What’s up with… Lumen & Meta, Veon, JTower

• Lumen lands datacentre interconnect deal from Meta
• Veon politely hits back at activist investor
• JTower has been acquired by DigitalBridge

In today’s industry news roundup: US operator Lumen continues its datacentre interconnect-driven renaissance with a major contract from Meta; Veon responds to activist investor calls for a more aggressive strategy; DigitalBridge has successfully acquired a majority stake in Japan’s JTower and will take it private; and much more!

Ashley Haynes-Gaspar, chief revenue officer at US network operator Lumen Technologies, didn’t hold back on his assessment of a deal the company has struck with Meta. “We’re enabling one of the biggest expansions of network capacity in our lifetime,” he said. No financial details were disclosed but Lumen, already riding on the wave of AI-fuelled demand for extra network capacity, says it’s going to provide “dedicated interconnection” – using its fibre-based ‘private connectivity fabric’ – for Meta’s infrastructure. “We’ve transformed our company to meet this demand,” enthused Haynes-Gaspar. “As Meta’s customers use more AI services across its platforms, we’re helping provide Meta with a seamless, effortless, and flexible network that will meet its growing needs.” Alex-Handrah Aimé, director of Meta’s network investments, seemed equally ebullient about the Lumen hook-up. “Our AI tools are performing increasingly more complex tasks, including enabling conversations in a variety of languages and translating text to images in real time, while helping people interact with the world around them in new, immersive ways,” she said. The Meta deal follows on from Lumen’s recent announcement that it had secured $5bn in new business deals to help it address the major demand for connectivity fuelled by AI. The company explained that large companies are looking to expand their fibre capacity as it becomes “increasingly valuable and potentially limited” due to “booming AI needs”. One of these deals includes a recent collaboration with Microsoft that will see Lumen act as a “strategic supplier” for the tech giant’s network infrastructure needs driven by AI developments.

International network operator Veon has swiftly responded to the letter sent to its board by activist investor Shah Capital (holding a 7% stake), which called for multiple courses of action to improve the operator’s valuation and shareholder returns (see Monday’s news roundup for Shah Capital’s shopping list of demands). Veon’s management conceded in this published response that its disgruntled shareholder might have a point: “While Veon’s share value has more than doubled over the past two years, the company also shares Shah Capital’s assessment that its current share price indicates a potential for further improvement, as Veon positions itself as a leading opportunity for investors seeking growth in frontier markets.” At the same time, though, it says it is already doing much of what Shah Capital is demanding, such as considering local or regional initial public offerings (IPOs) for some units and engaging more forcefully with investors and financial analysts (albeit without much in the way of concrete results as yet…). Veon noted that it continues to “execute its strategic initiatives, including advancing its strong operating outlook, optimising its capital structure, and maintaining a disciplined approach to capital allocation.” That’s not going to cut it for the Shah Capital team, though, which is also demanding share buybacks and dividends to help boost Veon’s valuation and make it a more attractive investment. “We are carefully considering the recommendations in the Shah Letter, which include suggestions on capital returns, improving market valuation, leveraging Veon’s strengths in emerging markets and further enhancing communication with the investment community,” noted Veon – so certainly no hint of any immediate share buyback plans. Veon’s third-quarter results are due to be published and discussed on 13 November – that could make for an interesting investor call. Veon’s share price dipped by almost 1.7% to $30.38 on the Nasdaq exchange in early trading on Tuesday and that certainly won’t appease any of Veon’s shareholders.  

DigitalBridge has successfully acquired a majority stake in Japanese towers firm JTower and will now move to take the company private. DigitalBridge announced its intention to acquire JTower in August after several large shareholders agreed to sell their stakes once it became clear that it was proving hard to raise additional external investment because of the long return on investment cycle in the business. DigitalBridge has managed to acquire a 75.62% controlling interest in JTower for 70.1bn yen ($465m): It now plans to delist JTower from the Tokyo stock exchange and take it private, with DigitalBridge and Cultive, an asset management company of JTower’s representative director Atsushi Tanaka, the only shareholders. JTower, which counts all of Japan’s main mobile operators as users of its shared infrastructure, operates 589 shared in-building systems (IBSs) in Japan, as well as 243 in other countries, and more than 6,700 outdoor towers in Japan. Justin Chang, senior managing director and head of Asia at DigitalBridge, stated: “We are excited to solidify our investment in JTower, a leading player in Japan’s digital infrastructure sector. This strategic investment underscores our confidence in JTower’s long-term potential and its critical role in advancing next-generation digital networks. We look forward to collaborating with the JTower team to accelerate their growth, expand their presence, and drive enhanced connectivity throughout Japan, while continuing to serve the strategic and operational needs of customers.”  

ZTE has posted a subdued set of Q3 2024 financials. Operating revenue, at 27.6bn yuan (CNY) ($3.9bn), fell by nearly 4% compared with the same period last year. Net cash flow plummeted by an alarming 63% over the same period, to a shade over CNY 1bn ($140m). This vitally important financial metric looks a bit more stable, however, when viewed from the longer timeframe of the first nine months of 2024 (falling 10.1% year-on-year to CNY 8.05bn). Detailed commentary on the vendor’s performance during the quarter proved elusive, although a brief press release covering the first nine months cited progress in its international markets, where the Chinese vendor “continued to make breakthroughs with major countries and key operators, maintaining double-digit growth”. It also referred, without a breakdown of figures, to “rapid growth” in the company’s consumer and government-enterprise businesses. What is clear is that ZTE continues to plough significant sums into R&D – CNY18.6bn ($2.6bn) during the first nine months of this year, which represents more than a fifth of revenue generated during that time. ZTE flagged 5G advanced, ‘full-stack intelligent computing’ and all-optical networks as key areas of innovation. What is also pretty clear is that ZTE is not doing nearly as well as high-flying rival Huawei, which racked up CNY 417.5bn ($58.6bn) in revenues during the first half of 2024 and a whopping year-on-year increase of 34.3%.

Consolidation in the cybersecurity sector… Oxford, UK-based Sophos, which is backed by private equity giant Thoma Bravo, is acquiring Secureworks for $859m. “Sophos’ experience and reputation as a leading provider of managed security services and end-to-end security products, combined with Secureworks’ security operations expertise… is expected to further deliver complementary advanced MDR [managed detection and response] and XDR [extended detection and response] solutions for the benefit of their global customer bases. Together, they will help strengthen the resilience and security posture of global organisations of any size with a combination of security controls, AI, world-class threat intelligence, and two teams with decades of cybersecurity expertise,” noted Sophos in this announcement. Joe Levy, CEO of Sophos, said: “Secureworks offers an innovative, market-leading solution with their Taegis XDR platform. Combined with our security solutions and industry leadership in MDR, we will strengthen our collective position in the market and provide better outcomes for organisations of all sizes globally. Secureworks’ renowned expertise in cybersecurity perfectly aligns with our mission to protect businesses from cybercrime by delivering powerful and intuitive products and services.”

Ericsson has struck 50 deals for its 5G charging system, of which 20 are using the system in their commercial day-to-day operations “to monetise 5G at scale”. In marking its customer milestone, Ericsson makes a key point about the importance of such systems, which are key to telco business processes. “While the charging functionality is a vital and important part of a CSP’s monetisation model, it is still part of a wider set of capabilities that work in concert to deliver revenue, manage costs and complexity and flex to adapt rapidly to changing demands and service creation needs. An adaptable 5G-ready charging system needs to support new charging trigger points as services and use cases evolve (including for internet of things [IoT]), manage lifecycles for mass IoT devices and huge numbers of individual subscriptions, manage multiparty charging involving hierarchies and charging ‘on behalf of’ arrangements as well as non-telco service charging, such as API monetisation use cases,” noted the vendor. For more on the importance and evolution of such business support systems, see our latest free-to-download DSP Leaders report, Digital Support Systems: The Evolution of OSS and BSS.    

– The staff, TelecomTV