What’s up with… e&, AWS, BT

• e& linked to United Group swoop, soars in Q1
• AWS is now a $100bn annual turnover operation
• BT taps AWS for AI smarts, powers up EV chargers

In today’s industry news roundup: Middle East giant e& reports impressive first-quarter growth and is once again linked to a potential bid for European service provider United Group; Amazon Web Services (AWS) reports first-quarter revenues of $25bn, up by 17%, and launches its Amazon Q generative AI assistant; BT, an early user of Amazon Q, boosts its green credentials by powering up its first electric vehicle charging unit that runs off its street cabinet infrastructure; and much more!

Middle East giant e& has once again been cited as the potential acquirer of United Group, the multicountry telecom and pay-TV service provider that has operations across south-east Europe (Bulgaria, Serbia, Croatia, Bosnia and Herzegovina, Slovenia, Greece, North Macedonia and Montenegro). Bloomberg has reported that BC Partners, the current majority owner of the European service provider (KKR holds a minority stake), is seeking to sell its stake in a deal that would value United Group at about €8bn, according to anonymous sources cited by Bloomberg, and that a formal sale process will begin in the coming weeks. According to the report, e& is considering a bid, a move that would add further scale to its existing communications network assets in central and eastern Europe, where last year it acquired a controlling stake in the telecom assets of PPF Group across four markets (Bulgaria, Hungary, Serbia and Slovakia). Both e& and STC (Saudi Telecom) were cited as potential bidders when speculation first emerged in March that BC Partners might look to cash in on its United Group stake, which it acquired in 2019. For 2023, United Group reported revenues of €2.8bn and earnings before costs and adjustments of €988m: It ended last year with 5.3 million broadband and fixed line customers and more than 7.3 million mobile subscribers, while its pay-TV and streaming video services are used by more than 8.2 million households.    

Rumours of e&’s interest in the European service provider emerged just as the Middle Eastern giant was reporting its first-quarter financials. Group revenues were up 9% year on year to 14.2bn Emirati Dirham (AED) ($3.87bn), with about two-thirds of those sales generated by its operations in the United Arab Emirates (UAE). Operating profit for the quarter increased by 36% to AED 4.8bn. e& ended March with 173 million customers across all of its operations in the Middle East, Africa and Asia, up from 164 million a year earlier, with that increase “driven by robust subscriber acquisition” in Egypt, Pakistan, UAE and Africa. Group CEO Hatem Dowidar noted: “Our evolution as a tech-co that embraces the future is reflected in our Q1 financial results, building on the momentum of last year’s success… This is a testament of the strategic choices we’ve made in diversifying our portfolio, fortifying our brand, and cementing partnerships in our unrelenting efforts to digitally empower the people and communities we serve while maximising value creation for our shareholders.” As we have already reported this week, e& is just one of a number of operators evolving from telco to the techco model. 

Cloud giant Amazon Web Services (AWS) recorded a 17% year-on-year increase in first-quarter revenues to $25bn (giving it an annual revenue run rate of $100bn!) and an operating profit of $9.4bn, up by 84%. The numbers were published in Amazon.com Inc’s earnings release. “The combination of companies renewing their infrastructure modernisation efforts and the appeal of AWS’s AI capabilities is reaccelerating AWS’s growth rate,” boasted Andy Jassy, Amazon president and CEO. The big tech firm also announced the general availability of Amazon Q, which it claims to be “the most capable generative artificial intelligence (GenAI)-powered assistant for accelerating software development and leveraging companies’ internal data. Amazon Q not only generates highly accurate code it also tests, debugs, and has multi-step planning and reasoning capabilities that can transform (eg. perform java version upgrades) and implement new code generated from developer requests.” One of the early users is UK national telco BT, which has “provided Amazon Q Developer to 1,200 of its engineers, generating more than 100,000 lines of code in its first four months and automating approximately 12% of the repetitive and time-consuming work done by software engineers using the platform.” So Amazon and AWS are pushing a big AI story, but not everyone’s convinced that AWS is as well placed as its hyperscaler rivals to take full advantage of the enterprise sector’s massive interest in GenAI. Experienced tech sector analyst Richard Windsor believes that while AWS is benefitting from the GenAI boom right now, that’s mainly to do with its infrastructure might and that, ultimately, the main beneficiary is Nvidia as AWS will need to remain invested in the vendor GPUs to deliver against customer demand. But as Nvidia is selling to everyone, in time more than just processing power will be needed. Windsor reckons AWS lags behind Microsoft and Google in terms of actual AI expertise and that, at some point in the future, it will end up acquiring Anthropic, the AI language model developer in which it recently invested another $2.75bn, “in order to give itself a competitive offering in generative AI.” For more on Windsor’s take on AWS and the GenAI sector, check out his latest Radio Free Mobile blog.   

Talking of BT… In January, the UK telco announced plans to build up to 60,000 electric vehicle (EV) charging units powered by its street cabinets. Now the first of those units has been installed and is ready to use in East Lothian, Scotland, where motorists can take advantage of the launch by charging their EVs for free until the end of this month (I wonder how long the queue will be…). BT plans to power up about 600 trial units around the UK before deciding how to develop the opportunity as a business. The opportunity certainly exists: In Scotland, for example, there are currently little more than 5,000 EV charging units, and BT estimates it has about 4,800 cabinets that could be upgraded to have EV charging units run from them. Read more.

e& isn’t the only Middle East telecom giant boasting of a good start to the year. Ooredoo, which has operations in multiple markets across the Middle East, Africa and Asia Pacific, has reported a 4% year-on-year increase in group revenues to 5.9bn Qatari riyals (QAR) ($1.62bn) and a 6% bump in EBITDA to QAR 2.5bn ($687m). The revenue increase was “driven by the sustained commercial momentum in Iraq, Algeria, Kuwait, Maldives and Tunisia,” but “partially offset by the revenue decline in Qatar and Oman, along with the foreign exchange currency affecting Myanmar and the war impact in Palestine,” the operator noted in this announcement. Ooredoo ended March with 58.5 million customers, up by 3% compared with a year earlier, but that total customer base number rises to 159.3 million when the telco’s joint venture in Indonesia, Indosat Ooredoo Hutchison, is included. Ooredoo group CEO Aziz Aluthman Fakhroo said: “Ooredoo made a strong start to the year, achieving solid financial KPIs [key performance indicators] with continued customer growth… The group’s performance for the quarter was backed by the strong operational performance in Iraq, Algeria, Maldives, and Tunisia… Looking ahead, Ooredoo aims to build on its successful transformation to drive new revenue sources and sustain its strong financial position, delivering greater value and returns for our stakeholders as we evolve toward becoming the leading digital infrastructure provider in the region.” The company stated that it is “positioning itself as the leading digital infrastructure provider in the region by transforming into a telecom and infrastructure holding company with a delayered multi-business structure, optimising capital deployment and operational focus for increased asset returns in telecommunications operations, towers, datacentres, sea cable business, and fintech.” The operator also noted that it has just been granted a Payment Service Provider licence in Oman.  

US operator Lumen Technologies continues to have a tough time. The service provider, which focuses mainly on enterprise customers and which recently completed a process to restructure $15bn of its debts, has reported a 12% year-on-year decline in revenues to $3.29bn and a 22% dip in adjusted EBITDA to $977m. The dip in sales can be partially explained by the sale of its EMEA business to Colt, which was completed towards the end of last year, but that business only generated $139m in the first quarter of 2023, which only accounts for part of the $448m shortfall. Despite the numbers, the company’s chief is putting on a brave face. President and CEO Kate Johnson noted: “Lumen continued to make material progress in our turnaround with our strategy intently focused on empowering digital enterprises with next-generation connectivity solutions powered by our best-in-class nationwide fibre network. While we experienced some expected headwinds in the first quarter, we accelerated North America Enterprise sales to fuel future revenue streams, drove material improvement in customer satisfaction scores across customer channels, and delivered our best ever reported Quantum Fiber broadband net additions. This progress, coupled with executing our debt restructuring and strategically shape shifting to drive cost efficiency, gives us line of sight around our expectations for improving financial results in 2024 and beyond.” Let’s hope she’s right. The Quantum Fiber broadband unit targets residential as well as business customers: The company added 36,000 fibre broadband customers during the first quarter to end March with 952,000, up from 856,000 a year earlier. The service provider has also announced the launch of Lumen Defender, a new AI-enabled cybersecurity product that “proactively blocks evolving threats at the network edge, before they can compromise a business’s network perimeter.”

Remember the metaverse? It was the talk of the tech town until late 2022 when GenAI turned up and kicked it down a dimly lit alley but it hasn’t gone away, of course, and it’s a market with a lot of value. So the team at ABI Research have decided it’s time for a re-evaluation and have come up with the following: “The metaverse has had many definitions, all of which have been too vague and misunderstood by the public. One general definition is ‘a persistent virtual environment that allows access to and interoperability of multiple individual virtual realities’… ABI Research takes a more granular definition of the metaverse, focusing on digital twins, simulations, edge and cloud computing, and professional services to define it. With this granular approach, ABI Research has valued the current metaverse at $36bn, forecasting the market to reach $66.7bn by 2030, with a CAGR of 9.7%.” Bold! You can check out further details in this press release.  

UK IT services firm Daisy, which provides unified communications, cybersecurity, cloud, connectivity and other related services to more than 2,000 private and public sector customers via its Daisy Corporate Services (DCS) division, looks set to agree an M&A deal that would see DCS merge with rival Wavenet to create a company worth more than £1bn, Sky News has reported. The move would create a company that would be a stronger rival to the likes of BT, Vodafone and Virgin Media O2 Business in the UK enterprise services sector. 

- The staff, TelecomTV