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Article | Satellite, 5G, 5G SA

A week in telecoms: AT&T, Google and Vodafone invest in satellite direct to device connectivity

Vodafone AT&T and Google invest in AST SpaceMobile, results season kicks off with figures from US operators, and TIM makes headway with NetCo sale.

Anne Morris
25 Jan 2024
A week in telecoms: AT&T, Google and Vodafone invest in satellite direct to device connectivity

A week in telecoms: AT&T, Google and Vodafone invest in satellite direct to device connectivity

Telecom Italia makes progress with planned NetCo sale

Telecom Italia’s objective to sell its national fixed-line grid, dubbed NatCo, in order to improve its financial standing took a couple of steps forwards with two key announcements in recent days.

First, TIM said the Italian government had cleared the planned sale of NetCo to investor KKR under the so-called golden power rule. Meanwhile, Italian infrastructure fund F2i said it plans to invest about €1 billion ($1.08 billion) in the purchase of around 10% of NetCo.

The Italian telco has been attempting to sell off its fixed network for some time in order to help reduce net debt. However, it has been thwarted by political and shareholder concerns, and has been forced back to the drawing board on a number of issues.

Now, a sale of NetCo is starting to look like it could go ahead. There is still shareholder resistance from Vivendi, which owns 24% of TIM, but the French media group does not seem to have any alternative strategies to suggest.

In the meantime, TIM has the Italian government on its side and commitments from three buyers: KKR, the Ministry of the Economy and Finance, which intends to buy a stake of between 15% and 20% in NetCo, and F2i.

The proposal to sell NetCo has been closely watched as a rare example of a European telco that is separating itself from its fixed network in order to focus on services.

TIM is nevertheless not alone: WindTre, one of its domestic rivals, is also still hoping to sell a majority stake in its telecoms grid, while Denmark’s TDC has been split into two independent companies: TDC NET, which operates the 5G and fiber networks; and Nuuday, which sells fixed, mobile and TV services to private customers and businesses.

AT&T, Google and Vodafone invest in AST SpaceMobile

AT&T and Google joined existing investor Vodafone in a $155 million strategic investment in AST SpaceMobile to fund its direct-to-device (D2D) connectivity constellation.

AST SpaceMobile also plans to draw up to $51.5 million from an existing debt facility and raise at least $100 million by selling discounted shares.

In addition, Vodafone and AT&T have placed purchase orders for network equipment from AST SpaceMobile to support planned commercial service, while Google and AST SpaceMobile agreed to collaborate on product development, testing and implementation plans for network connectivity on Android and related devices.

As well as AST SpaceMobile, Vodafone has previously formed a partnership with Project Kuiper, Amazon’s low Earth orbit satellite (LEO) communications initiative, to extend the reach of 4G and 5G services in Europe and Africa.

Indeed, several communications service providers (CSPs) are linking up with satellite service providers to solve backhaul and rural connectivity challenges, as well as gain access to D2D connectivity.

SpaceX recently launched the first six Starlink satellites to support direct-to-cell and is working closely with TMobile US in this area. Japan’s KDDI, Australia’s Optus, One NZ in New Zealand, Entel in Chile and Peru, Rogers in Canada and Salt of Switzerland have also signed up to use the Starlink service,

Ericsson CEO wants to see more 5G SA upgrades

Ericsson CEO Borje Ekholm said the industry needs to migrate to 5G standalone for the world to really benefit from 5G, but he noted that very few 5G SA networks have so far been deployed around the world.

According to a November 2023 update from the Global mobile Suppliers Association (GSA), 43 operators have deployed, launched or soft-launched 5G SA networks. Dell’Oro puts the number at 45 as of the third quarter of 2023.

Speaking during Ericsson’s earnings call for the fourth quarter of 2023, Ekholm noted that China is the front-runner here, where you “start to see enterprise applications coming on top of the 5G network that we are not seeing in the rest of the world yet for the simple reason the infrastructure is not built out.”

Ekholm conceded that 2023 had been a challenging year, “marked by persistent headwinds and an unprecedented slowdown in the North American market, which really saw customers reducing capex significantly.”

He said the current market uncertainty is expected to continue into 2024.

“Ultimately, we expect the market to recover to more normalized levels, but that will be over time [and] will also be based on operators’ need to invest to manage the rapid data traffic growth and also the continued migration to 5G SA,” he added.

In Q4 2023, Ericsson’s net sales fell 17% organically while reported sales were down by 16% to SEK71.9 billion. According to Ekholm, the vendor “concluded 2023 with a Q4 EBITA margin of 11.4% and a historic five-year $14 billion contract”, which it signed with AT&T for open radio access network (RAN) technology.

“Despite headwinds and a very weak mobile networks market, we were able to generate a full-year EBITA of SEK21.4 billion,” he said.

AT&T and Verizon brace for 2024 after tough 2023

The CEOs of AT&T and Verizon provided bullish assessments of their respective performances in 2023 in what was a challenging year overall.

Verizon CEO Hans Vestberg described 2023 as “a year of change,” and said the US operator has the “right assets and the best team in place and are well-positioned for growth in 2024.”

John Stankey, CEO of AT&T, said the operator “accomplished exactly what we said we would in 2023, delivering sustainable growth and consistent business performance, resulting in full-year free cash flow of $16.8 billion, ahead of our raised guidance.”

In Q4 2023, Verizon reported 375,000 fixed wireless net additions, bringing the subscriber base to over three million for the first time. Total wireless postpaid phone net additions reached 449,000 compared to 217,000 for Q4 2022.

Verizon’s full-year 2023 wireless service revenue was $76.7 billion, up 3.2% from 2022. However, 2023 earnings were lower, falling to $2.75 per share compared with $5.06 for 2022. In Q4 alone, the operator posted a loss of 64 cents per share and reported a total loss of $2.71 billion for the quarter.

For the full year, the operator reported a profit of $11.61 billion and revenue of $133.97 billion. For 2024, the outlook is for total wireless service revenue growth of 2% to 3.5%, adjusted EBITDA growth of 1% to 3%, and adjusted EPS of $4.50 to $4.70.

AT&T reported a 1.4% increase in total revenue for 2023, to $122.4 billion. Operating income was $23.5 billion compared to a loss of $4.6 billion in 2022. The operator added 526,000 postpaid phone net adds in the fourth quarter.

In terms of outlook, AT&T expects to see wireless service revenue growth in the 3% range and broadband revenue growth of 7%. Adjusted EBITDA growth is expected in the 3% range.

Telecom Egypt starts 5G trials

Telecom Egypt CEO Mohamed Nasr said the operator has begun 5G network trials in five locations after it secured the nation’s first 5G license.

The license was granted by the National Telecommunications Regulatory Authority (NTRA) and will be valid for a 15-year period. The operator is paying US$150 million for the license.

Nasr told news site Asharq Business that the financial impact of 5G was not expected to become apparent until the end of 2024. The operator plans to launch 5G services in the next six months.

The country has four major network players — Orange Egypt, Vodafone Egypt, Etisalat Egypt, and Telecom Egypt. They all already own frequencies suitable for 5G services as the NTRA has already allocated TDD spectrum within the 2.6GHz band.

T-Mobile US adds Nokia MAG for 5G fixed access

T-Mobile US plans to implement Nokia’s Multi-Access Gateway (MAG) product to help improve the efficiency and scalability of its 5G fixed wireless access (FWA) service.

According to John Saw, T-Mobile’s Executive Vice President and Chief Technology Officer, the Nokia MAG will “allow us to simplify our architecture and reduce operational life cycle management, and our energy footprint”.

Nokia said its MAG supports LTE, non-standalone 5G, and standalone 5G technologies and implements disaggregated broadband network gateway (DBNG) architecture with control and user plane separation (CUPS). The vendor has also trialed the product with China United Network Communication Group (CUC) and deployed it at UAE-based operator du.

In the third quarter of 2023, T-Mobile signed up another 557,000 users to its 5G FWA service, bringing the total base to 4.2 million Its mid-term target is to achieve seven million to eight million FWA customers. The service was first launched in 2021.