A week in telecoms: 5G comes to Egypt, smartphone market momentum builds

Telecom Egypt ties with Nokia for 5G

Telecom Egypt took further steps towards becoming the first operator to bring 5G to Egypt after it announced a new partnership with Nokia, which is providing its AirScale portfolio.

5G will initially be deployed in cities such as Alexandria, Giza, Luxor, and Aswan, although precise timelines were not provided.

Telecom Egypt is currently the nation’s only operator with a 5G license. In January, the National Telecommunications Regulatory Authority (NTRA) granted Telecom Egypt the country’s first license to install and operate a 5G network, apparently eschewing an auction process. The operator paid US$150 million for the 15-year license.

The country has four major players — Orange Egypt, Vodafone Egypt, Etisalat Egypt, and Telecom Egypt — all of which were expected to bid in any auction or tender.

However, the four operators already own frequencies suitable for 5G services as the NTRA previously allocated TDD spectrum within the 2.6GHz band. In 2022, Orange Egypt paid $440 million for 30MHz, while NTRA previously allocated 80MHz to Vodafone Egypt, Egypt Telecom and Etisalat Egypt at a cost of $1.1 billion. 4G licenses were granted to all four operators in 2016.

In early June, Vodafone Egypt said it was deploying Ericsson’s triple-band radio, allowing it to offer 2G, 3G, 4G as well as 5G across 1800MHz, 2100MHz, and 2.6GHz spectrum layer with a single unit. 

Orange Egypt has also selected Ericsson as a strategic partner to accelerate its digital transformation and build a resilient architecture across its network. 

SK Telecom invests $200m in Smart Global in AI push

The ever-innovative SK Telecom (SKT), which has already announced its intention of becoming an AI company, took a further step towards attaining this goal with a $200 million investment in Smart Global Holdings (SGH).

Headquartered in Milpitas, California, SGH offers specialized platforms and services for high-performance computing, AI, machine learning, fault-tolerant computing, and IoT that “span the continuum of edge, core, and cloud.”

Through its Penguin Solutions business, SGH provides integrated AI data center solutions ranging from the design of AI clusters consisting of large-scale GPU servers to the expertise in data center deployment and operation.

SKT and SGH plan to enter into a collaboration this year with an emphasis on establishing a “more concrete cooperation across the AI infrastructure business, including AI data center, edge AI, and future memory solutions.”

SKT’s current AI-related investments and partnerships include Anthropic, Lambda, and Perplexity. 

“Along with these investments, the alliance with SGH is expected to solidify SKT’s position in the AI value chain across the three pillars: AI semiconductor, AI infrastructure and AI services,” the operator said. 

According to the Korea Herald, the amount SKT has invested in the AI sector since last year now surpasses $300 million.

SGH has also just announced its intention to take on the Penguin Solutions brand for the entire group, positioning it as an “expert in end-to-end AI infrastructure solutions.” The transition is expected to be completed later in 2024. 

Ericsson sees boost from North America in Q2; Nokia expects demand to pick up in H2

Times have been hard for traditional telecoms equipment providers in recent months owing to a slowdown in 5G equipment spending by operators.

In the first quarter, both Ericsson and Nokia reported that sluggish demand for 5G gear in North America and India had continued to weigh on sales. In April, however, both companies were more upbeat, forecasting that demand would gradually improve towards the year-end.

Ericsson was already able to beat profit and sales forecasts in Q2 after demand picked up in North America, according to Reuters. 

The news agency said that the Swedish vendor’s adjusted core earnings halved to 4.05 billion Swedish crowns from the SEK 8.21 billion a year ago, but was 9.5% above a consensus estimate cited by J.P. Morgan, largely owing to a 14% rise in sales in North America. Sales fell 7% to SEK 59.9 billion, also beating forecasts.

Börje Ekholm, President and CEO of Ericsson, noted that the vendor returned to growth in North America, “and delivered strong gross margin expansion and free cash flow. We remained focused on matters in our control, to optimize our business amid a challenging market environment, with industry investment levels unsustainably low.”

He added: “We expect market conditions to remain challenging this year, as the pace of India investments slow, however our sales will benefit during the second half from contract deliveries in North America.”

Last year, Ericsson won a high-profile deal in North America from AT&T. CFO Lars Sandström told Reuters that the second quarter in North America was boosted by several customers, but he did not name them.

Nokia said its operating profit fell 32% in Q2 because of weak demand for 5G equipment. Sales fell by 18%, largely because the pace of investment is slowing in India. 

However, the Finnish vendor expects demand to pick up in the second half of the year. Pekka Lundmark, CEO of Nokia, said that “while the dynamic is improving, the net sales recovery is happening somewhat later than we previously expected.”

He added: “We believe the industry is stabilizing and given the order intake seen in recent quarters we expect a significant acceleration in net sales growth in the second half.”

IDC says smartphone market momentum continues to build

Latest figures from International Data Corporation (IDC) brought some positive news for the global smartphone market, although the sector is not yet completely out of the woods. 

According to IDC’s preliminary data, global smartphone shipments increased 6.5% year over year to 285.4 million units in the second quarter of 2024. 

Although this marks the fourth consecutive quarter of shipment growth and builds the momentum towards the expected recovery this year, demand has yet to come around in full and remains challenged in many markets, IDC warned.

Nabila Popal, senior research director with IDC’s Worldwide Tracker team, noted that recovery is well under way, with the top five companies all making year-over-year gains. However, Popal said there is also evidence of increasing competition amongst the leaders and a polarization of price bands.

“As Apple and Samsung both continue to push the top of the market and benefit the most from the ongoing premiumization trend, many leading Chinese OEMs are increasing shipments in the low end in an attempt to capture volume share amidst weak demand. As a result, the share of mid-range devices is challenged,” she said.

Popal added: “Still, there is lots of excitement in the smartphone market today thanks to higher average selling prices (ASPs) and the buzz created by Gen AI smartphones, which are expected to grow faster than any mobile innovation we have seen to date and forecast to capture 19% of the market with 234 million shipments this year.”

The preliminary market results show that Samsung captured the top position in Q2 2024 with 18.9% share of shipments, thanks to a strategic focus on its flagships and a strong AI strategy. Apple finished the quarter in second place with 15.8% share with improved performance in China and other key regions. 

Xiaomi placed third with a 14.8% share while vivo and OPPO tied for the fourth position with 9.1% and 9.0% share respectively. 

As competition increases, IDC said it expects a very positive and interesting second half of the year with a tight race among the leading OEMs.

GSMA highlights mobile’s role in unlocking AI potential in Africa

The GSMA has published a new report that highlights how AI holds “immense potential to boost Africa’s economy and to support the Sustainable Development Goals (SDGs) on the continent.”

The report, AI for Africa: Use cases delivering impact, developed from existing research and from interviews with leaders across civil society, NGOs, academia and the private sector, identifies over 90 AI use case applications in markets such as Kenya, Nigeria, and South Africa that can drive socio-economic and climate impact.

However, the GSMA warned that unlocking the potential of AI will require overcoming critical barriers including the limited availability of data centers and expensive technology investments.

“By addressing digital skills gaps and increasing the availability of smartphones, mobile-based AI solutions may offer a practical way to circumvent current limitations and tap into AI’s full potential across the continent,” the association said. 

For instance, the GSMA noted that as local compute ecosystems grow, countries can leverage mobile-first markets to develop distributed or hyperlocal edge computing, where tasks occur on devices including phones and laptops, thereby reducing reliance on high-powered data centres.

“After foundational models are trained on large datasets, AI models can be transferred to smartphones for fine tuning. With smartphone penetration at 51% and expected to reach 88% by 2030, mobile-based edge computing will be central to expanding the proliferation and capabilities of AI in Africa,” it commented.

Today, among the Africa AI use case applications identified, the vast majority are related to agriculture (49%), climate action (26%) and energy (24%). According to AI4D Africa, Africa represents just 2.5% of the global AI market, but emerging applications could boost the continent’s economic growth by $2.9 trillion by 2030.

Also noted…

AT&T is under pressure over a massive hacking incident in April that resulted in the illegal downloading of about 109 million customer accounts.

Record labels Universal, Sony and Warner have sued Verizon for $2.6 billion over the illegal download of content by its users. 

Google owner Alphabet is reportedly in advanced discussions to buy cybersecurity startup Wiz for roughly $23 billion. 

The board of Millicom International Cellular has recommended that shareholders reject a $4.1bn takeover offer by Xavier Niel’s Atlas Luxco vehicle. 

Thai billionaire entrepreneur Sarath Ratanavadi plans to merge his energy and telecoms companies in a new firm, said to be worth around $20.5 billion.