Other Stories >
AT&T posts upbeat results
Fourth quarter results from AT&T have affirmed the company’s positive outlook for 2008.
AT&T’s reported fourth-quarter 2007 revenues were $30.3 billion, up from $15.9 billion in the fourth quarter of last year. The company cited a 16.3% increase in wireless revenues over the same quarter last year, improved growth in recurring enterprise services, continued growth in
regional business and stable regional consumer revenues as the drivers for overall revenue growth in the quarter.
“Our wireless business delivered outstanding results, with the largest quarterly subscriber gain ever posted by a US provider,” said Randall Stephenson, AT&T chairman, chief executive officer and president. “Enterprise service revenue growth continues to improve. Broadband subscribers and revenues continue to grow at a solid double-digit pace. The ramp in our AT&T U-verse TV service accelerated, and we are on track to reach more than one million
subscribers by the end of 2008.”
AT&T had a net gain of 2.7 million wireless subscribers up 13.5% from 2.4 million net adds in the fourth quarter of 2006. The acquisition of Dobson Communications, which was completed in November 2007, added 1.7 million subscribers, bringing AT&T’s wireless
subscriber base at year end to 70.1 million.
“These growth trends, combined with the significant opportunities we have for continuous cost improvements, reinforce the positive outlook we have for our business,” Stephenson said. “AT&T has a terrific set of assets and an impressive record in terms of executing and delivering on targets, and I am very confident in our ability to drive strong results in 2008.”
AT&T believes there are opportunities to reduce costs over the next five years. The company expects its annual operating expense savings run rate from AT&T and Bell South merger synergies and from operational initiatives to increase by approximately $2 billion from 2007
levels to approximately $5.9 billion in 2008 and more than $7.0 billion in 2010.
Nokia Siemens Networks wins Saudi deal
Nokia Siemens Networks has signed a $1 billion network contract and extended its presence in Africa and the Middle East.
Zain in Saudi Arabia, a subsidiary of what was MTC, has contracted
Nokia Siemens Networks to deliver a 2G and 3G mobile network, including core and radio networks, operations and business support systems, applications and a full suite of services, including managed services.
“This project takes our long-standing collaboration with Zain, established in 1994, to a new level. We are proud to support Zain’s entry into the Saudi market with our services and solutions. This deal is one of the most important in Nokia Siemens Networks’ history, and also very strategic for our growth in Africa as Zain is present in more than 14 countries in the region,” said Walid Moneimne, chairman for the Middle East and Africa region at Nokia Siemens Networks.
Nokia Siemens Networks is the sole supplier of Zain in Saudi Arabia’s core network. “This huge project will radically change the face of mobile communications in the Kingdom of Saudi Arabia and sets the benchmark for future mobile communications in the region. We are extremely pleased with Nokia Siemens Networks’ dedicated team, broad product portfolio and its strong history in providing best-in-class technology. We see Nokia Siemens Networks as our preferred partner in supporting our global expansion plans and in creating the largest and most advanced networks in the world,” said Marwan Al-Ahmadi, CEO at Zain in Saudi Arabia.
Zain is a mobile provider in 22 countries across the Middle East and Africa and was recently awarded the third mobile telecommunications licence for Saudi Arabia.
Sprint turmoil continues
Sprint Nextel began the first quarter of 2008 by announcing a plan to save the $800 million a year that resulted from losing a large number of wireless subscribers. Its plan: eliminate 4,000 positions and close 125 company-owned stores along with more than 4,000 third-party
distribution points.
Shortly after this announcement, three top executives said they would leave the company almost immediately. CFO Paul Saleh, CMO Tim Kelly and president of sales and distribution Mark Angelino have stepped down, and have been replaced with interim executives, including SVP and controller William Arendt who will serve as interim CFO.
These actions appear to reflect newly-installed CEO Dan Hesse’s effort to demonstrate his commitment to efficiency and cost discipline. He won’t appoint permanent replacements for the executives until finishing his overall strategy review. “I have no predetermined timeframe
in filling these positions but plan to act as quickly as possible as I consider both internal and external candidates,” he said.
Before the closings, Sprint Nextel maintained about 20,000 distribution points including nearly 1,400 company-owned stores. It expects to complete the lay-offs – of management and nonmanagement positions – during in the first half of 2008.
From a wholesale standpoint, Sprint’s strength is reflected in its consistent wins of user awards for network quality and brand, said Judy Reed Smith, CEO of Atlantic-ACM. It reported a net gain of 500,000 subscribers through wireless wholesale channels. Boost Unlimited reached 256,000 users and affiliate channels added 20,000 subscribers.
Counterbalancing this wholesale performance was a net loss of 683,000 post-paid subscribers – those who sign annual contracts and pay monthly bills – and 202,000 prepaid users. These data reflect a continuation of losses from the third quarter when 337,000 postpaidsubscribers
and 202,000 traditional pre-paid users dropped Sprint. It has been losing high-value subscribers for more than a year.
Sprint’s acquisition of Nextel seems to have catalysed two critical problems: managing separate networks and management teams. Maintaining separate wireless networks – Nextel’s iDEN and Sprint’s CDMA – appears to compromise network quality and requires expensive and cumbersome efforts to run them separately. Additionally, the merged company maintains Nextel’s corporate offices in Reston, Virginia with about 4,500 employees, while retaining the bulk of its operational activities in Overland Park, Kansas, Sprint’s former headquarters.
Hesse said he is evaluating a plan to consolidate the company’s headquarters in Overland Park to streamline decision-making. “Moving headquarters back to Overland Park could reinvigorate management,” said Reed Smith.
Med cable damage leads to outage
Egypt and the Indian subcontinent were the hardest hit by a Mediterranean cable break at the end of last month. On January 30, the Flag Europe-Asia cable and Sea-Me-We-4 were damaged
off the coast of Alexandria, Egypt, causing disruption to connectivity to Egypt, Saudi Arabia, India and the Gulf states.
Internet monitoring company Renesys noted: “In the case of disasters like this, we will suddenly see a large percentage and/or a large number of country-specific networks disappear from the internet. Egypt and Pakistan lost the highest percentage of their networks, while India lost the least. However, India had the third highest total number of networks disappear. It is not surprising that the Indian subcontinent was impacted by events off the coast of Egypt. There are essentially
two ways to get to this part of the world: via the Suez Canal or via south east Asia.”
Telecom Italia estimates damage to the cables caused a loss of approximately 60% of India’s internet traffic and close to 70% of Egyptian internet traffic. The company used alternative routes
westbound via Palermo, Sicily, and eastbound via Singapore and Los Angeles, USA to
deliver connectivity.
Alan Mauldin, research director at Telegeography, said new cable construction should help to prevent such outages in the future. He said: “Many new cable systems are slated to enter service between Europe and Egypt in the next few years, including Telecom Egypt’s TE North cable, Orascom’s MENA system, the IMEWE consortium cable, and a new cable by Flag Telecom.”
Renesys believes repair time for the cable will be measured in weeks rather than days.
Telstra builds Sydney-Hawaii cable
Capacity demand between Australia, Asia and the US is driving expansion in the undersea cable market. Telstra is building a Sydney-Hawaii undersea cable for completion in August 2008
and adding a direct route to the US to its undersea cable portfolio.
“Normal market forces dictate that prices are relatively high at the moment because there is strong demand,” said Steve Day, CTO at Telstra Europe. “With the advent of new applications and our 10-year capacity forecast, the timing of the build is right. There is also an economic advantage in owning more of the network itself so rather than having to pass traffic onto partner
networks there is a huge benefit of owning more of the margin as well.”
The Sydney-Hawaii cable is 100% owned by Telstra and gives Telstra more direct connectivity from Sydney to the west coast of the US via Hawaii.
“The cable creates Telstra’s own path that they can control and it also allows them to compete against Southern Cross and keep prices where they want them to be. Prices have been coming down for a while but I think we are going to see the pace really pick up here in the next 18
months,” said Alan Mauldin, research director at Telegeography. “There is pricing pressure right now. Prices don’t drop when cables come online they drop in advance of it.”
Pipe Networks has also secured contracts that allow it to go ahead with its plans to build an undersea cable system linking Sydney to Guam with a spur connecting Papua New Guinea. This cable will cost approximately US$176 million (A$200 million) and will be referred to as PPC-1. Foundation customers who can be identified at this time include VSNL, Telikom PNG, Iinet, Internode and Primus Communications. Other domestic and international customer contracts and counterparties cannot be disclosed due to confidentiality restrictions.
Mauldin noted that these cable builds are forcing cable operators to be more competitive in the market. He said: “Pipe Networks and Telstra are going to have change what they are offering in their pre-sales. They want to try to lock in customers now and try to keep them as customers when the cables come online. My guess is that right now most carriers are buying capacity but not getting locked into long-term contracts. They are going to be getting some sort of price protection. They are going to be trying to hedge their bets and see what happens.
Private equity consortium buys GTS CE
A group of private equity investors, led by Columbia Capital, M/C Venture Partners and Innova Capital has acquired 100% of the shares in GTS Central Europe from GML.
Columbia Capital and M/C Venture Partners invest in the telecommunication and information technology sectors, and Innova Capital is one of the leading private equity groups focussed on
central Europe.
“The funds that are investing have quite deep telecoms experience and two of the four funds are telecoms specialists,” said Davis Amland, director of international partnering and wholesale division at GTS Central Europe. “They have been telecoms specialists for the last 20 to 25
years and have good track records and a wealth of contacts. There is definitely a knowledge base. The board will be stacked with some fairly heavyweight telecoms expertise from all
over the canvas.”
GTS Central Europe provides telecom services in Czech Republic, Poland, Hungary, Romania and Slovakia, and expects to achieve a consolidated revenue of approximately €393 million in 2007.
Krzysztof Krawczyk, partner at Innova Capital commented: “We view GTS CE as a highly attractive opportunity given its dense metro and long-haul fibre footprint which is unique in
the central and eastern European region and offers attractive growth prospects. This acquisition is a significant investment for all the leading members of the consortium and we are looking forward to further developing this asset.”
The consortium also includes include Bessemer Venture Partners and other selected private equity investors.
Amland said: “I think the acquisition will lead to a significant extension of our existing strategy. These investors will increase the sophistication of how GTS functions in the marketplace with the
types of service offerings we will have. We are at a place where we need expertise and a strategic focus because the next step forward is one that requires capital and expertise.”
Bernt Ostergaard, research director, telecom services Europe at Current Analysis noted that acquisition comes even as private equity activity is slowing down due to higher lending rates and credit squeeze. He said: “Private equity is showing diminishing returns and attracting fewer investors.” ABN AMRO Corporate Finance was sole financial advisor to the consortium and KBC Securities acted as a sole financial advisor to the seller.
Published February 2008
To return to News and Views menu please click here
