Friday News Round-up: 03/10/2014

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

Interoute to explore further acquisitions?

Interoute’s rapid roll-out of its Virtual Data Centre (VDC) platform over the last two years has mainly been organic, although that changed this week when the operator acquired the UK-based Vtesse Group.

The acquisition ticks a number of boxes. It adds 7,000km of fibre to a network that already reaches 102 cities in 30 countries across Europe. It provides Interoute with a 2,700 sq m data centre just outside of London, marking it’s third in the UK and twelfth in total. And finally, it offers access to a customer base that includes the likes of IBM, ARUP and Redstone, which it can serve with its Unified ICT portfolio of services.

In 2014, Interoute has added to its European footprint by deploying its VDC platform in Italy and opening a new data centre in Spain. Globally it has also been active in bringing its VDC platform to new markets, including New York and Hong Kong.

The moves build on an impressive 2013, which saw the operator increase EBITDA by €91 million compared to 2012, and top-line revenues grow 2% year-on-year. The operator has again looked to the cloud to continue its period of growth, while also maintaining a strong connectivity offering.

The acquisition of Vtesse appears to help on both fronts, and perhaps further M&A activity could be on the cards for the UK operator in the months to come.

Stirring in the east

The tempestuous Ambani brothers have made headlines once again this week with news that Anil Ambani’s Reliance Group is to launch a 4G mobile network in India in 2015.

And given that Mukesh Ambani’s Reliance Industries has spent the last few years planning its own 4G launch in the country – not to mention investing nearly $12 billion – the news could ruffle a few feathers.

Last year, the two companies signed an agreement which allowed Reliance Industries’ Jio Infocomm to use the optical fibre network of Reliance Group’s Reliance Communications to roll-out 4G services.

However, Anil now wants to extend his own offering by bidding for mobile spectrum in India’s relatively untapped 4G market; Bharti Airtel and Aircel are the only existing players offering services in the country.

“In 2015-16, we will be participating in the next round of auction and that will enable us to launch 4G services in many circles,” Anil Ambani said at the company’s annual general body meeting. “That will ensure that our customers have all types of services.”

Neither party has yet commented on what this will mean in terms of competition between the two, but market watchers have their own concerns.

“The worry is that he [Anil Ambani] is going to have to invest a lot in a new 4G network, and that he does not have the balance sheet to do that," one analyst told the Financial Times.

Alcatel-loosens its purse strings

Following a period of intense cost-cutting, Alcatel-Lucent is finally starting to reap some of the benefits and earlier this week, finalised the divestment of its enterprise division.

The French vendor sold Alcatel-Lucent Enterprise to the China Huaxin Post & Telecommunication Economy Development Centre for €202 million, but the former will maintain a minority stake.

The company will be incorporated in France and headquartered near Paris with more than 2,700 employees worldwide and operations in over 80 countries.

"With such a dedicated investor, we now have the ability to execute on our ambition to become an essential player in the enterprise communications market and still be a reference for innovation and user experience," Michel Emelianoff, CEO at Alcatel-Lucent Enterprise.

The sale comes off the back of Alcatel-Lucent’s debt-reducing Shift Plan revealed in June 2013, which also saw the sale of its satellite unit in April this year and the slashing of 10,000 jobs last October.

But the lengths the vendor has gone to have started to prove worthwhile with its revenue rocketing in Q3 2013 and the repayment of a $1.75 billion loan in August this year.

Of the sale this week, both parties have said that it will help the acceleration of investment in new areas of net growth for Alcatel-Lucent Enterprise, and in particular earmarked opportunities in high-growth markets, vertical solutions and cloud services.

As part of its movement into new areas of investment, the French vendor was also in talks with security firm Thales earlier this year for a similar arrangement.

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