• Zegona gets the EC green light to buy Vodafone Spain
• UBS downgrades Ericsson over Open RAN concerns
• Samsung’s margins take a dive

In today’s industry news roundup: The European Commission has given Zegona the all clear to acquire Vodafone Spain for €5bn; UBS investment analysts believe Open RAN investments are going to weigh heavy on the margins of major incumbent radio access network vendors such as Ericsson, even if they are picking up the big Open RAN deals themselves; Samsung’s operating profits almost did a disappearing act in 2023; and much more! 

The European Commission competition directorate has approved Zegona’s planned €5bn acquisition of Vodafone Spain, according to El Economista (in Spanish), as it has reportedly ruled that there are no reasons for the watchdog to initiate an in-depth investigation. According to the newspaper, the EC sent Zegona a letter this week to inform it of the decision, though there has been no clarification from any of the parties so far. Zegona and Vodafone Spain now need approval from the country’s National Commission of Markets and Competition (CNMC), which is currently considering the potential impact of the acquisition on the Spanish market. 

Here’s an interesting timeline… In late 2020, Ericsson CEO Börje Ekholm predicted that network operator Open RAN investment strategies would start to impact the Swedish vendor’s business from 2023 onwards. In late 2023, Ericsson was awarded a $14bn five-year Open RAN deal by AT&T that dealt a crushing blow to its main US radio access network (RAN) technology rival Nokia. But there has been much speculation, not addressed head on by Ericsson’s management, that the Open RAN deal might impact the company’s margins. Now investment analysts at UBS have, according to the Investing.com website, downgraded Ericsson’s stock from ‘neutral’ to ‘sell’ over concerns that Open RAN disruption “will have a negative impact on Ericsson and the wireless telco equipment landscape in the medium term.” One to watch…

Samsung Electronics has reported a near sevenfold year-on-year drop in operating profit for 2023, due to weakened demand across many of its lines of businesses. Its full year operating profit was 6.57tn Korean won (KRW) (US$5bn) in 2023, which is more than six times less than the KRW 43.38tn ($32.6bn) profit reported for 2022. Its annual revenue in 2023 stood at KRW 258.94tn ($194.5bn), down 14% year on year from the KRW 302.23tn ($227bn) booked in 2022. “The business environment deteriorated significantly in the fourth quarter due to weak demand amid a global economic slowdown,” the company explained in its statement announcing its financials. Furthermore, earnings at its Memory Business have “decreased sharply as prices fell and customers continued to adjust inventory”. The company’s System LSI division, which designs core semiconductors, also saw a decline as “sales of key products were weighed down by inventory adjustments in the industry”. However, on a brighter note, its foundry division marked “a new record for quarterly revenue while profit increased year on year on the back of advanced node capacity expansion as well as customer base and application area diversification.” Samsung’s mobile business, Mobile eXperience (MX), posted lower revenues and profits due to “weak demand in the mid- to low-end segments”, while its Networks Business reported an increase in revenue “led by domestic demand for 5G installations and expansion in overseas businesses”. In the first quarter of 2024, Samsung expects smartphone market demand to “decline sequentially due to seasonality”, though the premium segment is forecast to grow. The MX division expects its fortunes to improve following the launch of the Galaxy S24 series, which features enhanced AI capabilities, to boost sales of flagship products. Find out more.

AI chipmaker Rebellions has raised $124m in a Series B funding round led by South Korean operator KT. According to Rebellions, this investment pushes it to the forefront as “South Korea’s most funded semiconductor startup”, with the total raised exceeding $200m. Other participants in the funding round, which was also “boosted by global investors”, include KT’s cloud computing subsidiary, kt cloud, and investor Shinhan Venture Investment. Rebellions noted that the fresh financial injection will empower it to “attract more talents and accelerate the development of Rebel, the company’s next-generation AI chip” designed to run large language models (LLMs) with Samsung Electronics. Furthermore, its second chip, ATOM, is planned for mass production this year, promising to grow the chip maker’s customer base in South Korea and beyond. “This investment is a robust foundation for expanding our global presence, particularly in markets like the US and Japan, and will accelerate the pace of our global business strategies and next-gen product development,” said Sungkyue Shin, CFO of Rebellions. Read more.

India’s Jio Platforms, the Reliance Industries division responsible for the conglomerate’s digital activities including the country’s largest telco, Reliance Jio, is one of two companies pre-qualified to bid for a stake in Sri Lanka Telecom, according to Reuters (as published by The Business Standard). The other pre-qualified bidder is China-based investment firm Fortune International Investment Holding. If Jio Platforms, which has been making AI news this week, is successful, it would represent the company’s first foray into telecom asset ownership outside of India. The Sri Lankan government is required to reduce its holding in state-owned companies as part of a fiscal arrangement with the International Monetary Fund (IMF). 

The European Union (EU) and the US strengthened their commitment to collaborate on key areas of technology development, including AI, next-generation mobile network systems and semiconductors, during the fifth meeting of the EU-US Trade and Technology Council (TTC), which was held in Washington, DC, this week. The conference was co-chaired by a bevy of big hitters – European Commission (EC) executive vice president Margrethe Vestager, EC executive vice president Valdis Dombrovskis, US Secretary of State Antony Blinken, US Secretary of Commerce Gina Raimondo, and US trade representative Katherine Tai, and was attended by EC commissioner Thierry Breton. According to an EC statement, “The EU and the US welcomed the International Guiding Principles on Artificial Intelligence (AI) and the voluntary Code of Conduct for AI developers adopted in the G7 and agreed to continue cooperating on international AI governance. Both parties also welcomed the industry roadmap on 6G,” which was published last December and “sets out guiding principles and next steps to develop this critical technology”. “They also took stock of progress in supporting secure connectivity around the globe, notably for 5G networks and undersea cables,” the EC added. “The EU and the US are also intensifying their coordination on the availability of critical raw materials, crucial for semiconductor production, having activated the joint TTC early warning mechanism for semiconductor supply chain disruptions, following China's announced controls on gallium and germanium. They continued to exchange information on public support for the investments taking place under the respective EU and US Chips Acts. A roundtable on the semiconductor supply chain took place in the margins of the TTC, focusing on developments and potential cooperation in the legacy semiconductor supply chains. Finally, the EU and the US discussed a report mapping EU and US approaches to digital identity, currently open for comments.” 

Deutsche Telekom (DT) has extended its mobile coverage across its domestic market of Germany. The telco noted it has expanded the reach of its network at 849 locations over the past four weeks, either by adding new physical infrastructure – 118 additional sites were activated with 4G and 5G services during January – or by enhancing existing sites: DT boosted its network capacity at 731 existing locations, including launching 5G services for the first time at 111 of these spots. According to the operator’s own figures, there are around 10,700 5G antennas in 840 German cities and towns that operate on “the fast 3.6 GHz frequency” which offers download speeds of up to 1Gbit/s. DT also stated that its LTE household coverage is 99%, while its 5G network is accessible to 96% of the population. The company aims to make 5G available to 99% of the country’s population by 2025. For more information, read DT’s statement, available here in German.

Safaricom, M-PESA Africa and Sumitomo Corporation have launched a new scheme to support early-stage startups specialising in fintech and content. In a statement, Vodafone (which is a partner in the programme) explained that the three-month accelerator programme, called Spark Accelerator, will offer training, mentorship, funding and go-to-market resources, “setting participants up for long-term success”. Startups will then be able to pitch for investment from Safaricom, M-PESA Africa, Sumitomo Corporation and other partners, including Vodacom and Amazon Web Services (AWS), at an upcoming investor demo day. According to Safaricom’s CEO, Peter Ndegwa, the move is in line with the operator’s ambition to be “a purpose-led technology company”. “With the accelerator, we are offering more than just capital injection, which is what we did previously with Spark Fund. We have restructured the programme to address the challenges that hinder early startups from growing,” said Peter Ndegwa, CEO of Safaricom.

- The staff, TelecomTV