New Zealand sensibly abandons latest 5G auction and just hands the spectrum over

A chunk of mid-band spectrum was due to be auctioned-off in New Zealand around now, but COVID-19 has caused a change of plan.

The Radio Spectrum Management department of the NZ government recently made the following announcement: “In May 2020, the Auction for short-term, early access rights in the 3.5 GHz band for 5G services (Auction 20) was cancelled. This was due to the constraints imposed by the Covid-19 pandemic. Instead, a direct allocation process will be undertaken. Offers will be made of 40 MHz to Dense Air, 60 MHz to Spark, and 60 MHz to 2degrees.”

Spark and 2degrees are two of the three Kiwi MNOs, alongside Vodafone NZ, which apparently has quite enough mid band spectrum already, thank you very much. Dense Air is a UK-based company that specialises in small cell connectivity. Understandably Spark and 2degrees are happy with the decision.

“Securing 3.5GHz spectrum was critical for the rollout of a full suite of 5G services, so we would like to acknowledge the Government for facilitating the allocation, which will enable us to proceed with our planned 5G roll out at pace,” said Spark CEO Jolie Hodson. “We plan to switch on 5G sites in a number of major centres and regions across the North and South islands over the next year. To maintain this momentum, we are keen to work with Government to accelerate the timeline for the longer-term spectrum auction, which is currently scheduled for November 2022.”

“This decision makes sense. At a time when the impact of Covid-19 means operators are having to make tough calls on how they spend their capital, it needs to be focused on the networks delivering the capacity people need – and can use – today,” said 2degrees Chief Executive Mark Aue. “At the same time, access to 5G spectrum will allow 2degrees to continue its 5G network planning and site acquisition so it can build and test the technology. This will provide time for 5G uses cases to develop, and initial deployments, in advance of long term spectrum rights that will power national 5G services from late 2022.”

Vodafone seems to have kept quiet on the matter, but it must be secretly annoyed at the good fortune of its rivals. Maybe it will have a quiet word with the government behind the scenes, asking for a cheeky bit of spectrum sometime in future, to level the playing field once more.

It’s good to see that governments and regulators are capable of forgoing easy money when the circumstances demand radical action. Besides, public money is already being thrown around in a bid to stave off another great depression, so a few Kiwi buck is just a drop in the ocean. But credit where it’s due, this is not the time for the public sector to be extorting money from the private sector and NZ deserves credit for acknowledging that and acting accordingly.

Samsung gets a 5G Spark in New Zealand

Korean tech giant Samsung has scored a much needed 5G deal win with Kiwi operator Spark.

Every day we hear about the latest 5G-related achievement from Nokia, Ericsson and Huawei. Even ZTE seems to be rediscovering its mojo after the traumas of 2018. But it’s easy to forget that Samsung has a networking division to go with nearly every other part of the tech and industrial world it seems to have a toehold in.

So it almost came as a surprise to hear that Spark, which vies with Vodafone for be the number one MNO in New Zealand, is getting Samsung involved in building its 5G network. Spark has been trying out Samsung’s ‘end-to-end’ gear for 5G testing for a year or so. The narrative would have us believe that the trials went so well, Spark decided to double down on Samsung, which will now be providing it with 5G NR massive MIMO radios.

“We are pleased to have Samsung as a 5G vendor for our mobile services,” said Rajesh Singh, General Manager of Value Management of Spark New Zealand. “Not only are they able to offer us a huge amount of global best practice and network infrastructure knowledge, they can also provide a proven immersive 5G experience for our customers. One of the main reasons we selected Samsung was their 5G NR solutions which deliver enhanced network capability, high quality connections, and state of the art technology.”

“We are excited to begin this collaboration with Spark, which is a big step in bringing the power of 5G to New Zealand,” said WooJune Kim, Head of Global Sales & Marketing, Networks Business at Samsung Electronics. “We are looking forward to helping Spark unlock the future of mobile connectivity, and are ready to support the new level of 5G experiences they will deliver to their customers with our next generation network solution.”

Samsung has been getting lots of 5G work in South Korea, which seems to be giving it a good shop window to the rest of the world. With Chinese vendors being treated with caution by any country that wants to stay in America’s good books, MNOs keen on maintaining their multiple network supplier strategy may be increasingly inclined to give Samsung a second look.

Nokia celebrates 50th 5G deal win but it still lags Ericsson and Huawei

Being chosen by Spark New Zealand for some 5G work marks Nokia’s 50th 5G commercial contract, but Ericsson and Huawei have got more.

“I am thrilled to see Nokia 5G equipment chosen to power 5G initially in Spark’s heartland areas,” said Tommi Uitto, President of Mobile Networks at Nokia. “We are committed to keeping New Zealanders at the cutting edge of technology and are confident they will benefit from Nokia’s global reach, expertise and agility.”

“We are delighted to be continuing our partnership with Nokia in building our 5G network across New Zealand,” said Rajesh Singh, General Manager of Value Management at Spark New Zealand. “The local teams have collaborated extensively on a 5G solution that delivers on the outcomes we want to drive in 5G, not just in the RAN, but also in the end-to-end network.”

All this thrilling and delightful business takes Nokia’s 5G commercial contract count to 50. That’s a decent tally, but in the great global 5G race that still only earns it a bronze medal. Ericsson keeps a public tally of its 5G wins and puts the total at 76, with 31 of those publicly named and 23 transmitting shiny new 5G beams as you read this. Nokia says it’s involved in 16 live networks.

Huawei is less transparent about these things but the last we heard it had signed at least 60 5G contracts. Given Nokia’s recent admission about dropping the ball on 5G, the fact that it’s still in touch with the other two isn’t a bad effort, but if that gap continues to increase we might see fewer press releases referring to Nokia deal wins in future.

Nokia gets 5G gig from new-look Vodafone New Zealand

Just days after Vodafone flogged its New Zealand business, Nokia has been unveiled as its 5G network partner.

Even though it has been sold, the company still has permission to keep the Vodafone brand and even has favourable roaming rates on other global Vodafone networks. So to all intents and purposes it’s the same setup, just with the returns ending up in someone else’s pockets.

The decision to go with Nokia for the 5G network was presumably months in the making and represents the continuation of a longstanding partnership, so the involvement of the new ownership was presumably minimal.

“We are excited to be joining forces with Vodafone New Zealand, our partner of over 20 years, to bring 5G to New Zealand,” said Tommi Uitto, Nokia’s President of Mobile Networks. “With this agreement, we will enable Vodafone New Zealand to deliver 5G services to their customers and create an even more connected society.”

“We are excited to be working with Nokia to deliver a commercial 5G network for Vodafone and New Zealand, building on our proud heritage of being first to deliver to Kiwis, the best mobile technology available at the time, including 2G, 3G, 4G and now 5G,” said Tony Baird, Technology Director, Vodafone New Zealand.

Vodafone New Zealand will launch 5G in Auckland, Wellington, Christchurch and Queenstown later this year, which will be the first 5G network in the country. It looks like it’s buying the full monty of 5G stuff from Nokia, including RAN, core and design services, so this will serve as a decent shop window for Nokia.

‘Five Eyes’ align security objectives but where does this leave Huawei?

After a meeting in London, the members of the ‘Five Eyes’ intelligence alliance has released a communique to reinforce the relationship and outline quite generic objectives.

As with all of these communiques, the language sounds very impressive, but in reality, nothing material is being said. In this document, the UK, US, New Zealand, Australia and Canada have committed to countering online child sexual exploitation and abuse, tackling cybersecurity threats and building trust in emerging technologies.

Although nothing revolutionary has been said, the reinforcement of this alliance leaves questions over Huawei’s role in the aforementioned countries.

“There is agreement between the Five Countries of the need to ensure supply chains are trusted and reliable to protect our networks from unauthorised access or interference,” the communique reads. “We recognise the need for a rigorous risk-based evaluation of a range of factors which may include, but not be limited to, control by foreign governments.”

Government officials will never be so obvious as to point the finger at another nation, at least not most of the time, but it isn’t difficult to imagine who this statement is directed towards.

So where does this leave Huawei? Banned in Australia and the US, denied work in New Zealand and on thin ice in Canada. The only market from the ‘Five Eyes’ where is does not look doomed is the UK. But can the other members of the intelligence club trust the UK while Huawei is maintaining a presence in the country’s communications infrastructure?

The US has already spoken of withholding intelligence data should the partner nation allow Huawei to contribute to 5G networks, and this alliance is already very anti-Huawei. In re-affirming its position to the alliance, the UK is certainly sending mixed messages only a week after a statement which suggested Huawei might be safe.

Of course, this might mean very little in the long-run, but it is another factor which should be considered when trying to figure out what Huawei’s fate will actually be.

For its own part, Huawei is doing as much as possible to disprove collusion and security allegations. Aside from the cybersecurity centres opened to allow customers and governments to validate security credentials, it has recently signed up to the Paris Call.

“The quest for better security serves as the foundation of our existence,” said John Suffolk, Global Cyber Security & Privacy Officer at Huawei. “We fully support any endeavour, idea or suggestion that can enhance the resilience and security of products and services for Governments, customers and their customers.”

The Paris Call is an initiative launched by the French Government in November 2018. It is a call-to-action to tackle cybersecurity challenges, strengthen collective defences against cybercrime, and promote cooperation among stakeholders across national borders. To date, 67 national governments, 139 international and civil society organizations, and 358 private-sector companies have signed up to the collaborative initiative.

Although we are surprised it has taken Huawei so long to sign up to the initiative, it is another incremental step in the pursuit to demonstrate its security credentials and build trust in the brand.

Even with this commitment from Huawei, you have to question how the UK can continue to be a member of the ‘Five Eyes’ alliance and work with the Chinese infrastructure vendor. The concept of the alliance is to align activities and this communique talks about managing risk individually but also about supporting the efforts of other partners.

It does appear the UK is attempting to have its cake and eat it too. We suspect there will be pressure on the newly-appointed Prime Minister Boris Johnson to fall into line before too long, and it will be interesting to see how the newly formed Cabinet manage expectations externally with international partners and internally with British telcos who rely on Huawei.

Vodafone officially walks away from New Zealand

Vodafone has completed the sale of its Kiwi business to a consortium of investors for €2.1 billion.

Although Vodafone is technically leaving the country, the brand will remain. The consortium, featuring Infratil Limited and Brookfield Asset Management, have signed an agreement to continue using the brand, while also accessing favourable roaming rates in countries where Vodafone is maintaining its presence.

“This transaction is a continuation of our strategy to optimise our portfolio and reduce our debt,” said Group CEO Nick Read.

“I am pleased we will continue our 21-year relationship with the business and talented team in New Zealand through a Partner Market agreement, delivering Vodafone’s technology and services to benefit the country as it transitions to a digital society.”

The sale of the Kiwi business was announced back in May as Vodafone searched for ‘financial headroom’. It appears this business unit was deemed surplus to requirements at a business which has been facing financial pressures in recent months.

Although Vodafone has remained profitable in a difficult time for telcos on the whole and maintained semi-favourable positions across the world, there are more difficult times on the horizon due to some lavish spending.

Not only does Vodafone have to source cash to fuel 5G deployments in various different markets, there are a couple of spectrum auctions to keep an eye on and marketing euros which need to be spent combatting resourceful rivals in some countries. The recent acquisition of Liberty Global’s European assets will also place stress on the spreadsheets.

It is been a couple of busy weeks for the Vodafone PR team, as aside from this transaction there have been network sharing announcements in Italy and the UK, as well as the prospect of a tower infrastructure business being spun off. The team is certainly working hard to generate extra cash in any way it possibly can.

Vodafone ditches Kiwis and cuts dividend in search of ‘financial headroom’

Vodafone has announced the sale of its New Zealand arm and a cut to the dividend as the firm searches for breathing room on the spreadsheets amid its Liberty Global acquisition and annual loss.

Such is the precarious position Vodafone is under, a cut to the dividend was expected by many analysts, though the sale of its Kiwi business unit compounds the misery. Facing various challenges around the world, including expensive spectrum auctions in Europe, the telco giant is searching for financial relief, though whether these moves prove to be adequate remains to be seen.

“We are executing our strategy at pace and have achieved our guidance for the year, with good growth in most markets but also increased competition in Spain and Italy and headwinds in South Africa,” said Group CEO Nick Read. “These challenges weighed on our service revenue growth during the year, and together with high spectrum auction costs have reduced our financial headroom.

“The Group is at a key point of transformation – deepening customer engagement, accelerating digital transformation, radically simplifying our operations, generating better returns from our infrastructure assets and continuing to optimise our portfolio. To support these goals and to rebuild headroom, the Board has made the decision to rebase the dividend, helping us to reduce debt and deliver to the low end of our target range in the next few years.”

While the news of a dividend cut saw share price drop by more than 5%, trading prior to markets opening has seen a slight recovery (at the time of writing). The dividend cut is not as drastic as some had forecast, down to 9 euro cents from 15, while an additional €2.1 billion from the New Zealand sale will provide some relief.

Looking at the financials for the year ending March 31, group revenues declined by 6.2% to €43.666 billion, while the operating loss stood at a weighty €7.644 billion. This compares to a profit of €2.788 billion across the previous year, though there are several different factors to take into consideration such as the merger with Idea Cellular in India and a change in accounting standards.

The loss might shock some for the moment, though this is likely to balance out in the long-run. In changing from the IAS18 accounting standard to IFRS15, Vodafone is altering how it is realising revenue on the spreadsheets. From here on forward, revenues are only reported as each stage of the contract is completed. It might be a shock for the moment, but more revenue is there to be realised in the future.

Although these numbers are the not the most positive, there is a hope on the horizon.

“The dividend cut is a massive blow for investors, while the results highlight the on-going challenges facing the company in its quest to turnaround its fortunes,” said Paolo Pescatore of analyst firm PP Foresight. “All hopes seem to be pinned on 5G, but the business model is unproven. Huge investment is required to roll out these new ultra-fast networks, but it comes at a cost.”

On the 5G front, Vodafone UK has announced it will go live on July 3, initially launching in seven cities, with an additional 12 live by the end of the year. Vodafone will also offer 5G roaming in the UK, Germany, Italy and Spain over the summer period. Interestingly enough, the firm has said it will price 5G at the levels as 4G.

Although this is a minor consolation set against the backdrop of a monstrous loss, it is at least something to hold onto. As it stands, Vodafone is winning the 5G race in the UK, while the roaming claim is another which gives the firm something to shout about. Vodafone is not in a terrible position, though many will be wary of the daunting spectrum auctions it faces over the coming months.

New Zealand joins the march against Huawei

Kiwi telco Spark has had an application to incorporate Huawei’s radio access network (RAN) equipment in its 5G infrastructure plans slapped down over security concerns.

The Government Communications Security Bureau (GCSB) has quoted the Telecommunications Interception Capability and Security Act (TICSA) as the grounds for rejecting Spark’s application to include Huawei equipment in its 5G infrastructure, suggesting this might be another country which will be shutting the door completely to Huawei.

“The Director-General has informed Spark today that he considers Spark’s proposal to use Huawei 5G equipment in Spark’s planned 5G RAN would, if implemented, raise significant national security risks,” Spark said in a statement. “Spark has not yet had an opportunity to review the detailed reasoning behind the Director-General’s decision. Following our review, Spark will consider what further steps, if any, it will take.”

“As per Spark New Zealand’s statement today, I can confirm the GCSB under its TICSA responsibilities, has recently undertaken an assessment of a notification from Spark,” said Director-General of GCSB, Andrew Hampton. “I have informed Spark that a significant network security risk was identified. As there is an ongoing regulatory process I will not be commenting further at this stage. The GCSB treats all notifications it receives as commercially sensitive.”

Details on the GCSB’s specific reasoning is absent for the moment, though this will emerge in the coming weeks. Either Spark will make a fuss over the situation, Huawei will hit back or someone will leak the documents on the internet. It’ll only be a matter of time, though Spark has reiterated the decision will not impact its plans to launch 5G services in New Zealand by mid-2020.

Unfortunately for Huawei, this looks like it will be another country where it will be banned from the 5G bonanza.

The anti-China rhetoric was of course started in the US, where both Huawei and ZTE has been effectively banned from any meaningful contracts, though Australia quickly followed suit. South Korea was the next domino to fall, though the operators simply omitted Huawei from the preferred suppliers list as opposed to a ban. New Zealand is the next country to join, though this is unlikely to be the last story we write of this nature.

With trade discussions between the US and China continuing, President Trump has been ramping up the pressure on his counterpart in Beijing. Not only have more tariffs been threatened, with potential collateral damage to Apple, it has been rumoured Trump has been whispering in the ears of allies, attempting to convince them to ban Huawei and ZTE from operating within their borders. It seems the repetitive whispers managed to convince the Kiwis.

There are of course a few countries which will resist the calls to ban Huawei, the UK is an example which seems overly invested in the vendor and would have too much to lose through any ban, though the dominos are lined up and beginning to fall. The political and economic power of the US does make it an influential voice in the global community, which will certainly be a worry for the Chinese vendor. On the other side, Nokia, Ericsson and Samsung will be pleased with the way the conversation is developing.