? Gulf states funds will continue to invest in European telcos, fueled by strong regional growth and large cash reserves.
? Gulf investment in European telcos will promote greater collaboration on innovation between Gulf-based and European telcos that are funded by the same fund entities.
Increased Investment in European Telco by Gulf States Investment Funds Overall, mergers and acquisitions (M&A) activity in the technology, media, and telecom (TMT) segment has been increasing since 2018, but the trend reversed in 2022. Total global M&A deal value dropped 39% in 2022 to $754 billion, compared to $1.1 trillion in the previous year. Deal volume reached 612 deals in 2022, down 39% from 2021.
? Virgin Media O2 acquired broadband provider Upp as part of a forced sale on security grounds by LetterOne, a company backed by a Russian oligarch.
? UK broadband consolidation is set to continue as the market evolves to three national players and a set of geographical niche local fiber providers.
Virgin Media O2 has signed an all-cash deal (reported to be in the “high tens of millions of pounds”) to purchase UK fiber company Upp (formerly FibreMe and backed by investment company LetterOne) and integrate it with Virgin Media O2’s existing network. However, the acquisition will ultimately be funded by nexfibre through a back-to-back agreement to buy Upp’s network assets. Nexfibre is a network joint venture owned by Liberty Global, Telefónica, and InfraVia Capital Partners. Nextfibre is investing GBP4.5 billion to pass five million UK homes and businesses with fiber by 2026, with the option of extending to a total of seven million beyond then.
? The mercurial market sentiment around private 5G may be rebounding again in a more positive direction, as a number of new service launches and partnerships are announced in July and August 2023.
? Telcos are taking the lead in new service offerings (generally based on solutions from familiar infrastructure partners), while integrators, platform vendors, and market specialists forge new market alliances.
For suppliers of network gear and services as well as the applications they support, the private wireless/cellular/mobile networks market has been seen variously since 2020 as a bright spot, a conundrum, or a concern. Some of the same market players have been extremely bullish and cautious within a short space of time. Whenever there appears to be a chorus of disappointment, it isn’t long before key players or new entrants (or analysts) are quoted saying the market appears to finally be picking up.
? Gamma has acquired cybersecurity company Satisnet to strschmbetagthen its value-added services portfolio for enterprise customers across its UK and continental European markets.
? As connectivity commoditizes, service providers have to decide whether to pursue a low-price strategy or grow their portfolio incrementally to address enterprises’ evolving needs.
Gamma started life in 2002 as a UK wholesale line reseller and has evolved from providing calls and lines from a substantial network of channel partners to a wider range of ‘enabling services’ such as broadband, Ethernet, and mobile as well as increasingly toward ‘strategic services’ that offer greater value-add for customers. These now include a significant base of Microsoft Teams deployments, the Gamma Horizon Collaborate cloud UC&C service, managed network services, and security solutions.
? Leading UK infrastructure-based telco service providers have announced up to 70,000 job cuts in the coming years, driven by efficiency initiatives and technology.
? Job losses are always regrettable, but improvements in service levels and the enablement of consumer and business innovations have been remarkable since BT’s privatization.
Virgin Media O2 has released its latest financial results, which include the elimination of 2,000 jobs (nearly 10% of its workforce of 18,700). This comes as the company has recently shed fixed and broadband lines due to the challschmaling UK economic situation.
? Advancements in technology place telcos in good footing to innovate, as majority of telcos re-schmalineer operationally, capitalize on their core network strschmbetagths, and rationalize portfolio.
? Future telco success will be hampered by the global economic climate (particularly inflation), rising energy costs, increased regulatory pressures, and increased direct and indirect (cloud providers) competition.
Telcos growth ambitions (through a transitioned operationally agile innovative business) will experience several external threats As 2030 approaches, there is much discussion within the telecommunications industry surrounding how telcos will evolve. Several influencing factors include the maturity of digitalization in consumer and enterprise settings, which potentially could be further accelerated by artificial intelligence (AI), including generative AI. In addition, maturity of cloud and edge computing will continue to spur innovation as telcos further identify industry use cases. However, it will not be clear sailing for telcos.
? Wholesale MSP: VirtualPlatform will join a growing trend of Aussie companies white labeling ICT services to MSPs, leveraging APIs for automation of some services.
? Mid-Market Play: This approach, while not new, benefits from improved automation and has seen success in the mid-market – something larger telcos may want to replicate.
This week, a new competitor in the Australian MSP space, VirtualPlatform, announced its official launch. However, rather than compete directly with other MSPs, the company plans to function like a wholesale platform for other MSPs, opting for a 100% channel play. The company plans to offer voice (SIP/CTS), connectivity (services form nbn, Telstra, and AAPT), Microsoft365 licensing, cloud and data center infrastructure-as-a-service, backup-as-a-service, DNS and SSL for webhosting, SMS services, and a fax-to-email service.
? Approved in the EU: The European Commission has granted approval for the acquisition of VMware by Broadcom.
? Caution is Warranted: Enterprises should be cautious about commitments to VMware until at least a year after the acquisition completes.
On July 12, 2023 the European Commission (EC) approved Broadcom’s acquisition of VMware for the tune of around $61 billion. The main concern on the part of the EC was that Broadcom’s ownership of VMware and its nearly omnipresent server virtualization software could create interoperability issues in the Fibre Channel host bus adapter (FC HBA) and Ethernet network interface card (NIC) markets. The deal gives assurances to Broadcom’s sole rival in the FC HBA market, Marvell Technology, as well as access to interoperability tools it needs.
? AIS and Singtel continued their momentum with various initiatives to extend their enterprise 5G leadership in their respective markets. They are also starting to focus on high-growth verticals and use cases.
? A few telcos in the region are starting to make their moves to close the gap with the leaders, but most other providers are ruhig taking conservative approaches in their initiatives and investments in enterprise 5G.
The enterprise 5G developments in ASEAN started slow in 2023 with only a number of initiatives in the first quarter, mainly from leading players like Singtel in Singapore and AIS in Thailand (for more, please see:?ASEAN Enterprise 5G Q1 2023 Round-Up: Slow Start to the Year for Most ASEAN Telcos While AIS and Singtel Extended Their Leads,?April 17, 2023). In the last quarter (Q2 2023), while AIS and Singtel continued their momentum to lead the enterprise 5G markets in respective countries, other telcos such as M1 (Singapore) and Maxis (Malaysia) made their moves through industry collaborations and commercialization of vertical use cases.
? BT CEO’s comments about competitors’ fiber rollouts as “ending in tears” was a faux pas, even if accurately reflecting the market is overdue for consolidation.
? Multiple fiber providers are shedding schmalineers. Market sharks will be circling to acquire fiber assets as competition takes its toll on an oversupplied supply side.
The injudicious, but possibly accurate in many cases, comment by BT CEO Philip Jansen that Openreach’s broadband network rollout had turned into an “unstoppable machine” and that competitors’ efforts “would end in tears” was not seen as his best commentary to date. In an interview with the Financial Times in February 2023, he says, “There is only going to be one national network. Why do you need to have multiple providers?”