Telia finds cause for optimism in its latest numbers

Swedish operator group Telia has a spring in its step and decided to upwardly revise its outlook following better than expected Q3 earnings.

Adjusted EBITDA rose 1.8%, in the third quarter, with margin up slightly too. In his accompanying comments Telia CEO Johan Dennelind said the company’s cost reduction programme is going well and that he’s confident whatever financial objectives they set for the year will be achieved.

“We are clearly on track to deliver the net cost reduction of SEK 1.1 billion that we have set out as a priority for the year,” said Dennelind. “Our operational free cash flow continues to be strong, having generated SEK 10.2 billion over the last 12 months. Our adjusted EBITDA is growing in six out of seven countries, with Finland, Norway as well as our central units being the main drivers. The performance is a combination of strong execution of the cost ambition as well as delivering synergies and stronger propositions to customers from the acquisitions we have done in recent years.

“No doubt comparisons will continue to be tough in the fourth quarter, especially in Sweden. Still, given the performance so far, with adjusted EBITDA having grown by 4 percent excluding currency effects, we up our full year EBITDA guidance from ‘in line or slightly above the 2017 level’ to ‘slightly above the 2017 level’.”

Telia seems to be on a similar journey to its compatriot Ericsson, which also expressed cautious optimism when it announced its Q3 numbers yesterday. It’s early days but if vendors and operators continue to sound so chirpy we might be inclined to start drawing hasty conclusions about a 5G-fueled uptick in the telecoms cycle.

Telia Q3 2018

Telia pays the most in Finnish 5G auction

Finland offered up nearly 400 MHz of mid frequency 5G spectrum to its MNOs and Telia bought the most expensive block.

The whole of the 3410-3800 MHz frequency range, split into three blocks of 130 MHz each. After just a few days of bidding Finland’s three MNOs concluded their business as follows:

Frequency band 3410–3540 MHz (A)

Telia Finland

€30,258,000

Frequency band 3540–3670 MHz (B)

Elisa

€26,347,000

Frequency band 3670–3800 MHz (C)

DNA

€21,000,000

The slightly lower frequency stuff apparently has a bit more value than the rest and it’s worth noting that Elisa is the market leader by subscriber number so it looks like Telia has decided to make a strategic move to close the gap in the 5G era. While Finland is admittedly a much smaller country, €77 million seems like a small return for the government when you compare it to the frenzied bidding we’re seeing in Italy.

Telia declares Finland is ready for the 5G promised land

Finland is set to be one of the first nations in Europe to experience the wonders of 5G as Telia targets the beginning of 2019 for commercial launch.

With tests in the Telia 5G Arena in Helsinki completed, the first base stations in the city operational and the first phase of roll-out set to be completed in the Autumn, Telia has confidently proclaimed full-scale commercial operation will be possible in 2019, just as soon as the 3.5 GHz 5G frequency auction has been conducted.

“For two years we have prepared for 5G with demos and trials,” said Jari Collin, CTO at Telia Finland. “We set up the 5G Finland cooperation network to create and pilot 5G services with our partners, and now we can continue exploring the possibilities of 5G in a real live network.”

It is certainly a bold promise to make, though seeing as this launch will be prior to the availability of 5G devices, who is going to know whether those crafty Finns are telling the truth or not. The on switch could well be hooked up to a couple of dozen pink and green light-bulbs spelling out ‘viides sukupolvi’ and nothing else; who would be able to tell?

Perhaps the reason we can joke about the Finns having a network and no flashy devices is because it’s probably a better way to have it than the other way around. Some might mock the idea of boasting of 5G with no consumer devices to make use of it, but upon the launch of said devices, consumers in other nations will own very expensive, glitzy smartphones, connected to an imaginary 5G network.

Progress has been steady in the Telia business. It is now boasting of getting to a point where all 5G network components are available, from 3GPP specification-based radio access to high capacity IP networks, virtualized core and the massive computing capacity offered by its Helsinki data centre.

“We are pleased to begin the deployment of the first 5G base stations in Finland – the Nokia AirScale radio access –  and we will continue working with Telia Company to identify the technologies and services that meet the demands of consumers and industries in the 5G era,” said Jan Lindgren, Head of Telia Customer Team at Nokia, a key partner of the project.

While the 5G posturing has largely been left to telcos in the US, China or Korea, Telia has slipped through the peloton relatively undetected, and could in fact be one of the first worldwide to hit the on-switch. Considering the rather humble progress made by the Telia team, who would have thought we would have been saying that.

Telia continues on the TV acquisition trail

Only a matter of days after Telia announced the purchase of GET and TDC Norway to bolster its convergence play, the Swedish telco has confirmed the acquisition of Bonnier Broadcasting.

Telia has been gearing towards the convergence business model for years, with content as a notable prong, though the acquisition work this week brings the promise closer to reality. The new business will be a separate entity within Telia, with a comprehensive ethics and compliance framework already in place to maintain editorial independence.

“The debate which has been taking place ahead of today’s announcement shows that Telia Company has several important roles to play in the Swedish society,” Telia said in a statement. “It is a role that the company takes most seriously and one that, as we move forward, will continue to be handled responsibly. Telia Company therefore welcomes shareholders and other affected parties within politics and society to take part in constructive dialogue around these issues.”

While the convergence business model is a logical one, there are some concerns in Sweden about the takeover, mainly surrounding government influence in broadcasting. The acquisition will have to be handled carefully, somewhat explaining Telia’s compulsion to explicitly state there will be no changes within the organization once it is brought into the telcos family.

The Swedish government is currently the largest shareholder in the Telia business, controlling a 37% stake, and already controls the largest traditional broadcaster in the country, SVT. Should the government have direct/in-direct influence over two of the major broadcasters in the country, some might question whether this is a sensible decision. With a general election scheduled for Sunday 9 September 2018 in the country, the timing of the deal could make this a much more politically sensitive position.

Although some might suggest this is a paranoid distraction, you only have to look across to other countries with far more ‘proactive’ governments, to understand why some critics are sensitive to the idea.

Telia bags GET and TDC Norway for €2.2 billion to bolster convergence game

Telia has announced the acquisition of GET and TDC Norway for roughly €2.2 billion as the telco looks to strengthen its hand in the convergence business.

The Norwegian business of Danish operator TDC encompasses GET, a provider of fixed and TV services, as well as the B2B business in Norway. The team claims there are more than 518,000 households and businesses connected to the fiber-based network, as part of a total of one million private and business customers who use the TV and broadband services.

“It is with great excitement and commitment that we announce the agreement to acquire GET and TDC Norway,” said Johan Dennelind, President and CEO of Telia.

“It will create a leading convergent operator for both consumers and enterprises in Norway which can compete in the market with a lot of attractive and new products and services. This transaction is beneficial for the Norwegian customers and society. We are building a great company with passionate employees where we have invested heavily in our mobile network which now covers 98 percent of the country. As part of Telia Company, GET will continue to invest in the rollout of broadband and fiber.”

Telia has been making progress in the Norwegian market with 2.3 million mobile subscriptions, a market share of roughly 42%, with the company’s 4G network covers 98% of the country. Telenor is leading the country’s mobile stakes, though investment in fibre and video assets will certainly give Telia impetus to make moves in the market.

Nokia, Intel and Telia test out smart factory in Finland

Nokia, Intel and Telia have teamed up to test out industrial applications of 5G for manufacturing at the Nokia Conscious Factory in Oulu.

The trials were aimed at making use of the ultra-low latency and high-bandwidth capabilities of 5G with machine-learning to enhance production in manufacturing environment. Taking place at the end of last month, the trio claim it is a world first in terms of testing out the ‘Industrial 4.0’ idea, focusing on automation and data exchange in the manufacturing process. In other words, how to do it more efficiently and with less employees.

Nokia deployed the network, using its 5G AirScale and Multi-access Edge Computing (MEC) platforms, while the AirFrame data centre solution was equipped with Intel’s Xeon Scalable processors, to deliver network edge and core cloud flexibilities and capabilities. The trial also used the Intel 5G Mobile Trial Platform as the end-user device as well as an integrated video analytics application from Finnish software start up Finwe.

This project is another example of edge computing starting to get a bit more buzz. To reduce latency and improve performance, the use of Multi-access Edge Computing together with 5G allows data to be processed close to where it’s needed. The Finwe video application was used to monitor and analyse a video feed of a process on one assembly line, while machine learning applications alerted the assembly line operator of any inconsistencies in the process so they could be corrected in real-time. In the second trial, Nokia and Telia demonstrated the ability of the technology to enable Telia to offer cloud remote service delivery for business customers.

“Under our ‘5G Finland’ initiative we are working with companies such as Nokia to accelerate the fourth industrial revolution in the country,” said Janne Koistinen, Director of 5G Program at Telia Finland. “In this trial we could show how we can extend our service offering to new industry customers to enable efficiencies that will advance their production capabilities.”

Nokia waves Telia win in Ericsson’s face

Nokia thinks it’s important that everyone knows its cloud-native packet core solution has been chosen by Swedish operator group Telia Company.

There is, of course, intense competition between Finnish Nokia and Swedish Ericsson, so securing the business of Telia must surely carry some extra weight for both of them. TeliaSonera is the clear leader in the Swedish market and Telia Finland is a solid second there, behind Elisa. It’s also a significant player in the Danish and Norwegian markets so it’s fair to say Telia is the daddy of the Nordic telecoms market.

So the news that Nokia has been selected as the sole vendor for packet core for the entire group, including Estonia and Lithuania, is a pretty big deal for Nokia and conversely a blow for Ericsson. Whether anyone else should care is another matter but this is a B2B telecoms trade title and we have to cover this stuff so just back off, OK? Having said that Nokia used this opportunity to shoehorn a bunch of related product propaganda that we don’t feel like repeating, so what can you do?

“There is tremendous potential with the continued growth of mobile broadband, and with new services and 5G in the near future,” explained Sri Reddy, SVP of Nokia’s IP and optical business. “To take advantage of these opportunities, Telia must deploy a new generation cloud-native packet core that is able to connect to a greater variety of devices and deliver a broader range of services over multiple access technologies.

“Nokia uniquely combines field-proven cloud-native software, cloud technologies and mobile and IP routing expertise to help Telia speed up service delivery, deliver greater scale and capacity and operate its network more efficiently. Plus, because our cloud packet core is built on our robust, field proven router software (SROS), it provides Telia with a solid foundational framework for the evolution of its 4G and the path forward to 5G.”

See? They always squeeze the propaganda in somehow. Just when I thought I was out, they pull me back in! And, of course, Nokia wasn’t about to let us off the hook without name-dropping 5G a couple of times. Touché Nokia – well played.

Out in

The Ericsson and Intel 5G roadshow heads to Tallinn

Ericsson and Intel are spending so much time together these days that people are starting to talk.

Having been seen walking hand-in-hand through Beijing earlier in the week, ostensibly in the name of field-testing 5G multi-vendor interoperability over the 3.5 GHz band, the glamourous pair made their way to Tallinn, the capital of Estonia today. By complete coincidence that is also the location of a meeting of the EU’s leaders, so that should ensure a nice lot of paparazzi will be milling around, looking for choice photo opportunities.

The pretext for this European leg of the couple’s world tour is the deployment by Telia of what it claims are the first 5G live network use cases. Ericsson and Intel are helping out with these projects, which include a 5G connection to a passenger cruise ship and a construction excavator remotely controlled over 5G.

Gabriela Styf Sjöman, Global Head of Networks, Telia Company says: “We want to be early with 5G and will bring it to life in Stockholm, Tallinn and Helsinki in 2018,” said Gabriela Styf Sjöman, Global Head of Networks at Telia. “We work together with our partners in the whole ecosystem to explore the powerful effect it is going to have for our customers and in society.

“It’s not only about building a new network but it’s also about building a new way of thinking and perceiving what a mobile network can be and can do. High speed, low latency, guaranteed capacity and truly mobile is going to push the boundaries of digitalization and we want to be there pushing it together with our partners.”

“Our own report about the 5G business potential identifies a huge opportunity for telecom operators globally who address industry digitalization with 5G,” said Arun Bansal, Head of Europe and Latin America at Ericsson. “We foresee that they can benefit from a market opportunity of $582 billion by 2026 and this represents a potential to add 34 percent growth in revenues. Capturing this market potential requires investment in 5G technology as well as business development, and go-to-market models.”

“Our work together trialing early usages of 5G technologies and the experiences it will bring to different industries, demonstrates the importance of collaboration and the need for seamless flow of data across the network, cloud and devices to make 5G a reality,” said Asha Keddy, GM of the Next Generation and Standards Group at Intel. “Intel’s 5G platforms are critical enablers for today’s active, real-world 5G trials with service providers around the globe, providing crucial insights and helping to define the future of 5G.”

As well as giving our leaders the setting for a slap-up dinner at our expense, Tallinn is also hosting the EU Digital Summit. This is the latest in an entrenched campaign by the Eurocracy to be seen to be keeping up with the US and Far East when it comes to emerging tech trends. Ericsson and Intel seem to have decided that getting in with the public sector is a good way enhance their own 5G credibility as well as a potentially handy source of public subsidy.

Telia hopes to draw a line under Uzbekistan nightmare with $965 million payment

The region that keeps on taking has claimed another pound of flesh from Swedish telco Telia in the form of a billion dollar fine.

Positioned as a ‘global settlement’, Telia is handing over $965 million to US and Dutch prosecutors in what it hopes will be the final resolution of the Uzbekistan corruption case that has dogged it, as well as Telenor and Veon, for years. Sweden seems to want a piece of the action and is looking for a disgorgement (repayment of illegal profits), but Telia is hoping that will be covered by this settlement too.

The figure is actually a bit of a let-off considering Telia expected to be stung for $1.4 billion this time last year. This seemed a tad harsh when Veon got away with considerably less and Telia’s lawyers seem to have earned their fees in the intervening time.

“Today’s settlement brings an end to an unfortunate chapter in Telia Company’s history,” said Telia’s President and CEO Johan Dennelind. “Since 2013 the new board and management have worked diligently and responsibly to understand what went wrong, to remedy what has been broken and to regain trust from all our stakeholders.

“We have come a long way to establish a more sustainable company with a strong focus on governance and compliance but it is a never-ending journey as we aspire to embed this into our culture making sure that all employees understand the importance of doing the right thing all the time. The resolution and related financial sanction that we announce today is a painful reminder of what happens if we don’t.”

“Today, we announce one of the largest criminal corporate bribery and corruption resolutions ever, with penalties totaling just under a billion dollars,” said acting U.S. Attorney Joon H. Kim. “Swedish telecom company Telia and its Uzbek subsidiary Coscom have admitted to paying, over many years, more than $331 million in bribes to an Uzbek government official.

“Telia, whose securities traded publicly in New York, corruptly built a lucrative telecommunications business in Uzbekistan, using bribe payments wired around the world through accounts here in New York City. If your securities trade on our exchanges and you use our banks to move ill-gotten money, then you have to abide by our country’s laws. Telia and Coscom refused to do so, and they have been held accountable in Manhattan federal court today.”

While bribery was clearly an implicit cost of doing business in Uzbekistan over the period that Telia and Veon committed their naughtiness, it’s less obvious why these companies chose to maintain their interests their rather than just bailing. Presumably targets and bonuses had a part to play and, if so, this simply echoes the mistakes of companies like Barings, Enron, Lehman Bros, etc.

Telia tries shocking new strategy: improving customer experience

Telcos in the UK might not understand what it means to be customer centric, but the Swedes seem to be having a solid crack at it. Well, Telia at least.

The point of attack here is an app called ‘Min Mobile’, developed by a company called eBuilder, which Telia has a non-controlling stake in. Essentially it is a platform which collects information about you and how you use you device, but then offers advice on how you can improve performance.

It’s an interesting strategy to re-engage customers, who are starting to forget about the operator. Telia’s Gustav Berghog highlighted to us the user is now more concerned with the handset manufacturer and the flashy content providers/OTTs; there is a risk the operator will be thought as nothing more than a commodity, and therefore traded out without much thought or emotional loss.

Ideas like ‘Min Mobile’ are designed to take Telia back into the customer life. The team want to show the operator is more than just a connectivity provider, but provide an experience which adds value. This idea of ‘positive discounting’, as Berghog describes it, removes the idea of an operator relationship being transactional, and aims to create an element of loyalty. That’s ultimately what ‘Min Mobile’ is; a customer retention strategy.

So how does the app work? Once downloaded, the app monitors how you use your device, and aims to predicts any flaws or errors on the device. The app currently monitors four areas; storage, battery, general performance and device condition/age. There are plans to extend in others, but these address the main pain points for consumers for the moment.

After monitoring your device for a while, the app might figure out that your battery performance is 15% less than other users on the same one. Using this information, Telia can make communication with you much more personalised. The might send out a message with tips focused on improving battery life to you, but your partner might get one on storage tricks, as this was an issue highlighted on their device. It is much more appealing, a step away from the general ‘engagement’ messaging which most operators make use of, and it is pretty useful as well.

Data usage is another area which the team might investigate. By monitoring your geographical location and where you turn your wifi on, a pattern will soon emerge. For those who are data conscious, a small reminder to turn on your wifi would be a good little value add. These are not ground breaking ideas, but tie enough of them together and they start to make a difference.

And it seems the Swedes like it as well. Since launching in January, the app has been downloaded 100,000 times, 76% of those downloads retained, and has a rating of 4.5/5 on Google Play. For those who have the app, the Net Promoter Score is 29, compared to a score of 1 when they don’t.  Berghog wasn’t able to say whether this has had a direct positive impact on churn rates, but the early signs are certainly good ones.

But it should be worth noting Telia also plan to make money off this data as well. By collecting information around storage, battery, general performance and device age/condition, and combining that with other data sets such as customer demographic, handset type and historical upgrading behaviour, Telia can start to develop a purchase pattern for each customer. This can be used to approach the customer at the right time to renew an agreement or upsell to more premium products.

Customer retention is clearly an objective for Telia, and creating these purchase patterns mean the team can engage the customer earlier in the process. Potentially the team can start that conversation before the customer get curious by other deals.

Berghog thinks there is also another way the team can provide value by becoming a bit of a broker for the mobile industry. All the data which has been collected so far not only allows Telia to increase engagement, avoid churn and upsell new products, it also tells the team about how you use your device specifically. An ambition for Berghog is to become an independent advisor to the customer.

Imagine you currently have a Samsung handset. With all of this information, Telia might be able to say because the way you use the device, the new Huawei model might be more suitable. It might also be able to suggest not to update to the newest version of an operating system, for example, because that would not suit the way you use your device. Helping the customer make more informed decisions is one way in which Berghog feels Telia can add value and create an emotional connection to the customer.

The best ideas are the ones where both sides of the equation feel they have gained something. This is one of the instances where it could be true. The customer gets a better experience, and potentially a better deal, whereas Telia increases customers loyalty. It is still early days for the moment; Berghog highlighted the team need to validate the benefits to Telia, while also scaling to the rest of the user base, but the early signs are certainly positive.