• Windstream to be swallowed by its infrastructure ex 
• e& plays down interest in United Group
• FCC highlights US rip-and-replace funding shortfall

In today’s industry news roundup: US operator Windstream is to be merged into Uniti Group, a wholesale fibre network operator that was spun out of Windstream in 2015; Middle Eastern giant e& is playing it cool over speculation that it fancies buying United Group; the FCC says another $3bn will be needed to help fund US network operators that plan to rip out and replace the technology from Chinese vendors Huawei and ZTE currently installed in their networks; and much more!

US network operator Windstream is to be swallowed by Uniti Group, the publicly listed wholesale fibre network infrastructure company that it spun out almost 10 years ago. The two companies are still closely linked as Windstream is Uniti’s single largest customer. The M&A deal is valued at about $13.4bn, including $8bn in debt and $4.4bn in annual revenues: When it closes, which won’t be until next year, Uniti’s current investors will hold a 62% stake in the combined company and Windstream’s investors will hold the other 38%. Combined, the companies will have (based on current assets) 1.1 million fibre-to-the-premises customers, wholesale fibre lines running along 217,000 route miles and a fibre access network that reaches 4.3 million US premises.  “As a combined company, we will continue our disciplined growth trajectory while expanding FTTH [fibre-to-the-home] buildouts and significantly improving our overall financial profile,” stated Uniti president and chief executive officer Kenny Gunderman in this announcement about the deal. “The demand for fibre broadband has never been greater, and Uniti is now expanding its reach into FTTH with an attractive scaled platform. The combination of Uniti and Windstream also removes several dis-synergies that exist in the current landlord/tenant relationship and greatly enhances Uniti’s optionality for strategic initiatives. We look forward to working with Windstream to create a national fibre powerhouse that will continue to bridge the digital divide for our customers,” added Gunderman, who will be the CEO of the combined company when the deal is completed. That same demand for fibre broadband connectivity has also drawn T-Mobile US into the market: It is forming a joint venture with private equity company EQT’s Infrastructure VI fund that will buy FTTH firm Lumos. The merger of Uniti and Windstream appears to have been driven by activist investor Elliott. Johannes Weber, portfolio manager at Elliott Investment Management, Windstream’s largest shareholder, stated: “As one of the largest investors in both Uniti and Windstream, we are pleased to support this combination, which has a compelling strategic rationale and creates a significant opportunity for enhanced value creation. We are confident that given Uniti’s focused strategy, unique positioning and a proven management team that will draw on leaders from both organisations, the combined company will be well positioned to deliver on its potential.” But news of the deal spooked many Uniti shareholders as the company’s stock lost about 2.2% of its value to dip to $5.90 on the Nasdaq exchange in early trading on Friday after the announcement was made. Read more.

e& has played down speculation that it is interested in buying European service provider United Group. Bloomberg reported earlier this week that the Middle Eastern digital services giant, which has been engaging in M&A activity in Europe in recent years, was mulling a potential takeover offer for United Group, which has telecom and pay-TV operations in multiple markets across south-east Europe. In an announcement to investors via the Abu Dhabi Securities Exchange (ADX), e& noted: “In response to media reports speculating on e&’s potential acquisition of United Group BV, we confirm that e& has not entered into any negotiation or agreement in respect of United Group BV’s assets. However, consistent with our corporate strategy, e& continually reviews relevant market opportunities with the objectives of maximising shareholder value.” In a nutshell, that means e& isn’t engaged in discussions right now but it doesn’t mean it’s not interested in the asset. This is one to watch, along with the international expansion aspirations of fellow regional telco STC which, having taken a stake in Telefónica, also has its eyes on Spanish rural network operator Avatel Telecom as well as another major Iberian peninsula operator, Altice Portugal.

The Federal Communications Commission (FCC) is asking for more funding so that communications providers can “rip and replace” equipment and services from Huawei or ZTE. In a letter to the US Congress, FCC chairwoman Jessica Rosenworcel highlighted a “more than $3bn funding shortfall” in the “rip-and-replace” programme, adding that nearly 40% of participants in the scheme reported they cannot complete the required kit removal work without additional government funding. The document further stresses that the programme has been appropriated only $1.9bn, while the reimbursable costs amount to approximately $4.98bn. “The inability of programme participants to fully remove, replace, and dispose of its covered equipment and services would also raise national security concerns by leaving insecure equipment and services in US networks. It could also raise network compatibility issues associated with piecemeal replacement of covered equipment as well [as] vendors that may shift their work to carriers that are not participating in this programme,” the letter cautions. The programme applicants were approved in July 2022 and so far, they have made more than 20,000 reimbursement claims across 122 applicants. FCC has already granted 64 time extensions for providers to complete their “rip-and-replace” obligations, and 52 of these extensions were partially or fully due to the funding shortfall, according to the commission.

Apple reported a 4% year-on-year dip in revenues for its fiscal second quarter to $90.8bn, but for the iPhone, computer and digital services giant the spin was all positive. Those financial numbers included “an all-time revenue record in services,” noted CEO Tim Cook. “During the quarter, we were thrilled to launch [extended reality headset] Apple Vision Pro and to show the world the potential that spatial computing unlocks. We’re also looking forward to an exciting product announcement next week and an incredible Worldwide Developers Conference next month. As always, we are focused on providing the very best products and services for our customers, and doing so while living up to the core values that drive us,” he added. And to keep shareholders happy, Apple announced it is setting aside an extra $110bn for share repurchases and has increased its upcoming dividend payment to $0.25. The company’s share price jumped by 6.6% in early Friday trading to $184.49, giving the company a market valuation of $2.85tn.

French satellite provider Eutelsat is reportedly mulling options for its ground station networks, including the possibility of selling its portfolio which could value it at more than €800m. Bloomberg reported that the company is in talks with advisers to find a buyer for the assets, which include antenna systems and other facilities. According to the report, this part of Eutelsat’s business is attracting interest from infrastructure investment companies, but there are no final decisions as of yet. In September 2023, Eutelsat finalised its merger with UK satellite player OneWeb to form what it claims to be the world’s first geostationary-low-earth orbit (GEO-LEO) integrated satellite player – see Eutelsat soars to new heights with OneWeb merger.

Telecom Italia (TIM) and Oracle have joined forces in a bid to accelerate the adoption of cloud services in Italy. Under the freshly sealed agreement, the business arm of the telco, TIM Enterprise, will integrate Oracle Cloud Infrastructure (OCI) into its portfolio. The operator will also become the host partner for Oracle’s second planned cloud region in Italy, which will be located in Turin and is set to be hosted in TIM’s “reliable, next-generation datacentre”, the Italian telco noted in a statement. TIM Enterprise will also offer OCI services to customers in the public and private sector across the region. The company highlighted that these solutions will come with “built-in security, superior performance, high availability and lower cost”, in order to help customers manage mission-critical and cloud-native workloads in large environments. Read more.

Wireless and video technology developer InterDigital has announced it has been awarded an injunction against consumer electronics company Lenovo by a German court. “The Regional Court in Munich held that Lenovo infringes InterDigital’s patent-in-suit covering 4G and 5G devices, that InterDigital has acted in a FRAND [fair, reasonable and non-discriminatory] manner at all times, and that Lenovo is an unwilling licensee who has not acted in line with widely recognised FRAND principles,” InterDigital noted, adding that this is a first-instance decision that can be appealed. “Following the court’s finding that Lenovo’s behaviour constitutes hold-out, we hope Lenovo reverses course and finally takes a fair and reasonable licence,” noted Josh Schmidt, chief legal officer of InterDigital. Alongside this announcement, the company reported its first-quarter results for 2024, which saw its revenues grow 30% year on year to $263.5m. President and CEO of InterDigital Liren Chen noted that the company has marked one of the highest quarters in its history, driven by new licence agreements, including an all-time high for its internet of things licensing programme. Its adjusted EBITDA declined 16% to $130.4m in the period.

- The staff, TelecomTV