What’s up with… Digi, Mynt, Vodafone UK/Three

• In Vodafone’s wake, Digi sweeps in to snap up Nowo 
• Philippines digital cash giant Mynt valued at $5bn  
• UK competition watchdog extends Vodafone UK/Three merger probe

In today’s industry news roundup: Digi Communications is hoping to succeed where Vodafone failed by acquiring Portuguese network operator Nowo; Globe Telecom-backed Mynt, which runs popular digital payments platform GCash in the Philippines, has attracted new investors at a valuation of $5bn; the UK’s Competition and Markets Authority gives itself eight extra weeks to ensure it reaches the right decision on the proposed merger of Vodafone UK and Three; and much more!

Ambitious European operator Digi Communications, which is already a significant service provider in Romania and Spain, is now set to become a telco mover and shaker in Portugal with the €150m acquisition of Nowo Communications, the country’s fourth-largest network operator that Vodafone tried to acquire before being thwarted only last month by Portugal’s competition watchdog, the Autoridade da Concorrência (AdC). Digi, which has already been investing in its own fibre access network infrastructure in Portugal, announced late last week that it has agreed to acquire Cabonitel, the parent company of Nowo, which has 270,000 mobile customers and 130,000 customers for its pay-TV and broadband services. Nowo also holds spectrum licences in the 1800 MHz, 2.6 GHz and 3.6 GHz frequency bands. Digi shouldn’t face any opposition from the AdC, which barred Vodafone from acquiring Nowo because it decided that Nowo’s presence in the market had been keeping its three larger rivals – Altice Portugal (Meo), Vodafone Portugal and Nos – in check and that if Nowo wasn’t there to keep the big three honest, prices would likely rise dramatically at a time when the cost-of-living crisis continues to put pressure on the disposable income of the Portuguese population. If Digi acquires Nowo there will still be four rivals competing for business and, in theory, with Digi’s support Nowo should increase the competitive pressure on Meo, Vodafone and Nos. It’s likely we will hear more about Digi’s plans for Portugal (as well as Belgium, where it is set to launch mobile and broadband services any time now) when the company announces its second-quarter results on 14 August. The big question now, though, is what Vodafone will do: It was trying to solidify its position as the number-two player in Portugal by acquiring Nowo but now that option is off the table, the powers that be at Vodafone Group level may well reconsider whether it looks to offload that business, something it has already done elsewhere on the Iberian peninsula with the recent €5bn sale of Vodafone Spain to Zegona Communications.  

Mynt, which runs the popular digital payments platform GCash in the Philippines, has attracted new investors at a valuation of almost $5bn, news that is music to the ears of Globe Telecom, which holds a near 36% stake in the company, and Singtel, which in turn holds a 22% stake in Globe. According to Mynt (aka Globe Fintech Innovations), it has “successfully secured fresh strategic investments from Ayala Corporation, one of the largest and most enduring conglomerates in the Philippines, and Mitsubishi UFJ Financial Group [MUFG], Japan’s largest banking group and one of the largest financial institutions globally. This latest deal pushed Mynt’s valuation to $5bn, more than doubling its $2bn valuation from the last funding round in 2021.” Both new investors are each taking an 8% stake in the digital payments firm; Ayala, an existing investor, increased its stake from 5% to 13% by acquiring shares worth $393m; and MUFG is set to invest the same amount. The other main investor in Mynt is Chinese fintech giant Ant Group, which holds a stake of about 34%. Cezar Consing, president and CEO of Ayala, stated: “We like the long-term growth prospects of Mynt. It is a clear leader in a fast-growing space and a key contributor to the Philippines’ economic growth. Mynt is valuable because it enables underserved Filipino consumer and business segments to thrive.” GCash reportedly had about 94 million registered users at the end of 2023, of which some 40 million are regular, active users. Mynt, which is being lined up for an IPO, operates two fintech companies: GCash (which also goes by the more official name of GXI); and Fuse Lending, a tech-based lending company that gives Filipinos access to microloans and business loans.

The UK’s Competition and Markets Authority (CMA) needs more time to investigate the proposed £16.5bn merger of Vodafone UK and Three because “it will not be possible to complete the investigation and to publish its final report within the revised reference period,” the watchdog noted in this announcement. Pressure has been growing on the CMA to reject the merger, so the authority wants to be sure it gets its decision right and is able to fully explain its final outcome in what will be a landmark decision for the UK telecom sector: If the CMA approves the deal and Vodafone UK and Three merge their businesses and networks, the UK’s mobile sector will have just three infrastructure-based operators, with BT’s EE and Virgin Media O2 (VMO2) being the other two. In June, the CMA extended its investigation deadline to 12 October and now it has extended it again by eight weeks to 7 December, though it noted that its final report might be published sooner.  

Australian operator TPG Telecom has revived talks for a potential sale of its fibre network to Vocus Group some nine months after it ended negotiations on the same deal. In an announcement to the Australian Securities Exchange, the telco noted that the two companies “have engaged in non-exclusive discussions” as the telco continues “assessing value-optimising alternatives for its fixed infrastructure assets as part of a strategic review”. TPG recalled that discussions with Vocus Group on a sale of its fixed network assets for AUS$6.3bn (US$4bn) did not lead to a transaction, and “there is no certainty a transaction will eventuate from the current discussions”. Previous negotiations fell through in November because “the proposed transaction involved considerable complexity and, ultimately, the parties have been unable to reach alignment on the operating model and commercial terms,” the telco explained at the time. The deal was first proposed in August 2023 and included TPG’s enterprise, government and wholesale assets, as well as associated fixed infrastructure and its residential fixed access business Vision Network.

As if the heavens aren’t crowded enough already, a new report from Juniper Research forecasts that, over the next five years, various satellite operators (and there are an increasing number of them) will launch 15,000 new ‘birds’ that will support the anticipated massive expansion of the internet of things (IoT). As of 4 May this year, the satellite tracking website Orbiting Now listed a total of 9,900 active satellites in various earth orbits. Geostationary-earth orbit (GEO) satellites, orbiting at 35,786 km above the earth, account for 12% of that total, while MEO (medium-earth orbit) satellites, usually orbiting anywhere between 5,000 km and 15,000 km above the earth and which are primarily used by global position systems (GPSs), account for just 3%. Low-earth orbit (LEO) satellites, mostly used for communications services purposes, orbit at between 500km and 1,000km above the earth’s surface and dominate the sector, accounting for 85% of the total, and the number of LEO satellites being propelled into space is growing by the week. Those 8,400-plus LEO birds are already making the astronomic observations of bodies beyond satellite orbits increasingly difficult. Furthermore, after sunset, the satellites become reflective, moving points of light. Easily seen from the ground, they are destroying areas of valuable and cherished “dark skies” around the world. That’s going to get worse when 15,000 more are added to the total to help service the needs of the IoT sector. According to the Juniper Research team, “the number of satellites in orbit that can be leveraged for IoT connectivity will grow 150% over the next five years, meaning that they will increase from the 10,000 or so currently in orbit to at least 24,000 by 2029. This, it seems, will be because of the ever-increasing demand for “connectivity in nomadic locations from IoT network users.” Some 98% of satellites launched between now and 2030 will be LEO constellations, mainly because they are so relatively inexpensive to build and launch. This, the report says, will enable satellite IoT providers to cater for the wide spectrum of IoT use cases, including data-intensive and LPWA (low-power, wide-area) connections. The recommendation of the Juniper study is that satellite network operators should form strategic partnerships able to fill in coverage gaps between LEO and GEO capabilities. Construction and infrastructure, together with logistics, are identified as two key growth opportunities. If this goes on, it won’t be long before Elon Musk, or one of his rivals, will be sending astronauts up to do space walks carrying very expensive crowbars to lever parts of the global satellite traffic jam apart so that humanity can look up at night and confirm that the moon is still there…

Nokia will be pleased to see that Infinera, the optical equipment vendor it has agreed to acquire for $2.3bn, has reported better-than-expected results for the second quarter of this year. Infinera generated revenues of $342.7m for the three months that ended on 29 June, an 11.7% improvement over the first quarter but down by 8.9% year on year, while gross margins improved both sequentially and year on year. Infinera CEO David Heard stated: “I am pleased with our second-quarter results, with revenue, gross margin and operating margin all above the midpoint of our outlook range. While the timing and pace of customer demand recovery remain uncertain, we continued our design-win momentum across our optical networking product portfolio in the quarter, with bookings up both sequentially and on a year-over-year basis… We remain excited about our pending combination with Nokia. Customers see value in accelerating the pace of innovation to lower both the cost per bit and power per bit required to stay ahead of the capacity demands fuelled by high-bandwidth usage applications including AI. Together, the combined business would have a broadened portfolio, greater scale and geographic reach, while leveraging vertically integrated optical semiconductor technologies developed here in the US,” added Heard. Read more. 

Back in 2018, it was an odds-on bet that Huawei of China would provide the network infrastructure for at least one of New Zealand’s planned 5G networks to be run by Spark, 2Degrees and One New Zealand (formerly Vodafone), the three biggest network operators in the Land of the Long White Cloud. Indeed, Huawei had already supplied the equipment used by Spark to build its 4G network, and so delighted was the telco with the result that then-CEO, Simon Moutter, publicly (and prematurely as it turned out) announced that it would again work with Huawei to upgrade its network to 5G. But there’s many a slip between cup and lip, and when, in due course, Spark went to New Zealand’s Government Communications Security Bureau (GCSB) to get the approval for such plans, it expected the process to be little more than an exercise in the wielding of a rubber stamp. So it was somewhat taken aback when the approval was denied on concerns that a Huawei 5G network would be a threat to national security. In official legal terms, the prohibition was because Huawei failed to meet the standard set in New Zealand’s 2013 Telecommunications (Interception Capability and Security) Act, commonly referred to as TICSA. New Zealand’s National Cyber Security Centre, NCSC, an agency under the aegis of the GCSB, said the decision to keep Huawei out of national telecom networks was to ensure “any changes to our telecommunications network infrastructure, which underpins the operation of many other critical infrastructure sectors, do not create network security risks”. The decision resulted in New Zealand’s other telcos and mobile virtual network operators (MVNOs), all of which had become increasingly reliant on Huawei hardware and software, doing a swift about-turn and ceasing to buy cost-effective and highly efficient Huawei products. Now, there are no more than minimal bits and pieces of ageing Huawei equipment still operating but these are isolated far from any network cores. They too will be retired, swapped-out and replaced in due course. Of the operators, One New Zealand, the country’s biggest mobile service provider, has historically been less exposed to Huawai and other Chinese vendors and has nothing that needs replacing, thanks in part to its long-term relationship with Nokia. However, as news website Scoop.co.nz reports, ripping out Huawei infrastructure has been an expensive undertaking for New Zealand’s telcos. Infrastructure from the likes of 5G equipment vendors, such as Ericsson, Nokia and Samsung, is considerably more expensive. Paying more than they have been accustomed to with Huawei puts financial pressure on the mobile service providers and could delay 5G network rollouts, especially to the many small towns and rural areas that characterise much of New Zealand. Furthermore, given that it’s always the customer that pays in the end, potential subscribers could well decide not to sign up for the heavily hyped but as yet unproven benefits of 5G, especially if already high prices are raised even higher to bolster lower-than-expected operator profits.

- The staff, TelecomTV