OT DD A Week in Wireless #203 (from email from fiercewireless.com)
4th November 2005
This week the industry's favourite long-running takeover story was finally wound up as British network operator O2 sold out to Telefonica for a thick £17bn. This takes the merged group to second place in the world market by revenue behind Vodafone and makes the O2 top management who took on the operator back in 2001 when it was generally perceived as the smelly bit that fell off BT all obscenely rich. Since then, though, the operator has done well, appealing strongly to text-addicted youngsters, launching i-Mode and HSDPA, and becoming the operator of choice to the British emergency services.
The London Stock Exchange has been obsessed all year with the idea of O2 being taken over by Deutsche Telekom, perhaps in some sort of folk-unconscious memory of the second world war, but no one seems to have predicted that the Spanish incumbent telco would be the winner. After all, Spain is where common people go on summer holidays, right? Deutsche would always have faced serious trouble in trying to absorb O2 for the simple reason that it is already its own best competitor in the UK and Germany, which would probably have triggered a whole succession of anti-trust investigations. In the summer, DT was forced to tell the LSE that its efforts to get round this through a side deal with KPN had failed. Deutsche was then prevented from bidding for six months by Stock Exchange rules, but such simple considerations didn't stop the rumours.
Even after the deal was tied up, they still hoped for a German bid until Karl-Gerhard Eick, Deutsche's finance director, explicitly told them there would be none. The obsession didn't stop, though-it just moved to Virgin Mobile, whose shares soared on rumours that "as the last remaining independent mobile operator" it would soon attract a German bid. Of course, Virgin is no such thing, being an MVNO perched atop T-Mobile's network. Why Deutsche would want to spend millions to buy revenue it already gets is a mystery comprehensible only to readers of Traders' Monthly, the new London-based publication aimed only at those earning over £250,000 a year according to its publisher.
There was real news about Virgin this week, though, as it agreed to start selling Emblaze Mobile's new Sting 6 gadgets in time for Christmas. Christmas already! My heart bleeds with joy. The device will be aimed at the 16-24 year old age group, and includes a 1.3 megapixel cam with up to 16x zoom. Apparently it's "for the confident, sociable fashion-conscious consumers for whom their mobile phone is the key to their lives," so users had better hope its engineering is better than its English.
The earth shook menacingly, meanwhile, as two mighty beasts confronted each other: Qualcomm and the European Commission. The EU has wapped the CDMA titan with an anti-trust charge after a brief who's who of telecoms manufacturing complained that the San Diego giant was operating a monopoly through its patents on standardised CDMA2K and WCDMA kit, alleging that it was deliberately jacking up the royalties on WCDMA chips despite less of its technology being involved. Predictably, Qualcomm denied it strenuously, bashing the case as "factually inaccurate and legally meritless." Well, it would say that, wouldn't it? Equally, the GSM Association weighed in with a broadside of its own in support of the case. But, well, It would say that, wouldn't it?
The imbroglio didn't seem to affect Qualcomm's fourth-quarter results, though. The kitco saw profits up from $393m a year ago to $582m, or 32 cents a share, and predicted revenue growth of between 18 and 25 per cent next year as against 40 per cent this year.
Trying to put a spoke on their wheel, though, are Motorola and Intel, who this week announced yet more collaboration on WiMax technology. This time, as well as working together at the WiMax Forum to get the specifications sorted, the monster manufacturers intend to test interoperability between Moto infrastructure kit and Intel data cards.
There was a minor WiMax outbreak in Australia, meanwhile, as Austar announced its aim to deliver wireless internet service to the outback using Navini Networks's not-quite-WiMax solution. The plan is to do larger towns in inland Australia first and move on from there, according to CEO John Porter, kicking off with maximum speeds of 1Mbps.
One well-known early adopter of WiMax is of course Sprint Nextel, what with its commitment to roll out national wireless broadband or lose its 2.5GHz spectrum. The firm is known to have been out testing Samsung equipment, and Samsung is confident enough to have publicly predicted a roll-out in 2006. But the carrier would seem to be hedging its bets-or why else would it have joined the Global TDD Alliance? Apparently UMTS-TDD kit is also being tested out in Washington in a project Sprint acquired with the rest of Nextel.
The FCC, meanwhile, signed off the mergers of (deep breath) SBC, AT&T, Verizon, and MCI. Under the terms of the mergers, they must maintain their current internet peering policy for at least two years and make the policy public.
Vodafone, for its part, rang the changes this week, selling its Swedish network to Telenor for around Euro1bn and buying more shares in South African operator Vodacom for "up to" £1.35bn, taking its holding to 50 per cent of the firm. Coming a week after Vodafone bought into Bharti Tele-Ventures of India, it looks as if Vodafone is engaged in a dash for fast-growth assets.
In Pakistan, on the contrary, the privatisation of Pakistan Telecommunications Ltd. has run into trouble. 26 per cent of the firm and the rights to take management control were sold back in June to Etisalat of the UAE for $2.34bn in a deal which involved hundreds of striking PTCL workers being dragged away by the army. However, it appears that Etisalat can't pay. In July, it fronted up ten per cent of the price, but the rest has apparently failed to appear, and according to the Privatisation Commission, "this deal seems to be over." An Etisalat spokesman told the Financial Times that "we will come out with a statement in a couple of days."
Nokia had a mixed week; on one hand, there was a wave of new phones in the top-end N-series. The one attracting most attention was the N92, which includes support for DVB-H mobile TV (does that make it a tellyphone?) and a curious hybrid clamshell/fliptop design. On the other hand, there were catastrophic sales figures for the N-Gage games gadget. Apparently, the Finnish firm was hoping to flog some six million of the things in three years, but so far only two million have gone. Full disclosure: one of the faceless, nameless entities behind the Informer has received a review gadget. He hasn't been seen since he took it home to "try it out", occasionally sending emails to the office demanding pizza.
Fancy phones are the business of Taiwanese manufacturer HTC, who had results out this week. Sales and profits for the third quarter broke the firm's records despite the seasonal slowdown, with revenues of TW$16.56bn, up seven per cent on the previous quarter and 134 per cent on the corresponding period a year ago. Net income after tax was TW$2.64 bn, up 251 per cent year-on-year. More gadgets, including a new 3G handset with Wi-Fi and 4GB of Flash storage, are expected soon. (Even fuller disclosure: another faceless, nameless entity has received an HTC review gadget that accepts his email. He was last seen stamping around importantly and kicking beggars on Waterloo station.)
Low-cost airline supreme Stelios Haji-Ianniou's MVNO, EasyMobile, just launched in Germany this week after its triumph in signing up a whole 15,000 UK subscribers. As in Britain, the network supplier is T-Mobile. MVNO target-turned owner and Danish telco TDC, which is supporting EasyMobile's operations in Britain and Germany, had figures out this week: net income was up 20 per cent at DKr1.3bn, on revenues up 10.9 per cent at DKr12.2bn. Forecasts for the year were revised upwards by DKr 500m to DKr 46.1bn. They would, however, say nothing about the swarm of bidders circling blackly and vulturelike over the firm…
One of those, Swisscom, was this week linked with a possible bid for Eircom in conjunction with an Australian investment fund. The Irish ex-state telco is valued at Euro4.4bn and has just bought out mobile operator Meteor. Swisscom's acquisition policy is confined to European ex-incumbents. Meanwhile in Ireland, Palm opened an R&D centre for 3G smartphone development in Swords, County Dublin.
In the exciting world of mobile media content, a whole gaggle of trendy young London mediacos have been commissioned by the BBC to develop a series of Java games based on their spy series Spooks, including a set of missions to download via GPRS and actual locations on a map of the UK. It's the first time a mobile game has used a live map of the whole UK. The guilty parties are Kudos Film and Television, Magic Lantern, and YDreams Entertainment.
Another BBC hit, Mr. Bean, will be coming to mobile phones in cartoon form thanks to a deal between producers Tiger Aspect and videoco Mobile Streams. Is it me, or do these media types have really silly company names?
After all this, you may be feeling a little overwhelmed. Don't worry, it's not AWIW. According to SmartTrust's Mobile Trends Guide, you've just got a dose of Mobile Service Fatigue, a condition characterised by an inability to keep pace with proliferating features, services, and complex pricing structures. One man who's certainly got the acute form of MSF is businessman Roger Steare, who travelled to France on holiday and then went on to Germany on business, taking his laptop and an Orange 3G-GPRS datacard with him. He was more than a little shocked to receive a bill for £769 worth of data transfer charges at £8 a megabyte. The same amount of data would have cost him less than £10 in the UK.
Take care
The Informer
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