Vodafone Idea (Vi) is worth ZERO; needs additional liquidity support from lenders
While announcing its FY23 earnings, UK telecom company, Vodafone Plc said the Group’s carrying value of investment in Indian listed firm Vodafone Idea (Vi) is Zero. Also, that the Group is recording no further losses related to Vi. The troubled-laden Vi is still in need of additional liquidity and plans to raise funds going forward. In its FY23 report, Vodafone Plc said, “VIL remains in need of additional liquidity support from its lenders and intends to raise additional funding.”
Vodafone seems to be backing away from Vi. The business needs more money, that Vodafone is certainly not willing to provide, and that zero valuation indicates that it will put no more effort into saving it. There are significant uncertainties in relation to Vi’s ability to make payments in relation to any remaining liabilities covered by the mechanism and no further cash payments are considered probable from the Group as at 31 March 2023, it added.
“VIL [Vodafone Idea Ltd] remains in need of additional liquidity support from its lenders and intends to raise additional funding. There are significant uncertainties in relation to VIL’s ability to make payments in relation to any remaining liabilities covered by the mechanism and no further cash payments are considered probable from the Group as at 31 March 2023,” Vodafone said, in the notes to its consolidated financial statements for the 2023 financial year.
Furthermore, Vodafone said, “the carrying value of the Group’s investment in VIL is nil and the Group is recording no further share of losses in respect of VIL.”
It should be noted that Vi is the only Indian telco that has NOT yet deployed 5G services. Since the launch of 5G last October, Reliance Jio’s 5G services have become available in more than 400 cities and towns, while Airtel’s 5G services can be accessed in more than 500. Jio plans to provide all-India 5G coverage by December, with Airtel aiming for blanket availability by March next year.
Recently, Vodafone Idea complained to the Telecom Regulatory Authority of India (TRAI), accusing its rivals of predatory 5G pricing. Although it has been shedding customers for years, there can be little doubt that losses have accelerated since the launch of 5G. Vodafone Idea had lost about 7 million in the four months leading up to 5G’s launch in October last year. In the four months following the introduction of 5G services by Airtel and Jio, its losses soared to about 10 million.
Vodafone Idea is known to have a significant percentage of high-spending customers who have remained loyal to it. These customers typically show limited interest in lower tariffs, but many will have been drawn to 5G services available only from other telcos, with Vodafone Idea’s 5G plan nowhere close to fruition. Airtel and Jio, accordingly, are racing to build 5G networks and attract as many Vodafone Idea subscribers as possible.
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When Vodafone and Idea Cellular entered into an merger agreement in 2017, the parties had agreed to a mechanism for payments between the Group and Vodafone Idea, pursuant to the difference between the crystallisation of certain identified contingent liabilitiesin relation to legal, regulatory, tax and other matters, and refunds relating to Vodafone India and Idea Cellular. Cash payments s or cash receipts relating to these matters must have been made or received by Vi before any amount becomes due from or owed to the Group.
Hence, any future future payments by the Group to VIL as a result of this agreement would only be made after satisfaction of this and other contractual conditions. Thereby, the UK-based telco said, “Vodafone Group’s potential exposure to liabilities within VIL is capped by the mechanism described above; consequently, contingent liabilities arising from litigation in India concerning operations of Vodafone India are not reported.”
Vodafone Plc’s potential exposure under this mechanism is capped at ₹64 billion n (€719 million) following payments made under this mechanism from Vodafone to VIL, in the year ended 31 March 2021, totalling ₹19 billion (€235 million).
In FY23, Vodafone Plc’s revenue increased by 0.3% to €45.7 billion driven by growth in Africa and higher equipment sales, offset by lower European service revenue and adverse exchange rate movements. While adjusted EBITDAal declined by 1.3% to €14.7 billion due to higher energy costs, and commercial underperformance in Germany.
References:
https://telecoms.com/521728/vodafone-sees-no-remaining-value-in-indian-operation/
Big 5G Conference: 6G spectrum sharing should learn from CBRS experiences
Spectrum sharing is a methodology that allows multiple wireless networks to access the same frequency band dynamically and efficiently. It can reduce the spectrum scarcity issue and enable more wireless applications and services, but also requires careful coordination and management to avoid interference and ensure fair access.
Examples of spectrum sharing techniques include Licensed Shared Access (LSA), which uses a regulatory framework to permit licensed users to share spectrum with incumbent users, Dynamic Spectrum Access (DSA), which enables wireless networks to sense and adapt to the spectrum environment, and Spectrum Aggregation, which combines multiple spectrum bands or channels into a larger bandwidth. LSA can be used by mobile operators to access spectrum that is not used by TV broadcasters, DSA can be employed by cognitive radio networks to detect and avoid channels occupied by primary users, Spectrum Aggregation can be used by 5G networks for coverage and speed.
The wireless telecom industry has to take a “concerted look at revolutionizing spectrum sharing” and to take a closer look at the lessons learned from CBRS spectrum sharing [1.], which took about a decade to be successfully implemented, according to Andrew Thiessen, chair of the spectrum working group at the Next G Alliance who was speaking at the Informa Big 5G conference panel session in Austin, TX. He opined that the industry needs to be pushing ahead with spectrum sharing technologies and techniques at speeds similar to the innovations that are being applied to smartphones.
Note 1. Citizens Broadband Radio Service (CBRS), which allows for dynamic spectrum sharing between the Department of Defense and commercial spectrum users. The DOD users have protected, prioritized use of the spectrum. When the government isn’t using the airwaves, companies and the public can gain access through a tiered licensing arrangement. This means the DOD can use the same spectrum for its critical missions while companies can use it for 5G and high-speed Internet deployment.
“Innovative spectrum sharing frameworks are key to unlocking additional bandwidth for wireless connectivity across the country,” Deputy Assistant Secretary of Commerce for Communications and Information April McClain-Delaney said. “The success and growth of the CBRS band shows the promise of dynamic spectrum sharing to make more efficient use of this finite resource.”
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Joe Kochan, executive director of the National Spectrum Consortium, agreed that spectrum sharing for 6G does present challenges as it faces a wide range of commercial users, federal users and non-federal users, as well as different types of technologies, such as radar. That elicits a need for the industry to build new tools and to get more creative about how that spectrum can be shared.
The Biden administration’s National Spectrum Strategy will “lay the framework” to get everything moving, said Derek Khlopin, deputy associate administrator, spectrum planning policy, at the NTIA. “We’re tech and application-neutral. But the better we understand, the better we can plan.” he explained.
“We’ve started listening, to be frank,” Khlopin said. “But it’s not necessarily the role of the government to figure all of this out. We need help, so we’re working closely with industry, with academia and others. Spectrum sharing is here to stay between federal and non-federal users,” he added.
Khlopin was asked about NTIA’s exploration of the 7GHz band and its potential for 6G. “It’s a very complicated band,” he said. “There’s a lot there … We’re aware of the industry interest there.”
Thiessen said one challenge for 6G will be a lack of contiguous spectrum. He believes that 6G will likely be made up of a lot of pieces of spectrum, and those pieces will likely need to be targeted to specific use cases. However, that presumption is premature as neither 3GPP or ITU-R WP5D has started any serious work on defining 6G specifications. That is why all the buzz about 6G is irrelevant at this time.
References:
https://www.linkedin.com/advice/1/how-can-wireless-network-coexistence-interference
https://ntia.gov/blog/2023/innovative-spectrum-sharing-framework-connecting-americans-across-country
https://www.lightreading.com/6g/spectrum-sharing-will-be-key-to-unlocking-6g/d/d-id/784884?
Vodafone tests 5G Dynamic Spectrum Sharing (DSS) in its Dusseldorf lab
GSMA: Closing the digital divide in Central Asia and the South Caucasus
The GSMA has published a report – Closing the digital divide in Central Asia and the South Caucasus – which affirms that mobile technology is fundamental to expanding connectivity across the region, with over 40% of the population living in rural areas where mobile connectivity is the primary, and often only, form of internet access. The report assesses the state of mobile adoption and infrastructure availability in Armenia; Azerbaijan; Georgia; Kazakhstan; Kyrgyzstan; Tajikistan; Turkmenistan; and Uzbekistan.
GSMA Intelligence estimated around 45 million people across the eight countries used mobile internet (as of the date of publication). This represented a significant increase from 14.1 million recorded a decade earlier, though it still leaves around 50 million unconnected. Although lack of coverage was cited as still a challenge in parts of Central Asia, where around 10 per cent of the population in some markets lived in underserved areas, it generally noted the pace of adoption was lagging rollout.
GSMA Intelligence noted collaboration as key to addressing the digital divide in the regions, adding there is a need to “increase digital skills and literacy and improve affordability, in addition to investing in local digital ecosystems and an enabling policy environment that can accelerate growth in local content, services and applications”
The new report was launched to mark the opening of M360 Eurasia 2023, which today welcomed global leaders from the mobile ecosystem and adjacent industries for two days of learning, debate and networking at the Four Seasons Hotel in Baku, Azerbaijan.
“Since the first mobile phone call 50 years ago, our industry has evolved, adapted and advanced the world around us, serving 5.4 billion unique customers. As we enter the era of intelligent connectivity, it feels like anything is possible, but it has also never been more important for us to focus on closing the digital divide. Together we must keep working to build a firm foundation for the next generation of intelligent connectivity and ensure that no one is left behind in our global digital economy,” said Mats Granryd, Director General of the GSMA, on stage for the opening ceremony and keynote.
“I am delighted to welcome the global connectivity community to Baku for M360 Eurasia,” said H.E. Rashad Nabiyev, Minister of Digital Development and Transport for the Republic of Azerbaijan. “As we continue our digital transformation journey in Azerbaijan, we look forward to hearing leaders in mobile and technology explore the latest trends in connectivity and the importance of digital resilience.”
As of April 2023, commercial 5G services were only available in Kazakhstan, Tajikistan and Uzbekistan, though GSMA Intelligence noted activities around the latest generation of mobile technology were ramping more widely.
“Although 5G is on the horizon in several markets in Central Asia and the South Caucasus, the focus for many operators in the medium term is to expand 4G capacity in urban areas and 4G coverage to underserved areas, and accelerate uptake among consumers.”
Closing the Digital Divide in Eurasia:
M360 Eurasia comes to Baku, Azerbaijan as progress to build the digitally powered economy of the future continues in the region, driven by ambitious digital transformation initiatives and a general trend towards greater digitisation.
The new report from the GSMA, which evaluates the connectivity landscape of eight countries1 in Central Asia and the South Caucasus, outlines the digital divide and spotlights ongoing initiatives in the region to close it with recommended action points for stakeholders to accelerate progress.
Other key findings from the report include:
- While 45 million people are now using mobile internet across the eight countries evaluated, a digital divide remains with nearly 50 million unconnected people at risk of missing out on the benefits of mobile internet.
- The adoption of mobile internet services has not kept pace with the expansion of network coverage, resulting in a significant usage gap2. As of 2022, the regional usage gap was widest in Georgia (52%) and Turkmenistan (50%), and lowest in Armenia (33%) and Azerbaijan (31%) versus a global average of 41%.
- While 4G is now the dominant technology in Azerbaijan (59%) and Kazakhstan (62%), 3G still accounts for over 40% of total connections across the region versus a global average of 17%.
- The region’s 5G uptake is still in its infancy with commercial 5G services only available in Kazakhstan, Tajikistan and Uzbekistan as of April 2023. The medium-term focus for operators in the region is to expand 4G capacity in urban areas and 4G coverage to underserved areas.
- While 4G coverage has reached 83% of the population in Central Asia, extending coverage to the last frontier can be costly and complex. This has led to operators increasingly turning to alternate technologies, such as satellite backhaul, and innovative partnerships as a means of closing the digital divide.
- Closing the region’s digital divide will require substantial collaborative actions. To this end, governments and policymakers should implement measures that can attract investment in the deployment of network infrastructure in underserved areas; create innovative digital services to stimulate demand; and address the various non-infrastructure barriers to mobile internet adoption.
M360 Series: Regional focus, global impact:
M360 Eurasia marks this year’s first iteration of the M360 Series. Presented by the GSMA, M360 is a series of global events that unifies the regional mobile ecosystem to discover, develop and deliver innovation that is the foundation to positive business environments and societal change.
The events facilitate inspirational keynotes, engaging panel discussions and insightful case studies across mobile technology and adjacent industry verticals.
To download the report, please click here: Closing the digital divide in Central Asia and the South Caucasus
About GSMA:
The GSMA is a global organisation unifying the mobile ecosystem to discover, develop and deliver innovation foundational to positive business environments and societal change. Our vision is to unlock the full power of connectivity so that people, industry, and society thrive. Representing mobile operators and organisations across the mobile ecosystem and adjacent industries, the GSMA delivers for its members across three broad pillars: Connectivity for Good, Industry Services and Solutions, and Outreach. This activity includes advancing policy, tackling today’s biggest societal challenges, underpinning the technology and interoperability that make mobile work, and providing the world’s largest platform to convene the mobile ecosystem at the MWC and M360 series of events.
References:
GSMA REPORT HIGHLIGHTS PIVOTAL ROLE OF MOBILE TECHNOLOGY IN EXPANDING CONNECTIVITY IN EURASIA REGION
EU wants to build a subsea internet cable in the Black Sea
Since 2021, the EU and the nation of Georgia (previously in the USSR) have highlighted a need to install an underwater (subsea) internet cable through the Black Sea to improve the connectivity between Georgia and other European countries.
After the start of war in Ukraine, the project has garnered increased attention as countries in the South Caucasus region have been working to decrease their reliance on Russian resources—a trend that goes for energy as well as communications infrastructure. Internet cables have been under scrutiny because they could be tapped into by hackers or governments for spying.
“Concerns around intentional sabotage of undersea cables and other maritime infrastructure have also grown since multiple explosions on the Nord Stream gas pipelines last September, which media reports recently linked to Russian vessels,” the Financial Times reported. The proposed cable, which will cross international water through the Black Sea, will be 1,100 kilometers, or 684 miles long, and will link the Caucasus nations to EU member states. It’s estimated to cost €45 million (approximately $49 million).
“Russia is one of multiple routes through which data packages move between Asia and Europe and is integral to connectivity in some parts of Asia and the Caucasus, which has sparked concern from some politicians about an over-reliance on the nation for connectivity,” The Financial Times reported.
Across the dark depths of the globe’s oceans there are 552 cables that are “active and planned,” according to TeleGeography. All together, they may measure nearly 870,000 miles long, the company estimates. Take a look at a map showing existing cables, including in the Black Sea area, and here’s a bit more about how they work.
The Black Sea cable is just one project in the European Commission’s infrastructure-related Global Gateway Initiative. According to the European Commission’s website, “the new cable will be essential to accelerate the digital transformation of the region and increase its resilience by reducing its dependency on terrestrial fibre-optic connectivity transiting via Russia. In 2023, the European Investment Bank is planning to submit a proposal for a €20 million investment grant to support this project.”
Currently, the project is still in the feasibility testing stage. While the general route and the locations for the converter stations have already been selected, it will have to go through geotechnical and geophysical studies before formal construction can go forward.
References:
Why the EU wants to build an underwater cable in the Black Sea
China seeks to control Asian subsea cable systems; SJC2 delayed, Apricot and Echo avoid South China Sea
SEACOM telecom services now on Equiano subsea cable surrounding Africa
Bharti Airtel and Meta extend 2Africa Pearls subsea cable system to India
Google’s Equiano subsea cable lands in Namibia en route to Cape Town, South Africa
Google’s Topaz subsea cable to link Canada and Japan
Altice Portugal MEO signs landing party agreement for Medusa subsea cable in Lisbon
2Africa subsea cable system adds 4 new branches
Echo and Bifrost: Facebook’s new subsea cables between Asia-Pacific and North America
Banned in the U.S., China Telecom Americas launches eSurfing Cloud services in Brazil
China Telecom do Brasil (“CTB”) today announced the launch of eSurfing Cloud services in Brazil. Through on-demand purchases that aim to simplify the process for more targeted service, the new offering provides businesses with the flexibility of accessing public and private cloud services, combined with the security and control of private cloud.
CTB’s eSurfing Cloud services enable enterprises in Brazil to take advantage of the latest cloud technologies, with the added benefit of local support and expertise. With this new offering, businesses in Brazil can optimize their cloud environments, reduce costs, and improve efficiency, all while maintaining high levels of security and compliance. The eSurfing Cloud services in São Paulo will allow customers to connect on a global multi-cloud network of more than nine public cloud nodes, 30 proprietary edge cloud nodes, and more than 200 CDN nodes.
“We are excited to bring our world-class cloud solutions to businesses in Brazil,” said Luis Fiallo, the officer of China Telecom do Brasil. “Our eSurfing Cloud services deliver flexible and scalable solutions that can meet the unique evolving needs of businesses in the region. The launch of this new offering is our continued commitment to helping our customers achieve their business goals and succeed in today’s digital landscape.”
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Brazil is one of the most active cloud markets in Latin America, with high demand for the critical services that connect LATAM to the global market. Cloud adoption in Brazil has increased nearly 40% since 2019 and is expected to grow nearly 19% by 2033. While eSurfing Cloud provides customers with access to public cloud, private cloud, hybrid cloud, and edge cloud, its advantages in cloud-network integration, security, and extensive customization make it the choice digital transformation accelerator for businesses of any size.
About China Telecom do Brasil:
China Telecom do Brasil is the largest subsidiary of China Telecom Americas in Latin America and a leading provider of Internet and cloud computing services in Brazil. With a focus on customer satisfaction, the company delivers reliable, scalable, and secure solutions that enable businesses to connect their networks within Brazil and internationally, while thriving in today’s digital landscape. The company is the largest Chinese Internet provider in Brazil with network POPs and backbone connecting the state of Sao Paulo, State of Rio De Janeiro, State of Parana and State of Rio Grande do Sul to the China Telecom global network.
SOURCE: China Telecom Americas
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China Telecom still banned in U.S.:
The Federal Communications Commission (FCC) has raised mounting concerns about Chinese telecom companies in recent years which had won permission to operate in the United States decades ago. On October 26, 2021 the FCC revoked and terminated China Telecom America’s authority to provide Telecom Services in America. The FCC said that China Telecom (Americas) “is subject to exploitation, influence and control by the Chinese government.”
On December 20, 2022, a U.S. federal appeals court rejected China Telecom Corp’s challenge to the order withdrawing the company’s authority to provide services in the United States.
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References:
https://www.fcc.gov/document/fcc-revokes-china-telecom-americas-telecom-services-authority
Analysis and Implications: China’s 3 Major Telecom Operators to be delisted by NYSE
Deutsche Telekom’s fiber optic expansion in 140 of the 179 municipalities within the Gigabit region of Stuttgart
Deutsche Telekom said it has deployed its fiber optic network in more than 140 of the 179 municipalities covered by its agreement with the “gigabit region” of Stuttgart. The German network operator has developed its network in the districts of Boeblingen, Esslingen, Goeppingen, Ludwigsburg and Rems-Murr districts.With ongoing expansion efforts at over 58 construction sites, the company is making significant progress, particularly in nine districts in Stuttgart, according to the statement from the company.
Since 2019, Telekom has accounted for more than 90 percent of the growth in fiber optic infrastructure. As the sole company expanding into both rural and urban areas, Telekom has established itself as a reliable partner, delivering on all construction projects and cooperation agreements, according to the broadband officer of the region and managing director of Gigabit Region Stuttgart (GRS).
In Ludwigsburg and Esslingen alone, Telekom has already been awarded contracts for 76 funding projects. The recent collaboration with Stadtwerke Nuertingen serves as a prime example of Telekom’s cooperative efforts.
Currently, approximately 30,000 households in expansion areas under this partnership can already subscribe to Telekom’s fibre optic connections. The long-term goal is to enable 185,000 households within cooperative areas with municipal utilities to choose their preferred communication provider for fibre optic connections by 2030.
The combined efforts of self-expansion, collaborations, and subsidized projects have granted around 335,000 households throughout the region access to the fibre optic network, Telekom said.
The core focus of the gigabit project is to expand the ultra-fast fiber optic network through strategic partnerships. Currently, 177 municipalities, including Stuttgart and the neighbouring districts of Boeblingen, Esslingen, Goeppingen, Ludwigsburg, and Rems-Murr, are participating in the expansion program.
The project aims to provide 50 percent of households, all companies, and schools with fiber optic connectivity by 2025. By 2030, the target is to achieve 90 percent household coverage. With a population of approximately 2.8 million in the conurbation, other companies in the Stuttgart region are also actively involved in fiber optic expansion initiatives said Telekom.
Telekom includes provisions for rapidly expanding the performance of its 5G network. Presently, almost 95 percent of households can already access 5G in Telekom’s mobile network, while over 99 percent of the population can utilize 4G/LTE connectivity.
Significance of DT Tower Sales:
Deutsche Telekom said proceeds from the sale of its tower business helped reduce net debt excluding leases by over 10 billion euros compared with the end of 2022, to 93 billion euros. The transaction was also the main factor behind the near quadrupling of net profit, to 15.4 billion euros, compared with the same period last year, the company said.
Deutsche Telekom had agreed in July 2022 to sell 51% of its tower business in Germany and Austria to a consortium of Canada’s Brookfield and U.S. private equity firm DigitalBridge after they made a surprise last-minute bid that valued the unit at 17.5 billion euros ($17.5 billion).
References:
NTT pins growth on IOWN (Innovative Optical and Wireless Network)
NTT Corp has unveiled a plan to invest JPY8 trillion ($59 billion) in growth businesses over the next five years. The core of its new growth will be its self-developed IOWN concept. The Japanese telecom giant is aiming to lift EBITDA (earnings before interest, taxes, depreciation and amortization) from JPY3.3 trillion ($24.3 billion) today to JPY4.0 trillion ($29.5 billion) in 2027.
The IOWN (Innovative Optical and Wireless Network) is an initiative for networks and information processing infrastructure including terminals that can provide high-speed, high-capacity communication utilizing innovative technology focused on optics, as well as tremendous computational resources. This is done in order to overcome the limitations of existing infrastructure with innovative technologies, optimize the individual with the whole based on all available information, and create a rich society that is tolerant of diversity. We have started R&D with the aim of finalizing specifications in 2024 and realizing the initiative in 2030.
IOWN consists of the following three major technical fields:
- APN: All-Photonics Network
Major improvement to information processing infrastructure potential - DTC: Digital Twin Computing
A new world of services and applications - CF: Cognitive Foundation®
Optimal harmonization of all ICT resources
A key concept is Photonic Disaggregated Computing – a new computing architecture that makes the shift from traditional server box-oriented computing infrastructure to boxless computing infrastructure, building on photonics-based data transmission paths.
By enabling each module, such as memory and AI computing devices, with photonic I / O (Input / Output) and connecting modules with a high-capacity and high-speed photonic data network, photonic disaggregated computing achieves highly flexible computing infrastructure. By dynamically combining modules according to computing demand, it also dramatically improves performance. Using NTT’s optoelectronic integration technology, the inter-package and inter-chip data transmission process can be replaced with photonics even inside of modules, while also dramatically improving energy efficiency.
By including data-centric computing technology and photonic disaggregated computing technology into the IOWN concept, we will accelerate creation of a natural cyber space in the era of the Smart World.
For example, AI control done by transmitting a large volume of data with low latency can realize system control that goes beyond the limits of human perception and reflexes. By coordinating a vast number of AI systems, NTT says they can realize overall optimization on the scale of society, as well as prediction of the future through large-scale simulations.
References:
https://group.ntt/en/ir/library/presentation/2022/230512e_2.pdf
MTN Consulting: Satellite network operators to focus on Direct-to-device (D2D), Internet of Things (IoT), and cloud-based services
Satellite network operators are being forced to expand their addressable markets in the near term, due to several factors: rising competition, with the emergence of players such as SpaceX along with several upstarts including AST SpaceMobile and Lynk. A difficult funding climate resulting from a grim economic outlook and rising interest rates is a challenge. There are also market concentration risks arising from the current focus on satellite broadband internet.
To address these challenges, satellite network operators are raising stakes in new pursuits and developing new offerings. MTN Consulting expects three new potential addressable markets to provide transformational opportunities for satellite operators in the next 2-4 years. These include Direct-to-device (D2D), Internet of Things (IoT), and cloud-based services.
Looking at these market opportunities, a thought may arise whether satellite operators are trying to disrupt the traditional telecom market. But the reality is that telcos will continue to be the primary service provider for wireless access. Telcos are also going to benefit from partnerships with satellite operators as they will aid in providing an enhanced experience for telco customers, reinforced by ubiquitous coverage. For satellite operators though, navigating the regulatory hurdles and ensuring constant capital flow are key concerns; several players from the current herd will vanish in the next 3-5 years.
The battle for space based Internet gained momentum in the year 2022 as several satellite operators, notwithstanding their size and years of operations, shifted gears with the launch of commercial broadband internet through low earth orbit (LEO) satellites. The space rush, aided by the advancement in satellite development and large-scale manufacturing, witnessed the sudden surge in large fleets of LEO satellites being deployed in recent years, as shown in Figure 1. As of May 2022, about 4,700 active LEO satellites are girdling the planet; that’s 16x the number of active LEO satellites deployed a decade ago.
Separately, MTN found that a number of large telcos have high debt, low margins, and/or weak top line growth, and may have to curtail spending in 2023-2024 in order to cope with this reality. In particular:
- Total telco debt in 4Q22 was $1.14 trillion, 17% due in next year
- Software capex as a % of revenues was 1.9% in 2022, up a bit from 1.8% in 2021.
- Spending on acquisitions amounted to 0.5% of revenues in 2022, the lowest figure since 2012.
- At the industry level, the ratio of net debt to EBITDA in 2022 was 1.9, a bit up from 2021 but down from 2020.
- A number of large telcos face short-term debt levels over 30% of total debt
- Average margins for the industry in 2022 disappointed: free cash flow margin for the telco industry in 2022 was 11.4%, down from 12.6% in 2021; EBITDA margin was 33.7% (2021: 34.0%), and EBIT margin was 14.4% (2021: 14.9%).
References:
Satellite players bet on direct-to-device (D2D), IoT, and cloud for next big liftoff
Graphiant: MPLS and SD-WAN Fail to Meet the Needs of the Modern Enterprise
Network-as-a-service startup Graphiant has released a report suggesting MPLS and SD-WAN are insufficient for meeting enterprise networking needs, and that businesses are starting to gravitate towards NaaS products.
In a survey of 200 network architects and admins across North America, Graphiant highlighted three use cases MPLS and SD-WAN are “failing” to meet. According to respondents, the most difficult task is connecting with external entities, such as customers or other companies. Other challenges include connecting to enterprise resources, which has grown more complex due to the rise of remote work, as well as connectivity with public clouds.
“This happens every 10-11 years,” says Khalid Raza, founder & CEO of Graphiant. “I saw this in 2000 while pioneering MPLS at Cisco. I saw it when I co-founded Viptela in 2012. And now It’s time again for a new approach to the network edge.”
Respondents called out three critical uses cases:
- Enterprise connectivity has changed in recent years, with a surge in remote workers, remote offices, and IoT.
- Cloud connectivity is the second use case that stretches enterprise capabilities.
- And trends such as digital transformation and the service economy are pushing enterprises to connect more often with customers and partners.
“These new use cases are tough for MPLS and SD-WAN,” says Robert Spangler, Senior Network Engineer at Ballad Health. “MPLS is too slow to deploy and change and far too expensive. And SD-WAN can’t handle that number of tunnels.”
The survey shows enterprises aren’t happy with MPLS and SD-WAN for these new use cases. Network architects gave both technologies D’s and F’s for metrics such as scalability, agility, and cost.
Graphiant Founder and CEO Khalid Raza told Fierce Telecom while MPLS has the advantage of being private and doesn’t place a heavy operational burden on the enterprise, it’s expensive, slow to provision and its scalability is tied to the service provider.
“If the Provider Edge needs to be upgraded to provide the bandwidth, routing table or site increase…it will take a while to get done,” he said. Regarding SD-WAN, Raza noted it gives enterprises last mile flexibility and the ability to add commodity bandwidth. However, SD-WAN’s need for an overlay (a virtual network created on top of a physical network) for every underlay “create[s] a huge tunnel scale problem,” which leads to challenges with hardware and software licenses and increases the operational burden for enterprises.
“SD-WAN leverages public transport so connecting to the resources the enterprise needs should be simple, but it’s not,” said Raza. “The security, privacy and compliance concerns that public networks create a huge operational burden that enterprises aren’t prepared to handle.”
Mauricio Sanchez, Dell’Oro Group’s research director of network security, SASE and SD-WAN, said larger enterprises with more sophisticated networking needs and architectures usually run into problems with MPLS and SD-WAN. For MPLS, he brought up the cost component and how “few enterprises are happy with how long it takes carriers to provision or change.”
“With regards to SD-WAN, it’s done wonders in the last mile where access routers used to rule,” Sanchez told Fierce. “However, SD-WAN hasn’t penetrated the middle-mile as much where meshed-SD-WAN stands to replace classic BGP-based [Border Gateway Protocol] networking.”
He explained meshed SD-WAN is more common in the enterprise WAN core than on the WAN edge, meaning smaller branch offices likely have their SD-WAN CPE router connect with a single-head end. Sanchez also noted it’s not easy for enterprises to set up large meshed SD-WAN deployments, “usually because the equipment starts running out of steam.” VPN capacity is one example of an issue.
“So I wouldn’t paper everything in SD-WAN and MPLS as having ‘failed,’ but more so highlight that there are areas where definite improvement opportunity exists,” he concluded.
Author’s Note: I have been blown away by SD-WANs success as there are no standards and therefore no interoperability. Especially needed is a NNI standard that would interconnect different vendor specific SD-WANs to facilitate communications between two or more enterprise networks.
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Graphiant’s report indicated more enterprises are thinking about implementing network-as-a-service solutions, with 62% of respondents saying they are “somewhat likely” to move to NaaS.
Launched last September, Graphiant has pitched a combination of MPLS-like performance in speed, scale and security with as-a-service agility. Raza told Fierce enterprises can connect to Graphiant’s core from any location – the data center, branch office, at home or the edge – and build their networks “in minutes instead of months.”
Separately, Graphiant in March closed a $62 million funding round led by Two Bear Capital, Sequoia Capital as well as other VC and private equity firms. The latest round brings Graphiant’s total funding to $96 million.
References:
https://www.fiercetelecom.com/telecom/graphiant-says-sd-wan-mpls-fail-meet-enterprise-needs
South Korea has 30 million 5G users, but did not meet expectations; KT and SKT AI initiatives
South Korea is arguably one of the leading countries that has deployed 5G. According to the Ministry of Science and ICT, the country had 29.6 million users as of this March, and given that number of subscribers has increased to around 500,000 per month up to now, it is more than likely that as of early May, there are 30 million 5G users. This milestone comes four years after 5G became available in smartphones in the country in April 2019 (based on 3GPP Release 15 specs).
South Korea started 2G code division multiple access (CDMA) services in 1996 and 3G wide CDMA in 2003, starting the cell phone era. This allowed South Korean telecommunication companies to expand abroad. The launch of WCDMA also allowed Qualcomm and Samsung to become leaders in application processors and smartphones, respectively, today. Then in 2011 came 4G long-term evolution (LTE) services. This truly enabled smartphones which could now stream videos in real time. South Korean wireless network operators SK Telecom, KT and LG Uplus became board members of GSMA, the global telecommunications suppliers organization.
Expectations were high for 5G. The government and telcos claimed in marketing before launch that 5G will be, compared to 4G, 20 times faster, 100 times better simultaneous access and 10 times shorter delays. They claimed new augmented reality, virtual reality, 3D content and IoT services would be introduced. However, the reality after 5G launched was quite different and none of the promises were kept.
According to the Ministry of Science and ICT, 5G download speed on average was 896.10Mbps as of October. Upload speed was on average 93.16Mbps. This was only faster by 5.9 times and 2.8 times faster, respectively than 4G LTE in the same month.
Image Credit: TheElec (http://thelec.net)
5G coverage was also only around 33.1% of the country, which means on a national level, most people were using non-standalone 5G services (5G NR with LTE infrastructure and EPC).
Spending to obtain 28 GHz mmWave spectrum has effectively ended. KT and LG Uplus had their spectrum cancelled in December; SK Telecom is also expected to lose theirs within the year (SEE UPDATE BELOW)! Without spending on 28GHz, there will be no “20 times faster 5G.” The country’s Fair Trade Commission is expected to penalize the three South Korean telcos for violating advertisement laws.
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On the positive side, 5G is being combined with AI. KT announced the commercial launch of a new solution, which it calls its “5G Infrastructure Intelligent Control Solution”, that is based on artificial intelligence (AI) technology. The South Korean network operator noted that this solution is designed to control 5G infrastructure with the aim of making that infrastructure more efficient and stable.
KT’s new solution is equipped with AI technology to detect abnormalities in the status of networks and equipment in real-time. By comparing dozens of equipment quality data in real-time with pre-learned data, the new solution can determine whether the equipment is abnormal or not with a single indicator, KT said. Also, the solution also displays the status of access and core equipment in five stages, making it easy to “intuitively check the equipment and the degree of abnormality” that occurred, the Korean telco added.
The company highlighted that companies and institutions without expertise in network management can use KT’s 5G solution to operate 5G networks without any “burden.” KT said it has already implemented the solution in four institutions, including Bundang Seoul National University Hospital, Samsung Seoul Hospital, Korea Aerospace Industries Co., Ltd. and Navy Headquarters.
“When KT’s 5G specialized network testbed is established, it will be possible to perform a one-stop service for testing equipment for 5G specialized network, interworking with terminals, and conducting network trial operation and inspection. It is expected to greatly reduce the cost and technical burden of companies considering the introduction of a 5G specialized network,” KT said.
“SK Telecom (SKT) is stepping up efforts on all fronts to transform itself into an AI company,” CFO Kim Jin Won told a results briefing Wednesday. Its strategy is to grow through partnerships with local and global top-tier AI companies while also continuing to develop its own AI technology.
SKT has been trialing generative AI in its A. (pronounced “A-dot”) service, built on its own technology and capable of holding complex conversations and developing long-term memories. Last month the telco invested 15 billion Korean won (US$11.4 million) in local startup Scatter Lab, which has used deep learning to create a chatbot that can hold empathetic conversations. SKT wants to work with Scatter Lab to develop an AI agent that can have human-like conversations with A. customers. The two companies also aim to develop a hyperscale language model equipped with emotions and knowledge domains.
May 15 2023 Update:
On Friday, May 12th South Korea’s Ministry of Science and ICT cancelled SKT’s 28 GHz 5G license. The Korean network operator’s major rivals KT Corp and LG U+ had their 28 GHz licences cancelled last year for the same reason, but SKT held on to its concession by the skin of its teeth and escaped with a warning.
“It is regrettable that this result has finally come about despite the government’s active efforts so far,” said Choi Woo-hyuk, director of radio wave policy at the Ministry of Science and ICT, in a Korean language statement confirming the licence withdrawal.
The three South Korean mobile operators each acquired 800 MHz of 28 GHz spectrum, alongside 3.5 GHz frequencies, in 2018, with the band being available for use by the end of that year. The licence conditions required them to deploy 15,000 base stations using 28 GHz within three years. But an investigation on the part of the last year Ministry showed that the telcos had built only 10% of the number of sites they had committed to, which led to it pulling the licences of the worst offenders: KT and LG U+.
https://telecoms.com/521670/south-korea-cancels-skts-28-ghz-5g-licence/
References:
https://www.thelec.net/news/articleView.html?idxno=4524
https://irsvc.teletogether.com/skt/pdf/skt2023Q1_Subtitles_eng.pdf?2