A week in telecoms: Telefónica Germany puts 5G SA in the cloud, AT&T creates cybersecurity JV

In our weekly news round-up, we look at Telefónica Germany’s collaboration with AWS and Nokia on the 5G cloud core, AT&T’s creation of a new cybersecurity JV and a fresh start for Optus.

O2 Telefónica Germany, Nokia, AWS put 5G core network in the cloud

Telefónica Deutschland (O2 Telefónica) claimed a first for an existing telecoms operator: the launch of a new 5G core network that is built entirely in the cloud. The operator’s 5G Cloud Core uses cloud-native 5G core architecture from Nokia and runs on the AWS cloud.

Raghav Sahgal, President of Cloud and Network Services at Nokia, said the deployment is the “first of its kind for an existing communication service provider” and enables “greater network agility and service offerings.”

Mallik Rao, Chief Technology & Information Officer (CTIO) of O2 Telefónica, added that the new 5G Cloud Core enables the operator to move away from “traditional architectures” and instead focus on “modern, high-performance, and efficient network technologies.”

O2 Telefónica said “selected customers” will be able to benefit from the cloud core when using the operator’s standalone 5G network, which is branded as 5G Plus. Around one million 5G customers will be moved to the cloud core in the first phase. Rao told Reuters that he aims to move “at least 30-40%” of the O2 Telefónica customer base by 2025-2026.

The move also represents a breakthrough for AWS on the European 5G market. Writing on LinkedIn, Fabio Cerone, General Manager Telecom EMEA at AWS, said this was a “big day” for AWS in the telecoms industry.

Only a small handful of greenfield operators are building cloud-native 5G networks from scratch. These are 1&1 in Germany, Dish in the United States, and Rakuten Mobile in Japan.

AT&T forms cybersecurity JV called LevelBlue

AT&T has spun off its cybersecurity business and brought into a new joint venture with WillJam Ventures called LevelBlue.

The new standalone business plans to offer strategic cybersecurity services to enterprises, with capabilities that include managed security services, cybersecurity consulting, threat intelligence and continuous security operations center (SOC) support.

LevelBlue includes more than 1,000 employees globally, with AT&T retaining a minority ownership stake and board representation in the new entity. Bob McCullen, Managing Partner of WillJam Ventures, is appointed Chairman and CEO.

LevelBlue’s goal is to proactively identify threats and accelerate threat detection and response through its threat intelligence platform, which is backed by the Open Threat Exchange (OTX), a community of over 235,000 security professionals who submit 20 million plus threat indicators daily.

According to McCullen, “today’s rapidly evolving cybersecurity landscape requires organizations to leverage expert resources for continuous protection against emerging threats. LevelBlue’s advanced cybersecurity capabilities, our co-investment with AT&T and our ability to innovate will serve our customers and the industry well now and in the future.”

Telefónica reports strong net income growth in Q1 2024

Telefónica Group reported its first quarterly results following the implementation of its new strategic plan (Growth, Profitability and Sustainability or GPS), with an impressive 78.9% increase in net income to €532 million.

Revenues increased by 0.9% to €10.14 billion, boosted by service revenue growth (+2.3%).

The Spanish operator, which celebrates its centenary this year, also confirmed its financial targets for 2024, with expected revenue growth of around 1%, EBITDA growth between 1% and 2% and operating cash flow between 1% and 2%.

José María Álvarez-Pallete, Chairman and CEO, said: “Revenue is improving, commercial activity is improving and the quality of the service we provide to our customers and their satisfaction is also improving.”

The group also announced the signing of a non-binding MoU with MVNO Digi Spain for a long-term mobile network agreement. Digi emerged as the asset buyer that allowed Orange and MasMovil to merge their operations in Spain.

Telefónica made special mention of progress with AI and sustainability, pointing to the recent launch of the AI Centre of Excellence. Its aim is to increase the number of AI solutions from a total of 650 use cases today.

On the environmental front, the operator was included in the CDP Supplier Leaderboard for the fifth consecutive year and its Eco Smart solutions portfolio was named Champion Project by the ITU.

Optus appoints NBN’s Stephen Rue as CEO

Singtel-owned Australian telco Optus is attempting to move into a new phase following a rather challenging two years when it experienced an extended outage in November 2023 and a cyber attack in 2022 that led to the exposure of millions of customers’ personal data.

Optus announced this week that it has appointed Stephen Rue, currently the CEO of NBN Co, as its new CEO to succeed Kelly Bayer Rosmarin, who resigned last November. Rue will take up the Optus reins in November 2024. Until then, Michael Venter will continue as interim CEO.

NBN appointed Chief Financial Officer Philip Knox to the role of interim CEO “in due course, until a new CEO is appointed.”

Optus Chairman Paul O’Sullivan said Rue was chosen after a “rigorous process that involved a slate of high-quality candidates. We’re extremely pleased to have someone of his calibre to lead the next chapter at Optus. His experience in setting up the digital backbone of Australia will serve us well as we reinvigorate Optus as Australia’s leading challenger telecommunications brand. We expect Stephen’s operational and financial background to lift service standards significantly for the benefit of our customers.”

The telco further noted that Rue’s appointment coincides with the introduction of a new governance model “that is in line with the Singtel Group’s move in 2022 to adopt a decentralised operating company-driven structure to empower its businesses and leverage commercial synergies and capabilities to drive growth.”

According to Singtel Group CEO Yuen Kuan Moon, “in today’s uncertain economic environment, businesses need greater independence and agility to better navigate the market and we believe the new governance model will set the Optus management up for success and help Optus restore and cement its position as a leading player in the Australian telecommunications market.”

Optus has just signed a network sharing agreement with TPG Telecom to “strengthen Australia’s regional mobile network and enhance coverage for customers across regional Australia.” Optus expects to receive total service fees of approximately A$1.6 billion over the 11-year term of the agreement with incremental cash flows of approximately A$900 million expected over the same period.

“This will enable Optus to pull forward its 5G capex rollout to improve mobile services for customers in regional Australia,” the operator added.

Uniti to merge with Windstream - again

Almost a decade after they parted company, communications infrastructure provider Uniti announced that it intends to merge with Windstream in order to create a “premier insurgent fiber provider” in the United States.

The two businesses already have plenty of shared history, as Reuters explains here. Windstream had spun off Uniti in 2015 to reduce its debt, but filed for bankruptcy four years later. It emerged from bankruptcy in September 2020.

Windstream’s largest shareholders also include activist investor Elliott Investment Management, which is also a holder of Uniti’s equity and debt. The merger is expected to close in the second half of 2025.

Uniti operates as a real estate investment trust and is engaged in the acquisition and construction of communications infrastructure. As of March 31, 2024, it owned about141,000 fiber route miles, 8.5 million fiber strand miles, and other communications real estate throughout the United States. Windstream operates a fiber-to-the-home network.

The combined company will initially serve over 1.1 million customers and 1.5 million existing homes passed with a particularly strong presence in the Midwest and Southeast. It will continue to operate as Uniti and be headquartered in Little Rock, Arkansas.

Kenny Gunderman, President and CEO of Uniti, commented that demand for fiber broadband “has never been greater, and Uniti is now expanding its reach into FTTH with an attractive scaled platform. The combination of Uniti and Windstream also removes several dis-synergies that exist in the current landlord/tenant relationship and greatly enhances Uniti’s optionality for strategic initiatives.”

Also noted…

Vodafone committed to roll out standalone 5G in rural Wales.

TIM announced a collaboration with Oracle on cloud services.

The global smartphone market is reportedly on the mend.