• BT doubles down on UK focus as revenues shrink
• Qualcomm ends its fiscal year with strong results
• Telefónica on course for full year targets despite Q3 sales dip

In today’s industry news roundup: BT’s numbers are suffering due to its international operations as well as domestic competition, but it looks like its Global Fabric network will remain part of its future plans; Qualcomm had a strong end to its financial year, helped by accelerating demand for its automotive chips; Telefónica is hit by currency exchange fluctuations in Q3 but reports strong cash flow; and much more

BT Group hammered home the message that its international operations are a drag and that next-gen network investments in the UK are key to the company’s future as it presented its fiscal half year results for the six months to 30 September. There was quite a clear signal, though, that the telco’s sparkly new international Global Fabric network will survive (to a certain extent at least) any purge of international assets. BT’s revenues were down by 3% year on year to £10.1bn, “mainly due to challenging conditions” in BT Business (the division that provides services to enterprise customers) ”principally driven by non-UK trading in our Global and Portfolio channels,” the operator noted in its earnings release. Adjusted EBITDA edged up by 1% to £4.1bn thanks to cost reductions, which to a certain extent came from ongoing job cuts that are part of its previously announced long-term plan to reduce its payroll to between 75,000 and 90,000 roles – the operator’s headcount shrank by 2,000 during its fiscal first half to 118,000. The UK telco maintained its full year guidance for earnings before interest, taxes, depreciation and amortisation (EBITDA) but noted that it has revised its full year revenues down by between 1% and 2% because of difficult trading conditions in its overseas operations, together with spending constraints in both the corporate environment and the public sector and a highly competitive retail environment. Speculation is swirling currently about the future of BT’s operations outside the UK, especially as CEO Allison Kirkby made it clear in May this year that the company’s future lay in its domestic opportunities, but a question mark has been hanging over the prospects for the Global Fabric network that has taken years to deploy and is set to start commercial operations in early 2025 (see What now for BT’s Global Fabric?). BT partly answered that question today by reiterating its strategy to focus on the UK “where we have a strong competitive advantage” but noting that “while our global business sits outside this strategy, it shows strong commercial opportunity as we roll out Global Fabric, our network-as-a-service. We will explore ways to optimise the business and potentially partner to achieve scale.” BT, it seems, is keen to retain Global Fabric though is open to sharing it. So what of the UK, where BT is now so focused and where it has long pledged to reach 25 million premises with its fibre access lines by the end of 2026? Kirkby noted: “Our nationwide full fibre rollout has set new records, now reaching more than 16 million premises, and we have further extended our industry-leading take-up rate to 35%. Our cost to build continues to reduce, enabling us to increase this year’s build target to 4.2 million with no additional capex [capital expenditure] spend. We also expanded our 5G network to cover 80% of the UK population, more than any other operator. These investments in the UK’s next-generation networks are enabling much better experiences, reflected in our improved net promoter scores.” In addition, BT claims to be making solid progress on broadband ARPU (average revenue per user) at Openreach (BT’s wholly owned but quasi-autonomous fixed access network division) as it grew by 6% year on year to £16, driven by the accelerating trend by consumers to opt for fibre-to-the-premises (FTTP) connections. However, there’s likely to be a sting in the tail for consumers. The recent budget set by the UK’s new Labour government increased employers’ National Insurance (NI) contributions, and BT calculates it will cost the company an additional £100m per year – you can bet that additional burden will be met not by BT but via its subscribers. Investors were clearly hoping for better news overall, though, as BT’s share price slumped by 6.8% to 132.5 pence on the London Stock Exchange in Thursday trading, though it is still 6% higher than at the start of the year.  

Wireless chip giant Qualcomm had a very good end to its fiscal year, reporting a 19% year-on-year increase in revenues for its fiscal fourth quarter that ended 29 September to $10.24bn, while its pre-tax profits grew by 83% to almost $2.6bn. For its full financial year, Qualcomm reported revenues of almost $39bn, up 9%, and pre-tax profits of $10.34bn, up by 39%. In its products division (QCT), Qualcomm reported good growth across all three lines – handsets, automotive and IoT – but particularly strong growth for its automotive unit, which reported a 68% year-on-year increase in fourth-quarter revenues to $899m. Experienced technology sector analyst Richard Windsor was impressed with the vendor’s results. “Qualcomm reported good results that beat expectations as a result of a strong performance in automotive, providing the first piece of hard evidence that the diversification strategy is beginning to bear fruit,” he noted in his latest Radio Free Mobile blog, adding that he believes the company is winning market share and benefitting from a shift to using its own chip designs rather than those from Arm. Qualcomm also issued a projection for the first quarter of its current financial year, with revenues expected to be in the range of $10.5bn to $11.3bn, ahead of expectations.      

Telefónica has blamed currency exchange rate fluctuations (especially with the Brazilian real) for its 2.9% year-on-year dip in third-quarter revenues to just over €10bn and a 2.5% dip in EBITDA to €3.26bn. Despite the dip in those numbers, the operator, which has operations across Europe and Latin America, said it is still on course to meet its previously stated (and rather modest) full year targets of a 1% increase in revenues and EBITDA growth of between 1% and 2%. In addition, Telefónica did significantly improve its free cash flow, an indication of a company’s financial health, by almost 90% to €866m in the third quarter, enabling the telco to confirm it will pay shareholders dividends of €0.30 per share this year (in two tranches). Across all of its operating units the telco now has 393 million customers “thanks to the acceleration of commercial activity in its key markets, particularly in Spain, where it achieved its highest net customer additions in six years,” it noted in this announcement, adding that it was helped by ongoing investment in its 5G and fibre access networks. “We continue to transform the networks with a strategic focus on quality and robustness, and we do so with a higher degree of customer satisfaction,” stated Telefónica chairman and CEO José María Álvarez-Pallete. “The opportunities ahead are enormous and Telefónica will continue to effectively leverage its resources to drive growth at the service of our shareholders and customers,” he added. 

The ramifications of Donald Trump’s success in the US election are legion, with various regulatory and financial changes expected when he returns to the White House in 2025. One of the least surprising changes will be to the makeup of US telecom regulator the Federal Communications Commission (FCC), where a pro-Republican commissioner will be given the top spot. The expectation is that Brendan Carr, one of the FCC’s current commissioners, will get the nod: He effectively applied for the role by kicking up a stink after last weekend’s appearance by Kamala Harris on the comedy TV show Saturday Night Live, suggesting that broadcaster NBC should be sanctioned for partisan behaviour, The Verge reported. The thorny topic of net neutrality is also likely to rear its head again, with the likelihood that the net neutrality rules reintroduced earlier this year will be reversed once again (Carr was particularly opposed to their reinstatement). And quite how any import tariff changes might impact the telecom sector is anyone’s guess right now… but like all industry verticals, telecom should be braced for sudden and significant changes once Trump is back in the hot seat.  

And now – quantum Lego! Its pieces are very small but what they make is remarkable. Finding it hard to get your head around the theoretical mathematical model of how, in a quantum computer, a sufficient number of qubits can be linked to perform meaningful calculations? You are not alone! For that to happen the ‘ones’ and ‘zeros’ (or ‘ups’ and ‘downs’) of any qubit must be aligned via the fundamental quantum mechanical property of ‘electron spin’ that enables them to interact with one another to provide the vital ones and zeros. When two or more spins are quantum-mechanically linked, they influence the state of each other such that when the orientation of one is changed it will also change for all the others. This phenomenon is perceived to be the most evident way to make qubits communicate with one another, but observing and controlling interactions between the spins is mind-bendingly complex. The process can be described mathematically but, hitherto, has never been realised in a real, physical synthetic material. Now though, research scientists in Zurich, at the Swiss Federal Laboratories for Materials Science and Technology (Empa) have used what is described as “quantum Lego” to recreate the theoretical quantum model. Working together with other researchers from the Technical University of Dresden, Germany and the International Iberian Nanotechnology Laboratory in Portugal, the scientists, under the leadership of Roman Fasel, the head of Empa’s Nanotech Surfaces Laboratory, used minuscule pieces of the two-dimensional carbon material, graphene, to create longer chains of spin-carrying molecules that were linked together on a surface of pure gold. With this methodology and in a controlled environment, many spins were enabled to communicate with one another whilst the researchers “listened” to the interactions, selectively switched individual spins on and off, and rotated them from one state to another and worked out what was going on. It is hoped that the breakthrough research will help towards finding the solution of the “quantum measurement problem” where, when measuring a quantum system, such as an electron in a state of superposition (i.e. in two states at once), the system will collapse and the electron will assume one state or another. It is still not known why this happens. Fasel commented: “Real materials are always much more complex than a theoretical model. We have shown that theoretical models of quantum physics can be realised with nanographenes in order to test their predictions experimentally. Nanographenes with other spin configurations can be linked to form other types of chains or even more complex systems.” Another step forward on the road to commercial quantum computing. The breakthrough research is published in Nature Nanotechnology, the monthly peer-reviewed scientific journal from the Nature Publishing Group. 

– The staff, TelecomTV