KT, the second largest telco in South Korea,  has opened up 100,000 Wi-Fi access points (APs) as part of its participation in a government-led program which will improve the public’s access to free Wi-Fi-based connectivity.  According to the Korea Times the operator has also pledged to enhance Wi-Fi network equipment in subway trains across the country.

“Aiming at reducing people’s telecom (i.e. broadband Internet access) expenses, we have worked on opening 100,000 Wi-Fi APs and improving the quality of Wi-Fi networks inside subway trains,” said Park Hyun-jin, vice president of KT Mobile’s business department. “We will come up with more measures to further cut household telecom expenses and expand benefits for our subscribers.”

With the government’s ‘Public Wi-Fi 2.0’ policy seeking to improve Wi-Fi APs nationwide, KT has said that the bulk of its newly opened hotspots are at busy locations, such as shopping malls, bus stations, subway stations and tourist sites. The hotspots can be accessed by both KT mobile subscribers and those that are not signed up to the cellco’s services, though the latter users are required to provide personal information (such as an email address, phone number, gender and age) in order to take advantage of free Wi-Fi for one hour.

Alongside its expansion of free Wi-Fi APs, KT has begun work on improving network equipment to provide faster and more stable wireless broadband connectivity. To that end, it is reportedly replacing old Wi-Fi network devices, which are based only on WiBro technology (the Korean variant of WiMAX), on subway trains with new hybrid devices that support both WiBro and LTE technologies. KT has said it expects to first complete the replacement for subway trains on lines 1 to 8 in Seoul, before expanding upgrade works nationwide by the end of this month.

KT models show promotion materials for the Giga-WiFi and LTE networks ………………………………………………………………………………………………..

Over one year ago, KT introduced its GiGA WiFi 2.0 that will provide network speeds twice as fast as the previous version. With the world’s first Wi-Fi 2.0 technology, the nation’s second-largest telecom company said it will soon be able to upgrade maximum Wi-Fi speed to 3.4 gigabits per second (Gbps).

The Wi-Fi 2.0 network adopted “multi-user, multiple input and multiple output” technology to provide faster speeds to all users simultaneously connected to a network, KT said. It has also applied the “wireless intrusion prevention system” to block unauthorized access points and devices.
KT also said it has provided more than 200,000 public Wi-Fi access points nationwide of which 100,000 were announced this past Friday.

References:

http://www.koreatimes.co.kr/www/common/vpage-pt.asp?categorycode=133&newsidx=234602

https://www.telegeography.com/products/commsupdate/articles/2017/08/14/kt-opens-up-access-to-100000-wi-fi-hotspots/

http://www.koreatimes.co.kr/www/tech/2017/07/693_210108.html

As we’ve previously reported, Sprint is exploring various M &A options, including a merger with rival wireless carrier T-Mobile US Inc as well as a tie-up with cableco/ MSO Charter Communications Inc.  Japan’s SoftBank Group Corp owns approximately 80% of the company.

“We’ve had sufficient conversations with several parties and soon we’re going to start making decisions,” Sprint CEO Marcelo Claure said on a conference call Tuesday (see Reference 1. below for the replay) after the company reported results for the three months ending June 30.  The company achieved net income of $206 million, compared to a loss of $302 million one year earlier.  This was the first time in three years Sprint did not have a loss for any quarter.  However, the positive net income was achieved via cost cutting.  Sprint reported almost $370 million of combined year-over-year reductions in cost of services and selling, general and administrative expenses.

Sprint is in the middle of a turnaround plan and has sought to strengthen its balance sheet to compete in a saturated market for wireless service.  Although Sprint has cut costs, analysts have said the company is highly leveraged.  While its customer base has expanded under Mr. Claure, growth has been driven by heavy discounting.  It recently offered free wireless service (including unlimited data) for one year to new subscribers.  Sprint’s CEO had previously hinted that the  #4 U.S. wireless carrier doesn’t have the necessary funds to invest in 5G infrastructure, which gives more impetus to some type of M&A deal if Sprint is to survive.

A person familiar with the matter told Reuters that SoftBank CEO Masayoshi Son is considering making an acquisition offer for the cable company to combine it with Sprint as early as the end of August. The deal would entail SoftBank buying the Sprint shares it does not already own, the Reuters source said.

“The talks with T-Mobile have been encouraging, the talks with other partners have been encouraging,” Mr. Claure said. “Everybody has shown a high level of interest in evaluating Sprint as a potential merger partner,” he added.

The Wall Street Journal reported  (on line subscription required) that the offer being considered by Sprint’s chairman and SoftBank founder, Masayoshi Son, would be to form a new publicly traded entity that would use SoftBank money to buyout shareholders of both Sprint and Charter at a premium. The transaction would be funded with roughly half cash and half stock. The deal would result in SoftBank controlling the combined company.

SoftBank has already lined up financing from at least three banks to fund the deal, according to people familiar with the matter. One of them cautioned that it could still take several weeks or more to reach an agreement with either company.

Mr. Claure said a deal with T-Mobile might be the preferred option, but it would be tougher to get past antitrust regulators in Washington. Sprint and T-Mobile held merger talks in 2014 but backed down in the face of regulator opposition.

“If you were to merge with another wireless carrier, the synergies are enormous. I mean, this is a scale business, and today you need to operate two competing networks to offer the same service, having half the amount of customers that AT&T and Verizon have,” Mr. Claure said.

A Charter deal poses its own hurdles, particularly since the company said Sunday that it isn’t interested in buying Sprint. Mr. Claure said Tuesday that Sprint didn’t offer to sell itself, so he was “surprised to see Charter’s announcement.”

Were Sprint to go it alone, the results it reported on August 1st show it has a rough road ahead. The carrier drew praise from analysts for posting its first quarterly profit in three years—$206 million compared with a loss of $302 million a year ago—but revenue fell 4.5% to $8.2 billion and it added fewer customers than rivals. While Sprint started investing more money in network improvements, its quarterly profit came primarily from cost-cutting.

The company said it had 88,000 postpaid phone additions during the quarter, the eighth consecutive period of expansion. However, the pace of growth has slowed from a year ago when the company reported 173,000 postpaid additions. Overall, it still suffered a net loss of 39,000 postpaid subscribers (a figure that includes things like tablets and smartwatches.)

Mr. Claure said Sprint will be fine without a deal, but “doing a strategic transaction will always be significantly better than having a stand-alone entity.”

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“The obvious risk in so openly courting one potential suitor after another is that Sprint will increasingly be viewed as damaged goods,” said analyst Craig Moffet in a research note to clients.  “Like an unsold house that has sat too long on the market, an asset that has been shopped too often without success takes on an air of taint.”

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References:

1.  Sprint’s earning call webcast- available on demand requires registration at:

https://event.on24.com/eventRegistration/EventLobbyServlet?target=reg20.jsp&referrer=http%3A%2F%2Finvestors.sprint.com%2FHome%2Fdefault.aspx&eventid=1398551&sessionid=1&key=4DF9602D9C5D5AB1FAC1435DC0A533EA&regTag=&sourcepage=register

2.  Sprint Reports Net Income for the First Time in Three Years with 1st Quarter of Fiscal 2017:

http://investors.sprint.com/news-and-events/press-releases/press-release-details/2017/Sprint-Reports-Net-Income-for-the-First-Time-in-Three-Years-with-First-Quarter-of-Fiscal-2017-Results/default.aspx

3. Earnings Results Presentation:

http://s21.q4cdn.com/487940486/files/doc_financials/quarterly/2017/q1/02_Q1FY17-Slides_Final.pdf

BT has offered to spend up to £600M to connect the final 1M homes and businesses in rural areas of Britain to a broadband connection suitable for most needs. The telecom company said every home and business in the UK would have a broadband speed of at least 10 megabits per second (Mbits/s), fast enough to stream movies, video conference and browse the web.

Broadband endpoints will either be connected via the Openreach network through fiber-optic cables, a network of copper lines via xDSL, or through the fixed broadband wireless system, where connections use radio and, in some cases, satellite signals.

BT’s plan is for 99% of the UK population to be able to obtain a broadband service of at least 10 Mbit/s by 2020.  That speed meets the needs of a typical household, according to UK regulatory authority Ofcom, but is less than the 2015 FCC broadband speed minimum of 25M bit/s (downstream).

About 93% of the UK population can already access a service of at least 24 Mbit/s, according to the UK government, but there has been concern about a growing “digital divide” as rural communities miss out on the broadband revolution.

The government said it was weighing BT’s proposal against a regulatory approach. “We warmly welcome BT’s offer and now will look at whether this or a regulatory approach works better for homes and businesses,” said Culture Secretary Karen Bradley in a weekend statement. “Whichever of the two approaches we go with in the end, the driving force behind our decision making will be making sure we get the best deal for consumers.”

Actual network construction is not due to finish until late 2021 or 2022, because of work on the rollout of fixed network technologies.

The UK government said rollout would take longer under a regulatory approach but highlighted the pricing implications of BT’s plan for rivals and broadband consumers.

“It is also proposed that BT would fund this investment and recover its costs through the charges for products providing access to its local access networks,” it said. “The approach to recovering these costs will be considered in Ofcom’s current wholesale local access review.”

Gavin Patterson, CEO of BT, said:“  We are pleased to make a voluntary offer to deliver the Government’s goal for universal broadband access at minimum speeds of 10Mbps. This would involve an estimated investment of £450m — £600m depending on the final technology solution.”

At the top end of this range, the investment would equal about 2.5% of BT’s revenues in its last fiscal year (to end-March 2017) and about 17% of overall capital expenditure across the Group.

BT said it would look to recover the cost of its investment by leasing the rural networks to its rivals. The offer will also be reflected in Ofcom’s current review of how to regulate the market for super fast, fiber-based networks of the future.

Capex soared by about £3.5 billion ($4.6 billion) at BT last year, largely because of spending on broadband roll outs.  BT is planning several major investments in the coming years: it plans to extend all-fiber networks to around 2 million UK premises by 2020, and connect another 10 million homes and businesses to a xDSL technology called G.fast, which boosts connectivity speeds over last-mile copper loops. (See BT to Cover 2M Homes With FTTP in $8.7B Plan.)

Earlier this month, BT CEO Patterson said he was considering the viability of a much more ambitious fiber roll out that would benefit around 10 million premises by 2025. (See BT Rejigs Consumer Biz as Profits Hit by £225M Italy Payout.)

He has also indicated that BT will participate in an upcoming auction of airwaves that could be used to support new 5G services. Operators made crippling payments for spectrum licenses during previous auctions, although experts do not expect a 5G auction to generate a similar windfall.

References:

https://www.ft.com/content/a4ba67a4-73b0-11e7-aca6-c6bd07df1a3c

http://www.lightreading.com/regulation/bt-offers-to-spend–gb-pound-600m-on-rural-broadband/d/d-id/735011?

https://www.bloomberg.com/news/articles/2017-07-30/bt-pitches-788-million-plan-for-faster-u-k-rural-broadband

https://www.techrepublic.com/article/british-telecoms-778m-broadband-investment-could-improve-remote-work-for-rural-uk-workers/

http://www.businessinsider.com/r-bt-floats-600-million-pound-plan-to-push-broadband-into-remote-corners-of-uk-2017-7

http://www.itproportal.com/news/bt-unveils-600m-scheme-to-bring-broadband-to-every-rural-uk-home/

J.D. Power Report Highlights:

Enterprises with 500 or more employees are more likely to be satisfied with their telecom service, according to a report from J.D. Power, which sees the small- to medium-size business market as a growth opportunity for telcos.  Medium-size businesses had an average satisfaction score of 787, J.D. Power said in a press release.

The J.D. Power report, which grades larger telecoms and cable companies, gives Verizon and AT&T the highest marks.

Verizon exceeded the average satisfaction level and topped the rankings for all three categories of businesses – small, mid-size and large. The company’s overall scores were 762, 816 and 821, respectively, for small, mid-size and large companies.

AT&T came in second place and exceeded the average score in the mid-size and large categories, with scores of 792 and 820, respectively. But Cox came in second among the smallest businesses, with a score of 744. AT&T followed at 730.

Cox was the only cableco to have a score above the average in any of the three categories. Among the telcos, CenturyLink also failed to have a score above the average in any category – a situation that company will want to address whenever its merger with Level 3 closes and the company becomes the most enterprise-focused of all the major service providers.

J.D. Power attributes the higher satisfaction level of the larger businesses to several factors, including higher satisfaction levels with communication, cost of service and customer service. Those companies with an account representative assigned to their business have notably higher overall satisfaction, researchers noted – and larger companies are more likely to have account representatives assigned to them.

Service providers in general have been emphasizing the business market in recent years and that emphasis seems to be yielding positive results. Scores for all the categories of companies were higher than for a similar study that J.D. Power conducted in 2015. Scores for 2015 were 783 for large companies, 747 for mid-size companies and 715 for small companies.

The business market has been a particularly strong focus for cable companies, which do not have wireless businesses but do have modern fiber network infrastructure. The J.D. Power results suggest cable companies still have a way to go in gaining business customers’ loyalty and trust, however.

The J.D. Power results suggest opportunities for service providers that can excel at serving SMBs – and tier two service providers such as Windstream  and Frontier have been focusing on that market for a long time.  So was TW Telecom (which was acquired by Level 3, which is in turn being acquired by Century Link) and XO Communications which was acquired by Verizon.

Tier two telcos were not included in the J.D. Power report.

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Telecom ARPU Falling in Every Region

Closing Comment:

Perhaps, the negative growth in telecom is causing telcos to merge to acquire scale and to go into other businesses (like Orange investing in on-line banking instead of its core telecom business).

Fierce Telecom reported on July 24th:

CenturyLink, Frontier, Windstream suffer worst 3 quarters in history

CenturyLink, Frontier and Windstream have continued to see pressure over the past three quarters as shares at each of these companies dropped dramatically due to issues at each company.

“Shares in the wireline ILEC/RLEC space (CenturyLink, Frontier, Windstream) have endured the worst three consecutive quarters in industry history, with shares plummeting an average of -20% in 4Q16, -21% in 1Q17, and -24% in 2Q17 (we note another -5% in 3Q17 thus far), mostly from Frontier and Windstream as CenturyLink shares are being supported by the Level 3 acquisition,” Cowen said in a research note.

Overall, the three companies face the industry-wide challenge of balancing strategic service growth with ongoing legacy service declines and losing market share to cable operators.

Additionally, each of these companies has been dealing with specific headwinds in their businesses. Frontier has been challenged by integrating the properties it purchased from Verizon in California, Texas and Florida, while CenturyLink is dealing with a raft of lawsuits over alleged consumer fraud issues and Windstream is seeing declines in its legacy TDM-based wholesale business sector.

References:

J.D. Power: Business Telecom Satisfaction Highest for Largest Companies, Highlighting SMB Opportunity

http://www.jdpower.com/sites/default/files/2017108.pdf

http://www.prnewswire.com/news-releases/big-satisfaction-gap-exists-between-large-and-small-business-internet-and-phone-line-customers-jd-power-finds-300491000.html