What’s up with… Ericsson, big tech in Europe, MTN

• Ericsson to cut 1,200 jobs in Sweden
• EC clamps down on Alphabet, Apple and Meta 
• Pan-African operator MTN reports a massive slump in profits

In today’s industry news roundup: Ericsson starts the process of axing 1,200 jobs in Sweden amid yet another year of challenging market trends; the European Commission opens probes into anti-competitive behaviour of “gatekeepers” Alphabet, Apple and Meta; MTN Group reports a nearly 85% drop in profit after tax for 2023 due to “tough macro headwinds”, especially in Nigeria; and more!

With dire 2023 financials behind it and another year of challenging market trends ahead of it, few will be surprised to hear that giant Swedish vendor Ericsson is reducing its headcount: It has announced that it will cut 1,200 jobs in its home market and that negotiations are already underway with local unions. In late January, Ericsson reported grim full year financials, with organic (like-for-like) revenues down by 10% to 263.4bn Swedish krona (SEK) ($25.2bn), earnings before interest, tax and amortisation (EBITA) down by 49% to SEK14.9bn ($1.43bn), and a full year net loss of SEK26.1bn ($2.5bn) compared with a net profit in 2022. It also noted that the radio access network (RAN) equipment market is to shrink again in 2024, in line with industry analyst expectations, and that it is hard to predict when the market might improve. In an announcement made early Monday morning, Ericsson noted that it still expects “a challenging mobile networks market in 2024, with further volume contraction as customers remain cautious”, and that “in line with managing lower volumes,” it is cutting some 1,200 jobs in Sweden, equivalent to about 8.6% of its workforce in the country: Ericsson ended 2023 with almost 100,000 staff worldwide, of which nearly 14,000 were in Sweden. “This measure is part of the global initiatives to improve the cost position, including headcount reductions, while maintaining investments critical to Ericsson’s technology leadership. Initiatives to increase operational efficiency will continue during 2024 but will not be announced separately,” the company added. In addition to cutting those jobs, Ericsson is also introducing other cost-saving initiatives, including a reduction in the use of consultants, a streamlining of processes and a reduction in the facilities it uses. Its main global mobile network infrastructure rival, Nokia, announced significant job cuts in October last year, mainly due to the same market pressures.  

Still with Ericsson… The Swedish vendor has made a “landmark achievement” by deploying a 5G standalone (SA) network in the United Arab Emirates, in partnership with domestic telco du. The pair tested 10 carriers per sector on du’s live 5G network, achieving an aggregated download speed of up to 16.7Gbit/s. The implementation was based on Ericsson’s 5G SA New Radio-Dual Connectivity (NR-DC) and carrier aggregation, to enable it to combine eight carriers of millimeter wave (mmWave) and two carriers of mid-band. In its statement, the vendor claimed that the test opens the door to “an increased network capacity”, providing fixed wireless access (FWA) users with “differentiated experiences”, as well as offering new opportunities for augmented reality/virtual reality (AR/VR) and cloud gaming. Find out more.

In September 2023, the European Commission designated six companies as gatekeepers – Alphabet (Google’s parent company), Amazon, Apple, ByteDance (TikTok’s parent), Meta and Microsoft – under the Digital Markets Act (DMA): The act is designed to curb the monopolistic and anti-competitive instincts of big tech “gatekeeper” companies, as it legislates for smaller, rival companies to be able to sell their apps on a gatekeeper company’s platform. The EC noted at the time that the six companies had six months “to ensure full compliance with the DMA obligations for each of their designated core platform services.” Well, that six months is up, and the EC has now announced non-compliance investigations under the DMA into Alphabet’s rules on steering in Google Play and self-preferencing on Google Search, Apple’s rules on steering in the App Store and the choice screen for Safari, and Meta’s “pay-or-consent model”. The EC “suspects that the measures put in place by these gatekeepers fall short of effective compliance of their obligations under the DMA,” the commission noted in this announcement issued early on Monday. “In addition, the Commission has launched investigatory steps relating to Apple’s new fee structure for alternative app stores and Amazon’s ranking practices on its marketplace. Finally, the Commission has ordered gatekeepers to retain certain documents to monitor the effective implementation and compliance with their obligations.” 

MTN Group has posted a whopping 83.2% year-on-year drop in profit after tax for 2023 due to “tough macro headwinds”, including a sharp devaluation of the Nigerian currency, the naira. Its profit after tax for the past year was 4bn South African rand (ZAR) (US$218m), significantly lower than the ZAR23.8bn (around $1.26bn as per current exchange rates) it booked in 2022. Additionally, the Pan-African telco group noted that elevated inflation (averaging a blended 16.7%) in several key markets, had also affected its performance. Its total revenue rose 6.8% year on year to ZAR221bn ($11.7bn), boosted by a more than 35% increase in data traffic, as well as rising numbers of active data users (up by more than 9% to 150 million) and fintech subscribers (up by 5% to 72.5 million). MTN ended the year with a total of 295 million subscribers across all its markets. The company highlighted “good strategic progress” in developing its fintech and fibre businesses, including through finalising the agreement with Mastercard under which the payment network processor will invest up to $200m for a minority stake in MTN Group Fintech at a valuation of $5.2bn. “We are excited about this partnership, particularly the commercial agreements, which we expect to support the accelerated growth of our fintech business,” explained MTN Group CEO Ralph Mupita. Moving forward, he anticipates naira volatility and elevated inflation to remain key challenges for the group in 2024, which he says the company “will need to navigate”. He has reportedly claimed that the telco is working with regulators in several markets, including Nigeria, to obtain approvals for tariff hikes for voice and data services, as a way to mitigate the cost of running the networks.

With a European Commission blessing in the bag, the imminent €18.6bn merger between Orange Spain and MásMóvil is set to create a single company that will sport the name MásOrange, according to Spanish newspaper El Economista. Look out for confirmation (or not!) of this new name soon, as the deal is set to close before the end of this week and so create Spain’s largest single service provider by customer numbers. 

Xavier Niel, the billionaire owner of pan-European operator Iliad and telecom sector entrepreneur, has been complaining to The Times (subscription required) about the shrinking value of his investment in the 2.5% stake in Vodafone Group that he acquired in September 2022. The value of that stake has sunk to about £470m now, down from the £750m or so Niel’s investment vehicle, Atlas Investissement, initially stumped up.  “Being a shareholder, I’m not sure my money is well managed. We’ve lost a lot of money since we bought our shares in Vodafone. And I’m not sure of the management of this company,” complained the Frenchman, who was twice thwarted in his recent efforts to merge his Italian operation with that of Vodafone, which eventually opted to sell Vodafone Italia to Swisscom. Sour grapes, peut-être?

There’s some bleak news for operators in the business messaging domain. According to a new forecast from Juniper Research, revenue from business SMS traffic is set to grow by a mere 5% in 2024, in stark contrast with last year when operator revenue was up 23% globally. The analyst firm attributed this slowdown in growth to waning demand from enterprises following “significant SMS price increases” from operators. To counter this, Juniper Research has urged telcos to make “substantial cuts” to SMS termination costs, otherwise it foresees the market for this type of messaging becoming “unsustainable”. Furthermore, operators risk losing revenue-generating traffic to other channels, such as application programming interfaces (APIs) or over-the-top (OTT) business messaging. “Operators are expected to lose $3.1bn in business messaging revenue to OTT messaging channels over the next five years and in order to mitigate these losses, operators must look to support new technologies, such as APIs, to retain high levels of mobile messaging traffic in its ecosystem,” suggested research author Molly Gatford.

- The staff, TelecomTV