What’s up with… Ericsson, BT, cyber extortion

• Ericsson writes down another $1.08bn on Vonage
• BT awarded broadband QoE crown 
• Cyber extortion is on the up, finds Orange

In today’s industry news roundup: Ericsson revisits its valuation of Vonage – again; BT tops fixed broadband performance ranking in the UK and across Europe; cyber extortion victims keep rising, with small businesses taking the biggest hit, according to new Orange Cyberdefense data; and much more!

Ericsson is taking another balance sheet hit on the value of its Vonage unit: The giant Swedish vendor announced late Wednesday that it will record a non-cash 11.4bn krona (SEK) ($1.08bn) impairment charge as part of its second-quarter earnings, which are due to be announced on 12 July. Ericsson acquired cloud-based communications platform-as-a-service (CPaaS) specialist Vonage for $6.2bn in late 2021, stating that it would be a vital part of its future enterprise technology and services strategy, but in October 2023 it announced a SEK 32bn ($3bn) impairment charge against the Vonage business, citing a slowdown in Vonage’s core markets as one of the reasons for the revaluation of the unit. And now it’s taking an additional near $1.1bn hit, stating that the move is mainly due to “lower anticipated market growth rates in Vonage’s current portfolio.” Niklas Heuveldop, who took over as head of business area global communications platform and CEO of Vonage in January this year, noted: “Given deterioration in the market environment and elective decisions, we have made to refocus our investments in strategically prioritised areas, we have reassessed certain growth assumptions, resulting in a non-cash impairment of SEK 11.4bn.” As a result, Ericsson is admitting that Vonage is now only worth about 40% of the price it paid in 2022. Perhaps surprisingly, Ericsson’s share price dropped by only 1.2% to SEK 65.20 on the Stockholm exchange in Thursday trading. Ericsson is determined to stick to its strategic guns, though, as it believes Vonage can become one of the key aggregation platforms in the emerging telco network API ecosystem. “We continue to advance our strategy to build a global network platform for network APIs, which was the strategic impetus for the Vonage acquisition,” stated Heuveldop. “We recently announced additional partnerships with leading mobile network operators and we see continued positive momentum across the industry. Through this strategy, we are making advanced 5G network capabilities available to the world’s developer community to accelerate the innovation of value-added applications for industry and society. This will open up new revenue streams for our operator customers and spur growth in the telecom industry.” That may well be, and certainly Vonage has some big-name customers and partners already for its network API aggregation platforms, including Deutsche Telekom, Singtel, Telstra, Verizon and AT&T, but Ericsson’s board and senior management team, including CEO Borje Ekholm, must surely be under scrutiny now for miscalculating Vonage’s value by so much, especially at a time when the potential value of the network API sector to any players in the ecosystem is somewhat uncertain – see Network APIs? Let’s get on with it and Network APIs: Telco traction and IDC’s forecast.

BT has been crowned the leading fixed broadband performance provider in the UK and across Europe, according to a new study from MedUX, which tests and benchmarks fixed and mobile networks in European countries. According to the company’s findings, the UK incumbent telco leads the way in fixed broadband network responsiveness and provides “the overall finest” quality of experience (QoE) in the UK. MedUX also evaluated BT rivals Sky and Vodafone, by assessing criteria such as service reliability, speed compliance, accessibility, throughput, streaming, data and over-the-top (OTT) experience results. It found BT delivered “the most consistent experience” when benchmarked against comparable ISP counterparts in other European countries with predominant fibre-to-the-cabinet (FTTC) technology, including Italy and Greece. The study also found Vodafone to be the provider “most likely to match its service promises with an average ratio of effective download speed versus what it advertised of 86%, a good mark when benchmarked against the European average of 72%”. However, the UK is lagging behind other European countries in terms of internet speed packages, although it is leading in terms of full-fibre deployment advancements.

The past 12 months have seen a record rise in the number of victims of cyber extortion (Cy-X – where threat actors exploit security vulnerabilities to breach digital security systems and gain unauthorised access to valuable assets), according to the latest data from Orange Cyberdefense. The cybersecurity arm of the telco group discovered a total of 11,244 confirmed business victims of such attacks, marking a 77% year-on-year increase in observable cyber extortion victims. Notably, small businesses were four times more likely than medium and large businesses combined to fall victim to such attacks. Interestingly, the majority of victims were based in predominantly English-speaking countries that dominate the world economy, including the US, Canada and the UK. The manufacturing industry continued to be the most targeted sector globally in the examined period, but attacks in healthcare and social assistance recorded the highest growth rate at 160% year on year. Orange’s cybersecurity team also found generative AI (GenAI) to be “a red herring”, suggesting that it is not significantly helping in the fight against Cy-X. “The concerns for GenAI are instead that it could allow the threat ecosystem to globalise – by providing the language and cultural tools attackers need to reach across language and cultural barriers that have, until now, potentially shielded some economies from greater impacts,” the company added in its report. Read more.

MásOrange, the newly formed operator resulting from the merger of Orange Spain and MásMóvil, is making some hefty investments in its fibre and mobile networks across Spain. In one translated statement, the telco announced plans to invest more than €700m over the next three years to boost digital transformation, economic development and job creation in the community of Andalusia. MásOrange added that this investment is on top of a combined historical investment by Orange and MásMóvil into the region in excess of €5.5bn. Just a day after this announcement, MásOrange announced it will make a joint investment of €200m together with Euskaltel to help boost the economic and technological development of the Basque Country. This follows a previous investment by the duo of more than €3.7bn. You can read more here (in Spanish).

Indonesian telco Indosat Ooredoo Hutchison has introduced AI solutions designed to support Indonesia’s upstream oil and gas industry. The portfolio, offered by the operator’s enterprise arm Indosat Business, and its subsidiary Lintasarta, includes a solution that uses AI to make high-resolution seismic wave measurements to ease exploration methods and well planning which, according to the telco, can increase production by up to 10%. Another solution to be powered by AI will connect workers to each other to enable better quality and productivity, and will monitor safety compliance. Indosat also demonstrated a solution that addresses critical equipment maintenance failures, and an AI cloud-based solution that analyses complex legal contracts. “The goal is to reshape the oil and gas industry by leveraging AI technology to make it more resilient, adaptable, and sustainable in the future,” noted Muhammad Buldansyah, director and chief business officer of Indosat Ooredoo Hutchison. Read more.

- The staff, TelecomTV