What’s up with… CityFibre, Huawei, Zayo

• CityFibre finally hits profitability
• US puts further chip pressure on Huawei 
• Zayo does the splits

In today’s industry news roundup: UK wholesale broadband operator CityFibre records a profitable quarter as its customer connections reach 400,000; the US is reportedly clamping down even further on the supply of US chips to Huawei; network operator Zayo spins out European and international units; and much more!

It’s been a long time coming but CityFibre, the UK independent wholesale fibre-to-the-premises (FTTP) network operator that had the determination and, ultimately, the funding to take on BT’s quasi-autonomous fixed broadband wholesale unit Openreach, has finally achieved profitability. According to the company, it achieved a “positive EBITDA performance for the full three months ended 31 March 2024, ahead of its target to break even in the first half of the year. Quarterly revenues have increased by more than 30% year-on-year,” the company noted, without providing any sales numbers. CityFibre says its customer connections now exceed 400,000, an increase of 77% year-on-year and that it is “regularly installing over 1,000 new customers a day.” In January, CityFibre was awarded five new contracts under the UK government’s Project Gigabit scheme, bringing its total to nine contracts worth almost £800m in subsidies. Its extensive participation in Project Gigabit has “led to a reprofiling of CityFibre’s build, densifying the rural areas close to its existing urban assets,” the company noted. Its network currently reaches 6 million UK premises and its current target is 8 million. Read more.  

The US government reportedly revoked licences with immediate effect on Tuesday that allowed Intel, Qualcomm and other chip vendors to continue to export their products to Huawei, according to Reuters. Restrictions on the export of US technology to Chinese vendors have been in place for a number of years but the US Department of Commerce had allowed some exports. However, it seems the growing strength of Huawei, which is improving its sales and profits and once again becoming a force in the smartphone sector, is leading to ever greater restrictions that, ultimately, will impact US chip firm sales.  

Long-distance network operator Zayo has decided to split its business into three separate units by spinning out two parts of its existing operations. One will be the operator’s European operations, which has a new CEO in the form of former Vodafone executive Colman Deegan and which comprises a “mostly owned” fibre network spanning eight countries in north-west Europe and staffed facilities in London, Paris, Stuttgart, and Sofia. According to the operator, giving the European operation its independence will help it to better “achieve [its] growth objectives”, though quite why that would be the case is not explained in the official announcement other than that the move will “simplify operations” and provide the unit with greater “flexibility”. The other new independent unit is the business that “manages customers’ global network needs outside of Zayo’s core North American and European networks”: It will also have its own management team. Zayo is currently owned by private investment firms EQT and DigitalBridge, which acquired the operator in 2019 in a deal valued at $14.3bn. The company doesn’t share its financials but before it was made private it generated annual revenues of around $2.5bn.  

Saudi telco STC reported a 7.76% year-on-year increase in revenue for the opening quarter of 2024, to 19.1bn Saudi riyal (SAR) (around US$5bn). It noted that this growth was mainly attributed to a rise in its domestic market revenues and was driven by gains across its commercial unit, as well as its carriers and wholesale division, offsetting a decline recorded in business unit revenues. Additionally, STC’s subsidiaries in other markets also grew by a combined 13%. The telco group’s earnings before interest, taxes, depreciation and amortisation (EBITDA) rose by 16.3% year on year to 6.5bn SAR ($1.7bn). Read more.

Millicom, which provides mobile and fixed broadband services under the Tigo brand in nine Latin American markets, has reported increases in its first-quarter results. Its revenue was up 8.6% year on year to $1.5bn, driven by a service revenue surge on the back of “stronger currencies and organic growth”, as well as by “large B2B contracts in Panama” and a return to growth in Guatemala. Its EBITDA rose 24.5% year on year despite the company incurring $30m in restructuring costs in the period. “I am very pleased to report that 2024 is off to a good start, as the combination of key investments and strategic initiatives implemented over the last several years, combined with savings from both phases of Project Everest [a programme by the telco to deliver run-rate savings of more than $100m by the end of 2024], produced strong Q1 performance on many fronts,” commented Mauricio Ramos, CEO of Millicom. Find out more.

Canadian operator Telus has beefed up its digital security portfolio for North American businesses by acquiring Vumetric Cybersecurity, which specialises in advanced penetration testing for identifying cyber vulnerabilities. The takeover sees Telus add to its portfolio Vumetric’s digital platform, which is integrated with major cloud platforms and delivers “a cutting-edge, client-centric approach to cybersecurity testing”. According to the telco, this will help businesses to “proactively strengthen their cybersecurity with efficient, on-demand testing”. Alongside the announcement, Telus cited alarming figures that suggested the number of cyber threats is escalating and leading to an average global cost of $4.45m in terms of data breaches, up 15% over the past three years. Read more.

Japanese telco giants SoftBank and KDDI are considering expanding their combined efforts to build out 5G networks across Japan. In a statement, they announced they are discussing plans to expand their joint initiative for deploying 5G networks together, through their joint venture 5G Japan. They will consider expanding applicable coverage locations from rural to nationwide areas, and will explore the mutual use of 4G base station assets. Through such an expansion, the two operators will aim to build out a total of 100,000 base stations each by the fiscal year 2030 (ending 31 March 2031), and each achieve capital expenditure (capex) reductions of 120bn Japanese yen (US$771m). Under 5G Japan, they have already built out more than 38,000 base stations each.

Just days after announcing it had received an unexpected takeover offer, US internet service provider (ISP) WideOpenWest (WOW), which offers broadband and TV services in six states in the midwest and south of the country, has reported first-quarter revenues of $161.5m, down 6.2% year on year, and adjusted EBITDA of $67.4m, up by 3.4% year on year. It ended March with a subscriber base of 500,700, a decrease of 26,600, or 5%, compared with a year earlier and down 3,400 from the end of 2023. Late last week, WOW announced it had received an unsolicited takeover offer from DigitalBridge Investments and Crestview, which are offering to acquire the shares that Crestview doesn’t already own for $4.80 in cash (Crestview is already WOW’s biggest single shareholder with a stake of 38%). That offer values WOW at just under $400m. WOW is forming a special committee of independent directors to evaluate the acquisition proposal.  

UK operator Virgin Media O2 (VMO2) has hooked up with Accenture to tackle the UK market for private 5G networks, which the partners believe to be worth as much as £500m. 

- The staff, TelecomTV