Bharti and MTN walk away from merger

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LONDON, UK: Bharti and MTN announced that the proposed $24 billion deal to merge the two companies has fallen apart, four months after restarting negotiations. This is the second time negotiations have failed, after an unsuccessful attempt to merge last year.

This time the South African government failed to give its blessing to the proposed deal structure. In Bharti’s words, “this structure needed an approval from the government of South Africa, which has expressed its inability to accept it in the current form.” Angel Dobardziev, Practice Leader, based in London comments:

A political decision overriding compelling strategic reasons
There were always lots of things that could go wrong with this proposed deal. In the end it seems to have been derailed by political decisions rather than issues of price and/or management control. The South African government was keen not to be seen as ceding control to one of its key national champions.

In order to maintain MTN’s South African identity and to provide cover for potential accusations of ‘selling off’, the South African government required the future entity to have dual listing on both the South African and Indian bourses. Indian law does not currently allow dual listing, and the Indian government was apparently unwilling to make changes to its laws to accommodate this.

After two extensions to the current negotiations, this was the final blow. Bharti was careful to leave the door open for restarting negotiations in the future, although having failed twice it is hard to see this deal being resurrected again.

We maintain that this deal was a good fit strategically and operationally, over and above the issues of economies of scale and complementary footprints. MTN’s strong retail mindset and experience from over 20 different African and Middle Eastern markets would have been a good complement to Bharti’s strong operational experience in network and IT outsourcing, and infrastructure sharing.

For example, MTN was one of the first telcos globally to successfully introduce dynamic mobile pricing and Bharti was one of the first telcos to outsource its IT to IBM on a revenue-sharing model (which has since been replicated by many other telcos) and has recently followed that with a network outsourcing deal with Alcatel-Lucent. For now, all of this remains an academic consideration.

Emerging market consolidation will accelerate
It is interesting to contrast the position of the South African government with that of the Kuwaiti government, which for some time has been keen to sell Zain, either as a whole or in parts.

Leaving aside political considerations, from an investment perspective right now may be a good time to sell an attractive emerging market player. The financial markets are opening up and many stock market valuations have rebounded strongly. There remains a massive interest in emerging market companies as mature market growth has slowed down to a trickle.

Emerging market subscriber and revenue growth is still in strong double-digit numbers, and the leading players have attractive margins. In addition, smart financial investors are looking to cash in their chips while things are still looking good.

However, over the next few years’ competition in many emerging markets is set to rapidly increase due to the entry of new players in the markets and slower subscriber growth as the quality (i.e. higher-spending) market segments start to saturate. This will lead to a slowdown in subscriber and revenue growth, and ARPU and profit margins will decline as a result.

Bharti is a prime example of all of these factors at play in the intensely competitive Indian market –- hence its drive for an ambitious M&A deal in search of growth and diversification.

Other emerging market players such as Reliance, Etisalat, Batelco, Qtel and STC, not to mention Vodafone and Orange, remain on the lookout for M&A targets, so further consolidation and increased M&A activity from strategic investors in the emerging markets will be the norm in the coming year.

LIDO celebrates 25 years of providing telecom education

PETALUMA, USA & BANGALORE, INDIA: The LIDO Organization Inc., which provides telecommunication education, training, consulting and advisory services, is celebrating its 25th anniversary this summer by announcing its fall international training seminars and becoming a CompTIA Authorized Quality Curriculum (CAQC) for Convergence+ certification.

In addition, this year also marks the 10th anniversary of LIDO Telecommunications Essentials online training which has demystified telecom concepts and terminology for numerous business and educational organizations.

Presented in four parts online, this concise and comprehensive program covers the principles, technology and infrastructure of the telecommunications industry. In August, LIDO also will celebrate the 1st anniversary of LIDO Telecom Pvt. Ltd., which offers telecom content and eLearning solutions in India.

“Telecommunications is the critical infrastructure for the 21st century. In a global economy with nearly every facet of a business touched by intersecting information and communication technologies (ICT), companies need to understand the fundamentals of telecom to make their businesses function more efficiently,” stated Lillian Goleniewski, president, The LIDO Organization Inc.

“Whether they are in healthcare, education, entertainment, government, transportation, finance, national security, defense or public utilities –- these industries are dependent on ICT. LIDO helps them understand telecom fundamentals and close the widening skill gap between current industry technologies and professional knowledge.”

In October, business professionals can master telecom through LIDO’s intensive seminar program in just three days. Offered October 7-9 in Singapore and October 19-21 in London, the program allows operators, service providers, regulators, financiers, lawyers and government authorities to gain a solid grounding in telecom technologies, applications, and regulations.

Attendees will examine the impact of converged and new-generation networks and learn how to compete effectively as regulations change, opening up new market opportunities for their businesses.

Prospective attendees can register for the London seminar and the Singapore seminar.

For professionals not able to attend the seminars in person, they can access LIDO Telecommunications Essentials online and complete the course independently. The CompTIA Educational Foundation’s Creating Futures participants can access the program for free, through LIDO’s donation of 100 single-user licenses.

With the $115,000 donation received recently, the Foundation now can offer both free IT and telecommunications training to transitioning US veterans, wounded warriors and their spouses.

The software-delivered program includes 34 hours of dynamic multimedia lectures, simultaneous transcripts, accompanying slide shows and clickable links to supporting educational resources, as well as quizzes to test student understanding.

Topics covered include communications fundamentals, transmission media, circuit versus packet switching, public switched telephone networks, data communications basics, local area networking, wide area networking, Internet and IP infrastructures, IP services and converged networks, next generation networks, optical networking, broadband access alternatives, wireless communication principles, wireless WANs, MANs, LANs, PANs, broadband wireless access and emerging mobile applications.

xMax to bring lower calling costs to consumers

SARASOTA, USA: xG Technology has released field trial results of a new approach to mobile telecommunications that will significantly lower the cost of offering wireless voice and data services.

Called xMax, the technology enables an Internet calling service similar to Skype, but in the form of a fully mobile handset that doesn’t require the use, and extra cost, of a computer or broadband Internet connection, which is typically required to place such low-cost calls.

The field trial results highlighted the reasons why the xMax approach can allow cheaper calling:

* xMax transmits over unlicensed spectrum—the same as baby monitors and cordless phones. Major national cellular carriers paid billions of dollars for licensed spectrum that they recoup from customers.

* xMax was built as a totally Internet-based digital system from top to bottom—an extremely cost efficient communication approach.

* xMax networks will enable communication providers to aggressively compete with national carriers by offering customers unlimited voice and data plans both locally and long distance, extremely low-cost international calling, no contracts, as well as home phone and high-speed Internet service.

Seven-year-old xG Technology is a US based company, but development of xMax is an international effort that involves companies in Europe and Asia. A portfolio of 50 US and 101 international patents and pending patent applications has been developed with the goal of bringing lower-cost communications to consumers.

Hans Vestberg appointed President and CEO of Ericsson

SWEDEN: Ericsson’s Board of Directors has appointed Hans Vestberg President and CEO of Ericsson as of January 1, 2010. Hans Vestberg is currently CFO and Executive Vice President. He is succeeding Carl-Henric Svanberg who has accepted to take on the position as Chairman of BP, the world’s fourth largest company.

Hans Vestberg is 44 years old and earned a Bachelor of Business Administration degree from the University of Uppsala, Sweden, in 1991. He joined Ericsson the same year and was within a short time period appointed to various international managerial positions in China, Sweden, Chile, Brazil and the US.

Between 1998 and 2000 he was CFO of Ericsson in Brazil. In the years 2000 to 2002, Vestberg was Chief Financial Officer for Ericsson in North America and Ericsson’s controller for the Americas. From 2002 to 2003 Vestberg served as President of Ericsson in Mexico. He became Senior Vice President and head of business unit Global Services in 2003 and was appointed Executive Vice President in 2005. Vestberg was appointed Chief Financial Officer in 2007.

Michael Treschow, chairman of the Ericsson Board of Directors, says: “Hans Vestberg was early in his career at Ericsson identified as a person with outstanding leadership skills. He has a proven excellent understanding of Ericsson’s business with experience from all different Ericsson business activities.

"He has been instrumental in developing Ericsson’s industry leading services operation which grew threefold with good profitability during his five years of management. Vestberg has a broad international experience through assignments for more than ten years in three continents.”

“Hans Vestberg will lead Ericsson in a phase where the transformation of telecom operators’ networks and implementation of IP-based services are crucial in order to continue the company’s successful creation of shareholder value.”

Ericsson’s present President and CEO Carl-Henric Svanberg will remain in his position until year-end when he takes on his new assignment as chairman of BP. Svanberg will remain as member of the Ericsson Board of Directors and the main owners, Investor and Industrivärden, have expressed their wish to see Carl-Henric Svanberg as member of the Ericsson Board of Directors long-term.

Michael Treschow continues: “With Carl-Henric Svanberg’s leadership, Ericsson has become the industry’s most profitable company and its market position has been tremendously strengthened. With Svanberg, the industry’s most successful strategy has been developed and implemented.”

“Over the past six years, mobile telephony has grown from 1 billion to 4 billion subscribers in the world, an unparalleled development. Ericsson has been one of the main drivers in this development with a steadily increased market share. The strong position in GSM and continued industry leading R&D investments have paved the way for leadership in mobile broadband and 4G/LTE now being deployed worldwide.“

“Strategic acquisitions have been made in the area of fixed and optical fiber as well as IP and TV which makes Ericsson the only player in the industry with a complete portfolio for mobile and fixed converging IP based networks. Products are today software based and Ericsson has become the world’s fifth largest software company. At the same time, services have grown quickly, and now represents one third of total sales.”

During 2003-2008 Ericsson’s compounded annual growth was 12 percent. Over the past five years, the company has generated a total profit of SEK 103 b. and a cash flow of SEK 101 b. Total dividends over the past five years amount to SEK 27 b.

Svanberg joined Ericsson on April 8, 2003 at a troublesome time when the company struggled with losses and restructuring. One of his first actions was to introduce his leadership philosophies and focus on operational excellence. Culture and ways of working changed in the company and is a major reason for today’s good profitability.

Michael Treschow says: “Technology and services leadership in combination with tight customer relationships and operational excellence are Ericsson’s key success factors. Hans Vestberg will continue to drive and implement Ericsson’s successful strategy.”

Telecom enhances globalization in every possible way!

Is it any other way, apart from this? I was quite surprised on being asked whether telecom growth somehow blocked globalization! Quite the opposite!!

Take the Indian telecom industry for instance! Those who have followed the Indian telecom closely -- right from the days of C-DoT developing 256-switch RAX, down to the introduction of mobile phones -- after massive overbidding by folks such as HFCL in 1994, to the introduction of the Internet in India -- on the eve of India's independence day in 1994 -- the growth of satellite communications in the country in the mid and late nineties -- remember DAMA? -- to, to the introduction of CDMA in the early 2000s, to the great proliferation of mobile phones that we see around us now!

Does any of this indicate India has not been able to globalize?

When C-DoT had introduced RAX in the late 1980s, it really brought about a telecom revolution. Today, we don't talk of C-DoT in the glowing terms that it really deserves. Who would have ever imagined that mobile phones would take off the way they have done now! And well, we just can't survive without the email and the Internet!

Let's trace the global telecom history from the late 1980s. When AMPS gave way to GSM, you had the feature called roaming! People wondered what they would do with this feature? Today, we complain, if we can't roam!

ARIB, Japan, had visited India in early 1994, to try and sell PHS. In those days, PHS and DECT were the hot WiLL technologies. Later, Japan, thanks to Takeshi Natsuno and NTT DoCoMO, saw the advent of i-mode, and well, it indicated the first signs of what mobile Internet would really do!

Pages and pages were rolled out screaming "WAP is CRAP"! Now, all phones are WAP enabled and no one says a word! We love to surf on the mobile phone now, isn't it? What about all those MMS messages, including the sleazy ones? You can do mobile blogging now, can't you? Also, update your Twitter!

In optical networking, in the early nineties, PDH gave way to SDH! We later saw the advent of DWDM and also VCSELs. With the advent of 3G in the late nineties, we discovered W-CDMA. China came up with TD-SCDMA, another 3G technology. For some time, LAS-CDMA tried to make its mark, then I don't know what happened to it!

How many of you know that a simple SMS led to the famous second people power revolution in the Phillipines in early 2001, a peaceful revolution that overthrew Philippine President Joseph (Erap) Estrada!

Why, I still remember, during a spot survey at a Frost & Sullivan's telecom conference in Singapore in 2001, I was one among the three who used the mobile phone to check my Yahoo mails. I received such stares Today, we can't stop talking about Blackberry and iPhone! In Hong Kong, in the early 2000s, I used my Siemens WAP phone to locate Indian restaurants! When Nokia added GPS via HS-CSD in Hong Kong's Citybus in 2000, it was sensational! Today, we talk about LBS and GPS, and all that!

I can go on and on with such anecdotes! If there was no telecom, the world would not have progressed in the manner it has done now. Still having doubts?