New BT logo looks more like a warning than an invitation

British Telecom has filed for a trademark on a new logo but it’s a bit rubbish and the internet is ridiculing it.

Whichever brand consultancy BT has hired, presumably at great expense, to refresh its logo presumably either couldn’t be bothered to think about it properly or was given bad advice by its client. The result is simply the letters ‘BT’ with a circle around them. Black letters, black circle, white background, that’s it. Even the font is boring.

The Guardian was one of the first to cover the filing and marketing mag Campaign pointed out that its seems to be an even more stark and boring version of a rebrand it was planning three years ago, but wisely put on the back burner. At least that one had some colour in it. Unsurprisingly the internet has been quick to mock this feeble effort, with a great piece of opportunistic guerilla marketing from Poundland our current favourite.

“We’ve shared our new logo with our colleagues today and will consult them on the detail as we gradually roll it out towards the end of the summer,” a BT spokesperson told the Guardian. “Our CEO has been very clear that the new mark symbolises real change. Making every BT employee a shareholder in the company is the first step towards transforming BT into a national champion that exceeds our customers’ expectations.”

While it’s understandable that new CEO Jansen would want to spray his scent on his new company we think he can afford to take a bit longer over such a momentous decision. Right now it looks at best like a functional street sign designed to warn the unsuspecting punter about BT rather than endear it to them. Not all change is good, Phil, and you might want to give the whole thing a rethink on your summer holidays.

The real branding challenge faced by BT is how to incorporate, if at all, EE. Its brand currently goes heavy on the letters-in-a-circle theme, albeit with a bit more creative flair, so maybe BT is trying for a bit of geometric alignment or something. But as we move into the 5G era, Britain’s biggest telco should think twice before rebranding itself to look like a speed limit sign.

US official overseeing country’s frequency strategy has resigned

David Redl, heading National Telecommunications and Information Administration (NTIA), responsible for the US’ strategy on frequency and 5G, abruptly resigned from his post.

The circumstances of his resignation were not disclosed, but the Wall Street Journal reported that Redl has had conflicts with other political appointees at the current administration, including officials at the FCC. Redl, together with the Commerce Secretary, was tasked by President Trump to develop the country’s “National Spectrum Strategy” last October.

A few days before his resignation, Redl used his speech at Satellite Industry Association’s annual dinner to voice his concerns. “We don’t have to choose between making more spectrum available for the private sector and sustaining our critical government systems. We also don’t have to choose between terrestrial 5G and satellite services,” Redl said on that occasion. “To start with, satellite will play an important role in 5G connectivity, but perhaps more to the point these uses are not mutually exclusive; it’s just going to take hard work for them to continue to coexist in a more contentious spectrum environment.”

Meanwhile, FCC would not wait to have the “comprehensive, balanced and forward-looking” spectrum strategy in place before it pressed ahead with the auction of the mmWave frequencies, including the 24GHz and 37GHz bands that are also being coveted by the satellite industry. “I can’t recall ever in the past watching two different arms of an administration get into this kind of public disagreements,” FCC Commissioner Jessica Rosenworcel commented.

In other cases, Redl’s opinions often carried a lot of weight in FCC’s decision making. Before the decision was taken to deny China Mobile the operation licence, Redl’s earlier note had already set the tone. Ajit Pai, the FCC Chairman, in his statement called Redl “a longtime colleague, who served with distinction during his 18 months at NTIA.  He was a vocal advocate within the Department of Commerce for repurposing federal spectrum for commercial use and fostering the private sector’s lead in 5G deployment.  I thank David for his service and wish him all the best in his future endeavors.”

It may or may not be related, but Redl’s resignation also coincided with fresh pressure from the US on the UK to join the alliance to ban Huawei from the country’s 5G networks. The DC-based news outlet The Hill reported that Diane Rinaldo, Redl’s former deputy, would be taking over as acting administrator.

UK and Latin America gave Telefónica a steady Q1

Telefónica’s otherwise flat quarter was bolstered by strong performance in its UK and Latin America South units, which delivered 5.3% and 15.2% organic growth rates, taking the group level growth rate to 3.8%.

Telefónica reported its first-quarter results, with the total revenue at €12.611 billion, an increase of 3.8% in organic terms. This means adjustments were made to the reported numbers considering impacts of exchange rate moves, regulation and reporting standard changes, and special factors, for example adjustment made to the Argentina numbers on account of the hyper-inflation. Otherwise, the total revenue would have reported at € 11.979, or a 1.7% decline from a year ago. The quarterly operating income before depreciation and amortisation (OIBDA) reached €4.264 billion, up by 10.3%; and the net income grew by 10.6% to reach €926 million.

The Telefónica group is now serving a total of 332 million subscriber accounts (“accesses”), 6 million less than a year ago. The total mobile accesses by the end of the quarter stood at 267 million, down by 4 million from a year ago. But the good news for Telefónica is that it actually grew the contract customer base by 7.5 million over Q1 last year, meaning the loss is mainly on the pre-paid market, down by 11.5 million. It also grew its fixed broadband (including FTTx and cable) customer base by 2.1 million over the course of the year.

“The first quarter results showed a significant improvement in revenue growth trends and double-digit growth in net income and earnings per share. Strong cash generation, which was three times higher than the figure reported in the first quarter of the previous year, allowed for an acceleration in debt reduction, for the 8th consecutive quarter, further strengthening our balance sheet,” commented José María Álvarez-Pallete, Chairman and CEO of Telefónica. “We have started the year by extending our leadership in fibre and 4G deployment, testing new 5G capabilities and making progress in the UNICA virtualisation programme, allowing us to continue gaining customer relevance through better experience and higher average lifetime.”

Ángel Vilá, Chief Operating Officer of Telefónica, introduced the Q1 results and its outlook to 2019 annual outlook in more detail in the video clip at the bottom (in Spanish, with English subtitle).

While the its two biggest markets, Spain and Brazil, managed to stay stable, delivering modest organic growth of 0.3% and 1.7% respective (+0.3% and -5.2% in reported terms), Telefónica’s UK business registered a strong 5.3% organic growth to reach €1.67 billion (£1.47 billion). Excluding the exchange rate impact, the UK business would have reported a 6.6% revenue growth to reach €1.691 billion (£1.488 billion). The company is now serving 32.7 million mobile subscribers, up 2.3% over Q1 last year, which includes both customers on O2 (25.1 million) and those on the MVNOs using Telefónica networks (Sky Mobile, giffgaff, Lycamobile, and Tesco Mobile).

“This is another good set of results building on our momentum from 2018. We have delivered further revenue and customer growth underpinned by our award-winning network and market-leading loyalty,” commented Mark Evans, CEO of Telefónica UK. “We are committed to making every day better, providing customers with compelling reasons to join and stay with us through attractive propositions such as O2 Custom Plans.”

Looking across all the Telefónica markets, the UK registered the lowest churn rate of 0.9% among in its postpaid customers. In comparison, in Telefónica’s other European markets, the churn rate of contract customers was 1.6% in Germany and 1.7% in Spain. Comparable churn rates in markets like Chile and Mexico ran around 3%.

Telefónica attributed high customer loyalty, among other things, to its aggressive investment to improve its networks. The company claims it is investing equivalent to £2 million a day to strengthen its network and increase its reach.

One of O2’s focus investment areas in 2019, in addition to the planned launch of 5G, will be high density venues, including sports arenas, shopping centres, hotels, and conference centres. Already serving the Anfield Stadium in Liverpool and the Lord’s cricket ground in London with improved networks, in collaboration with the Wireless Infrastructure Group (WIG), an infrastructure company, O2 is planning to upgrade and improve its coverage and capacities in other high usage venues.

“While we look ahead to 5G we also continue to focus on our existing network capability. We strive to deliver a great network experience to all our customers, including some of the UK’s busiest locations where network demand is at its peak,” said Brendan O’Reilly, O2’s Chief Technology Officer. “Our multi-million pound investment with our partners at WIG should provide O2 customers with even better connectivity in the places they love to visit.”

Here’s more commentary from COO Ángel Vilá.

Vodafone Germany tries to placate regulators via wholesale cable deal with Telefónica

Telefónica Deutschland will be able to sell services that run on the combined Vodafone and Unitymedia cable network in Germany, as a remedy measure taken by Vodafone to satisfy EU’s competition concern over its proposed acquisition of Liberty Global.

The two companies announced that they have entered into a definite “cable wholesale agreement” in Germany, whereby Telefónica Deutschland will offer its customers broadband services that use both the Vodafone fixed network and that of Unitymedia. The combined networks cover 23.7 million households and represent a significant upgrade to whatever Telefónica Deutschland customers are currently getting.

“The cable agreement will enable us to connect millions of additional households in Germany with high-speed internet in the future,” said Markus Haas, CEO of Telefónica Deutschland. “By adding fast cable connections, we now have access to an extensive infrastructure portfolio and can offer to even more O2 customers attractive broadband products – including internet-based TV with O2 TV – for better value for money.”

Vodafone’s plan to acquire Liberty Global in Germany (where it trades under the brand Unitymedia), the Czech Republic, Hungary, and Romania, has run into difficulty at the European Union, which raised competition concerns at the end of last year. The Commission was particularly worried that the combined business would deprive the consumers in Germany of access to high speed internet access, and the OTT services carried over it. Vodafone expressed its confidence that it would be able to satisfy the Commission’s demand. Opening its fixed internet access to its competitor is clearly one of the remedies. Also included in the remedy package Vodafone submitted to the Commission was its commitment to ensure sufficient capacity is available for OTT TV distribution.

“Our deal with Liberty Global is transformational in many ways. It is a significant step towards a Gigabit society, which will enable consumers & businesses to access the world of content & digital services at high speeds. It also creates a converged national challenger in four important European countries, bringing innovation & greater choice,” said Nick Read, CEO of Vodafone Group. “We are very pleased to announce today our cable wholesale access agreement with Telefonica DE, enabling them to bring faster broadband speeds to their customers and further enhancing infrastructure competition across Germany.”

Vodafone believed the remedial measures it put in place should sufficiently reassure the Commission that competitions will not suffer after its acquisition of Liberty Global. The company now expects the Commission to undertake market testing of the remedy package it submitted, and to give the greenlight to the acquisition deal covering the four countries by July 2019. It plans to complete the transaction by the end of July. The merger between Vodafone’s and Liberty Global’s operation in The Netherlands was approved by the EU in 2016.

A weak France overshadowed Orange’s Q1

The telecom operator Orange reported a flat Q1, with a weak performance in its home market partially compensated by the strength in Africa and the Middle East.

Orange reported a set of stable top line numbers in its first quarter results. On Group level, the total revenue of €10.185 billion was largely flat from a year ago (-0.1%), and the EBITDAaL (earnings before interest, tax, depreciation and amortisation after lease) improved by 0.7% to reach €2.583. Due to the 8% increase in eCAPEX (“economic” CAPEX), the total operating cash flow decline by 10.2% to €951 million.

Orange 2019Q1 Group level numbers.pdf

Commenting on the results, Stéphane Richard, Chairman and CEO of the Orange Group, said that “the Group succeeded in maintaining its high quality commercial performance in spite of a particularly challenging competitive context notably in our two principal countries of France and Spain. Our strategy is paying off since EBITDAal is continuing to grow while revenues remain stable, allo wing us to reaffirm our 2019 objectives”

On geography level, France, its home and biggest market is going through a weak period. Despite registering net gain in the number of customers, the total income dropped by 1.8% to €4.408 billion, the first quarterly decline in two years. The company blamed competition, a one-off promotion of digital reading offer towards the end of the quarter, and “a weaker performance on high-end equipment sales in the 1st quarter of this year”. The move to “Convergence” was positive, but not fast enough to offset the lose in narrowband customers. The competition pressure is still visible. The Sosh package (home broadband + mobile) Orange rolled out to combat Free is gaining weight among its broadband customers, which resulted in a decline of revenues despite the growth in customer base.

Orange’s European markets, including Spain and the rest of Europe, reported modest growth, with strength in Poland (+2.6%) and Belgium & Luxembourg (+3.8%) offset by a weaker Central Europe (-1.9%). The bright spot was Africa and Middle East, which registered a 5.3% growth to reach €1.349 billion revenue, taking the market’s total revenue above Spain and just marginally behind the rest of Europe. The company’s drive to extend its 4G coverage in Africa is paying off, with mobile data service contributing to 2/3 of its mobile growth. Orange Money also saw strong enthusiasm, with the revenue up by 29% and total number of monthly active users totalling 15.5 million.

Both the Q1 results and outlook to the rest of the year spelled mixed messages for the wider telecom market and Orange’s suppliers, but negatives look to outweigh positives. On the consumer market side, the slowdown of high-end smartphone sales and prolonged replacement cycle has once again been demonstrated in the weak numbers in France. On the network market side, Orange predicts more efficiency. This includes both the network sharing deal signed with Vodafone Spain, which is expected to deliver €800 million savings over ten years, and an overall reduction in CAPEX this year.

As the CEO said, “while the level of eCapex for this quarter is higher, it should reduce slightly for 2019 as a whole, as predicted, excluding the effect of the network sharing agreement with Vodafone in Spain announced on 25 April.” This means, to achieve the annual target of reduced CAPEX, the spending will drop much faster in the rest of year. There is no timetable to start 5G auction in France yet, but it will be safe to say that any expectations of 5G spending extravaganza will be misplaced.

On the positive side, Orange has seen its efforts to diversify its business gaining traction, especially in IoT and smart homes. But these areas, fast as the growth may be, only make a small portion of Orange’s total business.

T-Mobile/Sprint merger approval is still hanging in the balance

The US DoJ’s anti-trust chief has not made up his mind on the T-Mobile/Sprint merger case, saying the deal must meet key criteria.

Speaking on CNBC (see below) Makan Delrahim, Assistant Attorney General for the US Departments of Justice’s Antitrust Division, said he has not made up his mind yet. Although he refused to comment on if his staff resisted the deal, as was reported by the media, Delrahim did allude to more data being requested from the two parties.

Delrahim also dismissed the notion that there is any magical number of competitors to deliver optimal competition in a regulated market like telecom. Any proposed deal needs to deliver efficiency, but the efficiency needs to be both merger specific, that is the efficiency cannot be achieved through other means, and verifiable.

With regard to the effects of the merger on consumers, Delrahim listed two items, price effect and coordinated effect. The first is related to the potential price move up or down after the merger. The second refers to if the merged company has the incentive to continue to compete with the existing competitors on price, in this case AT&T and Verizon. 5G will also factor in the DoJ’s decision making consideration, Delrahim said. But, instead of being positioned as a counteract against China, in this interview Delrahim was treating 5G in the framework of service offer to consumers, and the merger’s impact on it.

When being asked on the timeline, Delrahim said there is no deadline on the DoJ side, except that the deal cannot be completed before a certain date. This timeline can be extended if more deliberation is needed.

On the FCC front, another hurdle that the two carriers need to overcome before they can become one, they continued to play the offensive. Last week representatives from the two companies, including John Legere, the CEO of T-Mobile, and Marcelo Claure, Executive Chairman of Sprint, called on the FCC commissioner Jessica Rosenworcel and her Legal Advisor. The team presented the updated merger case, including their pledge to deploy home broadband, drive down prices, deliver more benefits to prepaid customers, and create, instead of cutting, jobs.

FCC’s unofficial 180-day consultation period was reopened early this month, after being halted three times, and is now on day 147.

Makan Delrahim’s CNBC interview is here:

 

 

China Telecom gets a piece of the Philippines new third telco

Chinese operator China Telecom has signed a $5.4 billion deal to get involved in Mislatel, the Philippines third CSP.

The other stakeholders are Udenna Corporation and Chelsea Logistics Holdings Corporation but it’s not clear how much cash each is contributing to the enterprise. The full name of the new operator is Mindanao Islamic Telephone Company but presumably it will be available to the entire population of the Philippines.

“This is a historic occasion,” said Udenna Chairman Dennis Uy. “This is another step forward in realizing Udenna’s vision to improve the lives of Filipinos. Everything that we do is about making lives better not just for this generation, but for the next generation. And that is happening here. Thank you to our partners and to all for being a part of this journey.”

Isn’t that nice? There was no quote from a China Telecom person, although apparently its Chairman Ke Ruiwen turned up to the ceremonial signing that seems to be a prerequisite to actually doing stuff in that part of the world. Presumably he is no less committed to improving the lives of successive generations of Filipinos and any strategic benefit his company achieves as a result of bankrolling infrastructure projects outside of China is entirely incidental.

The big signing took place at the second belt and road forum for international cooperation event, which is China’s big international trade strategy and an opportunity for President Xi Jinping to get his photo taken shaking hands with other politicians. A lot of it seems to involve massive foreign direct investment, so this was certainly the right place to make such an announcement. Here’s an infographic summarising what it was all about.

belt and road

KPN bans Huawei from its 5G network core

Dutch operator KPN announced it has signed an agreement with Huawei to build the 5G radio network but will only select a western vendor for 5G core.

KPN said it will modernise its mobile network towards 5G, and has adopted a tightened security policy with regard to vendor selection. The company believes that “the mobile core network which from a security point of view is more sensitive”, while the RAN is less so.

As a result, the operator has entered into a preliminary agreement with Huawei to provide the radio access part of the 5G network, but the agreement is adjustable and reversable “to align it with future Dutch government policy.” Meanwhile, the company “plans to select a Western vendor for the construction of the new mobile core network for 5G.”

Jan Kees de Jager, KPN’s CFO, told the media separately that the upgrade will also involve swapping out Huawei equipment from its current core network, according to a report by Reuters. In contrast to what his counterparts in Germany and the UK have claimed, de Jager did not believe switching from Huawei for other vendors would lead to addition cost. Equipment from Nokia, Ericsson and other suppliers would be as affordable as Huawei for the 5G infrastructure, he was reported to tell the media.

“We appreciate KPN’s trust and are honoured by their decision to partner with us for the mobile radio access network modernisation,” said a Huawei spokesperson. “We are committed to support KPN in their ambition to maintain and strengthen their lead in the global telecoms industry.In general, Huawei believes that excluding parties based on geographical origin does not provide a higher level of security. Cyber security can be improved by establishing standards that apply to all parties in the sector. Today, the IT supply chain is highly globalised. Cyber security must therefore be addressed jointly at a global level and suppliers must not be treated differently based on the country of origin.”

KPN is essentially adopting the same policy as the leaked UK government guideline related Huawei’s role in the country’s 5G network: banned from the core but fine to use in the RAN. But precisely because it is adopting the same policy, KPN has to face the same issue raised by Tom Tugenthat MP, chairman of the British parliamentary Foreign Affairs Committee, that it will be very hard to insulate the non-core from the core on 5G network thanks to its virtualisation and software-defined nature.

Additionally, although equipment from different vendors should work together as they all comply with the 3GPP standards, standards do not cover every detail. As Huawei stand staff told Telecoms.com during MWC, there are plenty of discreet innovations vendors can make to optimise the performance of the system if both RAN and core come from the same vendor. So, operators might risk having subprime performance out of the network equipment sourced from different vendors, if not facing downright incompatibility headache.

Verizon expands 5G supported by Samsung 5G phone

US operator Verizon will switch on 5G in 20 more cities and has opened pre-orders of Samsung’s Galaxy S10 5G smartphone.

Verizon announced that it will switch on 5G Ultra Wideband service within this year in: Atlanta, Boston, Charlotte, Cincinnati, Cleveland, Columbus, Dallas, Des Moines, Denver, Detroit, Houston, Indianapolis, Kansas City, Little Rock, Memphis, Phoenix, Providence, San Diego, Salt Lake City and Washington DC. That will take the total number of cities to offer 5G Ultra Wideband to at least 22 by the end of the year, with the networks in Chicago and Minneapolis already live since March. Verizon stands by its plan to deploy 5G network in about 30 cities across the country during the year, so a few more cities may still join the club later.

Meanwhile, all Verizon users can start pre-ordering the Samsung Galaxy S10 5G, though only those in the 22 cities and on Verizon’s Above and Beyond Unlimited plans will be able to enjoy 5G service. The S10 5G will be exclusive to Verizon for a limited period, and will arrive at Verizon stores on 16 May.

“The Galaxy S10 5G on Verizon’s 5G Ultra Wideband network will give our customers access to incredible speeds and the latest and greatest streaming, augmented-reality, gaming, and consumer and business applications that bring us into a future powered by 5G,” said Ronan Dunne, EVP of Verizon and president of Verizon’s consumer group. “With the rollout of 5G in more than 30 markets by the end of 2019 and the upcoming launch of Samsung’s first 5G Galaxy smartphone, we are pulling further ahead of the competition in 5G.”

When Verizon first launched 5G at the end of last year in four cities, Los Angeles, Sacramento, Indianapolis, and Houston, the service was limited to fixed wireless access, due to the lack of smartphones in the market. Consumers in Chicago and Minneapolis, the first two cities to go live on 5G Ultra Wideband in March were supported by the 5G Moto Mod attached to the LTE Moto Z3.

In addition to just fast internet, which Verizon promised to reach “typical” download speeds of 450 Mbps when the Chicago and Minneapolis service was switched on, Verizon’s group-level partnership with YouTube TV will also give the new 5G users plenty of content to fill the bandwidth with, similar to what SK Telecom does with its own 5G service.

Nokia laments a weak first quarter

Finnish telecom vendor Nokia reported a disappointing Q1 of flat revenue and expanding loss. The company blamed competition and slow ramp-up of 5G.

Nokia reported a modest 2% net sales growth to reach €5.032 billion over €4.924 billion of Q1 2018, which would be down by 2% on constant currency basis. The gross margin was at 31.3%, down from 36.7% a year ago. The operating loss increased from €336 million (or -6.8% of net sales) to €524 million (-10.4%). Net cash was depleted by more than half from €4.179 billion to €1.991 billion. Earnings per share went from positive €0.02 to negative €0.02.

Nokia Q1 2019

Rajeev Suri, the President and CEO of Nokia, conceded that “Q1 was a weak quarter for Nokia.” Meanwhile, the company believes that its fortunes will improve in the rest of the year, especially in the second half.  “As the year progresses, we expect meaningful topline and margin improvements. 5G revenues are expected to grow sharply, particularly in the second half of the year, driven by our 36 commercial wins to date.”

In addition to the slow start of the year, Suri also saw risks in intensified competition and customers reassessing their investment. He said in the statement that “competitive intensity has slightly increased in certain accounts as some competitors seek to be more commercially aggressive in the early stages of 5G and as some customers reassess their vendors in light of security concerns, creating near-term pressure but longer-term opportunity.”

When looking at the results by business lines, Networks, by far the biggest segment of Nokia’s business, grew by 4%, both Software and Nokia Technologies kept flat, while sales from the Group Common and Other unit (including Alcatel Submarine, Bell Labs, Radio Frequency Systems, etc.) went down by 13%. Geographically, North America, which overtook Europe to become Nokia’s biggest market in the last quarter, fell back to below Europe in Q1 despite registering an impressive 9% year-on-year growth. Europe was largely flat with the sales keeping at €1.5 billion level. Asia Pacific grew by a decent 6% to get closer to the €1 billion mark, but the biggest loss was in Greater China, where the sales plunged by 10%, now only marginally bigger than Middle East & Africa.

To say things have not been going smoothly for Nokia recently would be an understatement. In late March, the company first announced that it had discovered certain “compliance issues” in the Alcatel-Lucent business it acquired years ago which might have “material adverse effect” on its business, causing a rush sell in the financial market, only to retract a couple of hours later to declare those issues would not have materials impact. More recently it was reported that the company has been struggling to fulfil its business contracts in Korea.

This must be a painful moment for the Nokia management and shareholders (it’s shares were down around 9% at time of writing), who have to watch its two major competitors reporting strong results while sitting on its own disappointments. Ericsson has just delivered an encouraging quarter, and Huawei, despite all the headwind, has reported a particularly impressive Q1. As Light Reading, our sister publication, said earlier, Huawei’s woes may not necessarily mean good fortunes for its two main competitors. So far they have not translated into good fortunes for at least one of them.

Comparing the numbers with Ericsson we could see that despite Ericsson’s total sales in Q1 was about 10% smaller than Nokia’s, it was considerably more profitable (gross margin at 38.4% vs. Nokia’s 31.3%), and its operation more efficient (€1.3 billion operating cost vs. Nokia’s €2.1 billion).

These are also the two key aspects the Nokia management are focusing on to turn things around. On the profitability side, Suri said “we will continue to take a balanced view, and are prepared to invest prudently in cases where there is the right longer-term profitability profile.” On the efficiency side, the company is “also progressing well with our previously announced EUR 700 million cost savings program,” Suri said in his statement.