Uber is much more than a taxi firm

To most people, Uber is just a cheap and convenient way to get home after a few drinks, but the scope of the business is extraordinary.

While the inclusion of Uber at a broadband conference might have raised a few eyebrows, the overview given by Global Head of Connectivity Rahul Vijay demonstrated the creativity, innovation and stubborn drive which has ensured Silicon Valley and its residents are some of the most influential in the world.

First and foremost, no-one should consider Uber as a taxi company anymore, at least not in the traditional sense. The taxi’s might still account for the majority of annual revenues, but the team is expanding into so many different areas it is difficult to sum up the business in a single sentence.

Aside from the taxi business we all know and love, Uber has a commercial business working with the travel teams at large corporations, the food delivery business unit is solidly position in a fast-growing segment, the team also work with insurance companies to make sure patients make it to their hospital appointments and it is also making promising moves into the freight world. In markets in south east Asia, the team has launched a 2G-compatible app and is also applying the same business model to mopeds and scooters. In Croatia, Uber has launched a boat taxi service.

These are the ideas which are up-and-running or currently being live trialled, though the R&D unit is also playing around with some interesting ideas. Autonomous vehicles, flying taxis and drone delivery initiatives are just some of the blue-thinking projects. This is a company where a lot is going on.

The interesting aspect of the autonomous vehicles is not just the technology but the supporting connectivity landscape.

“Without mobility there is no Uber,” Vijay said at Broadband World Forum in Amsterdam.

Some have suggested that Uber will never be profitable until autonomous vehicles are commonplace through the fleet, though it doesn’t seem to be the technology which is worrying Vijay; connectivity is too expensive today.

The test vehicles which are currently purring around the highways of North America transmit as much as 2 TB of data a day. This is not only a monstrous amount of information to store and analyse, but the economics of taking this data from the car to the data centres is not there. Vijay said it is still by far and away cheaper to transmit this data through optical cables than over the air, which is not practical. Until 5G arrives, and is scaled throughout the transportation infrastructure, autonomous vehicles are not a commercially viable concept for Uber.

This also opens the door up to another very useful revenue stream for Uber. With more than 110 million users around the world, 200 new trips are started every second. These vehicles are travelling through cities, countryside’s and down highways. The amount of information on mobile signal strength or the performance of mobile handoff between cell sites is boggling. These are only two areas, but Vijay suggested there could be hordes of valuable information which could be collected by the vehicles as they fulfil the core primary business objective.

For telcos, regulators, governments or cloud companies, this insight could be incredibly valuable. It could inform investment strategies or encourage policy changes. If data is the new oil, Uber is sitting on a very significant reserve.

As it stands, the company brings in a lot of money, but the prospect of profits are questionable. In the three months ending June 30, Uber revenues attributable to bookings stood at $15.756 billion. The loss from these operations was $5.485 billion. The transportation game operates on very fine margins. Share price has declined by 28% since this earnings call, though there is hope on the horizon.

If Uber can gain traction in the new markets it is pushing aggressively into there will be increased revenues, though in monetizing assets which it creates organically, the data collected from taxi trips, there could be some interesting developments.

Altice still under pressure to make Europe work

Revenues are down across the continent, but telecoms group Altice is pointing to healthy mobile acquisitions in France as a glimmer of hope.

With France accounting for almost 2/3 of total revenues across the now separated European business, Altice could use some good news. Promotions might have taken a bite out of the spreadsheets, but with 1.3 million subscription gains in 2018, the management team is suggesting there might be an end to the gloom.

“In 2018, we have completed the reorganization and simplification of Altice Europe’s structure, with the separation of Altice USA from Altice NV effective on June 8 and a drastic management change,” said Patrick Drahi, founder of Altice. “Altice Europe has achieved all of its FY 2018 guidance, with the successful operational turnaround leading to very strong subscriber trends.

“The significant and continued investments in both fixed and mobile networks, as well as the consistent improvements in customer care, led to a material reduction in complaints from customers and significantly lower churn rates on all technologies. We already see a tangible inflection in Portugal and France, paving the way for growth in 2019, underpinned by our strategy in infrastructure and content.”

While Altice is still not out of the woods, the 1.3 million adds across 2018 surpasses the customer churn the business has been swallowing since its acquisition of SFR in 2015. The management team is also bragging about a 30% reduction in churn, Q4 2018 vs. Q4 2017, and an improvement in network quality metrics, customer satisfaction increased 20% year-on-year for the final quarter.

The company does seem to be heading in the right direction, but you have to place some context on the situation. Debt currently stands at €28.8 billion, more than double the annual revenues of the business, suggesting there might be a few divestment quests over the short- to medium-term future.

Huawei enters 2019 swinging with $108.5 billion revenues

To say 2018 was a rollercoaster ride for Huawei would be somewhat of an understatement, but the New Year’s message from Rotating Chairman Guo Ping is one of defiance.

Ping has proudly stated the business has reached record sales revenues in 2018, $108.5 billion, signed 26 5G commercial contracts with telcos, shipped more than 10,000 5G base stations, tempted 160 cities and 211 Fortune Global 500 companies into digital transformation contracts and shipped more than 200 million smartphones.

The company might have been the antagonist in the Great Security Saga of 2018, but it is still moving in the right direction. That is, for the moment at least. This message from Ping is one of reassurance. Huawei is proactively seeking to engagement the community, promising everything is above board and legitmate. This is a business which is scrapping for its reputation.

“It has been an eventful year, to say the least,” said Ping. “But we have never stopped pushing forward, and as a result our 2018 sales revenue is expected to reach 108.5 billion US dollars, up 21% year-on-year.”

Reading between the lines you have to wonder whether the business is worried about its dependence on the US. Prior to Christmas, Rotating CEO Ken Hu promised the company’s supply chain was in a stronger position than ZTE, and there was no chance a ban from using US components and IP would create the same disaster zone. Ping seems to be reiterating this message.

“In 2019, we will focus on strategic businesses and strategic opportunities and build a more resilient business structure,” said Ping. “We will continue to optimize our product investment portfolio to achieve end-to-end strategic leadership. As part of this, we need to retain products that are competitive and appealing and phase out those that aren’t.”

Huawei are in a worrying position right now, teetering on a knifes edge. On one side, you have an incredibly successful and innovative business, with a proven track record of delivering results and a culture of account management rivalled by few. This is a vendor a lot of telcos will want to work with. However, with the echoes of accusation getting louder, governments excluding it from 5G bonanzas and the possibility of being banned from using any US goods in its supply chain, some will naturally be nervous about entering into any commercial contract.

The security concerns which plagued Huawei for the majority of 2018, accelerating in the final quarter, look like they will continue over the next couple of months but there hasn’t been an immediate impact on the business just yet. With numerous contracts already secured, Huawei is certainly not going to disappear from the connectivity landscape, but in choosing not to mention any financial predictions for 2019, Huawei has effectively stated what we are all thinking; its dominance is coming to an end.

Looking at the major vendors across the 4G era, the story was relatively clear; Huawei freely counted the cash at the expense of others, most notably Ericsson and Nokia. This will not be the story for 5G as more telcos look for greater diversity in the supply chain and governments place more scrutiny on Huawei, as well as Chinese vendors in general. Perhaps there will not be such a clear winner in the 5G era, with the bounties being more evenly spread throughout the ecosystem.

Huawei is promising to be more secure, more transparent and more innovative than competitors, and it needs to be. But we suspect the damage has already been inflicted. Success seems to have been the downfall for Huawei, forcing the company into the limelight and raising its profile so much questions were bound to be asked. Huawei will certainly continue to be a heavyweight in the connectivity industry, but its era of such spectacular dominance seems to be over.