What’s up with… Broadcom, Optus, Telecom Italia’s NetCo

• VMware fuels Broadcom’s Q1 growth
• Another Optus exec bails out
• Canadian investment firm wants a piece of TIM’s NetCo

In today’s industry news roundup: Broadcom starts the year with improved revenues, driven by its recent takeover of VMware; post-outage troubles continue for Optus as, having already lost its CEO, it now faces the departure of its network head too; Canadian investment firm agrees to buy a minority stake in Telecom Italia’s landline network business, NetCo; and much more!

Broadcom has reported fiscal first-quarter revenues of almost $12bn, up by 34% year on year thanks to the contribution of VMware numbers, through the $61bn acquisition that was closed in November last year. “Our acquisition of VMware is accelerating revenue growth in our infrastructure software segment, as customers deploy VMware Cloud Foundation,” noted Broadcom’s CEO Hock Tan. Excluding the contribution of VMware, Broadcom’s sales still grew by an impressive 11% thanks, in part, to “strong demand for our networking products in AI datacentres, as well as custom AI accelerators from hyperscalers,” that are driving demand for the company’s semiconductor products. Broadcom says it is on course to generate full fiscal year revenues of $50bn and adjusted EBITDA of $30bn. Those trends and numbers helped Broadcom’s share price to edge up slightly to $1,408 – the company’s stock has risen by more than 28% this calendar year. Read more.

Tough times for Optus, which continues to lose executives from its leadership team, following the massive outage that affected some 10 million customers in November and led to the departure of then-CEO Kelly Bayer Rosmarin. According to Australian tabloid newspaper The Sydney Morning Herald, the managing director of networks, Lambo Kanagaratnam, has waved goodbye to the telco four months after the incident left millions of customers without access to mobile services, and caused disruption to emergency calls. Kanagaratnam had been with Optus for nine years, and was appointed as network head in July 2023. The report suggested that his exit from Optus was announced in an internal staff memo, in which interim CEO Michael Venter (also CFO at Optus) noted Kanagaratnam helped the company navigate challenges around natural disasters and respond to the complexities stemming from the Covid-19 pandemic and the recent outage. According to the report, the new interim managing director of networks will be Jorge Fernandes, who currently serves as group CTO at Optus. Meanwhile, the search for a new CEO of Optus continues, with parent company Singtel now looking outside of the company for a candidate. The Australian Senate is set to report on an inquiry into the outage by 9 May 2024, after extending the original timeline from 28 February 2024. Optus is also under scrutiny by the Australian Communications and Media Authority (ACMA) in regard to its compliance with obligations set out by the IPND industry code relating to emergency services, and recently paid a fine of AUS$1.5m (US$982.163) for “large-scale breaches of public safety rules”.

Canada Pension Plan Investment Board (CPP Investments) has agreed to acquire a 17.5% stake in Telecom Italia (TIM)’s landline network business, NetCo, for €2bn. The investment management organisation is making the takeover by entering into an agreement to join investor group Optics BidCo, which is leading the acquisition of NetCo. The group is controlled by KKR and includes Azure Vista, a wholly owned subsidiary of the Abu Dhabi Investment Authority, as well as Italian infrastructure fund manager F2i and the Italian Ministry of Economy and Finance. With this transaction, it is estimated that NetCo’s enterprise value will be around €18.8bn. James Bryce, MD and global head of infrastructure at CPP Investments, argued that the company’s investment into NetCo will deliver “high-quality digital infrastructure” across Italy, while generating “long-term risk-adjusted returns for the fund”. The transaction is expected to complete before the end of this year. Other digital infrastructure companies that CPP Investments has already invested in include US neutral host networks specialist Boldyn Networks, pan-European towers giant Cellnex, and V.tal, a Brazilian wholesale fibre network. You can find out more from CPP Investment’s statement, available here in French.

Telefónica has been recognised as a leader in the provision of internet of things (IoT) managed services for the 10th consecutive year, according to a global report by research firm Gartner. The telco’s digital technology and services division, Telefónica Tech, provides IoT services to diverse sectors, including energy, automotive, retail, manufacturing, agriculture and transportation, in Europe and Latin America, where it says it has seen “strong double-digit growth” in global IoT connections. The tech subsidiary also provides low-power, wide-area (LPWA) network solutions for utility sectors, and has been involved in 5G and edge computing deployments in Spain, Germany and Latin America. Furthermore, it offers mobile virtual network operator (MVNO) capabilities, connectivity options, such as satellite, and operates an open lab for simulating IoT projects before deployment, called TheThinX. Read more.

The warning signs for US operator Dish Network are growing: The 5G newcomer, which is trying to compete with AT&T, T-Mobile US and Verizon with its alternative Open RAN-based greenfield network, was subsumed into Echostar at the start of the year in an effort to cut costs, but Echostar’s revenues are declining, it’s losing a lot of money and its subscriber numbers across all of its activities (payTV, mobile, broadband) are shrinking, as its latest earnings release showed. Now Echostar has noted in its Form 10-K filing with the SEC that it essentially can’t afford the near $3.6bn needed to acquire spectrum licences in the 800 MHz band from T-Mobile US, which had agreed to offload the spectrum to Dish when T-Mobile US merged with Sprint in 2020. Now it’s likely that T-Mobile US will auction that spectrum instead. Dish has already spent $30bn on spectrum licences as part of its 5G rollout and it seems, for now at least, it can’t dig any deeper for more airwave assets. None of this bodes well for Echostar and Dish – the big question now is whether it can haul itself back into growth mode and avoid a catastrophic collapse. 

In an update on its network expansion efforts in the Philippines, Globe Telecom says it added 1,217 new cell sites and upgraded 6,975 existing mobile sites to 4G LTE in 2023. The company has also made progress with its 5G network rollout, switching on 894 new 5G sites in the past year, which it said  was in line with current market dynamics, “offering improved browsing experience for customers”. On the fixed broadband side, Globe deployed more than 199,000 fibre-to-the-home (FTTH) lines in 2023, to maximise the use of its existing fibre inventory and to ensure the delivery of “the right product” to the underserved prepaid fibre market. The Philippine operator also revealed that its capital expenditure (capex) in 2023 amounted to US$1.3bn following peak spending during the Covid-19 pandemic, amid surges in connectivity demand. Out of the total capex for the past year, 91% was used to boost data infrastructure “as demand for data connectivity steadily increased”, the company noted. Read more.

Expect to hear a lot more about quantum computing and quantum-safe networking as the year progresses, the era of next-generation computing gets ever nearer and concerns grow about how to secure IT systems and networks from quantum computing-enabled hackers. A number of companies around the world, including BT and Vodafone in the UK, have been making significant strides in quantum-safe networking, while South Korea’s SK Telecom has been advancing its quantum strategy with the formation of a new alliance that includes Nokia and ID Quantique among its participants. Now personal computer maker HP is getting in early on the end user device side with the launch of what it claims are the “world’s first business PCs to protect firmware against quantum computer attacks.” The protection comes from the deployment of an upgraded Endpoint Security Controller (ESC) chip built into select PCs. For further details, see this announcement.

- The staff, TelecomTV