Friday News Round-up: 05/09/2014

Friday News Round-up: 05/09/2014

A summary of the week's biggest telecoms news stories.

Unifying mobile and fixed-line

Egypt’s unified telecoms licence is the latest indication that carriers across the world are becoming increasingly reliant on mobile revenues to leverage the loss of traditional fixed-line business.

The convergence between the two segments is seen as essential, even for the most ardent incumbent player, and yesterday saw the final approval for the country’s long-awaited reform to combine the two segments.

The move now means Telecom Egypt will finally be able to offer mobile services within its portfolio.

It will also now compete with international players Vodafone Egypt, Mobinil and Etisalat Egypt, which have operated mobile services for years, and tap into the lucrative mobile market.

It seems strange that the company, until now, has been unable to operate mobile services, and will have to fork out $350 million for the privilege.

The situation is unlike that in the UK, where incumbent BT has been frozen out of the mobile market for years.

It, too, announced plans in April to revive its mobile operations, through the spectrum it acquired, and will launch a quad-play offering at the end of the year.

Despite widespread consolidation in mobile, there are still large companies that have yet to taste a piece of the pie.

What will Iliad do next?

Fresh rumours emerged this week that Iliad could make a second offer to acquire T-Mobile US after the company came back on the market following Sprint’s failure to secure the deal.

Xavier Niel, Iliad’s eccentric chief, has built up a reputation in France for disrupting the status quo, and instigated a price war two years ago through the company’s low-cost mobile player Free.

The company has now sought out investors to help it improve its initial offer, which valued a 56.6% stake at $15 billion.

CFO Thomas Reynaud revealed that the company was engaging in conversations with financial institutions and other companies in the industry over a potential tie-up, and analysts have suggested that tech giant Google could be the perfect ally.

Google’s recent plays in the infrastructure space – in addition to its lobbying over spectrum – suggests the company would be keen on greater influence in the US telecoms space. Rebellious Iliad could be its perfect partner. Watch this space.

Staying with the US, Facebook’s proposed $19 billion acquisition of WhatsApp could be under further scrutiny after the European Commission revealed it had sought feedback from telecoms operators in the continent over the deal.

There are concerns from the EU that the deal could have further ramifications for the telecoms sector. Increased growth of instant messaging and the effect this has on telecoms revenues – in addition to price hikes and effects to innovation – could have a lasting impact.

It marks direct telecoms involvement in a deal regarding two over-the-top players, and suggests that convergence between technology and telecoms is increasing.

The EU is due to provide its decision next month, and it could either clear the deal or start proceedings into a wider probe.

Towers and carriers

MTN became the latest African operator to lease its tower infrastructure, after it struck a deal with IHS for the company to manage its 9,151 transmitter towers in Nigeria.

The move follows Etisalat Nigeria, which took that extra step and sold its 2,136 tower infrastructure to the specialist tower company last month.

The trend is becoming common in Africa, and IHS now manages 20,000 towers in the continent. African operators seem to have identified towers as an asset that simply yields the necessary return, and they are turning to companies like IHS to either manage or acquire the infrastructure.

In Africa in particular, this traditional infrastructure has higher security risks and is more prone to electricity outages, while revenue per user is also lower.

Operators see towers as an unnecessary resource, and by leasing or selling the facilities, one single company like IHS can reduce maintenance and building costs by hosting multiple tenants.

MTN and Etisalat Nigeria can now focus on customer service and innovation. How long will it be before operators around the world embrace the same strategy?

Kavit Majithia

News editor

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