Russia’s Vimpelcom completes merger with Golden (Russia)
Russia’s second-largest mobile phone operator, Vimpelcom, said on Friday it had completed a $4.3 billion merger with fixed-line operator Golden Telecom.
Vimpelcom, which offered to buy 100 percent of Golden Telecom (GT) in December last year for $105 per share, said in a statement that GT became its indirect wholly owned subsidiary upon completion of the merger.
Golden Telecom common stock ceased trading on Nasdaq at market close on Feb. 28, Vimpelcom said. Both Vimpelcom and GT had Norwegian group Telenor and Altimo, the investment vehicle of Russia’s Alfa Group, as strategic shareholders.
Wireless Mobile Telecom Wireless News
Acision and OgilvyOne Join Forces to Enable Digital Marketing and Advertising for Mobile Operators
Acision, a messaging and charging company for over 300 network operators and service providers worldwide, and OgilvyOne Worldwide, a WPP company in interactive marketing, have announced that they have forged an alliance for mobile marketing.
Today, the basic requirements for realizing the full potential of mobile marketing and advertising are marketing expertise and mobile delivery capability. In this partnership, OgilvyOne has the marketing expertise and Acision has the mobile delivery capability. Together, both the companies are looking to realize the full potential of mobile marketing and advertising.
Together, both the companies will seek to offer advertisers with complete brand engagement over multiple channels and control, brand protection and mass market level revenues for carriers.
Rory Buckley, CEO, Acision said in a press release: Mobile operators have been incredibly vocal about their hopes for mobile advertising, but the discussion should really be about mobile marketing. While ideas for advertising are often focused on the simple process of sending unwelcome brand messages to a consumer, the real potential lies in the targeting and delivery of marketing communications both for the operator themselves and for third party brands addressing churn and opening the opportunity for new revenue models. What has been missing until now is a bridge between the marketing and telecoms worlds. Working with OgilvyOne, we are now in a position to offer support for the complete mobile marketing value chain; from an understanding of today’s mobile subscriber, through the technology, right into the brand strategy.â€
OgilvyOne is the global leader in Customer Ownershipâ„¢ and interactive marketing. The company provides brands crucial insights into their customers, company, and market. With this partnership, carriers can unlock the revenue generating potential that resides within their data as the partnership delivers the technologies and the necessary expertise for an end-to-end Customer Value Management solution. Acision’s platforms generate more than half of all global text and multimedia messaging traffic, offering real time extraction of information about individual mobile subscriber behavior.
Sprint suffers $29.5bn loss after Nextel blow (USA)
Sprint Nextel, the third largest US mobile phone company, reported a $29.5bn fourth-quarter net loss after writing down most of the remaining value of its 2005 purchase of Nextel Communications.
The loss is the fifth largest for a company in the Standard & Poor’s 500 index since 1990.
Shares in Kansas-based Sprint, which also warned that subscriber losses would deepen in the current quarter and said the turnround would take longer than expected, fell by 9.6 per cent after the group said it would stop paying dividends for the “foreseeable future”. The stock has fallen more than 51 per cent in the past year.
Sprint, which warned at the end of last month that it might take a goodwill impairment charge of up to $31bn, also revealed that it had borrowed $2.5bn under a revolving credit line, in part to mitigate financing risk related to maturing debt securities but it said it believed it was still in compliance with debt covenants.
The $29.7bn fourth-quarter goodwill impairment charge means Sprint has written off nearly all of Nextel’s value following its acquisition for $36bn three years ago. Sprint has been struggling with the integration and has been losing ground to both AT&T Mobile and Verizon Wireless, its larger rivals. It also recorded a further $279m in other charges.
“The fourth-quarter financial results reflect the challenges facing our wireless business,” said Dan Hesse, Sprint’s recently appointed chief executive. “We are making significant changes across the organisation in an effort to improve execution, stabilise our customer base and deliver on the opportunity provided by our assets.”
But Mr Hesse cautioned that “given current deteriorating business conditions, which are more difficult than what I had expected to encounter, these changes will take time to produce improved operating performance, and our near-term subscriber and financial results will continue to be pressured”.
On a conference call with analysts, Mr Hesse added: “We will have a difficult 2008 as we turn this ship around. This turnaround will not happen for many quarters.”
The company, which lost 683,000 post-paid monthly contract customers during the fourth quarter, said it now expects to lose 1.2m customers. Average revenues per subscriber fell by $2 to $58 while churn rate, a key measure of customer loyalty, were high at 2.3 per cent.
Wireless Mobile Telecom Wireless News
Mobile advertising showing real results
The mobile advertising space is starting to see important growth and is likely to explode in the run up to the 2010 FIFA World Cup. Internationally, mobile advertising and branding campaigns are starting to show significant results.
According to a report on an Adidas campaign posted on the JackMyers.com business-to-business media website, an internal branding study showed a 69% increase in intent to purchase Adidas products, with 87.5% of people who saw the campaign interacting with the ad on their handheld devices.
Concept positioning
Targeting boys and girls aged 13 19, the ad features well-known basketball stars positioning the concept that Basketball is a Brotherhood.
Mobile viewers who clicked on a text ad posted on various mobile websites (mobisites) were sent to a specially built mobisite where they could choose from a handful of options, which included calling one of the stars, tailored voicemail on their phones from the stars, specialised ringtones, and wallpaper.
Five million mobile impressions on ads for the Adidas mobisite drove 75 000 page views to the mobisite in the first week, and some 8000 people opted in, providing their cellphone numbers. About a thousand of those people clicked to call one of the stars, Kevin Garnett, and 18% of those called him again. The research also found that mobile outperformed all other media for driving opt-ins at a fraction of the cost.
Teens predisposed to mobile
A JackMyers survey of 500 teens in the US States aged 15 17 found that 37% viewed news and/or sports videos on their cellphones and were likely to pay attention to video advertising on cellphones, while 31% were likely to pay attention to text advertising on cellphones.
In a similar campaign to the Adidas Basketball is a Brotherhood campaign, Nike ran a campaign locally on Vodacom’s VLive! Portal around ‘using your body as a weapon’ (www.justdoit.co.za).
Like the Adidas campaign, the portal hosted within VLive! offered mobile content free (no digital rights management) which saw 84 000 downloads and 9200 survey responses in about three weeks. (www.on-the-line.co.za/content/view/65/61). Interestingly, Nike only expected 15 000 downloads and 4000 survey responses.
Forecasts
JackMyers Media BusinessReport projects mobile advertising will increase 120% to US$1.1 billion in 2008 and 120% again in 2009 to US$2.44 billion. In contrast, newspaper advertising in the US was expected to decline over 2008 and 2009, while broadcast network TV and radio advertising were expected to start declining in 2009.
Online advertising is the only other big grower in the US and was expected to grow by 24% in 2008 and 28.5% in 2009.
Mobile advertising is therefore on the cusp of huge growth. Given the low Internet penetration stats in SA, the large mobile base of subscribers and the fact that Vodacom launched a mobile advertising unit in 2007, SA is poised to see mobile advertising take off in the run up to the World Cup.
Wireless Mobile Telecom Wireless News
Korea’s Mobile Services Becoming Friendlier (Korea)
A fingernail-sized chip that stores subscriber information is set to change South Korea’s mobile phone culture, allowing people to choose which handset they want to use according to their outfit and occasion. In addition, roaming fees in China are expected to be cut by up to 70 percent starting next month.
Korea’s second-largest mobile carrier said Thursday that it will lift the “lock-in” function on its universal subscriber identity module (USIM) cards starting next month.
The announcement was made by KTF president Cho Young-chu during a ceremony marking the one-year anniversary of the company’s Show third-generation mobile service.
Market leader SK Telecom also plans to lift the lock-in function for its T Live third-generation service starting March 27.
Subscribers to 3G services are currently not allowed to use their USIM card, which stores their subscriber information, in different handsets. That means if a subscriber wants to change mobile phones, he has to go through an authentication and opening process all over again. But starting from March customers will be able to switch from one handset to another just by swapping the USIM card into the new phone.
Customers who buy new handsets will also be spared the trouble of entering phone numbers again as their phone book is stored in their USIM. They can also use mobile payment services as well, by including a credit card function in the chip. All this means that people with more than one handset can choose which they want to use to match their clothes or occasion.
The sharing of USIM cards, however, will be limited in the early stage to handsets linked to the same service provider. Those who want to share their card among phones linked to different carriers will have to wait until the second half of this year.
LG Telecom, which uses code division multiple access (CDMA) technology, is not going to join the move. Both SK and KTF use wideband code division multiple access (WCDMA).
In addition, KTF plans to cut its roaming fees in China by up to 70 percent. Under the plan, KTF executive vice president Kim Ki-chul said Show subscribers who make local calls in China will be charged at local rates starting next month.
For this, KTF will make available to its roaming subscribers a pool of 10,000 Chinese phone numbers through a partnership with China’s top operator China Mobile. The service will be rolled out in Beijing, Shanghai and Guangdong Province before it is expanded to other regions.
KTF also plans to cut its roaming fees in Japan by forming an alliance with NTT DoCoMo, Japan’s largest cell phone company, which holds a 10 percent stake in the Korean operator.
Wireless Mobile Telecom Wireless News
Apple joins top 10 mobile phone vendors (USA)
Apple, Research In Motion and ZTE took places among the world’s top 10 mobile phone makers in 2007, new research from Gartner Inc. claims.
Despite being available in only four markets — the U.S., U.K., Germany and France — the iPhone transformed Apple into the world’s 10th largest handset maker in the fourth quarter of 2007, the analysts said.
RIM took sixth place, while low-cost handset manufacturer ZTE, which specializes in delivering devices to emerging markets, took seventh place.
Apple holds 0.6% of the world market, while RIM has 1.2%. Motorola saw its share fall to 11.9% from 21.5%. Nokia, at 40.4%, and Samsung, at 13.4%, continue to dominate global handset sales.
Gartner analyst Carolina Milanesi observed, “The global mobile devices market will remain relatively immune to a recession in the U.S. and Western European economies, as the majority of growth in 2008 will come from emerging markets. The mature Western Europe and North America markets are driven by operator contract terms and replacement cycles and will account for just 30% of the global mobile devices market in 2008.”
Wireless Mobile Telecom Wireless News
Telekom Austria outlook hit by fixed-line migration (Austria)
Operator still eyeing Bosnian mobile market in 2008, but insists there are ‘no concrete plans’ for expansion.
The biggest threat to Telekom Austria’s financial performance is fixed-line migration in its home market, which is impacting the growth it is enjoying at its Eastern European mobile subsidiaries, said the operator’s CEO Boris Nemsic Thursday.
Reporting its 2007 financial results yesterday, the operator said fierce competition in the Austrian mobile sector had led to declines in prices and accelerated fixed-mobile substitution.
“It’s a very simple calculation. If we lose 200,000 fixed-line connections, that’s 200,000 multiplied by the fee multiplied by 12 months,” Nemsic.
“These declines, plus the interest on its acquisition costs for Belarus-based MDC, mean that Telekom Austria said it expects a 12% decline in net income for 2008, with modest revenue and EBITDA increases of 5% and 3% respectively, helped by growth in its international operations.
Still, Nemsic said he was encouraged by the financial performance of the company over the course of 2007, given the number of subsidiaries and greenfield deployments it has undertaken.
“2007 was the biggest year of expansion in the history of the company… We’ve raised our customer base by over 50%, doubled the number of addressable markets to eight, and increased the number of addressable consumers to 44 million,” he said.
According to the telco’s full-year results, it now has a total of 15.4 million subscribers across its entire base of operations.
In 2007 Telekom Austria began operating mobile services in Serbia and Macedonia, and in Belarus following its October acquisition of local operator MDC, all of which Nemsic said have performed in line with expectations.
“After six months of operations in Serbia we had over 500,000 subscribers, we launched a post-pay tariff and began selling BlackBerrys… With MDC we managed to consolidate the company in one quarter,” he added.
However, in a report from Dow Jones Newswires, Citigroup Wednesday warned that Telekom Austria’s dependency on emerging markets leaves it more exposed to investor changes in risk appetite than most peers.
“I don’t see it as a risk I see it as an opportunity,” said Nemsic Thursday.
“We have higher operating margins in emerging markets than we do in Austria where the competition is more fierce,” he commented.
Still, for 2008 Telekom Austria has no solid plans to expand into other countries, but at the same time Nemsic reiterated he is keeping a close watch on the Bosnian mobile market.
“We’re not excluding anything but it needs to be a profit and a growth opportunity for us to consider it,” he said.
In November the company’s CFO Hans Tschuden said Telekom Austria was closely monitoring the proposed privatisation of one of Bosnia’s three mobile operators BH Telekom.
“Two of Bosnia’s three mobile operators have been almost wholly privatised, the third one, BH Telekom, is starting to be privatised and we are watching that closely,” said Nemsic on Thursday.
“It’s a difficult one because Bosnia has a complex decision-making process, so we’re watching to see how it pans out,” he said.
Wireless Mobile Telecom Wireless News
DT’s Obermann on T-Systems, job cuts, mobile Internet growth (Germany)
Deutsche Telekom posts stable 2007 results, largely on a strong performance from its mobile businesses.
Deutsche Telekom is close to brokering a partnership deal for its T-Systems unit, chief executive Rene Obermann said on Thursday, as he presented a solid, if uninspiring, set of 2007 results.
More interesting than the financials, the German incumbent’s CEO also indicated that he expects further job losses going forward as cost-cutting measures continue, and and painted a positive picture of the mobile data market.
“We have made excellent progress in negotiations on the planned partnership and expect to be able to conclude an agreement shortly,” said Obermann, referring to plans to find a partner for the systems integration arm of its IT services business. He added that by “shortly”, he means the coming “weeks and months”.
“T-Systems is making a significant contribution to our cost-cutting programme,” said Obermann, explaining that revenue fell by 6.9% to €12 billion last year, primarily as a result of internal service relationships in the group.
Under its so-called Save for Service programme, Deutsche Telekom recorded cost-savings of €2.3 billion in 2007, more than half of which – €1.2 billion were realised at its domestic fixed networks business. And it is optimistic about future cost-cutting, foreseeing savings of €4.2 billion to €4.7 billion by 2010.
Staff reductions have been a key part of Deutsche Telekom’s strategy over the past 12 months, and have caused the incumbent considerable headaches.
“14,400 staff left the group last year,” said Obermann, 11,100 of which were German employees. He insisted that the creation of new service companies, a move the unions attempted to block last year, “demonstrate[s] we are indeed on the right track.”
However, the telco was cagey about future headcount reductions, but it seems certain there are more to come.
“We are restructuring our workforce and that will continue in years to come,” said Obermann, refusing to be drawn on specifics.
The CEO also played his cards close to his chest when questioned on overseas expansion.
“We are still looking for favourable market penetration opportunities in areas where we haven’t been present before,” he said.
He declined to be more specific, but on possible opportunities in Asia said that the market is still fragmented, with more consolidation to come. “[We will] look for good strategic opportunities for us,” he said.
Mobile growth
Obermann identified the mobile Internet as a key growth driver for the company, and presented some encouraging figures to back up his comments.
“Mobile data usage increased significantly in 2007,” Obermann said, noting that data revenues, excluding messaging services such as SMS and MMS, rose by 40% on-year to €1.9 billion.
He added that growing data usage is further evidenced by the company’s growing number of Web’n'Walk customers; in Europe, Web’n'Walk users grew by 1.3 million to a total of 3.2 million last year.
Furthermore, the amount of data traffic on the telco’s UMTS networks increased by 61% between Q3 and Q4 last year, with traffic growing by a factor of between seven and 10, depending on the market, in the past couple of years.
“The international mobile communications business is the company’s growth engine,” said Obermann.
The company reported 119.6 million mobile customers across all its operations at the end of 2007, the vast majority 90.9 million of which were in Europe.
T-Mobile Deutschland gained 962,000 new contract customers last year, of a total increase of 4.6 million, taking its customer base to just under 36 million. Obermann highlighted the company’s low-cost wireless brand in particular, noting that it signed up “200,000 customers at six months.”
The domestic mobile business’ main growth drivers were the Max flat rate and the MyFaves community calling plans, and the iPhone, Obermann said.
T-Mobile USA ended last year with 28.7 million users, although Obermann noted that including SunCom, a U.S. wireless operator the company acquired late last year, the figure breaks the 30 million mark. T-Mobile USA also recorded an “increase of average revenue per user [of] $1.”
The company also reported “customer growth and an increase in ARPU,” in the U.K; customers grew by 406,000 to 17.3 million, while ARPU was up by €2 to €31.
Returning to the subject of cost-savings, Obermann made reference to T-Mobile UK’s recently-brokered network-sharing agreement with 3, which reminded the audience would enable both companies to “save around £1 billion sterling over the next 10 years.”
The figures
Deutsche Telekom posted an 82% decline – to €569 million from €3.17 billion in 2006 – in reported net profit in 2007, but adjusted net profit, taking into account currency issues, fell by 22% to €3 billion.
Adverse foreign exchange changes “did have a major influence on our results,” said Karl-Gerhard Eick, deputy CEO and member of the board of management finance at Deutsche Telekom.
“I don’t think anyone would have believed we would have got up to €19.3 billion adjusted EBITDA at the beginning of the year,” he added. Adjusted EBITDA was virtually flat compared with 2006, falling by 0.6%.
Net revenue grew by 1.9% to €62.5 billion; domestic revenue fell by 5.4% to €30.7 billion, while international revenue was up 10.2% to €31.8 billion.
The company felt the greatest pressure at its broadband/fixed networks division, where total revenues fell by 7.4% to €22.7 billion. 1% growth in international revenues failed to offset an 8% slide at the domestic business. Similarly, higher wholesale revenues did not offset lower calling revenues, although Eick said “that was not expected.”
Eick noted that the fourth quarter of the year brought some positive trends. For example, “domestic revenue stabilised at about €5 billion,” compared with Q3, while domestic adjusted EBITDA rose.
“We are encouraged by these improvements, but I would caution you not to project these developments into 2008,” he said, since Deutsche Telekom expects to face continued regulatory and competitive pressures, including the introduction of naked DSL.
