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.