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Deutsche Telekom suggests upcoming towers partnership

Karim Hussami

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Deutsche Telekom suggests upcoming towers partnership (1)

“Because everybody does something, this is exactly why I’m not doing it,” Tim Hoettges, Chief Executive Officer of Deutsche Telekom said, referring to the current trend of telecoms operators selling off tower assets for sizeable sums of money. “It might be right that you have to monetise your towers to deleverage your balance sheet… [but] we don’t need that today,” he said.

Deutsche Telekom will not part with its tower assets, despite recently reaching` a deal of that nature in the Netherlands, but it could look to float its passive infrastructure business or seek out a tower partnership.

Orange CEO Stéphane Richard recently named Deutsche Telekom as an ideal partner in the towers space; while the telco wants to retain control of its own towers, that could mean co-control with another big operator, Richard explained.

There were no formal talks happening with Deutsche Telekom – or Vodafone, Orange’s other perfect partner – when the CEO made the revelation.

Deustche Telekom appears to be following a similar strategy to Orange.

“It always takes two to tango,” said Hoettges, speaking at the German incumbent’s 2020 results call on Friday. “We might have a partner, where we have synergies and a value-enhancing story,” he said, a comment that doubtless caught the attention of executives at the operator’s French peer.

Passive infrastructure assets

Telefonica is one of the big names selling off towers, and it was honest about the fact that debt reduction was one of the main drivers of the €7.7 billion deal it inked with American Tower in January.

But for Deutsche Telekom, towers and their growing value are a strategic asset, “not just selling something and getting the money,” as Hoettges put it.

The operator brokered a deal for towers partnership in January, to combine its towers in the Netherlands with those of Cellnex and simultaneously create a fund in partnership with the towers firm to invest in passive infrastructure assets.

“This is a classic DT deal. We create optionalities for value-enhancing businesses outside…of our strategic envelope,” he said.

Benefits of towers partnership

As for the benefits that comes out of sharing networks, they include: the increase in the speed of opening new fields and enables the subscribers to provide network coverage to wide areas in a faster way with lower CapEx potential.

Operators also have chance to satisfy their customers with the quicker network coverage, as well as operators will start making money as of the first day by removing the field installing process.

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Journalist for 7 years in print media, with a bachelor degree in Political Science and International Affairs. Masters in Media communications.

Telecoms

SK Telecom to be split into two, holding company to oversee non-mobile biz

Karim Hussami

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SK Telecom to be split into two

South Korea’s largest mobile carrier SK Telecom Co. will split into two separate entities. It said it will create a new holding company for its non-mobile subsidiaries to accelerate growth in promising fields and tighten its grip on its chipmaking unit, SK Hynix Inc.

The horizontal spin-off is aimed at increasing enterprise and shareholder value, the operator said. The plan will leave the surviving company focused on its telecom business (tentatively named ‘AI & Digital Infra Company’) and the spin-off company taking over the memory business and new ventures (tentatively named ‘ICT Investment Company’).

Surviving entity

After the spin-off, SK Telecom will be divided into a surviving entity that will succeed its telecom business as a mobile network operator (MNO), and a new entity that is essentially an investment firm to seek new opportunities in non-telecom sectors.

The telecom operator’s spinoff plan had been widely expected after CEO Park Jung-ho said in a shareholders meeting last month that the company would overhaul its governance structure amid a slump in its share price in recent years.

SK Telecom’s share price had been in stalemate at the end of 2020 from the previous year at 238,000 won.

While SK Hynix has made active investments in the past, such as acquiring Intel’s NAND memory business in October last year for US$9 billion, its parent SK Group wants to tighten its grip on the chipmaker and help it aggressively expand investments.

The remaining entity will focus on the mobile carrier’s traditional telecom business and expand to new sectors, such as artificial intelligence and data centers.

The mobile carrier said it will decide on the details of the spinoff within the first half of this year.

Areas of interest

SK Telecom’s surviving entity will focus on artificial intelligence (AI) and digital infrastructure in addition to its current mobile and network businesses.

The entity will have SK Broadband Inc., the Internet service provider, as a subsidiary and will continue the current telecom and IPTV businesses.

The surviving company will also expand into a number of new areas such as cloud, data center and AI-based subscription segments. 

No merger

The latest announcement comes as the mobile carrier’s non-mobile subsidiaries have rapidly grown to account for 24 percent of the company’s total operating profit last year.

The subsidiaries have also formed global partnerships to boost their presence in the local market, with T Map Mobility joining hands with U.S. ride-hailing firm Uber Technologies Inc. to form a taxi-hailing joint venture in South Korea.

11Street has teamed up with Amazon.com Inc. with plans to offer the U.S. retail giant’s products to South Korean consumers.

SK Telecom is also preparing initial public offerings for app market unit ONE Store as well as security firm ADT Caps Co.

While analysts have speculated that the corporate revamp would eventually lead to a merger between SK Inc., the holding company for SK Group, and SK Telecom’s new holding company to elevate the status of SK Hynix in the conglomerate, the mobile carrier rejected the claim.

“There are no plans for a merger,” SK Telecom said in a statement.

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Italy to increase EU broadband funding by 60 percent

Karim Hussami

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broadband

Italy aims to spend almost 7 billion euros ($8.33 billion) in European recovery funds on ultra-fast networks, up to a 60 percent increase from a previous goal, as ministers lay out alternatives to a long-delayed single national broadband plan.

The total funds for boosting digitalization amount to some 49 billion euros, up from a previous 46.3 billion euros, including investments in public administration and grants for small and medium-sized companies, one of the sources added on condition of anonymity.

The government of Mario Draghi, which took office in February, is revising a national Recovery and Resilience Plan (RRP) that would entitle it to some 206 billion euros by 2026 from an EU program to help nations hardest hit by coronavirus.

Rome planned to raise the amount spent on 5G and broadband satellite infrastructure to 6.7 billion euros from 4.2 billion euros earmarked in January by the previous government.

In addition, the government is also devising alternatives to a previous plan to merge the fixed-line access network of former monopoly Telecom Italia (TIM) with those of smaller rival Open Fiber.

TIM has repeatedly said it would not agree to owning less than 50 percent of any combined entity – something that could trigger regulatory issues.

Under this project, TIM would not fold its primary network – connecting switching center to street cabinets – into the venture, preventing the former phone monopoly having a majority stake.

Draghi’s ministers are discussing an alternative plan to use EU funds to roll out fast broadband networks across Italy’s 20 regions using the best technologies available, including Fixed Wireless Access (FWA) systems, the sources said.

Italy ranked fourth to last in the European Union for digital competitiveness in 2019, the Digital Economy and Society Index (DESI) compiled by the European Commission found.

Open Fiber is jointly controlled by Italy’s biggest utility Enel and state lender Cassa Depositi e Prestiti (CDP). CDP is TIM’s No. 2 shareholder behind France’s Vivendi

Both options under discussion leave the door open to co-investment schemes allowing operators to build their own networks in some areas and have commercial agreements elsewhere.

TIM has repeatedly said it would not agree to owning less than 50 percent of any combined entity – something that could trigger regulatory issues.

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Japan’s Toshiba president steps down amid acquisition talks

Associated Press

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Japan's Toshiba president steps down amid acquisition talks

The president of Toshiba Corp. stepped down Wednesday, a week after the the Japanese technology and manufacturing giant said it was studying an acquisition proposal from a global fund where he previously worked.

Nobuaki Kurumatani tendered his resignation at a board meeting, and the board accepted, effective Wednesday, Tokyo-based Toshiba said in a statement.

Kurumatani headed the Japan operations of CVC Capital Partners, which proposed the acquisition last week, before taking his post as chief executive of Toshiba in 2018.

Some questions had been raised, both within and outside Tokyo-based Toshiba, about Kurumatani leading the board discussions on the acquisition.

Kurumatani did not attend the online news conference, where two board members explained his resignation and fielded questions.

A company official read his statement that said the resignation was for personal reasons.

“Toshiba is a wonderful company and is Japan’s precious wealth. I love Toshiba deeply,” Kurumatani said in his message.

The CVC deal is estimated to be worth 2 trillion yen ($18 billion) and will turn Toshiba private. Toshiba had said it was giving it “careful consideration.” Osamu Nagayama, a board member, told reporters the proposal lacked details and could not yet be evaluated.

Trading in the company’s shares was suspended when the news hit last week. Shares of Toshiba, whose sprawling business includes making elevators and railways, shot up on the CVC news and have been trading at nearly 5,000 yen ($46).

CVC is a European private equity firm, based in Luxembourg, which has committed nearly $162 billion in funds, managing more than 300 investors. It has declined to comment on the acquisition proposal or the president’s resignation.

But speculation has been growing other funds may offer better prices.

Kurumatani will be replaced as chief executive and president by his predecessor, Satoshi Tsunakawa, who remained on the board, first as COO and currently chairman.

Tsunakawa oversaw some of the recent financial challenges at Toshiba. Before becoming CEO, in his previous stint from 2016, he had headed Toshiba’s medical systems business, now a group company of Japanese camera and equipment maker Canon.

Tsunakawa told reporters Toshiba was ready to embark on growth as “an infrastructure services company.” He promised to work in the interests of shareholders, employees and society overall, and continue to strengthen governance.

“We stand behind the principle of ‘Do the right thing,’ ” he said, delivering the motto in English.

Toshiba, founded in 1875, was long revered as one of Japan’s respected brands, developing the nation’s first radar and microwaves, electric rice cookers and laptop computers.

It also invented flash memory, the ubiquitous computer chips that store and retain data for digital cameras, cell phones and other gadgets. Toshiba no longer makes laptops, and it has sold its computer chips division.

The company’s fortunes began to crumble over its heavy investment in nuclear power. After the March 2011 nuclear disaster in Fukushima, costs of the business ballooned because of growing safety concerns. Some nations are turning toward sustainable energy.

Toshiba also had massive losses from the nuclear power operations of U.S. manufacturer Westinghouse, which Toshiba acquired in 2006. Westinghouse filed for bankruptcy protection in 2017.

In Japan, Toshiba is decommissioning nuclear plants, including the one in Fukushima, where the tsunami 10 years ago set off multiple reactor meltdowns.

In 2015, Toshiba acknowledged it had been systematically falsifying its books since 2008, as managers tried to meet overly ambitious targets. An outside investigation found it had inflated profits and hid massive expenses.

TOKYO (AP) — BY Yuri Kageyama

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