What’s up with… Amdocs, Telefónica, India’s spectrum auction

• Amdocs boasts record sales, new deal with AT&T
• Telefónica on course to hit targets
• India’s next spectrum auction is set to start on 6 June

In today’s industry news roundup: Telecom software and professional services giant Amdocs reports record quarterly sales of $1.25bn and a new deal with AT&T; Telefónica’s first-quarter results won’t set pulses racing but the operator is on course to hit its full year targets; analysts are expecting a muted spectrum auction in India as the country’s main operators already have enough capacity for their immediate needs; and much more!

Software and professional services giant Amdocs is showing little sign of being affected by the spending squeeze that has been hitting other telecom sector vendors over the past year or so. It has reported record quarterly revenues of $1.25bn for the three months that ended 31 March (the second quarter of its fiscal year), up by 2% year on year (at constant currency exchange rates), though its operating profit did dip by almost 15% to $155.7m due to increasing costs. In the company’s earnings release, president and CEO Shuky Sheffer boasted of “healthy sales momentum as we delivered the market-leading innovation our customers need to support cloud migration, 5G monetisation, digital modernisation, and network automation. During Q2, we strengthened our relationships at several North American operators, and expanded our international footprint with several major network and digital modernisations wins, including Colt in the UK, a large South-east Asian operator, and J:COM in Japan. I am very happy to report that we just signed a significant five-year deal at AT&T, which expands our activities in the cloud domain, as well as extends our engagement with AT&T in the consumer domain.” Sheffer continued: “As the preferred technology partner for modernisation, we continue to see healthy market demand for Amdocs’ innovative products and services around our strategic pillars, supporting double-digit revenue growth in cloud. I am also encouraged by our progress advancing multiple GenAI development engagements in collaboration with key partners, such as Nvidia, Microsoft and AWS, and several flagship customers.” While this is all positive, it seems the vendor is not totally immune to the current economic climate as Amdocs has tightened its full fiscal year forecast slightly, though all the numbers are still heading in the right direction. The CEO added: “We continue to operate within a challenging environment of macro uncertainty and industry pressure… Looking to the fiscal second half, we expect sequential revenue growth based on our record 12-month backlog and an attractive pipeline of opportunities, albeit at a more moderate rate than we initially anticipated. Altogether, we now expect constant currency revenue growth of 1.7% to 3.7% year-over-year in fiscal 2024. Moreover, our accelerated profitability improvement is tracking in line with our initial targets, and we are positioned to deliver double-digit expected total shareholder returns for the fourth year running.” All in all, a lot of other companies would like to be in Amdocs’ shoes, though you wouldn’t know that from the vendor’s share price movement on Thursday: Because the revenues and earnings just missed the average expectations of Wall Street analysts, the stock dipped by 7.5% to $79.53. Amdocs is growing, profitable and has a market valuation of $9.3bn, so it’s doing just fine.  

In its centenary year, Spanish operator Telefónica has a slight spring in its step. The telco has just published first-quarter financials that show revenues are up by 0.9% to €1,014bn, adjusted EBITDA up by 1.9% to €3.2bn and net profit up almost 79% to €532m, though that is compared to a pitiful profit in the first quarter of 2023. According to the telco’s chairman and CEO, José María Álvarez-Pallete, the results are proof positive of the efficacy of the Growth, Profitability and Sustainability (GPS) plan that was unveiled at the company’s capital markets day last November and which is designed to guide and strengthen Telefónica through to the end of 2026.

“We have started the year with a solid strengthening of our business, supported by the deployment of our new roadmap… revenue is improving, commercial activity is improving and the quality of the service we provide to our customers and their satisfaction is also improving.” In its earnings release the telco noted that such quantifiable progress is evidence of the “favourable evolution of commercial activity, solid growth and profitability rates, as well as progress in sustainability strategy”, all of which enables the group to confirm it should hit the financial targets it has set itself for 2024. These include revenue growth of around 1%, EBITDA growth of between 1% and 2% and operating cash flow also of between 1% and 2%. Not exactly earth-shattering but solid and sustainable progress nonetheless. On the back of the latest figures, the telco will pay stockholders a cash dividend of €0.30 per share in two instalments payable in December this year and in June 2025, each of €0.15 per share. Telefónica says the dividend is “complemented” by last month’s “reduction of share capital through the cancellation of 80.3 million of the company’s own shares.” A breakdown of the revenues shows that 61% came from telco’s consumer customers across its multiple markets in Europe and Latin America, while  22% was attributable to the business-to-business segment and the remaining balance of 17% was made up of income from its wholesale division, partners and undisclosed “others”. It ended March with 388.3 million customers, up by 1.2% from a year earlier. Of that total, 16.6 million are fibre broadband customers and almost 131 million are contract mobile subscribers. Telefónica Tech, the telco’s digital and technology business arm, showed “solid revenue growth” with sales of €476m, up 11% year on year. The report also reveals that a “non-binding agreement” (MOU) has been signed with Digi Communications, which has become a stronger mobile player in Spain in recent months, for a long-term mobile network wholesale deal. Details are scant, but Telefónica says it “expects to conclude the agreement in the next few weeks, subject to definitive final long-form documentation.” 

Still with the Telefónica empire… Not every telco CTO is convinced about the use of public cloud platforms for critical workloads, but Mallik Rao, CTIO at O2 Telefónica (aka Telefónica Deutschland) is one of the industry’s public cloud evangelists. Having already migrated hundreds of business support functions from in-house IT systems onto the public cloud, Rao has now started the deployment of a 5G standalone (SA) core system from Nokia on Amazon Web Services (AWS). The system, which the operator is calling its 5G Cloud Core, will initially handle the accounts and interactions of up to 1 million customers in the first phase of the core platform’s deployment. And the deployment is, according to the operator, the first instance of an existing (brownfield) telco running a 5G core on AWS. (The brownfield reference is needed because US greenfield 5G operator Dish is running its core on the hyperscaler’s cloud platform). “We are building our network of the future. With the launch of the new, cloud-based 5G core network, we are doing pioneering work and are taking a major step in our transformation process,” noted Rao in this announcement. “With the new 5G Cloud Core, we are moving away from traditional architectures and instead focusing on modern, high-performance, and efficient network technologies. In doing so, we are relying on the quality and global expertise of Nokia and AWS,” he added. His colleague Matthias Sauder, director of the mobile access network at O2 Telefónica, noted in this AWS blog, which provides more technical background to the deployment: “We chose to use AWS to build our new solution because of its data security and sovereignty capabilities, as well as the improved performance, efficiency, and elasticity which will enable [us] to offer our customers an excellent 5G experience and new digital applications.” Fabio Cerone, general manager for EMEA telecom at AWS, stated: “By building their 5G Cloud Core network on AWS, O2 Telefónica is redefining its operating model through full automation and elasticity at scale. It will bring O2 Telefónica the ability to dynamically scale and allocate 5G network capabilities to meet customer needs, as well as the needs of the new applications that will run on top of the new core.” It should be noted that Rao isn’t working exclusively with Nokia and AWS for his next-generation core platform needs: O2 Telefónica is also running an Ericsson 5G core platform on Google Distributed Cloud servers in its own datacentres.   

India’s three leading mobile operators, Reliance Jio, Bharti Airtel and Vodafone Idea (Vi), have applied to participate in a spectrum auction slated to begin on 6 June. The Department of Telecommunications (DoT) will offer airwaves with a combined reserve value of  963.17bn Indian rupees (INR) ($11.53bn) across eight frequency bands that can be used for a range of services, including 5G: 800MHz, 900MHz, 1800MHz, 2100MHz, 2300MHz, 2500MHz, 3300MHz and 26GHz. However, industry experts anticipate a relatively low-key auction due to the telcos’ existing 5G spectrum holdings, which are considered sufficient to cater to their immediate requirements. Bharti Airtel and Vodafone Idea are expected to make selective purchases primarily to renew their airwaves in certain circles. “Airtel must renew its airwaves in J&K [Jammu and Kashmir], Odisha, Bihar, UP [Uttar Pradesh] (East), West Bengal and Assam,” according to recent estimates from Jefferies, a global investment bank. Similarly, Vi needs to renew its spectrum in the Western Uttar Pradesh (UP) and West Bengal circles (telecom service areas). In contrast, market leader Reliance Jio does not have any imminent spectrum renewals this year. Jefferies estimates that Airtel and Vi only need to renew airwaves valued at approximately 42bn rupees ($503m) and 19.5bn rupees ($234m), respectively. The DoT has outlined a detailed timeline for the auction process: The ownership details of the applicants will be published on 10 May; the deadline for withdrawal of applications is 17 May; and the final list of bidders is expected to be declared on 20 May. Successful bidders will have 10 calendar days to deposit the payment after receiving a demand notice from the DoT. “Within 30 calendar days of receiving payment, the department will provide the winning bidder with a frequency assignment letter that details the frequencies,” the DoT stated. Rollout obligations are specified for 3300 MHz and 26 GHz – telcos have to launch a commercial service anywhere in each Licensed Service Area within one year. Coverage targets are set for three and five years. The previous spectrum auction, held in the summer of 2022, was India’s first 5G spectrum auction and generated more than 1.5 trillion rupees ($18bn) for the government from the nation’s three mobile operators and newcomer Adani Group.

As it waits to find out if regulators will approve its proposed merger with Vodafone UK, Three continues to report improving sales and customer numbers. For the first quarter of this year, the UK mobile operator reported a 9% year-on-year increase in revenues to £664m and a 3% increase in its customer base to 10.65 million, it reported in this press release. But it continues to lose money due to increasing general costs and the ongoing need to invest in its network: Both Three and Vodafone UK claim they don’t currently have the scale to continue as long-term viable businesses and should be allowed to merge in order to become financially viable, a claim that is coming under increasing scrutiny. CEO Robert Finnegan hammered home these points in his earnings statement: “We have seen a solid start to the year, successfully growing our revenue and margin and adding 6% to our active contract base. However, we continue to be impacted by inflationary pressures, and market conditions remain challenging. Our EBITDA-capex remains negative, as it has been since 2020, which is unsustainable long term. I believe that merging with Vodafone is vital to give us the required scale to invest, grow and compete to create a best-in-class network for the UK,” stated Finnegan. 

Proximus Group has completed the acquisition of a majority stake in Indian communications platform-as-a-service (CPaaS) specialist Route Mobile. According to the Belgian national operator, this is “a transformational step” that will help it become “one of the world’s leading players in digital communications and digital identity.” The deal was done through the telco’s Proximus Opal entity that owns Telesign, the operator’s digital identity and CPaaS unit. On completion of the deal, the telco’s shareholding in Route Mobile will rise to 82.70%. Proximus first sealed an agreement to acquire a majority stake in Route Mobile in July 2023 for an initial amount of €643m.

Rakuten Mobile has partnered with outdoor tower sharing company JTower, which will see the telco adopting indoor infrastructure sharing solutions for its network in more than 100 of its shopping facilities, office buildings and other indoor locations across Japan. In a statement, the telco said the JTower solutions will help it build its own networks in a shorter period of time and at lower costs than if they were to build their own facilities. The partnership between the two companies began in January 2020. Read more.

Here’s a development for those in the industry looking for additional ways to improve their green credentials and find alternative sources of sustainable power… Researchers have created a semi-permeable reverse electrodialysis membrane that can “harvest” endlessly renewable osmotic energy from the “salt gradients” in estuarial waters to generate electricity. Rather than describing the breakthrough as a green technology, the scientists are calling it “blue” energy… because the sea is blue (for the most part and no thanks to the water companies). Osmosis is defined as “the spontaneous net movement or diffusion of solvent molecules through a selectively permeable membrane from a region of high water potential to a region of low water potential, in the direction that tends to equalise the solute concentrations on the two sides.” Osmotic energy can be generated anywhere salt gradients are found, and one method is to use arrays of reverse electrodialysis (RED) membranes that act as a sort of “salt battery”, generating electricity from pressure differences caused by the salt gradient. RED exploits the transportation of salt ions through membranes consisting of a stack of alternating cathodes and anodes. Compartments between the membranes are alternately filled with seawater and freshwater from the estuarial tides. The salinity gradient difference transports ions and that results in an electric potential, which is then converted to electricity. As reported in the scientific journal ACS Energy Letters, scientists have designed a new system that has an output power density 2.24 higher than in commercial membranes. The RED membrane prototype contained decoupled channels for ion transport and electron transport. This was achieved by sandwiching a negatively charged cellulose hydrogel (for ion transport) between layers of an organic, electrically conductive polymer called polyaniline (for electron transport) and the tests confirmed the theory that decoupled transport channels resulted in higher ion conductivity and lower resistivity compared to homogeneous membranes made from the same materials. The test ran for 16 days non-stop and demonstrated long-term, stable performance underwater. In a final test, the team created a salt battery array from 20 of their RED membranes and generated enough electricity to individually power a calculator, LED light and stopwatch – a tiny amount of electricity but a step towards the next stage to refine and enlarge the system sufficient for it to be applied in real-world commercial circumstances. As a matter of fact, back in 2013 in the Netherlands, construction did begin on a planned 50 kilowatt (kW) RED plant, based on an existing 5 kW pilot plant. It was mothballed in the absence of the large-scale production of cheap membranes but the potential is there and now the building of an osmotic power-station is one step closer. 

A new SD-WAN (software-defined wide area network) report from Hanover Research shows a prevailing majority of enterprise users prefer to partner with managed service providers rather than traditional network aggregators where deployment of the key technology is concerned. The work was commissioned by GTT, the US-headquartered global managed network and security services provider that operates a global Tier 1 IP network. Hanover Research surveyed 230 IT, operations and network security decision-makers in both the US and Europe, working in organisations with more than $100m in annual revenues. SD-WANs enable a company to improve network performance and reduce costs by enabling users to access resources over any combination of connections, depending on the application and the available connectivity options: The traffic is allocated between the connections based on pre-established parameters and network conditions at any particular point in time. Some 77% of those surveyed said they used a managed services provider for SD-WAN. The report identified three major user priorities for SD-WAN users: product quality (including performance, connectivity, automation, reliability and other factors), cited by 81% of respondents; availability (80%); and rapid installation (79%). In terms of which provider they would prefer to engage with, managed service providers are perceived as superior to traditional network aggregators, with 90% of respondents saying that working with a managed service provider was either very beneficial (65%) or extremely beneficial (25%). Furthermore, 68% of respondents said the ability to use the same provider for other network infrastructure services was an important selection criterion, though cost was not one of the biggest considerations with only 20% citing it as extremely influential and 34% finding it very influential. For the survey’s respondents, security concerns remain high, with 38% of them citing it as a “top-five” concern, along with high maintenance costs, reduced performance during high traffic periods, network bandwidth congestion and the complexity of setup and management. The research also shows that complexity, risk and the remorseless pace of innovation is driving 80% of business and IT executives to evolve their SD-WAN solutions every two years and 34% do so every year. That’s an excellent repeat-business opportunity that the likes of GTT are eager to snap up. 

- The staff, TelecomTV