A week in telecoms: STC plots towerco deal, Q1 results abound

Mobile tower giant takes shape in Saudi Arabia

Saudi Telecom (STC) announced a new agreement that it says will form the largest mobile tower giant in the region, following the example set by other telcos around the world that have separated off and in some cases sold their mobile tower assets. 

The Public Investment Fund (PIF), Saudi Arabia’s sovereign wealth fund, has agreed to buy a 51% stake in Telecommunication Towers Company Limited (TAWAL) from STC Group. TAWAL is described as the largest telecommunications infrastructure company in Saudi Arabia and one of the largest in the region, with an enterprise value of $5.85 billion.

Subsequently, PIF and STC will consolidate TAWAL and Golden Lattice Investment Company (GLIC) into a new merged entity. PIF bought a majority shareholding in GLIC from Zain Saudi in November 2023.

The combined new entity will be owned 54% by PIF and 43.1% by stc Group, with GLIC minority shareholders owning the remaining issued share capital. The various transactions are expected to be completed in the second half of 2024, after which PIF will own 54% and STC 43.1% of the new entity, with GLIC owning the remaining shares.

The new merged entity will own around 30,000 mobile tower sites in five countries and generate estimate annual revenue of $1.3 billion. As well as sites in Saudi Arabia and Pakistan, TAWAL owns over 4,800 sites in Bulgaria, Croatia and Slovenia following its acquisition of United Group’s telecom tower assets in 2023. 

Verizon, AT&T report “solid” start to 2024

This week saw a flurry of Q1 figures including those from US operators AT&T and Verizon, with both presenting a confident appraisal of their performance in the year to date. 

Verizon CEO, Hans Vestberg, said the operator had started 2024 with “a solid momentum, building on the progress we made throughout 2023.”

“Our results this quarter further validate that our strategy is working and position us well for a profitable growth this year. Our execution in the first quarter keeps us on track towards our full year 2024 guidance, as we continue to deliver against our key financial metrics,” he added. 

The operator said total operating revenue increased marginally by 0.2% to $33.0 billion compared to the previous year, while adjusted EBITDA grew to $12.1 billion, up from $11.9 billion in Q1 2023.

It also provided break-out figures for the much-watched fixed wireless access service, noting that fixed wireless revenue for Q1 2024 was $452 million, up $197 million compared to Q1 2023. Verizon Business reported 151,000 fixed wireless net additions, described as its best quarterly result to date. The consumer division gained 203,000 fixed wireless net additions.

Vestberg also outlined three priorities for AI: optimizing internal processes and operations through machine learning, such as creating efficiencies in fuel consumption; enhancing product experiences with AI capabilities like the personalized plan recommendation on myPlan; and establishing an AI-based revenue stream by commercializing the network’s low latency, high bandwidth, and “robust mobile edge compute capabilities.”

“And as we are deploying our 5G right now, with the mobile edge compute and AI, this is a great long-term opportunity for us using AI. So there are multiple places we see efficiencies, but also revenue opportunities with all the new technologies coming,” he said during the earnings call. 

Meanwhile, AT&T CEO John Stankey said the operator’s “consistent, solid performance” in the first quarter “gives us confidence to re-affirm our full-year consolidated financial guidance.”

Revenue was marginally lower at $30 billion owing to lower mobile equipment and business fixed-line sales. EBITDA increased to $11 billion compared to $10.6 billion a year previously.

Stankey particularly highlighted the operator’s strong mobile and fiber businesses, with 349,000 postpaid phone net adds in the quarter and a 252,000 increase in net fiber additions to nearly 8.6 million customers.

He also reflected on the benefits of AI, noting that its continued adoption “is not only helping us make progress on this goal but also benefiting our employee and customer experiences.”

“This focus on efficiency is translating into improved operating leverage despite continued elevated inflation. You can see this in our cash operating expenses, which were down year-over-year in the first quarter, contributing to adjusted EBITDA margin expansion of 170 basis points,” he added. 

Singtel partners with Ericsson’s Vonage

Singtel is partnering with Ericsson-owned cloud communications specialist Vonage to improve and expand the services it provides to enterprises and telcos via its own orchestration platform, called Paragon.

The aim is to integrate Paragon’s telco and edge APIs with Vonage’s API platform, providing enterprises, telcos and developers with “access to a global ecosystem of rich communications, network and edge APIs.”

Paragon-enabled telcos from Singapore, Thailand, Spain, Taiwan and Indonesia will then be able to federate APIs with one another “to create a globally unified telco and edge API library” that can be accessed by independent software vendors (ISVs), enterprises and developers.

Vonage APIs will be made available in the Paragon platform marketplace. Singtel said it also plans to make CAMARA and TM Forum network and edge APIs available to a broad community of developers through the Paragon and Vonage API platforms.

Network capabilities exposed through industry standard and new APIs, such as Quality on Demand, slicing and credential-less authentication, are expected to be available for preview in the fourth quarter. 

Singtel created a subsidiary called Digital InfraCo in June 2023 to house its infrastructure assets, including data centers, submarine cables, satellites, and the Paragon 5G MEC aggregation and orchestration platform, as part of its growth strategy.

Bill Chang, CEO of Singtel Digital InfraCo, said the Paragon platform is another growth driver that was designed “to ensure that carriers don’t get commoditized in a 5G world.”

Singtel is one of a number of Asian operators that is building an international business out of selling their internally developed IT platforms, along with Jio in India and Japan’s Rakuten. 

Zayo appoints Vodafone exec

The former CEO of Vodafone Spain has resurfaced at USA-based fiber infrastructure provider Zayo Group. The company appointed Colman Deegan as CEO of its Europe operations to drive growth “as cloud and AI adoption continues across the continent. 

Deegan spent more than two decades at Vodafone where he held senior leadership positions such as Group M&A Director, CFO at Vodafone India and Italy as well as CEO of Vodafone Turkey. He stepped down as CEO of Vodafone Spain in April 2023. Vodafone Group is in the process of selling its Spanish operations to Zegona Communications

Steve Smith, CEO of Zayo Group, said Deegan’s “experience and proven track record as a CEO leading large teams and businesses makes him perfectly equipped to take our European business to new heights, together with our outstanding local team.”

Zayo provides fiber network infrastructure and said its network spans over 17.5 million fiber miles and 144,000 route miles. In March, it announced new Waves on Demand service to deliver access to bandwidth across its 400G fiber network in Europe.

The operator is co-owned by DigitalBridge and EQT Partners and has network presence in the United States and Europe.

Orange maintains guidance for 2024

Orange published its first quarterly results since the merger of Orange Spain and MasMovil was complete in March. MasOrange is now up and running, and Spain has been deconsolidated from the France-based group’s results.

The Q1 2024 results already reflect the fact that Spain’s results have been removed from group figures, with total quarterly revenue of €9.85 billion compared to €10.6 billion a year previously. On a comparable basis, group revenue increased 2.1% year-on-year, while EBITDAal was 2.3% higher at €2.4 billion.

Orange Group CEO Christel Heydemann said the Q1 results “underpin our confidence in achieving a full-year guidance, which remains unchanged.”

During the earnings call, Heydemann also addressed questions on AI, pointing to recent developments such as the addition of AI and generative AI to its Google Cloud partnership. 

Orange has also recently introduced the Augtera Network AI platform to improve customer experience, and launched two GenAI offers for enterprise customers in collaboration with LightOn and HPE. 

Notably, Heydemann said Orange does not plan to follow Deutsche Telekom’s example by investing in its own large language models (LLM). The German group has joined forces with e& Group, Singtel, SoftBank Corp. and SK Telecom to develop telco-specific LLMs, for example. 

She said Orange has three key focus areas when it comes to AI: enabling smarter networks, improving the customer experience, and enabling employees to be more efficient. 

She also noted that Orange is working with several partners, including Mistral AI, which is described as a French version of ChatGPT, and has “many initiatives” in place. 

Also noted…

Investors such as Ardian and KKR are said to be interested in buying Patrick Drahi’s French fiber company XpFibre.

KKR finally notified the European Commission of its intention to buy NetCo from Telecom Italia. The commission has set May 30 as a provisional deadline for a decision. Meanwhile, TIM’s AGM gave CEO Pietro Labriola a mandate to serve for another three years.