Telenor makes some IoT predictions

The IoT bit of Norwegian operator group Telenor has had a go at predicting the IoT market, with a bit of help from its friends.

Telenor Connexion partnered with telecoms consultant Northstream (which is quite fond of predictions) to come up with five predictions, which probably means it got Northstream to do 99% of the work and then stuck its name at the end of it. For some reason they decided to conflate IoT with digital transformation – perhaps they could only think of three or four IoT ones. Anyway here they are.

  1. Enterprise data will take the lead in data trading

Enterprises will generate loads of IoT data and they’re not as uptight about things like privacy as consumers so they can flog it to whoever they want.

  1. Digital value will be unlocked faster

The work done by IoT trailblazers has lowered the barriers to entry for newcomers, which in turn will result in greater innovation.

  1. Connectivity will be at the centre of digital product innovation

Right now connectivity is still a bit of an afterthought when developing digital products but increasingly it will be factored in right at the start.

  1. Connectivity will push eCommerce even further

Logistics are improved by better connectivity, which in turn improves the service offered by ecommerce companies.

  1. Managed connectivity will be even more important

As industries become ever more dependent on connectivity, the importance of reliability will increase.

As luck would have it Telenor Connexion can help with all this. “Beyond simply connecting products, Telenor Connexion is dedicated to helping our customers identify the business value in connectivity,” said Mats Lundquist, CEO at Telenor Connexion. “This report is part of that commitment, designed to help enterprises find their way in an evolving business landscape.”

“The business landscape is changing rapidly, which means all types of companies need to consider where they fit in to new digital business processes.” said Bengt Nordström, CEO at Northstream. “With this analysis we also want to highlight the challenge for businesses to face digital transformation on their own – and thus the need to build partnerships with other actors in the ecosystem.”

While it predates 5G, IoT is considered one of the major commercial justifications for moving to the next generation of wireless technology. Not only are the enterprise applications of it easier to monetise, they’re also more likely to be genuinely useful than smart plat pots or whatever. But it’s all about the big data at the end of the day.

Telenor completes Nordic sweep with DNA acquisition

Norwegian telco Telenor has completed its reach across the Nordics, taking the first steps to acquire Finnish operator DNA.

Telenor has now officially entered into agreements with DNA’s two largest shareholders Finda Telecoms and PHP, who hold stakes of 28.3% and 25.8% respectively. Following approval at the Finda Telecoms and PHP AGMs, and regulatory approval, a mandatory public tender offer will be triggered for the remaining outstanding shares in DNA by Telenor. The current 54% will cost Telenor €1.5 billion.

The transaction is expected to be completed in Q3 2019, with the remaining shares being purchased for the same amount, valuing the entire DNA business at roughly €2.8 billion.

“I am very pleased to announce today’s transaction and our entry into Finland, the fastest growing mobile market in Europe,” said Telenor Group CEO Sigve Brekke.

“DNA is an exciting addition to Telenor Group, and a natural complement to our existing operations in the Nordic region. Not only are we strengthening our footprint in the Nordic region, we are also gaining a solid position across fixed and mobile in the Finnish market and making room for further value creation.”

DNA has been crafting itself a useful position in the Finnish market, with both fixed and mobile offerings. Having been founded in 2000, and restructured through various mergers in 2007, DNA has grown to become Finland’s third largest telco with a mobile market share of 28%. With Finland proving to be one of the fastest growing markets in Europe, this could be a useful acquisition from Telenor.

Having grown its mobile service revenues by at least 9.3% year-on-year for the last three years, Telenor expects to use its own expertise to grow revenues further through a larger product portfolio, though the enterprise market is also a target. On the business side of things, Telenor’s international footprint will certainly help, with operations across the Nordics.

The transaction will also offer Telenor more ammunition as it battles its Nordic competitor Telia,

Although Telenor still does have assets across various Asian markets, Pakistan and Thailand for example, it has been narrowing its focus on the Nordic markets recently. Exiting from India, although this was partly forced due to the success of Reliance Jio, while offloading its Eastern European business units will give the team more resources to dominate the Nordic region, though it will have to deal with Telia.

Should the transaction be approved by all the relevant parties, Telenor will have a presence in all the Nordic markets, pinning it head to head with long-time rival Telia. Aside from the Swedish market where Telia dominates, the pair are largely on level pegging, though the DNA business will add momentum.

Alongside considerable growth over the last three years, Finnish consumers have the biggest data appetites across the bloc. According to data from the OECD, the average Finnish mobile data subscription is a massive 15 GB per month which dwarfs the likes of the UK and France, where the average contract is 2.6 and 3.6 GB per month.

TDC hoovers up Danish spectrum in latest auction

The Danish Energy Agency has completed its latest spectrum auction, with TDC running away with the majority of the available assets.

Of the 20 blocks in the 700, 900 and 2300 MHz frequency bands, TDC won 14, the maximum available to the telco at this auction. 3 Denmark acquired two 10 MHz blocks in each of the 700 and 900 MHz bands, while TT Network, Telia and Telenor’s joint venture, two 5 MHz in the 700 MHz and two 10 MHz in the 900 MHz band.

“Several frequency blocks provide higher speed, longer range and stronger indoor coverage, which gives us a unique position to strengthen and develop the best coverage in Denmark,” said TDC CEO Allison Kirkby.

“TDC has connected all over Denmark for almost 140 years, and the new licenses ensure that Danish consumers, companies and society enjoy new experiences, services and the many opportunities that 5G offers.”

With ambitious plans to rollout 5G across Denmark by the end of 2020, this is certainly an aggressive sign of intent from TDC. The telco paid NOK 1.6 billion, roughly €210 million, for its haul, while 3 Denmark paid a total over roughly €68 million. TT Network paid €14 million for its 700 MHz assets and nothing for 900 MHz, though it will be charged with coverage obligations.

As it currently stands, according to Ovum’s WCIS database, TDC is currently the market leader with 42% market share, TT Network controls roughly 40% of subscriptions, while 3 collects the remaining 18%.

While these prices might seem ludicrously cheap in comparison to other spectrum auctions which have been taking place around the bloc, Denmark’s population of 5.8 million ranks it at 111th worldwide, while its land mass ranks at 130th.

Ericsson gets multinational 5G core network win with Telenor

Swedish kit vendor Ericsson has got a nice lot of fresh 5G work from Swedish operator group Telenor.

The win is all about 5G core network transformation, featuring a nice lot of NFV goodness. Since the point of issuing press releases about deal wins is to generate a sense of commercial momentum, this is a pretty handy one for Ericsson as it implies an endorsement of its NFV offerings.

Since this still a relatively new, unfamiliar field, any show of commercial faith at this stage counts double. Furthermore the deal encompasses Telenor’s core networks in Sweden, Denmark and Norway, so in terms of publicity, Ericsson gets three for the price of one.

“Ericsson’s portfolio of VNF enables Telenor to become more agile while reducing costs through improved operations,” said Morten Karlsen Sørby, Telenor’s EVP and Acting Cluster Head for Scandinavia. “This transformational deal is an important step towards future-proofing our core network as we look towards 5G. It provides us with state-of-the-art virtual core applications that serve mobile and fixed access and extend the lifecycle of our legacy network.”

“Ericsson is a long-term partner to Telenor in Scandinavia, supporting the company across multiple engagements in fixed and mobile networks in the region,” said Arun Bansal, Ericsson’s Head of Europe & Latin America. “This deal strengthens that partnership by evolving Telenor’s existing network to the cloud, ensuring continued exceptional services to their customers. As we move together towards 5G it also opens up new opportunities in the IoT space.”

In other Ericsson news, the company has quietly launched a new division called Edge Gravity. As Light Reading reports, it seems to be a semi-autonomous unit within Ericsson that focuses on edge computing and “operates a global edge cloud network that links together a core network of data centers with the last-mile networks of more than 80 partners that include cable operators, telcos and mobile service providers.”

Ookla says Telenor is the world’s fastest mobile operator

Telenor Norway registered an average download speed of 72 Mbps in Q2 2018 according to measurement service Ookla.

In a blog post Ookla, which has Telenor as an enterprise client, was able to shed some light on how such speeds are achieved. There doesn’t seem to be anything too surprising; carrier aggregation , 256QAM, 4×4 MIMO and all that jazz all add up to a nice lot of bandwidth. On top of that it seems to have largely shifted voice traffic over to LTE, which presumably frees up more spectrum to widen the 4G pipe.

As a consequence Ookla has Norway in second place in its global wireless speed rankings, although its average speed of 57 Mbps indicates the other Norwegian operators are way behind Telenor and need to introduce some QAM and MIMO into their diets. Qatar is the clear number one and UAE is third, indicating the Gulf has been investing heavily on infrastructure, while Singapore and Iceland are in the top five for both mobile and fixed speed. The UK is 51st on mobile and 30th on fixed.

Ookla speedtest July 2018

Europe gives thumbs up to Telenor simplification sales

The European Commission has given its blessing for Telenor to offload assets in Eastern Europe to Dutch financial and investment group PPF.

The Telenor business units in Hungary, Bulgaria, Montenegro, Serbia will now transfer into the PPF portfolio, for a cool €2.8 billion after the bureaucrats concluded there are direct risks to competition. The initial concern had focused around the existing PPF portfolio, which features O2 Czech Republic and Bulgarian broadcast company Nova Broadcasting Group, though little or no cross-over was found.

“The Commission found that the proposed transaction would raise no competition concerns,” the Commission said in a statement. “First, it would not give rise to horizontal overlaps, as the companies’ activities are confined to the different territories in which they hold their respective telecommunication licenses.”

Another area of concern was the wholesale international roaming and wholesale mobile and fixed call termination services and the downstream markets, though the Commission stated this would be ‘unproblematic’.

The new will be welcomed by Telenor, which has been looking to simplify its business operations, consolidating spend in its Nordic and Asian businesses. The headline of this strategy is focused around restructuring and a reduction of OPEX, though offloading non-core assets is generally a theme which goes hand-in-hand with such initiatives. Discontinued operations over the last couple of months have included Telenor India, Hungary, Montenegro & Serbia and Bulgaria, Telenor Common Operation, Telenor Microfinance Bank and Telenor Banka.

Looking at the last financial results, total revenues declined by 1%, though subscription numbers in the core markets are heading in the right direction. In Norway, and across Scandinavia on the whole, numbers were solid if not glorious, though Malaysia, Pakistan and Bangladesh all grew subscriber bases. Over the course of the quarter, two million subscriptions were added to the ranks, taking the total up to 172 million.

Telenor pulls out of Central and Eastern Europe

Norwegian telecoms group Telenor has called it a day in Central and Eastern Europe by selling out to private equity firm PPF Group for €2.8 billion.

The transaction includes Telenor’s wholly-owned mobile operations in Hungary, Bulgaria, Montenegro and Serbia and the technology service provider Telenor Common Operation. The stuff its flogging contributed 9% of Telenor Group revenues and 8% of EBITDA. It employs 3,500 people and has nine million customers.

“Telenor Group’s strategy is based on growth, efficiency and simplification,” said Sigve Brekke, CEO of Telenor Group. “With the sale of our CEE assets, we take an important step in simplifying and focusing Telenor’s portfolio on the regions where we see the strongest potential for value creation.

“Following this transaction, Telenor’s footprint will consist of integrated fixed and mobile operations in Scandinavia, and strong mobile positions in Asia. Telenor is confident that PPF Group’s experience in both the region and sector will make it a good owner of the CEE assets.”

“Our proposed use of proceeds balances our aim to deliver attractive shareholder remuneration, while preserving strategic flexibility,” said Jørgen C. Arentz Rostrup, CFO of Telenor Group.  “The special dividend will come on top of an all-time-high ordinary dividend and the recently executed buyback programme. We are currently focusing on developing our existing assets and driving digital transformation. In the coming years, we believe there will be value accretive opportunities within our core business areas and geographies.”

“With this purchase, PPF Group is expanding its telecommunications portfolio to four more countries, and fulfilling our long-held goal to become a mid-sized European operator and to use our experience to strengthen our market position,” said Ladislav Bartoníček, PPF Group’s shareholder responsible for telecommunications assets within PPF.

Telenor announced back in January that is was thinking of pulling out of Central and Eastern Europe and it apparently took it a couple of months to hammer out the details of the deal. Telenor has been trying to consolidate its operations back to its core geographical areas after a few foreign misadventures and this looks like a major step in that direction.

Telenor considers offloading Central and Eastern Europe operations

Telenor has said it has received unsolicited interest from an unnamed organization which is interested in acquiring its Central and Eastern Europe operations.

Details are very thin on the ground right now, but considering Telenor has not been setting the world alight in recent quarterly calls, such a cash injection and an opportunity to focus more acutely on the core business might be welcomed by investors.

“With a view of creating shareholder value, Telenor has engaged in a process to evaluate the interest received. Telenor expects to conduct these assessments in the first quarter of 2018, “ the company said in a statement. “The assessment will not impact Telenor’s operations, customers or employees.”

Central and Eastern European operations have been performing relatively well in recent years, contributing 9% to total revenues. Looking at the year-on-year comparisons for the last quarter, Hungary, Bulgaria, Montenegro and Serbia all demonstrated increases in both revenue and operating profit. As you would expect, these are markets which are notably smaller than Telenor’s Nordic playground, though any win is a good result in the present telco climate.

The approach is under consideration for the moment, and Telenor has said it will not release any additional information prior to the completion of this review.

Telenor tightens the purse strings

The team claim to have shaved 1 billion kroner (roughly €105 million) of fat across the business, but it doesn’t want to stop there.

For some it has been a bit touch and go, but Telenor has seemingly pulled a whopper out of the bag. Quarterly figures which demonstrate a profit and beat market expectations. The Norwegians are confident enough to stamp the foot down on full-year guidance; the telco version of a mic drop.

“So far this year, our team has achieved cost savings of 1 billion kroner, implying that our target for 2017 has already been met and further efficiency gains should be expected going forward,” said CEO Sigve Brekke.

“The solid results, together with the proceeds from the completion of the VEON sell-down, give us a free cash flow of 9.4 billion kroner for the quarter.”

Efficiency is the name and digital transformation is the game. 11 of the 13 business units are delivering lower year-on-year OPEX figures and the next focus is on digitalising the core. The team claim this will deliver a foundation for growth, but first and foremost it will save more money. Let’s hope the team are focusing too much on saving. If it comes at the detriment of searching for new ideas, this might not be the best ambition to harbour for the long-term.

Lean and mean is all well and good, but you have to look externally for new revenues to survive in this cut-throat world. You have to wonder when the penny-pinching exercise might start to hurt a bit too much. After all, you have to spend money to make money, and sometimes that means not getting something right. How would failure be viewed in this environment of efficiency and productivity?

What might be interesting is how much is cut away over the next three months. Brekke couldn’t be drawn into any targets for the next quarter, but the lead into the Christmas period is not exactly a perfect time to be trimming the budgets. Consumers will be looking to spend, and seeing as the team has already cut back on TV and radio advertising campaigns, there will have to be an interesting balance struck. Too much efficiency and all of a sudden the profile and visibility of the brand suffers. That would not be good news.

The team is confident of the current strategy however. The emerging Asia portfolio, both in the Bangladesh and in Pakistan, are operating on reduced costs, but offering good returns in terms of postpaid subscribers. The claim is there is also demand in the Nordic markets as well, where the team is capitalizing on the ever-growing appetite for data. Whether Telenor can continue to ride the rough waves on a stripped back ship remains to be seen, but CFO Jorgen Arentz Rostrup is confident.

“We see that there are revenue potentials in this markets if we done it right and 3% organic or 2% growth on the call revenues, it’s something we are happy with but this goes up and down dependent on the competitive environment in the various markets,” said Rostrup.

One ominous sign which might be worth paying attention to is the decline in revenues. For this quarter, Telenor managed to bring in 30.735 billion kroner (roughly €3.24 billion) compared to 31.249 billion kroner (€3.29 billion) during the same quarter of 2016. It’s not an earth shattering decline for the moment, but let’s see how big the gap is after a couple more quarters of cost cutting.

Profitability might be improving, but if revenues continue to head in the same direction, the business will only head in one direction.

Telenor says enough is enough with troubled Veon

Most Norwegians we’ve met to date have been nice, relatively laid back people, but the execs at Telenor have seemingly been pushed to breaking point, resulting in the divestment of Veon.

It’s been in the works for a while, and it would appear Telenor has finally gotten sick of dealing with Veon. There has been ‘debate’ over the future strategic direction of the company, but it won’t be long before the Norwegians finally ditch their final 19.7% stake in Veon.

Telenor has announced it has begun an offering of 90 million Veon shares, roughly a 5.1% stake in the telco, priced at $4.15, with the offering expected to close on September 25. This will leave Telenor holding onto 14.6% of Veon, though plans are to transfer this stake to an exchangeable bond. Telenor will be able to clean its hands of any association.

This should come as little surprise considering the saga which played out in Uzbekistan back in years gone, when the business was known as Vimpelcom. Back in 2015, Telenor announced plans to divest its stake in the business, citing ‘challenging’ conditions. Apparently paying hundreds of millions of dollars to firms controlled by Uzbekistan’s President Islam Karimov for a leg-up in the country, is a no-no in Oslo.

And while many might view this as an admirable move by a telco wanted to keep its hands clean, let’s not forget Telenor was not completely absent of wrong-doing. A seconded Telenor employee raised concerns of corruption back in 2011, but this news didn’t make it to the CEO until March 2014, and then onto the board in December later that year. From there the memo was lost until October 2015 when it made its way to the Norwegian government, the majority shareholder of Telenor. Negligence or incompetence – we’ll let you decide, but neither should be present.

Telenor is on the verge of getting rid of the headache, which also blamed Uzbekistan for a recent profit warning, and it will receive a nice little $365 million boost in cash in the first instance. Seems a bit backward to be rewarding the telco when you look at the saga from angles, but hey-ho.