A week in telecoms: Vodafone sells in Spain as BT and Airtel report revenue growth

Welcome to the Inform news round-up, where we take a look at a selection of recent CSP news and how it impacts the wider industry.

Vodafone to sell Spanish business for £5bn

Margherita Della Valle, the relatively new Chief Executive of Vodafone Group, has been implementing measures in certain mature European markets in order to improve the “group’s competitiveness and growth prospects.”

As is the case for telcos everywhere, some tough decisions have to be made. This week, Vodafone also agreed to sell 100% of its Spanish operating company to UK-based telecom investment firm Zegona Communications for €5 billion (US$5.3 billion). According to Della Valle, the sale of Vodafone Spain “is a key step in right-sizing our portfolio for growth and will enable us to focus our resources in markets with sustainable structures and sufficient local scale.”

The aim is to complete the Spanish transaction in the first half of 2024, although Zegona said it is targeting completion in Q1 2024. The investment firm will also have the right to use the Vodafone brand for up to ten years following the completion of the transaction.

Vodafone Spain is the third-largest player in the market after Telefónica-owned Movistar and Orange Spain. It’s not yet clear what impact the proposed sale of Vodafone Spain will have on Orange’s plan to merge its Spanish operations with those of Masmovil, with the aim of creating a 50:50 joint venture in Spain.

The merger transaction has yet to gain regulatory clearance from the European Commission, although it was reported recently that Orange and Masmovil have chosen Digi Communications as the buyer of any assets that have to be offloaded to enable the merger to go ahead. In June, Della Valle announced the merger of Vodafone UK with Three UK under an agreement with the latter’s parent company CK Hutchison. That transaction is now being scrutinized by the UK’s Competition and Markets Authority (CMA).

Meanwhile, Saudi Arabia’s STC has built up a 9.9% shareholding in Telefónica, leading to reports that the Spanish government was considering buying a stake in the telco to counter STC’s influence.

O2 and Samsung test open RAN and vRAN in Germany

It’s been a busy month for open radio access network (RAN) developments, kicked off by a number of announcements from Vodafone during the Telecom Infra Project’s Fyuz event in Madrid.

This week, Telefónica Deutschland (O2 Germany) flagged a new series of open radio access network (RAN) and virtualized RAN (vRAN) trials, with Samsung selected as the lead vendor. Highlighting the need to promote multi-vendor integration in open RAN, O2 said Dell Technologies, Intel and Wind River are also taking part in this commercial pilot.

Mallik Rao, Chief Technology & Information Officer at O2 Germany, emphasised that cloud-native and autonomous architecture “is a central pillar of network transformation to accelerate the adoption of innovative services.”

O2 and Samsung will begin with initial lab tests of 4G and 5G vRAN and open RAN technologies in Munich. The companies will then carry out field tests in a commercial 5G network in Landsberg am Lech.

Throughout the trial, the companies will also test intelligent network automation solutions to control life cycle management, from deployment and operation to maintenance.

Samsung is providing its service management and orchestration (SMO) solution that is designed to enable mobile operators “accelerate software-based network rollouts by enabling automated deployment of thousands of network sites simultaneously.”

Airtel, BT report revenue growth

Further quarterly results from communications service providers (CSPs) continue to reflect the revenue trends revealed in our recent benchmark report, Telco revenue growth: Time for operators to place new bets.

For example, two operators in very different markets reported revenue growth this week. In India, Bharti Airtel said fiscal second quarter revenue increased 7.3% to 370.44 billion rupees, attributed to the addition of more 4G and 5G subscribers. In India alone, revenue increased 10.9%.

Airtel said it added 7.7 million 4G and 5G data customers in the quarter. In September, it said its total 5G subscriber count stood at above 50 million, compared to more than 70 million at rival Reliance Jio.

Over in Europe, BT also reported a well-received set of figures for its fiscal first half to the end of September. Adjusted revenue increased 3% to £10.4 billion, but the headline figure for some was the 29% increase in net profits, attributed to the higher revenue as well as cost controls.

Also in the UK, Virgin Media O2 (VM O2) reported a moderate 1% rise in adjusted revenue for Q3 2023 but cut its annual revenue guidance from “growth” to “stable” as the cost-of-living crisis affects customer spending power.

Notably, the guidance excludes any impact from its fibre-building activities through Nexfibre, a joint venture owned by Liberty Global, Telefónica and InfraVia Capital Partners. The group also acquired altnet Upp in September.

Just ahead of its results announcement, VM O2 confirmed it has agreed to sell a third of its 50% stake in UK towerco Cornerstone Telecommunications Infrastructure. London-based GLIL Infrastructure is to buy the 16.67% stake for £360 million.

Cornerstone operates about 20,000 sites, which are used by both VM O2 and Vodafone UK. Vodafone-controlled Vantage Towers owns the other 50% stake in the towerco.

Colt buys Lumen EMEA

As CEO of Colt Technology Services, Keri Gilder is a familiar face and regular keynoter at Digital Transformation World events. At DTW23-Ignite in Copenhagen, for example, Gilder made use of her keynote to explain how Colt became the first (and only) CSP to achieve the EcoVadis Platinum rating.

Colt has now become a more dominant presence following its $1.8 billion acquisition of the EMEA activities of US-based Lumen Technologies. And Gilder made it clear that Colt intends to use its elevated position to continue to promote issues such as network sustainability.

“As a pioneer for sustainable networks, the acquisition makes Colt one of the most powerful voices in the industry. It gives us the opportunity to lead the industry in driving purposeful, meaningful change to protect our people and our planet,” she said in a statement.

The acquisition brings 2,700 new customers to Colt and sees it expand the reach of its services via points of presence in Dubai, Estonia, Greece, Iceland, Israel, Kenya, Serbia, Slovenia, South Africa and Turkey.

Deutsche Telekom and T-Mobile US launch AI challenge

Deutsche Telekom and T-Mobile US launched the fourth edition of the T Challenge contest and said they are looking for solutions that show how artificial intelligence can improve the management of the network and the customer experience.

Claudia Nemat, Member of the Board of Management for Technology and Innovation at DT, explained that the group wants to use AI in an innovative way.

“How, for example, does AI help us to better control our network? How can it improve the customer experience? That’s what we’ll explore in the next T-Challenge,” she said.

The first prize will receive €150,000, the second €75,000 and the third €35,000. Submissions are open until January 26, 2024 at: www.telekom-challenge.com

Veon launches digital-only operator in Uzbekistan

Veon launched a “digital first” operator in Uzbekistan as part of ongoing efforts to create new revenue streams from digital services. It said OQ will “provide integrated digital experiences in entertainment and communication” and focus on so-called digital natives.

Veon already runs an operator in Uzbekistan. However, like other telcos it is exploring different ways to serve customers beyond traditional connectivity offerings.

OQ will initially offer media services including access to streaming music on Stingray online radio and licensed films from Uzbek cinema without any additional charges. The group noted that content created exclusively for OQ will also become available in future.

After it has completed the sale of its key Russian business, Veon will operate in Bangladesh (Bangalink), Kazakhstan (Beeline and IZI), Kyrgyzstan (Beeline), Pakistan (Jazz), Uzbekistan (Beeline) and Ukraine (Kyivstar). It already offers digital services in some of its markets, such as Jazz Cash, Mobilink banking, Shopup and Toffee TV.

Light Reading reported that Veon has hired its own software developers and launched its own services, and has seen growth primarily from its additional engagement with customers.