What’s up with… Carlos Slim & BT, Vodafone Spain, Broadcom

• Carlos Slim snaps up a 3% slice of resurgent BT 
• More than one third of Vodafone Spain’s staff are set to be axed
• AI and VMware revenues boost Broadcom sales

In today’s industry news roundup: Mexican telecom giant Carlos Slim splashes more than £400m on BT shares; Vodafone Spain’s new owner Zegona is cutting almost 1,200 staff at the Spanish operator; VMware revenues are helping Broadcom’s sales boom; and much more!

Investment firms controlled by telecom sector entrepreneur and billionaire Carlos Slim, who founded and still controls Latin American telecom giant América Móvil, have snapped up a 3.16% stake in BT, according to a filing made by the UK national telco with the London Stock Exchange (LSE) late on Wednesday. The move gave BT’s share price a boost in trading on Thursday as it gained 3% to 133.3 pence on the LSE, giving BT a market capitalisation of almost £12.9bn and valuing Slim’s stake in the UK telco at just over £400m. The move comes just weeks after BT’s new CEO, Allison Kirkby, announced that the operator had “reached the inflection point on our long-term strategy” and planned to further cut costs and retrench its operations in the coming years: That announcement, which was delivered as BT announced modest full financial year results on 16 May, gave the telco’s stock a 12% boost to 127 pence at the time. BT’s current share price is about 20% higher than when Kirkby took the reins at the beginning of February this year. Slim clearly believes the new CEO has what it takes to improve BT’s financial standing and take advantage of the fibre access and 5G infrastructure in which the UK telco has been investing for several years. Slim isn’t the only investor in BT from the telecom world: Altice owner Patrick Drahi holds a 24.5% stake while Deutsche Telekom’s stake is about 12.5%.     

Only days after it completed the €5bn acquisition of Vodafone Spain, Zegona Communications is reportedly preparing to cut the Spanish telco’s headcount by 1,198, more than a third of the total workforce, according to unions informed of the plan. According to local reports, such as this one from Efe, the service provider says it needs to make the cuts to reduce its costs as its revenues are declining and it has lost about 400,000 contract mobile customers in the past couple of years. Vodafone Spain, which has more than 13 million mobile and about 3 million fixed broadband customers, has annual revenues of €3.9bn and cash flow (EBITDA less capex and spectrum\licence costs) of €400m, and a high-speed fixed broadband network that passes 10.7 million homes (95% of Spanish households). When the acquisition (first announced last October) completed on 31 May, Zegona’s chairman and CEO Eamonn O’Hare described Vodafone Spain, the country’s third largest operator, as a “scale business with significant cash flow potential” that has a “strong market positions in both consumer and B2B segments.” He added that the new team in charge looked forward to “transforming the business and returning it to growth,” and slashing the operating costs through mass redundancies looks like the first big step in that process.  

News of the cuts comes only days after Vodafone Spain issued a press release noting that it is now five years since it launched the first commercial 5G network in the country and that it has invested €2.3bn in its mobile network since 2019. Currently, its 5G services reach more than 82% of Spain’s population and it boasts more than 2 million 5G customers. 

Broadcom, which completed its $61bn acquisition of VMware in November last year, has reported a 43% year on year increase in revenues to $12.5bn for its fiscal second quarter that ended 5 May. "Broadcom's second quarter results were once again driven by AI demand and VMware,” noted Hock Tan, Broadcom’s president and CEO. “Revenue from our AI products was a record $3.1bn during the quarter. Infrastructure software revenue accelerated as more enterprises adopted the VMware software stack to build their own private clouds," added Tan, and as a result the vendor is raising its fiscal year 2024 guidance for consolidated revenue to $51bn and adjusted EBITDA to 61% of revenue. Broadcom’s CFO Kirsten Spears, stated: "Consolidated revenue grew 43% year-over-year to $12.5bn, including the contribution from VMware, and was up 12% year-over-year, excluding VMware. Adjusted EBITDA increased 31% year-over-year to $7.4bn. Free cash flow, excluding restructuring and integration in the quarter, was $5.3 billion, up 18% year-over-year. Today we are announcing a ten-for-one forward stock split of Broadcom's common stock, to make ownership of Broadcom stock more accessible to investors and employees." Broadcom has come under fire in recent months following changes to its VMware product licensing terms that has resulted in sharp increases in costs for its VMware customers, including telecom operators: European Union antitrust regulators have asked Broadcom for information about its recent changes, Reuters reported recently. 

The cost-of-living crisis is clearly diverting the disposable income of Europeans away from ‘going out’ and towards ‘staying in’, as European subscribers are now spending an average of €696 on subscription apps and services every year in addition to their communications services bills. That’s according to the findings of a new report, European Subscription Wars, digital payments and marketing technology specialist Bango. According to the report, which is based on the results of a survey of 5,000 consumers based in five countries, the Brits fork out the most – €814 per year on average – followed by France (€780), Spain (€720), Germany (€684), and Italy (€600). According to Bango, which offers telcos (and companies in other sectors) a Digital Vending Machine platform that enables the ‘super bundling’ of products and services, “European subscribers are increasingly seeking simplified management solutions” via which they can manage their multiple streaming services. “Over half (58%) express a desire for an all-in-one subscription platform that allows access to all services within a single content hub and provides the convenience of managing all subscriptions and accounts through one monthly bill,” notes Bango in this announcement. 

Vodafone Group has struck a partnership agreement with Azerconnect Group, a “key player in Azerbaijan's ICT and high technology industries,” according to the telco. The partner market agreement will enable Azerconnect Group to “accelerate development in crucial areas such as digitisation, security operations centres, network technologies and commercial services,” according to Vodafone, which will provide strategic consultancy services with the aim of helping Azerconnect to optimise its cost base and develop new business opportunities. Read more. 

Bath, UK-based fibre broadband altnet Truespeed says its network now reaches 100,000 premises and that it has now connected 21,000 homes in the South-west of England. CEO James Lowther noted: “Since we started in 2014, our mission has been to provide communities not only with world-class broadband, but also world-class customer service. The South West is one of Britain’s most under-served regions for broadband and we’re on a mission to bridge the digital divide and deliver high-quality, reliable broadband to communities across the region.” Read more. 

Deutsche Telekom is feeling pleased with itself as the generative AI (GenAI) that it and its enterprise IT services division, T-Systems, offer have been identified as “leaders” by research firm ISG in its report titled Microsoft Cloud Ecosystem 2024. The acclaim is for their respective Microsoft clouds (Azure, Microsoft 365 and Dynamics 365) – Deutsche Telekom for customers from the SME sector, T-Systems for large companies. “According to the study, T-Systems is already setting standards for generative AI projects in the early market phase with compliance-compliant solutions and innovative services,” noted DTR. “The IT service provider already offers highly developed AI applications with its M365 Managed AI Cognitive Services and M365 Managed Copilot,” it added in this press release.  

- The staff, TelecomTV