Vodafone relies on Verizon as profit from Europe declines (USA, UK)
Telecom operator Vodafone Group Plc will have to rely on its U.S. wireless venture to meet profit estimates and cover up declining sales in the European markets, largely Spain and Italy, according to a report by BN.
Vodafone said that operating profit excluding some items may rise as much as 3.2 percent in the 12 months ending March 2013. Profit on that basis slipped 2.4 percent last year to $18 billion after the sale of a stake in its SFR French unit. Verizon Wireless, the largest U.S. mobile carrier, accounted for 42 percent of the total, an increase of 9.3 percent.
As per the report, Vodafone, which relies on western Europe for most of its revenue, is no longer the world’s biggest mobile-phone company as China Mobile Ltd. boosted sales last year to $81.7 billion. While profits and sales at Verizon Wireless are rising, Newbury, England-based Vodafone still needs to negotiate dividends every year with U.S. partner Verizon Communications Inc. (VZ), which controls 55 percent of the venture.
Verizon to focus on Windows phones this holiday season (USA)
Verizon Wireless plans to put its marketing weight behind Microsoft Corp’s next mobile phone software to help develop a strong competitor to Apple Inc and Google Inc, according to the chief financial officer of Verizon Communications, as told to Reuters.
Verizon Wireless, a venture of Verizon and Vodafone Group Plc, already sells the Apple iPhone and many devices based on Google’s Android software.
But Verizon’s CFO Fran Shammo said the company wants a third strong software competitor in the mobile market where operators pay hefty subsidies for smartphones like the iPhone.
As per the interview, Shammo said that they are really looking at the Windows Phone 8.0 platform because that’s a differentiator. They are working with Microsoft on it.
Microsoft has not said anything publicly about the next update of its mobile software, but Windows Phone 8 — codenamed ‘Apollo’ — is expected on phones this holiday season.
As per the report, Shammo said that Verizon Wireless expects to have phones based on the next Microsoft software in time for the 2012 end of year holiday shopping season. The executive suggested that Verizon could play a similar role with Microsoft as it did with Google’s Android.
Verizon Wireless marketing played a big part in boosting the popularity of Android phones from manufacturers including Motorola Mobility, Samsung Electronics and HTC Corp. Verizon’s Droid brand even managed to give a struggling Motorola a new lease of life.
Nokia is Microsoft’s closest mobile partner as the Finnish company has bet its smartphone business on the U.S. company’s software. But Nokia’s fortunes have fallen sharply since it took up with Microsoft.
While Samsung and HTC both already sell phones based on Microsoft software, Motorola Mobility’s future plans are uncertain as it is in the process of being bought by Google.
Vodafone and Tata get till 19 April to make C&W bid (UK, India)
Vodafone Group Plc and Tata Communications, which are planning to bid for UK operator Cable & Wireless Worldwide (CWW), have been given an extended deadline to submit their bids. As per a report by BN, the new date for submission of bids has been set for 19 April. However, CWW has said that there is no certainty that an offer will be made.
CWW has said that the extension of the bid deadline will enable Vodafone and Tata to establish whether or not their preliminary discussions with Cable & Wireless might result in a formal offer for the company which the board of Cable & Wireless would be willing to recommend.
Tata Communications had hinted at a possible cash offer for CWW while Vodafone had said that they are evaluating a potential bid offer for the operator.
Skype steps up negotiations with mobile operators to permit internet calls (UK)
Skype technologies, a software application that allows users to make voice and video calls and chat over the Internet, has reportedly approached Ofcom, UK’s telecom authority, as British mobile operators have blocked Internet based calls on their networks. According to reports, Ofcom has said that by blocking Skype’s services mobile operators were restricting innovation and that it may intervene if the operators continue to block the services.
Mobile operators in the US such as Verizon Wireless, have not paced any restrictions on the services offered by Skype, but have infact offered the software on some of its handsets since the past year. However, on the other hand, British operator Vodafone Group Plc requires users to pay an additional charge of $ 23 each month to gain access to Web-based calls on their mobile phone. Further, reports suggest that France Telecom and Deutsche Telekom in UK have banned access to such services.
Sources claim that operators impose such restriction in an attempt to safeguard their profits as well as counter the fall in revenues from traditional voice and message services.
Initial valuation of 4G services at US$3.3bn (Italy)
The Italian government has reportedly received early offers totaling $ 3.3 billion for its 4G mobile frequencies to be auctioned this week. 4G technology provides a comprehensive and secure IP (Internet Protocol) solution, allowing users to access high quality video streaming along with voice and data at a much higher speed than previous generations.
As per reports, some of the operators that have put in their offers include Telecom Italia SpA, Vodafone Group Plc, Wind Telecomunicazioni S.p.A of VimpelCom Ltd. and Hutchison Whampoa Ltd.’s 3 Italia.
Polish Billionaire to own Polkomtel (Poland)
Poland’s second-largest mobile-phone company will be sold to Polish billionaire Zygmunt Solorz-Zak for $5.5 billion. The deal is said to be a benchmark in the history of acquisitions by a Polish investor. According to sources, the $ 956,029 billion of debt and dividend due to current owners were not included in the telecom deal.
The shareholders of Polkomtel including Vodafone Group PLC signed the deal which initiated the expansion of Solorz- Zak’s media and communication business. Polkomtel has around a client base of 14 million for voice and Internet services. The closest competitors of the company in the telecom market are Deutsche Telekom AG’s Polska Telefonia Cyfrowa and France Telecom SA’s Telekomunikacja Polska SA unit.
According to reports, after the deal, the total worth of Polkomtel as an enterprise came around $5.76489 billion, which is 6.4 times higher than the company’s earnings in 2010. Polkomtel sought advice on the deal from Goldman Sachs Group Inc., ING Groep NV, Nomura Holdings Inc. and Rothschild, while billionaire Solorz-Zak sought expert advice from Trigon Dom Maklerski SA, Deutsche Bank AG and Credit Agricole SA.
Solorz-Zak stated that the whole deal was financed for by Credit Agricole and Deutsche Bank AG while Societe Generale SA, Royal Bank of Scotland Group Plc and PKO Bank Polski SA participated in funding.
Bharti, Idea Cellular, Vodafone to sign 3G deal (India)
If the sources are to be believed, Bharti Airtel Ltd., Vodafone Essar Ltd. and Idea Cellular Ltd. are close to signing an agreement to share their 3G radio bandwidth.
According to sources, the agreement is almost in the final stages. Just the details need to be worked out.
Idea Cellular is scheduled to hold a media conference to announce the commercial launch of its 3G telecom services. Bharti Airtel and Vodafone Essar, the Indian unit of Vodafone Group PLC, have already launched similar services.
Bharti Airtel has licenses and radio bandwidth to offer 3G services in 13 service areas, Idea holds licenses for 11 service areas and Vodafone Essar can offer the services in 9 areas.
The agreement, if signed, will allow the companies to bring down their average cost of radio bandwidth by accessing each other’s networks in areas where they don’t own 3G licenses.
The companies had bought 3G licenses and bandwidth through a contested auction last year. Bharti paid US$2.77 billion for 3G spectrum, Vodafone Essar paid US$2.47 billion and Idea Cellular US$1.30 billion respectively.
The high cost of acquiring 3G bandwidth had led to concerns about the profitability of 3G operations. Telecom operators are expected to charge a premium for 3G services and hope for a boost to their revenue and profitability which have been hit in recent times due to extremely low tariffs for basic phone services amid intense competition.
The three companies had separately stated earlier that they were in talks with other 3G license owners for tie-ups to share networks in areas where they didn’t hold licenses.
The three companies already share their telecom towers and are the joint owners of Indus Towers Ltd., which has about 110,000 towers.
Polkomtel Binding bids due in early April (Poland)
Binding bids for Polish mobile operator Polkomtel SA are reportedly due in early April, after which two or three bidders will be selected to conduct due diligence.
According to reports, seven bidders–Polish tycoon Zygmunt Solorz-Zak, Sweden’s TeliaSonera AB, Norway’s Telenor ASA, and four private equity firms–Apax, KKR, Bain Capital, and Providence Equity Partners–are scheduled to meet with Polkomtel’s management on March 21.
Reports added that the bidders won’t be allowed to conduct their own due diligence until after they file this second round of bids and are selected to remain in the process. Until then, they can speak with Polkomtel management and have access to a virtual data room.
Polkomtel is owned by five companies, with the Polish government holding substantial stakes in three of them.
Poland’s largest power group, PGE Polska Grupa Energetyczna SA, holds a 21.85% stake in Polkomtel and is advised by ING Securities; oil refiner PKN Orlen SA holds 24.39% and is advised by Nomura; copper miner KGHM Polska Miedz SA has 24.39% and is advised by Rothschild. Poland’s Treasury owns stakes of 84.99%, 27.52%, and 31.79% in the three companies, respectively.
The remaining shareholders in Polkomtel are U.K.-based telecommunications operator Vodafone Group PLC, which has a 24.39% stake, and is being advised by Goldman Sachs and coal miner Weglokoks SA, which is wholly owned by the Treasury and holds a 4.98% stake.
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.
