisions, faster, across the hybrid cloud.”

Iliad flogs a bunch of towers to reduce debt pile

French telecoms conglomerate Iliad is selling most of its tower assets in France and Italy to Cellnex for €2 billion.

Iliad has debts in excess of €4 billion and seems to think paying some of them off might be an idea. Fellow French giant Altice has recently had to do a bunch of debt refinancing but it apparently had to pay a premium to do so. European telcos are increasingly inclined to sell and lease back assets like towers to free up cash for 5G investments and that sort of thing.

In France Iliad will be selling 70% of the company that manages 5,700 cell sites to Spanish infrastructure specialist Cellnex, while in Italy it’s offloading the whole company that takes care of 2,200 sites. Right now the whole process is at the ‘exclusive negotiations’ stage but that seems like a formality.

“This transaction is part of a long term industrial strategy allowing us to accelerate rollout of our 4G and 5G networks and to increase Iliad’s investment leeway,” said Thomas Reynaud, Iliad’s CEO. “This transaction supports the group’s new growth and innovation cycle. It enables more efficient infrastructure roll-outs in the future while meeting the challenges of further increasing territory coverage.”

On top of this Cellnext is acquiring 90% of the company that owns 2,800 sites in Switzerland from Salt.

“[These deals] allow us not only to reinforce our position as the main independent infrastructure operator in France, but also to decisively strengthen our platform in Italy, a key a strategic market, and significantly expand our foothold in Switzerland,” said Cellnex CEO Tobias Martinez.

“Furthermore, Cellnex strengthens its role as a neutral host by having two major anchor tenants within its sites network. The combined effect of these agreements is an increase of our current  portfolio across six European countries by more than 50% –to 45,000 sites in total. The latter allows us to properly assess the very quantum leap nature of these deals.

“A greater density and capillarity of our sites networks means a differential added value that enhances Cellnex’s role as a natural partner for all mobile operators in Europe, meeting their densification needs in the current 4G roll-out while accelerating that of 5G.”

T-Mobile Sprint merger cast into doubt once more

The US Department of Justice might not let the merger go through in its current form, according to reports.

The WSJ has the scoop, citing those handy people familiar with the matter once more, who also seem to have been chatting to Reuters. According to the latter, which isn’t paywalled, the DoJ has concerns about the deal as it’s currently structured. The news caused shares in both companies to fall and their respective CEOs to tweet coded dissent.

Both John Legere and Marcelo Claure said the article is, respectively, untrue and not accurate. While on the surface these might appear to be absolute rebuttals, it’s actually a bit more nuanced than that. Legere says the premise of the article is untrue without detailing what he thinks that premise is, while any small part of the piece could be inaccurate without the overall claim being so.

Here’s the opening paragraph of the WSJ story: “Justice Department antitrust enforcement staff have told T-Mobile US Inc. and Sprint Corp. that their planned merger is unlikely to be approved as currently structured, according to people familiar with the matter, casting doubt on the fate of the $26 billion deal.”

There’s not much else to say at this stage but the process certainly seems to be dragging on. Presumably there has been some discussions between the two companies and someone on the DoJ side decided to up the pressure on TMUS and Sprint to compromise via this mini-leak. Let’s see.