A week in telecoms: Telcos step up satellite technology investments

Vodafone completes Spanish sale to Zegona

Vodafone is coming closer to realizing the objective set out by group CEO Margherita Della Valle to overhaul operations in mature European markets where there is little growth.

The UK-based operator has just completed the sale of Vodafone Spain to Zegona Communications for a total fee of €5 billion, meaning that it is now able to exit this highly competitive market. Vodafone noted that it will provide certain services to Vodafone Spain in future, and maintain its innovation hub in Málaga.

Zegona has already picked the new management team, including José Miguel García as CEO to replace Mário Vaz, and has signed a new 10-year network access agreement with independent fiber and mobile operator Finetwork.

Elsewhere, Vodafone is still in the process of selling its Italian unit to Swisscom, and it is also seeking secure antitrust approval for the proposed merger of Vodafone UK with Three UK. 

Swisscom has just received partial regulatory clearance for its proposed acquisition of Vodafone Italy — an €8 billion deal that is expected to complete in the first quarter of 2025. However, the U.K. merger is currently being scrutinized by the Competition and Markets Authority (CMA) as part of a phase 2 investigation.

In May, the CMA effectively stopped the clock on the merger proceedings as it awaited information from Three UK’s parent company CK Hutchison. It has since restarted the process, although it has extended the statutory deadline by 24 days to October 12, 2024. 

Meanwhile, Della Valle has made it clear that Vodafone is not planning any further major deals after offloading its Italian and Spanish units. “We are done,” she reportedly told The Sunday Times (paywall).

Telcos step up satellite technology investments

The past week has seen a flurry of activity by telecoms operators in the field of satellite technology, as they seek to exploit the potential of services such as direct-to-cell, ubiquitous connectivity and more.

For example, Japanese telco NTT is bringing its various assets, projects and plans associated with space, satellites and high-altitude platform station (HAPS) developments under one brand, NTT C89, as it takes the next steps in its “space integrated computing network” strategy.

NTT C89 stands for NTT Constellation 89 Project and is now housed on a separate NTT web site. The operator pointed to developments such as AW3D, a digital 3D map service, plans to use GEO and LEO satellites as well as HAPS, Space DC and Space RAN businesses, and an IOWN concept for “creating a thriving new world using the latest optical and computing technologies.”

Meanwhile, NTT Docomo has also just announced it is part of a consortium of Japanese companies investing $100m in Aalto HAPS, a subsidiary of Airbus that manufactures and operates the stratospheric, solar-powered Zephyr HAPS. The investment is being made through the Japanese consortium’s investment vehicle, HAPS Japan Corporation.

Over in North America, Verizon joined its US peer AT&T as well as Vodafone by partnering with direct-to-cell startup AST SpaceMobile, committing a $100m investment. T-Mobile US, meanwhile, is partnering with SpaceX-owned Starlink for its own D2C service.

AI: Telefónica localises AI specialists, as Cisco and Microsoft step up investments

Artificial intelligence (AI) is rarely out of the headlines these days, and this week has proved to be no exception.

For instance, Telefónica Tech, the business-to-business digital services unit of the Spain-based group, has described how it intends to better position itself to meet the AI needs of enterprise customers, by ensuring that AI specialists are available at a local level.

It has now distributed more than 400 professionals “dedicated to the research, development and application of artificial intelligence use cases for customers” across ten centers in Spain (Madrid, Barcelona, Valencia and Valladolid), the United Kingdom (London), Central Europe (Slovenia and Austria), Brazil (Sao Paulo) and the Hispam region (Santiago de Chile and Mexico City).

Elena Gil Lizasoain, director of the artificial intelligence and data business unit at Telefónica Tech, said the knowledge and experience of the teams “is allowing us, for example, to help companies predict the demand for their products, automate processes, improve their decision making and personalise their customers‘ experience.”

Meanwhile, both Cisco and Microsoft have stepped up their AI investments. For instance, Microsoft said it will invest 33.7 billion Swedish crowns ($3.2 billion) to expand its cloud and AI infrastructure in Sweden over a two-year period. According to Reuters, Microsoft said it was committed to boosting AI adoption across the Nordic region.

As for Cisco, its Investments unit has launched a $1 billion fund to invest in AI startups in a push to become more dominant in the AI sphere. Cisco has already committed nearly $200 million of the investment fund to date, including strategic investments in GenAI startups Cohere, Mistral AI and Scale AI. 

According to Mark Patterson, Chief Strategy Officer at Cisco, “in addition to building essential technology to connect, secure and advance AI, Cisco is committed to investing in the broader AI ecosystem to more effectively meet our customers’ needs.”

Cisco noted it has made over 20 AI-focused acquisitions and investments in the past few years. 

KPN sets up TowerCo JV

Telcos continue to seek ways to monetize infrastructure assets through tower and fiber spin offs and joint ventures. 

This week it was the turn of Dutch telco KPN, which has announced the creation of a new tower joint venture with Dutch pension fund ABP to manage tower infrastructure across the country.

The new TowerCo will manage and operate around 3,800 mobile towers and rooftop sites, including passive mobile infrastructure assets of KPN, as well as those of passive infrastructure operator Novec and ABP portfolio company Open Tower Company (OTC).

The deal will also see KPN take over Novec, currently owned by energy grid operator TenneT, which also has a minority stake in OTC. In total, KPN will pay €120 million to Novec and OTC shareholders. KPN will hold a 51% stake in the business, with the remaining 49% owed by ABP.

The new TowerCo also has received a built-to-suit commitment for the next 10 years from KPN. In addition, TowerCo and KPN have entered into a long-term master service agreement, stipulating the terms under which KPN will continue to be a tenant of TowerCo for an initial period of 20 years.

Notably, this is the second joint venture between KPN and ABP. In 2021, they established a €1 billion open access wholesale fiber network operator called Glaspoort to build fiber networks throughout the Netherlands. 

United Group plots fiber network, as STC takeover rumors swirl

United Group, a telecom and pay-tv operator in Southeast Europe, has also been making headlines this week, primarily because of reports that expansive Saudi operator STC is considering making a bid for the group.

According to Reuters, which cited unidentified sources, STC has started early stage work on a transaction, which may or may not result in a formal offer. United Group is currently owned by investment firm BC Partners. 

STC has already acquired a 4.9% stake in Telefónica, with the potential to increase it further to nearly 10%, while its subsidiary TAWAL bought United Group’s tower assets in Bulgaria, Croatia and Slovenia.

Meanwhile, United Group is focusing on its fiber network buildout in Southeast Europe. The group already created United Fiber in Greece in 2021 and is now bringing its assets in Bulgaria, Croatia and Slovenia under the same brand.

It has also just launched a project to build a terrestrial cable between Athens and Thessaloniki, which it said will be part of a wider regional backbone aimed at enhancing its infrastructure footprint in Southeast Europe. Managed by United Fiber in Greece, the new terrestrial cable is scheduled to kick off in September 2024 and be completed by the end of 2025.

Zeljko Batistić, Vice President Technology, said United Group owns 60,000 km of backbone and metro network in its four markets.

The broadband network in these markets “reaches 3.6 million homes and we are currently executing the plan of delivering 475,000 new FTTH homes in 2024 with the similar pace in the following years. Our vision is to be the go-to brand of choice for individual customers, business clients and the preferred partner for the public sector,” Batistić said. 

Also noted…

KKR has won unconditional EU antitrust approval of its plan to buy Telecom Italia’s NetCo unit. In addition, Swisscom’s Fastweb unit agreed to sell its 4.5% stake in TIM’s FiberCop business to KKR for €438.7 million.

Germany has reduced its interest in Deutsche Telekom to 27.8% after KfW sold a further 2.2% shareholding.

Telenet’s Base adds fixed and TV services to its offer.

Virgin Media Ireland picks Cerillion for BSS/OSS transformation.