Telefonica to invest US$14.6 billion in Brazil
Spanish telecom giant Telefonica will invest US$14.6 billion in Brazil over three years (2011-2014).
This represents an increase of 52% over the last four years.
The company increased its investment to tap the growing demand for telecommunication services in Latin America. We believe Telefonica continues to invest in growth and transformation projects, fostering the development of broadband services (both fixed and wireless).
Latin America is one of the best performing regions and remains the principal growth region for Telefonica with a penetration rate of 99% at the end of fiscal 2010. The company reported solid growth in Latin America in the recently concluded quarter.
Brazil was the largest contributor to Latin America’s revenue that improved roughly 55% in the fourth quarter of 2010. Further, Telefonica bolstered its position in the country after acquiring the full stake in Vivo Participa§µes in October 2010. Vivo generated a massive 150% growth in revenue in the recently concluded quarter.
The consolidation of Vivo makes Telefonica the leader in Brazilian telecom market. It enables the company to offer full competitive bundled service and enhances its competitive position against America Movil. Telefonica merged Vivo with its Brazilian fixed-line voice and broadband unit Telesp, which is struggling to perform.
Telefonica is the leading telecommunications company in Spain by customer accesses, which has now become saturated with the penetration rate of more than 100%. We believe Telefonica’s dominant position in the Spanish telecom market and the strengthening position in the Brazilian market make it attractive for investment. The stock retains a Strong Buy rating with the Zacks #1 Rank for the short term (13 months).
However, for the long term, we are maintaining our Neutral rating as Telefonica remains challenged by a weak Spanish economy and ongoing reduction in mobile termination rates. We are also concerned about the company’s highly leveraged balance sheet, increasing competition (especially in Brazil and U.K.) and regulatory involvement, all of which may limit upside potential of the stock.
Verizon Ready to Activate Capacity on Europe India Gateway Submarine Cable System
Verizon enterprise customers can begin taking advantage of the newly activated Europe India Gateway cable. The $700 million high-capacity fiber-optic cable, one of the most advanced submarine cable systems in the world, will provide multinational customers additional diversity and capacity to meet their critical communications needs.
Verizon joined 15 other international communications leaders, which constitute the EIG Consortium, and formally accepted delivery of more than 11,300 kilometers (7,021 miles) of the total 15,000 km (9,320 miles) EIG cable system. The accepted cable system routes are: London to Bude, U.K.; Bude to Portugal to Gibraltar to Monaco to Libya; Monaco to Marseille, France; and Saudi Arabia to Djibouti to Oman to United Arab Emirates to India. The group also accepted 11 of 13 cable landing stations. The only remaining segment to be completed for the EIG is in Egypt where there are two landing sites.
“With the increasing demand for our strategic services and IP-based solutions, this EIG cable system is critical to support our customers’ high-bandwidth communication needs,” said Ihab Tarazi, Verizon vice president of global network planning. “This cable activation also shows our customers our strong network investment commitment around the globe. Virtually anywhere our Verizon enterprise customers do business in the world, they can count on us to use our outstanding network capabilities to deliver their communications solutions.”
Multinational customers also will be able to take advantage of Verizon’s capacity and routing on the EIG cable system by connecting directly to the company’s ultra-long-haul European network via the Verizon EIG cable terminal station in Marseille, France. Customers also can connect directly from the EIG to the Verizon network in India.
In addition to complementing existing high-bandwidth cable systems in the region, the EIG cable system will provide much-needed diversity for broadband traffic currently relying largely on traditional routes from Europe to India. This is important, considering the threat of earthquakes in this region.
With the addition of the EIG, Verizon is preparing to extend its industry-leading global mesh architecture to this cable. Meshing is a network design that connects undersea cable systems on land, allowing for instantaneous rerouting of traffic in the event of multiple undersea cable breaks. The company operates a global mesh network that circles the globe, and EIG will provide additional redundant mesh paths needed during service impacting events.
“When you combine all the customer benefits of EIG additional capacity, cable route diversity, network redundancy, direct connectivity to our European and India networks, global mesh around the world, and seamless connectivity to major submarine cables in Europe, the Middle East, Africa, India, Asia and North America this truly demonstrates why Verizon has one of the most robust and diverse communications network foundations in the world,” Tarazi said.
When fully activated, the EIG will be the first direct high-bandwidth optical fiber system from the United Kingdom to India. The design capacity on the full system is 3.84 terabits per second (Tbps) using dense wavelength division multiplexing (DWDM) technology to provide upgradeable transmission facilities.
As a leader in developing undersea cable communications systems, the EIG is the third major submarine cable project Verizon has helped launch in the last six years. The company continues its global network leadership work, delivering more capacity, reliability and speed for data, video, IP-based solutions and strategic services needed by its multinational customers. The company is involved in more than 80 submarine cables worldwide.
Verizon is a global leader in driving better business outcomes for mid-sized and large enterprises and government agencies. Verizon combines integrated communications and IT solutions and professional services expertise with high-IQ global IP and mobility networks to enable businesses to securely access information, share content and communicate. Verizon is rapidly transforming to a cloud-based “everything-as-a-service” delivery model that will put the power of enterprise-grade solutions within the reach of every business. Find out more at www.verizonbusiness.com.
Verizon Communications Inc., headquartered in New York, is a global leader in delivering broadband and other wireless and wireline communications services to mass market, business, government and wholesale customers. Verizon Wireless operates America’s most reliable wireless network, serving 94.1 million customers nationwide. Verizon also provides converged communications, information and entertainment services over America’s most advanced fiber-optic network, and delivers innovative, seamless business solutions to customers around the world. A Dow 30 company, Verizon employs a diverse workforce of more than 194,000 and last year generated consolidated revenues of $106.6 billion. For more information, visit www.verizon.com.
Portugal needs to raise $273.6 million in 4G auctions
The head of local telecom company has stated that Portugal’s cash-strapped government needs to raise US$273.6 million through the sale of 4G mobile telephony licenses this year, an urgency that may help push a revamp of the country’s communication network.
According to Xavier Rodriguez-Marin, Chief Executive of Oni Telecom, Portugal’s government budget for this year already includes such planned revenue from the sale of 4G licenses.
He added that this is a significant amount at a moment when every euro counts. The auction could let big international (telephony) corporations in the country.
Portugal already has three main mobile operators: Portugal Telecom SA; the local unit of the U.K.’s Vodafone Group PLC, and Sonaecom’s Optimus, providing sophisticated third-generation telephony services including high-speed mobile Internet connections.
There are several smaller mobile virtual network operators in the country.
The biggest draw of 4G for Portugal, as in the case of other European countries, is not only the improvement in network speed, but the revenue from the sale of 4G licenses, at a time when global markets are keeping close track of government pledges to cut large budget deficits.
Sony expands Music Unlimited service
Sony Corp. has expanded its digital music service, Music Unlimited, to France, Germany, Italy and Spain.
Music Unlimited, which launched in the U.K. and Ireland in December, is a cloud-based, digital music service that gives access to a catalogue of millions of songs from major labels including Universal Music Group, Sony Music Entertainment, Warner Music Group and EMI Music as well as independent labels and publishers world-wide.
Users can play music through Internet-connected Sony devices including Sony’s 2010 and 2011 models of network-enabled BRAVIA TV, Blu-ray Disc player, Blu-ray Disc Home Theater system, PlayStation 3 computer entertainment system as well as VAIO and other personal computers.
According to Kazuo Hirai, President of Networked Products & Services Group, Sony,Music Unlimited will not only enhance customers’ Sony devices by unifying their music experiences and content, but will further open up access, create music discovery opportunities and spawn new listening possibilities for customers.
Sony launches subscription music streaming service
Sony Corp. has launched a music streaming service in a bid to enhance sales of its consumer electronics and break Apple’s dominance of the online music business.
The Japanese company’s Music Unlimited powered by Qriocity is a digital music service based on cloud technology that does not involve downloading tracks like Apple’s iTunes, which started in 2001.
According to Sony, instead, a subscription gives users access to a catalog of about 6 million songs, which can be streamed across Sony’s Internet-connected devices like the PlayStation 3, personal computers and Bravia TVs. The service can be synchronized with a user’s existing music files, including iTunes.
The service debuted in the U.K. and Ireland on Wednesday and will be rolled out in Australia, Canada, France, Germany, Italy, Spain and New Zealand and the U.S. next year. Music Unlimited follows the launch this year of an on-demand video service that is now available in the U.S. and several European countries.
For Sony, the two services represent an effort to better integrate the company’s consumer electronics with content like music, movies and games in a fiercely competitive market. Sony is banking on Qriocity — its new online entertainment platform announced earlier this year_ to help make that happen.
While it remains to be seen whether consumers will embrace the new services, Sony is starting off with a substantial user base through the PlayStation 3. The video game console has more than 60 million users worldwide and about 80% of PS3s are connected to the Web.
According to Kazuo Hirai, Executive Vice President and Head of the company’s Networked Products and Services division, in developing its new music service, Sony decided to shift away from downloadable songs. They realized that if they were playing catch up with the same (iTunes) model, it would be difficult to appeal to users.
Initially, the service is intended to mainly enhance the appeal of its products against competitors like Microsoft Corp. and Samsung Electronics Co. But over time, it needs to stand on its own.
The service cannot yet be used on portable devices such as the Walkman or cell phones, though Sony says it plans to eventually integrate those as well.
The company returned to profitability in the July-September quarter and raised its earnings forecast in part due to brisk sales of the PS3.
Hirai added that his company is on pace to meet its goal of selling 15 million PS3 consoles this fiscal year through March, and expects the games division to finish in the black.
Launched in September, the PlayStation Move motion-sensing game controller has been a big holiday hit so far, exceeding Sony’s own expectations. The company said in late November that it had shipped 4.1 million Move units to retailers worldwide.
ZTE to launch first smartphone in Japan
ZTE Corp, china’s second-largest telecom equipment provider, and SoftBank, Japan’s third-largest telecommunications operator, have announced that their jointly developed Android smartphone, Libero, will be launched in the Japanese market later this month. 
The handset is ZTE’s first smartphone to be launched in Japan, and the second handset developed in collaboration with SoftBank. The first handset “SoftBank 840Z” was launched in October this year.
Libero, customized for the Japanese local market, is the lightest and thinnest smartphone among SoftBank’s newest products and is running the latest Android 2.2 operating system. The product has been launched in several European countries, including France, Germany, and the U.K.
ZTE and SoftBank jointly announced on the product release conference that they will launch eight models of terminal products in the Japanese market by next March.
SFR, France Telecom begin Apple’s iPad sale
France’s two largest telecom operators, France Telecom SA and Vivendi SA’s SFR, have started selling Apple Inc’s iPad in their stores, hoping for a sales boost during the crucial Christmas season.
Operators in France so far have not been able to sell the iPad directly in its stores. Clients had to go and buy the tablet in retail outlets such as Fnac and Darty and to then get a Wi-Fi or 3G subscription with one of the operators.
By reaching deals to subsidize the iPad, operators can offer the tablet at a lower price directly in its stores by committing customers to sign up for a two-year data plan.
According to SFR, it started selling the iPad in its online stores and will begin selling the tablet in its stores from Dec. 10.
According to the company’s spokesperson, SFR sells the iPad starting from US$238.29 if customers subscribe to the group’s new triple-play offer as well as an internet connection package. The iPad is available from US$370.75 with a two-year data plan for US$ 52.85 a month.
France Telecom, which had already announced last month that it would sell the iPad in France from early December from US$369.56, also stated that it started selling the iPad in stores on Friday.
According to France Telecom spokesman, sales are going well on the first day. However, some deliveries of the device were delayed due to the difficult weather conditions this week.
France Telecom’s Orange also started selling the iPad in the U.K. on Friday, where it is available from US$310.84 with a two-year data plan of US$39.05 a month for existing customers and US$42.17 per month for new customers.
According to Bouygues Telecom, it has not yet reached a deal to sell the iPad in its stores. The company won’t be selling the iPad by the end of the year but we continue to work with Apple to hopefully sell it in 2011.
Meanwhile, Bouygues Telecom is offering to reimburse customers US$ 198.69 if they sign up for one their iPad data packages.
C&W gets $4.1 million contract for MphasiS
Cable & Wireless Worldwide PLC has received a $4.1 million contract to manage Indian software services company MphasiS Ltd.’s communications network across India, China, U.K. and U.S.
According t the company’s statement, the three-year contract will help MphasiS obtain significant cost efficiencies in its network, Cable & Wireless, a London-based telecom services provider.
C&W Worldwide will migrate MphasiS from its existing wide-area network to multiprotocol-label-switching. This will help in the Indian company’s expansion plans in other countries including Poland, the Philippines and Sri Lanka.
Vodafone, O2 plans to Bid for U.K. Frequencies in 2012
Vodafone Group Plc and Telefonica SA’s O2 unit will be able to bid for additional frequencies for high-speed data services in the first quarter of 2012, after a U.K. regulator set a timetable for spectrum auctions.
According to Chief Executive Officer Ed Richards, Ofcom, the telecommunications regulator, will publish a consultation and proposals for the auction at the end of February 2011. Bidding will take place in the first quarter of 2012 and the frequencies will be available for use in 2013 after the auction.
The timetable comes after the sale was delayed by more than two years. In July, the U.K. government has stated that the auction would take place at the end of next year. Ofcom had initially planned to award some spectrum in September 2009, followed by an additional award of frequencies made available by the ending of analog television signals.
The U.K. auction will follow the sale of spectrum in Germany and India this year. The German auction raised US$5.96 billion, while frequencies for third- generation mobile networks in India were sold for $14.6 billion.
