What’s up with… Telecom Italia, Cellnex, Amazon & Nokia

• The ‘new’ Telecom Italia eyes further M&A deals as it reports Q2 growth 
• Cellnex ramps up sales and earnings as it preps more divestments
• Amazon takes Nokia to court

In today’s industry news roundup: The slimmed-down Telecom Italia has reported an encouraging set of second-quarter numbers as it closes in on further asset sale deals; European towers firm Cellnex is also growing steadily as it continues with its portfolio adjustment strategy; Amazon is suing Nokia over the alleged misuse of its patented cloud technology; and much more!

Following the completion in early July of the sale of its NetCo fixed access network unit for up to €22bn to a consortium led by private equity firm KKR, Telecom Italia (TIM) has reported the second-quarter financial results for the new-look, slimmer operator and is confident it can soon strike deals to sell other parts of remaining business too. Total group revenues for the remaining ServCo unit were up by 4.2% to €3.6bn for the three months to the end of June, with TIM Brasil contributing revenues of €1.12bn, up by 7.5%. Group earnings before interest, taxes, depreciation and amortisation (EBITDA) was up by 7.4% to €1.12bn, while capital expenditure (capex) dipped by 7.5% to €420m for the quarter. The operator now has just over 27,000 employees compared with almost 47,000 prior to the sale of NetCo. For further details, see this announcement. TIM’s CEO, Pietro Labriola, told financial analysts that the operator is confident it can soon broker deals to sell its Sparkle international services and submarine network unit, and its remaining stake in towers company Inwit with the aim of raising €1bn from those asset sales, reported Reuters.   

Pan-European neutral host giant Cellnex has reported a 7.1% year-on-year growth in revenues for the first half of the year to €1.9bn and a nearly 6% increase in adjusted EBITDA to €1.58bn. “Our key organic indicators – from revenue to cash flow to the main business metrics relating to the expansion of points of presence at our sites – reflect a solid first half of the year, in line with our objectives,” said Cellnex CEO Marco Patuano. He added that the mobile towers company is making “good progress” in its next chapter, in terms of “consolidating and streamlining our structure, strengthening our balance sheet and maximising shareholder value, thus fulfilling our commitments to the market”. The net debt of the group is down from €20.75bn at the end of June 2023 to €17.5bn, with 80% of it set at a fixed interest rate, according to Cellnex. However, the company reported a net loss of €418m for the first six months compared to a loss of €196m in the same period last year. This was due to an impairment related to the potential sale of its Austrian unit, but according to Cellnex, it is in advanced negotiations about the potential divestment of its assets in Austria after receiving binding offers. By the end of June this year, the company had a total of 113,216 operational sites: 24,340 in France; 22,572 in Italy; 16,409 in Poland; 13,417 in the UK; 8,770 in Spain; 6,672 in Portugal; 5,518 in Switzerland; 4,654 in Austria; 3,992 in the Netherlands; 3,212 in Sweden; 1,666 in Denmark and 1,994 in Ireland; along with 1,903 broadcasting and other sites and a total of 10,865 distributed antenna system (DAS) nodes and small cells. Read more.

Amazon is suing Nokia in a Delaware federal court for allegedly infringing 12 patents related to cloud computing technology, an accusation that the Finnish network equipment vendor strenuously denies, Reuters has reported. According to lawsuit filed by the big tech firm, Nokia has misused patented Amazon Web Services (AWS) technology related to cloud computing infrastructure, security and performance in its own cloud technology products. Amazon claims that Nokia’s strategy is, in part, “leveraging Amazon’s innovative solutions, including Amazon’s patented technology, to address issues faced by cloud service providers. For instance... Nokia CloudBand infringes Amazon patents related to configuring virtual machines and managing distributed application execution, in addition to autoscaling resources used during program execution. Similarly, Nokia Nuage Networks infringes Amazon’s patents related to managing communications in virtual networks and emulating physical network devices. Amazon brings this suit against Nokia because it was Amazon that pioneered in the cloud, and now Nokia is using Amazon’s patented cloud innovations without permission.” Nokia told Reuters it would “review these matters and defend ourselves vigorously in court.”  

Here we go! The first of what may well be many legal cases to be brought against US cybersecurity company CrowdStrike has been filed following the biggest IT service outage to date, which caused some 8.5 million systems to crash after a faulty content configuration update to its Falcon Sensor security software caused enormous worldwide problems with Microsoft Windows computers running the program on the Azure cloud. A class action lawsuit issued by the company’s own shareholders has been filed in a federal court in Austin, Texas. The leading plaintiff is the Plymouth County Retirement Association of Plymouth, Massachusetts. The class action alleges that CrowdStrike’s senior executives knowingly made “false and misleading statements” about its software testing capabilities, systems, routines and management, and defrauded investors by telling them that software upgrades are rigorously tested, validated and certified before being rolled out to the client base when, evidently, they are not. It adds that assurances about its technology touted by the company and reiterated by CrowdStrike’s CEO, George Kurtz, were “materially false and misleading”. Kurtz and the company’s chief financial officer, Burt Podbere, are individually named as defendants in the class action suit and Kurtz himself has been summoned to testify before the US Congress. US government departments and agencies, including the Department of Homeland Security, NASA, the Federal Trade Commission, the National Nuclear Security Administration, the Department of Justice, and Department of Education were hit by the outage as were the Department of the Treasury, the Department of State, the Department of Veterans Affairs and Department of Energy. The US government is not happy about it, but then neither are the businesses, airlines, airports, railway stations, other ground transport systems, hospitals and myriad of other enterprises, telecom operators, TV stations and other organisations that are still counting the cost of the unprecedented breakdown. The lawsuit demands as yet undisclosed and un-enumerated but no doubt massively punitive exemplary damages. In the aftermath of the outage, the company’s share price collapsed by 32%, which translates to a market value loss of $25bn. CrowdStrike denies the accusations, says the case “lacks merit” and adds that it will “vigorously” defend itself in the courts and fight to clear its name. That should be entertaining to watch. It took 10 days to deal with the initial disruption caused by the faulty configuration and even longer before affected business and organisations were able to get back to normal. Even now 3% of those affected are still struggling to restart their systems and recover lost or corrupted data. The class action suit is likely to be just the first intimation of what could be a landslide of lawsuits. For example, speaking to CNBC news channel, Ed Bastian, the CEO of Delta Airlines, confirmed that the outage had cost it $500m. He also said that the company has “no choice but to seek damages” after 5,000 flights were cancelled and 40,000 servers had to be individually and manually reset. He added, “We have to protect ourselves. We have to protect our customers, our employees, for the damage, not just to the cost of it, but to the brand, the reputational damage. If you’re going to be having access, priority access, to the Delta ecosystem in terms of technology, you’ve got to test the stuff. You can’t come into a mission-critical 24/7 operation and tell us we have a bug.” He’s angry and he’s right to be. As we say in journalism, “This one is going to run… and run.”

Joe Biden is a lame-duck US president, reluctantly taking a back seat as he sees out his remaining few months in office whilst passing the baton of opposing the re-election of Donald Trump to his previously overlooked vice-president, Kamala Harris, but there’s life in the old dog yet. In the waning days of his administration, plans are afoot to impose new regulations and prohibitions on the export of foreign semiconductor chips to China in an ongoing effort to impede the progress of the People’s Republic of China (PRC) in its development of AI and supercomputing. Expectations are of an imminent adaption of the Foreign Direct Product rule, which states that US items overseas, and items produced overseas using products of US origin and/or including components made using US technology remain subject to Export Administration Regulations. In other words, where any product made using US software or hardware technology is concerned, the federal government can prohibit their exportation, and that includes products made in another county if they contain US technologies. It is contentious legislation that has been characterised as “US imperialist overreach” in the Chinese media. The new US export controls will bite deeper by further reducing the amount of US technology in any given device or software that will be subject to sanctions. The intent of the amended Foreign Direct Product Rule is to prevent Chinese semiconductor fabrication factories from getting their hands on exports from other countries such as Israel, Malaysia, Singapore and Taiwan. Quoting an unnamed spokesperson of the the US Department of Commerce, Reuters reported that the US “is continually assessing the evolving threat environment and updating our export controls, as necessary, to protect US national security and safeguard our technological ecosystem.” The Biden administration imposed similar controls on exports to China in 2022 and 2023 but was careful to keep allies onside and negotiated an agreement with Japan and the Netherlands whereby those counties too would voluntarily restrict export of key chip technology to the PRC. It is assiduously courting South Korea and Germany to join the club, along with Japan and the Netherlands. However, the draft legislation actually provides various forms of exemptions to 30 companies, “based on factors like diplomatic relationships and security concerns”. Nonetheless, there must be a strong possibility that any company on the exemptions list could, at any time, decide to drive a coach and horses through the agreement and render it breached and potentially worthless. Simultaneously, Reuters reported, the current US government will add a further 120 Chinese companies to its restricted trade list, including not only fabs but also toolmaking enterprises and providers of EDA (electronic design automation) software and related companies. Suppliers for such companies will have to apply for licences to export them, but they won’t be granted. China’s reaction to the plans is predictable as might be expected. Lin Jian, a spokesperson for the Foreign Ministry in Beijing, said the US efforts to “coerce other countries into suppressing China’s semiconductor industry undermines global trade and hurts all parties” and will fail. He added that other countries should resist US efforts to ensure their own best long-term interests: “Containment and suppression cannot stop China’s development, but will only enhance China’s determination and ability to develop its scientific and technological self-reliance.”

Qualcomm has reported an 11% year-on-year rise in revenues to almost $9.4bn for its fiscal third quarter that ended 23 June, 2024, while its pre-tax profits increased by 30% to $2.28bn. “Our third-quarter results reflect strong execution of our growth and diversification strategy, with QCT [Qualcomm CDMA Technologies – the wireless chips division] quarterly revenues and EBT [earnings before tax] margins at the high end of guidance,” stated president and CEO Cristiano Amon. “We are excited about the launch of our Snapdragon X Series solutions for PCs that deliver leading performance, unmatched power efficiency and personalised AI experiences. This launch represents a significant milestone in our transformation from a communications company to a leading intelligent computing company,” he stated.

The ‘Un-carrier’ does it again. T-Mobile US has published some upbeat second-quarter figures, with a customer churn rate that remained impressively low at just 0.8% and postpaid net customer additions of 1.3 million. The operator now expects postpaid net customer additions for the full year to be between 5.4 million and 5.7 million, an increase from prior guidance of 5.2 million to 5.6 million. According to the press release announcing the latest numbers, the operator has now “crossed the 100 million postpaid customers milestone” as a result of its second-quarter gains. Service revenues grew by 4% year on year (on the back of increased tariffs on subscribers after 10 years of unchanged prices) to $16.4 bn, ahead of analyst’s estimates of $16.3 bn. T-Mobile’s CFO, Peter Osvaldik, said that new subscribers came from rural areas as well as highly populated conurbations and stressed that the figures do not include those customers adding a second line to their existing one. He said, “These are high-quality customers that are flocking to this network and are actually willing to pay for it.” More than 3.5 million subscribers have come over to the carrier following its $1.35bn  acquisition of the cut-price service provider Mint Mobile which, though agreed in April of 2023, took until the end of May this year before it finally passed the scrutiny of the US regulator, the Federal Communications Commission (FCC), which had concerns about the purchase reducing competition. In the end, a promise from T-Mobile that it would allow Mint customers to change providers, without financial penalties, for 60 days after the acquisition was cleared, along with a pledge that it would keep Mint’s enormously popular and remarkably cheap $15-a-month prepaid service tariff for existing and new customers “for the foreseeable future”, whatever that might mean in practice. The operator also added 406,000 new customers to its high-speed internet access (fixed wireless access) service during the quarter. T-Mobile US consistently tops Ookla’s trusted speed test lists to garner best provider plaudits from consumers while Opensignal ranks first for best US network experience overall. And finally, to top the Q2 sundae with a nice fat cherry, T-Mobile US boasted that its “total 5G and ultra-capacity 5G coverage area continues to far exceed that of the next closest competitor. The company’s unique multi-layer approach to 5G, with dedicated standalone 5G deployed nationwide across 600MHz, 1.9GHz, and 2.5GHz, delivers customers a consistently strong experience and 87% of 5G traffic is on sites with all three spectrum bands deployed.”

Accompanying the increased geo-political friction the world is now experiencing, cyber threats against global navigation satellite systems (GNSS) are on the rise and are causing network operators to urgently seek alternative sources of the positioning navigation and timing (PNT) data that is utterly vital to the functioning of their orbital global or regional communications constellations. To help provide a pre-emptive solution to a mounting problem, broadband and optical networking vendor Adtran, headquartered in Huntsville, Alabama, and Iridium Satellite Communications, based in McLean, Virginia, are working together to strengthen satellite PNT resilience in both Europe and the Asia Pacific regions. Iridium’s satellite time and location (STL) services have been adapted to access Adtran’s Oscilloquartz grandmaster clock timing capabilities as part of “a zero-trust architecture” to deliver precise and secure timing via low-earth orbit (LEO) satellites serving western Europe, parts of eastern Europe, Turkey and Asia Pacific regions, including most of South-east Asia, South Korea and Japan, to offer a comprehensive solution to threats to global navigation satellite systems. Iridium’s 75-strong satellite systems (66 of which are operational while the remaining nine are in-orbit spares) will now offer continuous synchronisation even where GNSS is compromised. Iridium began providing LEO services back in 1998 and today its satellites are used worldwide for voice and data communication from handheld satellite phones, satellite messenger communication devices and integrated transceivers, as well as for two-way satellite messaging service from supported conventional 4G/LTE and 5G mobile phones. Michael O’Connor, executive vice president of PNT at Iridium, commented, “The weakness of GNSS signals is increasingly being exploited to create serious problems. As Europe, APAC and the rest of the world have become more dependent on PNT data, attacks on GNSS have only escalated, creating an urgent need to pivot away from the exclusive use of these satellites. By integrating our STL service into Adtran Oscilloquartz devices and making it available across much of Europe and key areas of APAC, we’re providing network operators with valuable new options. They can choose to use our solution as a primary source of timing data in indoor environments, or they can leverage our secure, high-strength LEO signals as a backup source of PNT information when GNSS is unavailable. This offers the strongest ever safeguard against the threats that compromise so many aspects of our daily lives.” Iridium’s STL services exploit the capabilities of the Iridium satellite constellation to transmit encrypted signals 1,000 times stronger than those of GNSS, thus significantly reducing vulnerability to disruptions and manipulation. Gil Biran, general manager of Oscilloquartz at Adtran, added, “We partnered with Iridium to bring the benefits of its STL services to critical timing infrastructure around the world because we share a common goal. We’re committed to making PNT networks as resilient and secure as possible. STL is a powerful solution for fortifying zero-trust architecture and ensuring reliable PNT even when GPS signals fail, making it ideal for both indoor and challenging outdoor locations. By empowering operators of mission-critical networks to access reliable timing in the most demanding environments, we’re also eliminating the need to install outdoor antennas and core through concrete, significantly reducing expenses. We are excited to bring these advantages to so many more customers across Europe and APAC. Today’s announcement marks a significant advancement for the network operators and people of these regions, whose daily lives increasingly depend on robust PNT.”

- The staff, TelecomTV