Friday News Round-up: 07/11/2014

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

A Caribbean acquisition

This week Cable and Wireless Communications (CWC) shocked the Caribbean marketplace with news of its acquisition of Columbus International in its entirety.

CWC had said in May this year that it was eyeing further investment in the Caribbean and Central America and this week’s acquisition ties in with the company’s expansion strategy.

A subsidiary of Columbus International, Columbus Networks, and CWC created a joint venture in May 2013 to provide expanded wholesale bandwidth capacity to global, regional and local communications companies in the Caribbean and Americas Region.

The joint-venture company was called CNL-CWC Networks and the relationship between the two companies has now developed even further.

“This is a transaction that transforms CWC, providing a step-change in growth and returns,” said Phil Bentley, CEO at CWC. “Together, we will create the best-in-class quad-play offering in the region, delivered on a superior mobile, fibre and subsea network.”

Columbus International is a privately-owned, fibre-based provider operating in the Caribbean, Central America and Andean region, and the deal creates an enlarged company with a much greater regional footprint.

Columbus has 700,000 residential customers in the regions it operates in, and generated a revenue of $505 million in the year ending December 2013.

“Combining our businesses makes both companies stronger, faster and smarter in competing with larger competitors,” said Brendan Paddick, president and CEO at Columbus.

“This transaction reinforces our commitment to transform connectivity in the region, to increase the attractiveness of the region to investors, to support the growth of the communities we serve by making them more globally accessible and competitive and to ensure that our customers always have access to a complete portfolio of products and services.”

Altice bids for Portugal Telecom

In a move that could terminatethe proposed merger between Portugal Telecom and Brazil’s Oi, European cable firm Altice has made a €7 billion bid to acquire the Portuguese operator.

In a statement, Altice said: “These assets comprise the existing business of Portugal Telecom outside of Africa and excludes Portugal Telecom’s Rio Forte debt securities, Oi treasury shares and Portugal Telecom financing vehicles.”

The two companies were reportedly in discussions over the acquisition last month, and the offer this week is on a cash and debt-free basis. The transaction net of financial debt and other purchase price adjustments is to be financed by new debt and existing cash from Altice, the company said.

Altice has been eyeing European investments for some time, and the company’s CEO Patrick Drahi highlighted Portugal and Belgium as areas of interest for Altice during a conference in September 2014.

The company’s cable subsidiary Numericable also had success in France with the acquisition of SFR from Vivendi in April this year.

Several market watchers see the bid from Altice as a very positive move, particularly for the Brazilian marketplace.

Analysts at Jeffries said: “Altice's confirmation… that it has now submitted a binding, fully financed offer to Oi to purchase the Portuguese assets has got the ball rolling on Brazilian mobile consolidation."

However, if Altice’s bid for Portugal Telecom is accepted, it looks like the end of the road for the Portugal Telecom/Oi merger, which – despite confirmations from Brazilian regulators in July that the deal was “not at risk” – has already been hard hit following a bad debt deal with Esprito Santo bank in Portugal.

The deal left Portugal Telecom in difficulty and has already resulted in the resignation of its CEO Henrique Granadeiro.

Britain backs better mobile coverage

A report in August this year found that a third of UK mobile users experience coverage problems every week, and this week, the British government seem to have decided to do something about it.

Government officials have launched a consultation on new legislation in the UK, designed to force mobile operators to provide better coverage across the country.

In a statement, UK cultural secretary Sajid Javid said: "This consultation will complement the work industry is doing and allow the government to hear from the wider telecoms sector, businesses and the public."

One of four options being considered to eliminate this poor coverage is the implementation of a national roaming plan. The proposed plan would mean subscribers could switch between operators depending on signal strength, but this has come up against resistance from a number of UK operators.

"[National roaming] would be technically far more complex, slow to implement and would cause serious problems with network resilience," the UK’s Vodafone said in a statement.

EE, the country's largest mobile operator, reiterated this and said that it would deteriorate network reliability and could lead to price rises.

Sven Boddington, VP of client solutions at Teleplan, has also raised concerns: "Whilst allowing better roaming may provide a short-term solution, it may also cause pressure on radio base technology in low coverage areas, which become unable to cope with the load."

Other options include infrastructure sharing, allowing mobile networks to put transmitters on each other's masts and obliging the networks to cover a certain percentage of the UK.

The consultation is due to close on November 26, but some believe this is not enough time to address the situation with enough vigour.

"Extending the reach and quality of mobile services is a vital goal, but it's paramount that an in-depth and detailed consultation with industry takes place, ensuring investment infrastructure and competition is balanced with the needs and experience of the consumer," said Antony Walker, deputy CEO at techUK.

"A three-week consultation process is too short to fully consider all the options and implications of such an important issue with such long term consequence."

Both Vodafone and EE promised better and more extensive mobile coverage earlier this year.

Laura Hedges

Senior reporter


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