What’s up with… Reliance Platforms, the FWA sector, Telecom Italia

• Jio’s parent Reliance Platforms is on course for an IPO – reports
• The fixed wireless access (FWA) sector is set for dramatic growth
• Telecom Italia might sell its Sparkle unit to the state

In today’s industry news roundup: Reliance Platforms could be eyeing an IPO move next year, according to the Indian news outlet The Economic Times; the fixed wireless access (FWA) market continues to grow and could bring in $67bn in generated revenue for operators by 2027, CCS Insight estimates; Telecom Italia is mulling a proposal from the Italian government to sell its international networks and services unit; and much more! 

Speculation is growing that Reliance Platforms, the Reliance Industries division responsible for the conglomerate’s digital activities including the country’s largest telco Reliance Jio, will undergo an IPO process and float its shares on the open market in 2025. The Economic Times reports that an IPO seems increasingly likely as the multiple private equity and venture capital firms that invested in Jio Platforms during 2020 – including the likes of KKR, Silver Lake, Vista Equity Partners, General Atlantic and TPG (formerly Texas Pacific Group) – will either reduce their investments or exit them altogether to get a return on their initial investments. Jio Platforms is currently valued at $75bn and its outlook and attractiveness to those likely to invest via an IPO would be further boosted by a proposed 20% hike in service tariffs that is being held in abeyance until after India’s general election, which is due to take place later this year. The US brokerage Jefferies has forecast that, if the price rises go ahead, Jio will enjoy a 25% growth in operating income over the financial years spanning 2024 to 2026 to reach $9.7bn per year. However, should the increases not be applied (for whatever reason – political, economic or both), Jeffries reckons Jio’s fortunes would take a 22% hit, reducing the $9.7bn to $7.6bn. Jio is riding high on its success in expanding its ever-growing 5G network and now has more than 90 million 5G subscribers across the country. However, to attract customers, it is currently offering 5G internet access free of charge, a state of affairs that cannot continue indefinitely. Indeed, Jio’s plans post the general election are to begin to monetise its 5G services before year end and to start to realise some return on the massive investments it has made both in 5G and in JioAirFiber, a 5G-based fixed wireless access solution that delivers high-speed connectivity of up to 1 Gbit/s to both domestic premises and enterprises. Jio estimates (and analysts are in broad agreement with the company) that JioAirFiber services could generate annual revenues of between $4bn and $9bn if it can reach 50 million to 100 million customer premises, a target that is deemed to be achievable within a couple of years. Jio’s latest quarterly figures revealed that average revenue per user (ARPU) is stuck in a rut at 181.70 Indian rupees ($1.23) per month, in part because its free 5G data is cannibalising 4G top-up data packages. Thus, later this year, Jio will increase tariffs overall, stop providing free, unlimited 5G data plans and start pricing 5G services in excess of 4G rates. Having secured a lead position in 5G in India, all this makes eminent sense and implementation of the changes should attract investors to the proposed IPO.

The fixed wireless access (FWA) market is on a path of “significant potential for growth”, with new research from CCS Insight predicting that revenue generated from such services could reach $67bn by 2027, more than doubling the revenue of $29.5bn forecast in 2023. According to the company’s latest report on the market, global FWA connections grew to 90 million in 2023, up from 69 million in 2022. Furthermore, that number is expected to reach 216 million by the end of 2027. Growth in the past year is largely attributed to 5G advancements in Asia and Africa. Essentially, FWA is quickly becoming an “accessible first broadband connection” for emerging economies that lack existing infrastructure, suffer from difficult terrains and have high mobile internet penetration, such as India, the Philippines and Indonesia. “Countries like India are rapidly adopting fixed wireless access as their main way of getting online, which presents a huge opportunity for telecom operators and device manufacturers. We forecast that two-thirds of all fixed wireless access subscribers will be based in Asia and Africa by 2027,” explained Vaishali Purohit, analyst at CCS Insight. She added that 5G FWA is not just a complementary technology but “a primary connectivity solution” in many emerging markets. Opportunity in this segment is further enhanced by device and chipset manufacturers offering reduced capability 5G (also known as RedCap 5G), for use with FWA. “The justification is that it can bring down the cost of 5G equipment and cater to value-focused offerings for fixed wireless access,” CCS Insight’s team noted in its report. According to Luke Pearce, senior analyst at CCS Insight, RedCap 5G “offers a promising and cost-effective path for migrating a massive number of users from LTE to 5G connectivity in regions with poor fixed broadband connection.” Finally, the analyst firm highlighted that FWA is not just suitable for emerging markets: The technology is also being used in advanced economies to support last-mile connectivity or is offered as an alternative “simple and fast” deployment model. Find out more.

With no binding bid forthcoming from private equity group KKR for its international networks and services division Sparkle, Telecom Italia (TIM) has announced it has received an offer from Italy’s Ministry of Economy and Finance (MEF) for the unit. “The offer also refers to the possibility of negotiating a different option, with possible adjustments to the contractual terms, in the event TIM retains a minority stake for a certain period of time and supports the implementation of the strategic plan,” noted the operator, the board of which will consider the offer at a meeting on 7 February.

In another sign that the smartphone market is stabilising, the latest figures from Canalys suggest that the decline in global shipments of handsets is slowing down. The research team estimated that total shipments for the full year 2023 stood at 1.14 billion units, down 4% from 2022 (which can be seen as a positive sign given that shipments in 2022 had fallen by 12% compared to their level in 2021). Further reason for optimism is that shipments rose 8% year on year in the final quarter of 2023 to 319.5 million smartphones. The study also found that Apple topped the vendor charts for the first time ever, with a 20% market share and 229.2 million shipments in 2023, surpassing the long-term leader Samsung, which also had a market share of 20% but recorded 225.4 million units shipped throughout 2023. Xiaomi, Oppo and Transsion rounded out the top five spots. The analyst firm attributed the shrinking decline in smartphone shipments last year to the recovery in emerging markets, including in Latin America, Africa and the Middle East. According to Sanyam Chaurasia, senior analyst at Canalys, emerging markets will remain a “strategic battleground for most smartphone vendors seeking growth” in 2024. The current year will also be important when it comes to on-device AI implementation for the high-end segment and expanding shipments in mid-to-low-end segments. “AI will span from product-level differentiation to operational and corporate strategy, varying across companies. Samsung will incorporate generative AI in its long-term product strategy. At the same time, Chinese vendors, such as Xiaomi, Vivo, Oppo and Honor, have already released flagship devices” with GenAI capabilities in their home markets, explained Toby Zhu, senior analyst at Canalys.

Veon’s Bangladeshi subsidiary Banglalink has completed the sale of part of its tower portfolio to Summit Towers for approximately 11bn Bangladeshi taka (BDT), (US$100m), as part of the telco group’s efforts to become “an asset-light digital operator”. Under the terms of the deal, Summit Towers which is owned by the largest telecoms infrastructure company in Bangladesh, Summit Communications Group, has taken ownership of 2,012 towers. In addition, Banglalink has secured the provision of tower infrastructure services for an initial period of 12 years, subject to potential extensions. Veon explained that the proceeds from the deal will be used to fulfil Banglalink’s financial commitments, to generate cost efficiencies and to free up resources for its digital expansion. Furthermore, the telco group will continue to assess and seek “collaborative opportunities” related to the remaining tower assets of its division in Bangladesh. “This sale marks an important milestone for us, as we continue to successfully execute our strategy to transform Veon into an asset-light digital operator. This is a first and an important step in crystallising the value of our infrastructure assets in Bangladesh, enabling Banglalink to focus on delivering value as a digital operator that offers its customers locally relevant digital services,” noted Kaan Terzioğlu, group CEO of Veon. Read more.

Microsoft’s AI ‘masterpiece’ reflects its trillion dollar opportunity, apparently… The technology giant has turned in fourth-quarter financials indicating that its strategy of providing “AI at scale” is paying off big time. The latest earnings report shows that it beat analysts’ estimates with an 18% year-on-year increase in revenues to $62bn, better than the $61.14bn that had been expected. The big tech firm’s earnings per share also exceeded Wall Street’s estimates of $2.93, while net income rose by a highly impressive 33% to $21.9bn. So excited was Dan Ives, the managing director and senior industry analyst at Wedbush Securities, that, in a note to investors, his enthusiasm got the better of him, reports the Investing.com website. Ives went a tad OTT, proclaiming: “This was another masterpiece quarter and guidance from [Satya] Nadella that should be hung in the Louvre.” Hopefully no angry investors will throw soup at it should Microsoft ever slide down that slippery slope. With Wall Street now anticipating that this year will see a rampaging big tech bull market fuelled by an AI spending tidal wave, the prediction is that AI will become the “transformative force of the decade” and consume between 8% and 10% of all IT budgets this year. To put those figures into perspective, corporate spend on AI was less than 1% in 2023. Ives adds that “AI is the most significant transformation the tech sector has witnessed in the last 30 years” and will “redefine how we interact with technology and data.” He continued: “Microsoft’s earnings show it’s on the cusp of a years-long, trillion-dollar AI opportunity.” The latest figures show that more than 50,000 businesses now subscribe to Github Copilot, Microsoft’s AI ‘companion’ that helps developers to write code. GitHub Copilot – not to be confused with Copilot X, which is GitHub's ‘vision’ for next-gen Copilot features and thus somewhat nebulous – is a practical cloud-based AI tool developed by GitHub, which is a wholly owned subsidiary of Microsoft, and OpenAI, which is 49% owned by Microsoft. Currently, Microsoft’s focus is very much on AI, and it’s easy to understand why. However, the creation of the “masterpiece” was helped by Microsoft’s impressive AI-assisted cloud platform Azure, which has grown its revenues by 30% year on year and has also exceeded Wall Street forecasts. Microsoft’s guidance for the next quarter calls for the further integration of AI across its entire range of business offerings, and expectations are that revenues will further be boosted in areas such as productivity and business processes, intelligent cloud, and that good-old standby, personal computing. As Ives has it, AI is going mainstream, its reach is rapidly expanding and it’s becoming an integral part of everyday technology. And, it seems, Microsoft is already particularly well placed to exploit this once-in-a-lifetime trillion-dollar opportunity.

TelecomTV has received clarification from the European Commission that the competition directorate’s approval of Zegona’s planned €5bn acquisition of Vodafone Spain relates to a consideration under the Foreign Subsidies Regulation that was introduced last year. That ruling was required as Zegona is a UK company and thus outside of the European Union.

With the Chinese New Year (according to the Middle Kingdom's ancient, traditional lunisolar calendar) happening in less than two weeks (10 February, in fact), the massive Chinese multinational technology and multimedia company, Tencent, has published its Top Ten Technology Trends report for 2024 together with its “vision” for a near future in which high-performance computing, quantum computing and edge computing will merge to redefine the future of all computing, communications and IT. Compiled and written by Tencent’s own Research Institute, the report also covers the likely implications of its vision for both business and society in general. The report is basically a panegyric to the combined potential of the enormous processing power of high-performance computing, quantum computing’s ability to resolve hugely complex problems at incredible speed, the scalability of cloud computing and the power of edge computing to perform real-time data processing at the very edge of the network in an amorphous and dynamic combination (including AI, naturally). This renders it capable, according to the report, of transforming entire industries including healthcare, finance, transportation, manufacturing, logistics and supply chains, IoT, robotics and many other sectors. The report comes ready-tinged with the beguiling hue of highly optimistic blue-sky thinking but also accepts the reality that daunting problems stand in the way of realisation of Tencent’s vision, not the least of which is the fundamental, overarching requirement for highly robust infrastructure to be in place to support the revolutionary convergence. In particular, it points out that datacentres will have a crucial role to play in providing the necessary computing power and storage capacity and follows up that assertion with an undisguised (and thankfully short) advertorial for Huawei’s cooling technologies that claim to be able to best manage the heat generated by datacentres. The paper ends with the traditional call for business leaders “to stay ahead of the curve and harness this convergence to drive innovation and create new opportunities” and then descends into the usual  corporate-speak generalities that display all the hallmarks of being cobbled together by first generation AI from a collection of mission statements scraped from around the world during the past 50 years. Thus, “by understanding the implications, exploring real-life examples, and addressing challenges like infrastructure, we can pave the way for a future where these advanced technologies work in harmony, pushing the boundaries of what is possible and revolutionising the world as we know it. The time to embrace this convergence is now, as it promises to be the catalyst for the next wave of transformative change.” This, Tencent says, will happen soon, but no actual target date is given.

- The staff, TelecomTV