A week in telecoms: Mergers, job cuts, and FWA

Merger talk: Vodafone, Three UK face in-depth probe; Orange-Masmovil complete merger

Vodafone Group and CK Hutchison face further scrutiny of the plan to merge their respective operations in the United Kingdom after the Competition and Markets Authority (CMA) indicated it would likely refer the proposed merger for a phase two investigation.

The two operators were given five working days, or until April 2, to convince the CMA that a more in-depth probe would not be required.

Julie Bon, phase one decision maker for the case at the CMA, said that while Vodafone and Three have “made a number of claims about how their deal is good for competition and investment, the CMA has not seen sufficient evidence to date to back these claims.”

“Our initial assessment of this deal has identified concerns which could lead to higher prices for customers and lower investment in U.K. mobile networks. These warrant an in-depth investigation unless Vodafone and Three can come forward with solutions,” she said. The full summary of the decision can be found here.

Vodafone UK and Three UK said it was an expected next step in the process, and “in line with the timeframe for completion that we set out from the outset.” They “remain confident that the transaction will deliver significant benefits for competition, customers and the country.”

Meanwhile, Orange Group and Masmovil completed the merger of their respective operations in Spain, forming a 50:50 joint venture that has become the market’s largest operator in terms of customers, with over 37 million mobile and broadband lines.

The brand of the new combined entity was not confirmed, although Spanish media has reported that it will be named MasOrange.

Meinrad Spenger, the CEO of Masmovil, has been appointed CEO of the new JV, while Orange Spain CEO Ludovic Pech is chief financial officer. Germán López, general manager at Masmovil, is the JV’s chief operating officer.

In addition, Jean François Fallacher, CEO of Orange France, has been appointed non-executive chairman of the new combination. He served as CEO of Orange Spain between September 2020 and April 2023.

The new entity is expected to generate synergies of more than €490 million per year by the fourth year after closing. Based on preliminary closing accounts, the respective proceeds at closing will be approximately €4.4 billion for Orange and about €1.65 billion for Masmovil shareholders.

Job cuts: Ericsson slashes 1,200 jobs in Sweden; Vodafone to cut 2,000 in Germany

Sweden-based Ericsson announced plans to cut a further 1,200 jobs in Sweden as it continues to grapple with a challenging mobile networks market in 2024, “with further volume contraction as customers remain cautious.”

“This measure is part of the global initiatives to improve the cost position, including headcount reductions, while maintaining investments critical to Ericsson’s technology leadership. Initiatives to increase operational efficiency will continue during 2024 but will not be announced separately,” the company said.

Light Reading noted that staff at both Ericsson and Nokia are paying the price of a slump in spending by mobile network operators. The publication estimates that the Nordic equipment providers have slashed 27,500 jobs since 2016, about 13% of their combined workforce.

Both vendors saw sales fall in 2023 as operators reined in their expenditure following earlier investments in network equipment. Ericsson reported a 10% fall in annual sales, while Nokia revealed an 8% drop, with reported revenues down 11%.

Over in Germany, Vodafone Germany announced that it will cut 2,000 jobs in order to save around €400 million in the next two years. The operator has been on a mission to turn around its operations and said it returned to growth in recent quarters.

AT&T launches FWA for businesses

Fixed wireless access (FWA) services have proved to be a solid early use case for 5G networks. In the United States, all three operators now offer an FWA service.

AT&T recently extended its FWA offering to enterprise customers with the launch of AT&T Internet Air for Business. The operator is marketing it as a plug-and-play service that is quick and easy to set up. It is designed as an alternative to fiber in remote locations, as well as a supplemental or back-up connection.

Mike Troiano, Senior Vice President, Product and Pricing, AT&T Business, noted that customers “are telling us they need diverse connectivity options, the ability to connect new locations quickly, and are increasingly willing to adopt a converged connectivity approach.”

AT&T is relatively new to the FWA space, unlike rivals T-Mobile US and Verizon. In 2023, T-Mobile reported 4.8 million customers of its 5G Home Internet service, while Verizon raised its total to 3.06 million.

Reflecting how FWA is increasingly eating cable operators’ lunch, Leichtman Research Group said FWA services accounted for 104% of the total net broadband additions in 2023, compared to 90% of the net adds in 2022, and 20% of the net adds in 2021.

BT partners with Zscaler on AI-based managed security services

BT said it has positioned itself to become “the first global service provider to offer a full suite of managed security services” under an extended tie-up with Zscaler.

The UK operator said it can offer its customers a range of new solutions based on the Zscaler AI-driven platform that will “reduce the complexity of IT infrastructures, while shrinking their cyber-attack surface, enabling businesses to become more agile, efficient, resilient, and secure.”

Additionally, the telco will make use of Zcaler’s security solutions to protect its own operations.

Tris Morgan, BT’s Managing Director, Security, said: “With digital innovations constantly changing how businesses operate, the threat landscape continues to expand. We are delighted to extend our business relationship and enrich our managed service offering with Zscaler, allowing us to offer new zero trust cybersecurity solutions for customers and making sure we’ve got their back as they go through their digital transformation.”

Mike Rich, CRO and President of Global Sales at Zscaler, observed that zero trust security “will not only modernize the security infrastructure to better stop large-scale attacks and diminish the attack surface but also reduce the administrative burden to accelerate BT customers’ infrastructure and security transformation initiatives.”

MTN offloads two units to Telecel

African group MTN revealed it has sold its equity interests in MTN Guinea-Bissau and Guinea-Conakry for an undisclosed sum to Telecel.

The sale signals MTN’s exit from smaller markets in the West and Central Africa (WECA), allowing it to focus on Ghana, Cameroon, and Cote d’Ivoire.

Overall, MTN remains focused on its Ambition 2025 strategy that includes creating new platform-based digital services, driving efficiencies, and continuing to strengthen the balance sheet.

The group operates in a challenging environment, with high inflation in several key markets and the sharp devaluation of the Nigerian naira.

Ralph Mupita, group president and CEO, said the difficult macro conditions will persist in 2024, “with naira volatility and elevated inflation the key challenges we will need to navigate.”

MTN plans to invest 35 billion to 39 billion rand in 2024 “to position the company to capture the structural demand for data and fintech services across Africa,” Mupita said.

He particularly highlighted the operator’s partnership with Mastercard, which he said “positions the business well to scale faster and we are excited about the commercial launches of card issuance, acceptance and remittances across the footprint.”

Also noted…

The Spanish government took the first step in buying up to 10% of Telefónica by purchasing a 3% stake in the former incumbent.

Austria completed its third 5G spectrum auction, with Magenta Telekom again spending the most on frequencies, this time in the 3.6GHz and 26GHz bands.