What’s up with… T-Mobile/UScellular, China’s chip fund, Digi & OTE

• T-Mobile US strikes $4.4bn deal to acquire UScellular
• China sets up $47.5bn chip sector fund
• Digi lines up deal to buy Romanian mobile operation from OTE

In today’s industry news roundup: T-Mobile US is buying most of the assets of the US’s fourth-largest operator UScellular; China is pouring tens of billions of dollars into its semiconductor sector as the global chip race heats up even further; Digi Communications is looking to acquire its way to mobile market leadership in its home market of Romania; and much more!

T-Mobile US has struck an agreement to acquire most of the assets of UScellular, the country’s fourth-largest mobile operator, in a deal valued at $4.4bn, the operator has announced. The Deutsche Telekom-owned operator will acquire UScellular’s customer base, its retail stores and some of its spectrum licences in a deal that is expected to close in mid-2025. A deal of some sort had been expected, though previous reports had suggested that T-Mobile and Verizon might each acquire some assets. Chicago-based UScellular, which is majority owned by Telephone and Data Systems (TDS) and which has been considering its strategic options (including a trade sale) since last August, is a minnow compared with the three main mobile operators in the US (AT&T, T-Mobile US and Verizon) and is shrinking: It ended March with 4.05 million postpaid customers, down from 4.22 million a year earlier, and 436,000 pre-paid customers, down from 470,000. Its first-quarter revenues totalled $950m, down 3.6% from a year earlier, though its operating income nearly doubled year on year to $51m. “Upon closing, T-Mobile’s leading 5G network will expand to provide millions of UScellular customers, particularly those in underserved rural areas, a superior connectivity experience, moving from a roaming experience outside of the UScellular coverage area to full nationwide access on the country’s largest and fastest 5G network,” noted T-Mobile US in this announcement. “This transaction will create a much-needed choice for wireless in areas with expensive and limited plans from AT&T and Verizon, and for those that have been limited to one or no options for home broadband connectivity. By tapping into the additional capacity and coverage created through the combined spectrum and wireless assets, T-Mobile will spur competition and expand its fast-growing home broadband offering and fixed wireless products to communities without competitive broadband options, further bridging the digital divide for hundreds of thousands of customers in UScellular’s footprint,” it added. Once the deal has been completed, UScellular will retain ownership of some spectrum licences as well as its towers, with T-Mobile entering into a long-term arrangement to lease space on at least 2,100 additional towers that are to be retained by UScellular.

The global race to attain chip R&D and production supremacy has shifted up yet another gear… Only days after South Korea unveiled a support package for its semiconductor industry worth $19bn, China has established a new 344bn yuan ($47.48bn) state-backed investment fund for its own chip sector, Reuters has reported, noting that this is the third phase of the China Integrated Circuit Industry Investment Fund. China’s finance ministry and China Development Bank Capital are among those pumping cash into the fund. The previous (and smaller) funds were announced in 2014 and 2019, but US sanctions in recent years mean China needs to become more reliant on home-grown technology to provide the components needed across multiple industry verticals, including telecom: Huawei recently launched a new range of smartphones that are believed to be powered by the Chinese vendor’s own domestically produced Kirin chipsets. China and South Korea aren’t the only countries looking to shore up their semiconductor sectors: Taiwan is providing subsidies for semiconductor firms, such as Nvidia, AMD and Micron, to set up R&D centres, while the US government is ploughing billions in subsidies into companies, such as Intel, South Korea’s Samsung and Taiwan’s TSMC, that are building new chip production facilities in the country as a result of its Chips and Science Act.

Ambitious European operator Digi Communications is seeking to strengthen its position in its home market of Romania with a bid to acquire Telekom Romania Mobile from Greek operator OTE (which is majority owned by Deutsche Telekom). A preliminary agreement has been signed, but no financial details were shared. Digi, which has about 6 million mobile customers in Romania, noted that “the completion of the transaction is subject to several conditions, including the finalisation of the due diligence process, obtaining the necessary approvals from competent authorities, and the completion and signing of the documentation related to the transaction.” If the acquisition is completed, “Telekom Romania Mobile will remain in the market as an independent telecommunications operator,” noted Digi, which according to data from Romania’s regulator Ancom, is the country’s third-largest mobile operator in terms of active mobile SIM cards with a market share of almost 25%, while Telekom Romania Mobile has a market share of just over 12%. Market leader Orange has a 33% market share while Vodafone Romania’s share is 28.4%, so a combination of Digi and Telekom under the same group ownership will no doubt raise objections from Orange and Vodafone as it would, in effect, give Digi a market leadership position. OTE had previously struck a preliminary agreement with media company Quantum Projects Group for the sale of Romania’s fourth-largest mobile operator, but that deal fell through. OTE previously sold its majority stake in Telekom Romania’s fixed line network business to Orange for €268m. Digi Communications is also busy building up its presence in other European markets, such as Spain, Italy, Portugal and Belgium – see Digi grows as it gears up for further Euro launches

AtlasEdge, the European datacentre operator formed as a joint venture by Liberty Global and DigitalBridge in 2021, has named Tesh Durvasula as its new CEO starting in June. “Durvasula is a digital infrastructure and datacentre industry veteran with more than 25 years of experience across development, finance, sales, marketing, and real estate,” noted AtlasEdge in this announcement. “He has previously served in a broad range of leadership and value creation roles, including most recently as CEO of Africa Data Centres. Prior to this, he spent close to a decade at CyrusOne, where he rose to become president and CEO.” Giuliano Di Vitantonio, the current CEO of AtlasEdge, will become the company’s chairman. AtlasEdge’s European footprint now spans 20 metropolitan areas – including Amsterdam, Barcelona, Berlin, Brussels, Copenhagen, Dusseldorf, Hamburg, London, Leeds, Leverkusen, Madrid, Manchester, Milan, Paris, Stuttgart, Vienna and Zurich – across 13 countries and the company recently acquired two sites for development in Lisbon.  

Vodafone Group has published its first Climate Transition Plan (CTP), which sets out the actions it will take to drive progress towards net zero during the next three financial years, ending March 2027. The CTP shows how the operator plans to manage climate-related risks and opportunities and build climate resilience into our business. Read more. 

xAI, the AI startup launched last year by Elon Musk – owner of X (FKA Twitter) and CEO of SpaceX and Tesla – has raised $6bn in a Series B funding round. Among the investors are Valor Equity Partners, Vy Capital, Andreessen Horowitz, Sequoia Capital, Fidelity Management & Research Company, Prince Alwaleed Bin Talal and Kingdom Holding. The company announced in this blog that it has “made significant strides over the past year. From the announcement of the company in July 2023, to the release of Grok-1 on X in November, to the recent announcements of the improved Grok-1.5 model with long context capability, to Grok-1.5V with image understanding, xAI’s model capabilities have improved rapidly. With the open-source release of Grok-1, xAI has opened doors for advancements in various applications, optimisations, and extensions of the model,” it boasted. “xAI will continue on this steep trajectory of progress over the coming months, with multiple exciting technology updates and products soon to be announced. The funds from the round will be used to take xAI’s first products to market, build advanced infrastructure, and accelerate the research and development of future technologies. xAI is primarily focused on the development of advanced AI systems that are truthful, competent, and maximally beneficial for all of humanity. The company’s mission is to understand the true nature of the universe.” The funding round reportedly values xAI at $24bn. Season tech investment analyst Richard Windsor has written in his latest blog that this is the latest example of the “ludicrous valuations” emerging as part of the “AI bubble”. xAI, he noted, has “no commercial product and no revenues to speak of,” and even though it has X as a distribution platform, its proposition and developments are “unremarkable by today’s standards.” Windsor has seen a few bubbles in his time and follows the AI sector closely, so his views are worth noting.   

- The staff, TelecomTV