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Regulators must look past politics when banning Huawei, report warns

Inside Telecom Staff

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Regulators must look past politics when banning Huawei, report warns

The exclusion of Chinese tech companies from Western countries’ fifth generation rollout efforts due to alleged security concerns will negatively impact the progression of the technology for years to come, a recent report highlighted. 

According to a new report by global tech advisory firm ABI Research, phasing out vendors could hamper worldwide deployment by several years and overload network operators with bank breaking costs to replace already existing infrastructure.

“Our research shows that banning Huawei and ZTE from 5G deployments and restricting their access to silicon and semiconductor supply chains will have severe implications on economic performances. Furthermore, banning these Chinese vendors will hamper 5G and 6G R&D,” Leo Gergs, Research Analyst for 5G Markets at ABI Research, said in the report.

Gergs explained that banning Huawei and ZTE not only imposes additional costs for operators having to replace Huawei equipment from existing network deployments but also restricts the vendor landscape, reducing the degree of competition within the market.

“This imperfect competition inevitably decreases downward pricing pressure, forcing network operators to pay higher costs for network equipment than if they were under perfect competition conditions,” he added.

Matters have even escalated further.

Reuters reported that the outgoing Trump administration notified Huawei suppliers, among them chipmaker Intel, that it is revoking certain licenses to sell to the Chinese company and intends to reject dozens of other applications to supply the Chinese tech giant.

This restriction can easily prove to do more harm than good, especially for the American economy, as Huawei plans to start manufacturing their own chipset in a newly built factory in Shanghai, the ABI report explained.

“Even though Huawei will produce 5G chipsets for its products only, Huawei’s long-term ambitions will be to serve the entire Chinese market,” Gergs highlighted, adding that Chinese demand for U.S. chipsets will continuously decrease.

“American semiconductor companies generate a substantial portion of their revenues from China. The impending demand erosion will impact the U.S. semiconductor industry severely,” the report further emphasized.

It is also worth mentioning that phasing out these companies can result in negative implications on 5G standardization.

The report stressed that Huawei and other telecommunications companies are among the top contributors to the 3rd Generation Partnership Project (3GPP) – which is a program that unites telecom companies to develop protocols for mobile telecommunications.

Gergs noted that stripping Huawei from the opportunity to monetize this R&D investment will cause Huawei to reconsider and decrease their efforts. As a result, rollout, and evolution of 5G will suffer not only on a national level but also globally.

“Regulators need to be very careful and avoid taking a politically motivated decision on economic and technology matters,” Gergs warned. “To ensure that 5G can unveil its true transformative effect to the world, regulators and political bodies need to prevent the 5G rollout from becoming a bargaining chip for geopolitical interests.”

Thus, regulators and politicians need to fully access the consequences of what’s a stake when deciding to ban these vendors and look at the matter not only from a political perspective, but also from an economic and technological viewpoint.

“If certain network equipment were found to be insecure from a technology point of view, a healthy and unrestricted economic market would naturally move away from these infrastructure components. This would happen without the political intervention, which is harmful to the economy and will jeopardize the immense value that 5G and future generations of cellular connectivity will bring to societies around the globe,” the report concluded.

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Deutsche Telekom suggests upcoming towers partnership

Karim Hussami

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Deutsche Telekom suggests upcoming towers partnership

“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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MTN faces rocky situation in Syria, hampering Middle East exit

Inside Telecom Staff

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MTN faces rocky situation in Syria, hampering Middle East exit

South African operator MTN is facing a rocky situation in Syria, as the company was placed under a judicial guardianship following a court battle that went in favor of the country’s telecoms regulator.

The Syrian Telecommunications and Post Regulatory Authority had previously accused the provider of mismanagement and violations of its licensing contract. According to Reuters, the state had claimed that the alleged violations deprived it of revenue, while MTN denied the allegations and said last week that it intended to appeal.

The regulator filed a lawsuit against the South African courier before the administrative court of Damascus seeking interim measures against MTN’s Syrian operations. The move cripples the company’s exit from the Syrian market, as it was reportedly hoping to settle a deal worth $65 million, amounting to 75 percent of MTN’s Syrian unit, Reuters reported.

It is worth mentioning that the administrative court of Damascus appointed MTN Syria minority shareholder Tele Invest as its guardian, which was primarily tapped to become the buyer of the Group’s 75 percent stake in its Syrian office.

The judicial guardian is responsible for managing its day-to-day operations.

The sale to TeleInvest is meant to be part of MTN Group’s plan to exit the Middle East, corresponding with its new strategy to focus on its core African markets in the medium-term future.

MTN Group highlighted in a statement late last week that it “strongly disagrees with the allegations made before the court” — which have yet to be made known — as well as the decision and intends to file an appeal. In addition, the group is also considering other appropriate steps to take in light of the ruling.

According to the provider, in the six months to June 2020, MTN Syria contributed 0.7 percent to the group’s reported earnings before interest, tax, depreciation and amortization. At that time, the net assets attributable to MTN Syria in the MTN Group accounts had been written down to the estimated recoverable amount of $80 million.

Reuters had also reported that MTN’s operations in the Middle East have been the center of wide controversy, with allegations over its use of bribes to win a 15-year operating license in Iran, while, in parallel, aiding militant groups in Afghanistan; MTN, however, denies all the allegations.

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STL signs record high $100 million deals across MEA

Inside Telecom Staff

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STL

India-based digital network integrator Sterlite Technologies (STL) announced on Monday that it has renewed and extended deals with leading telecoms providers in the Middle East and Africa region (MEA).

According to a company statement, the deals are worth more than $100 million, taking STL’s order book to a record high, while exhibiting the company’s unwavering focus on building future-ready digital networks within the region.

“STL is building solutions to empower its customers in the MEA region for optical connectivity and network software, enabling FTTH and 5G deployments.  We are proud to be a part of the progress of the Middle East and Africa. With our deep technology expertise and growing talent base, we will continue to deliver on the full potential of digital networks, providing enhanced experiences to consumers and businesses alike,” speaking on the deals, Sandeep Girotra, Global Sales Head, STL, said in a statement.

The global pandemic has pushed many telcos to heavily invest in building digital networks to be able to meet the rising demand for connectivity from people remaining indoors due to lockdown measures. STL has capitalized on this and expanded its presence in the region with their fully 5G ready Opticonn and Software Solutions.

“Our unique end-to-end solutions enables customers to build 5G hyperscale networks at a fast pace with lower long-term Total Cost of Ownership (TCO). These multi-years, multi-million-dollar deals range from optical connectivity solutions to network solutions,” the company said.

According to STL, one of the large-scale deals has been signed with a leading telco in the UAE to advance its 5G, 4G and FTTX network infrastructure through STL’s Opticonn Solutions, including onshore logistics and warehousing. Another multi-million-dollar digital transformation partnership has been formed with the leading telecommunications group in North Africa.

The unnamed telco will deploy STL’s digital billing solutions to 7 million subscribers across the region.

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