What’s up with… Ericsson, Vodafone and e&, the Open RAN market

• Ericsson replaces Vonage CEO
• The UK deems e&’s stake in Vodafone as a potential security risk
• Open RAN sector is growing, but slowly

In today’s industry news roundup: Ericsson is replacing Rory Read, the CEO of its increasingly important network API platform unit, Vonage; the UK government has decided that e&’s stake in Vodafone Group is a potential national security risk; the Open RAN sector is on a slow path to growth and could be worth as much as 8% of the overall RAN market this year, according to ABI Research; and much more!

Ericsson has appointed a new CEO at Vonage, the cloud-based communications platform business it acquired for $6.2bn in July 2022 that then became the focus of a $2.9bn goodwill impairment charge last October. Senior VP Niklas Heuveldop, who has been heading up the vendor’s business in North America since 2017, has been appointed as the new head of the Business Area Global Communications Platform and CEO of Vonage with effect from 1 February, replacing Rory Read, who joined as part of the acquisition but who will leave Ericsson at the end of the first quarter. “I’m very pleased that Niklas has accepted to lead the Business Area Global Communications Platform at this pivotal time,” noted Ericsson CEO Börje Ekholm. “The Vonage acquisition and our investments in the global network platform are foundational to our long-term strategy execution, driving growth in both the enterprise segment but also reinforcing our network infrastructure business,” he added. Ekholm has been saying that the Vonage business and the global network API platform it is developing is absolutely critical to the vendor’s long-term future as enterprises and network operators adapt to cloud-based, API-enabled communications and applications and as the traditional telco network infrastructure market shrinks. “The Vonage business and technology remain key to executing on our strategy to expand in enterprise and help enable operators to monetise the network features in 5G. We are discussing network APIs and communications solutions with all customers today, as they see this as a major opportunity to monetise the networks and, in turn, drive further investments in mobile infrastructure,” he explained. Outgoing CEO Read noted: “It has been a true honour to lead this talented Vonage team on this journey – first around the power of the Vonage Communications Platform and then into the world of 5G with Ericsson.” As a result of the terms of the Vonage acquisition, Read leaves Ericsson with a bank balance that would make your eyes water – his 2022 total compensation topped $36m – so he’ll be fine.  

The 14.6% stake in Vodafone held by Middle East tech giant e& is a potential national security risk to the UK because of Vodafone’s strategic role in the UK’s telecom services sector, according to the government. The Cabinet Office noted that a national security committee will be set up at Vodafone to oversee and monitor any sensitive work it carries out that could have an impact on national security. The move is “necessary and proportionate” to “mitigate the risk to national security”, according to the government.

According to the latest forecast from ABI Research, the Open RAN market will continue on “an upward, albeit slow, growth trajectory” in 2024, and will represent between 6% and 8% of the overall radio access network (RAN) market by the end of the current year (a range that is not far removed from the forecast shared by Dell’Oro Group recently). Furthermore, developments in the next few years are set to be fuelled by the growing competition in this domain. “Currently, Open RAN vendors, including Samsung, Mavenir, NEC, Fujitsu, Rakuten Symphony and Parallel Wireless hold around 95% to 97% of the total Open RAN market share, whereas incumbent vendors, including Ericsson, started to develop their Open RAN ecosystem and the industry is expected to see a turnaround during the second half of 2024,” explained Saqlain Ali, senior analyst for 5G, 6G and Open RAN at ABI Research. According to the research house’s findings, the likes of Mavenir, NEC, Samsung, Fujitsu and Rakuten Symphony will face “fierce competition” from incumbent vendors, such as Ericsson and Nokia, which are “in a solid position” to carry out massive-scale Open RAN deployments in the coming years given their global presence in the RAN market. Examples include Ericsson’s deal with AT&T to roll out Open RAN in the US, and Nokia’s partnerships with Tier 1 operators, such as Deutsche Telekom and NTT Docomo, and with Open RAN vendor Mavenir, with a view to boosting their Open RAN footprint. “While the Open RAN ecosystem is not mature, small-scale deployments will continue for the next few years. However, with further advancements related to Open RAN silicon, multi-vendor interoperability, and testing, and the availability of RIC [RAN intelligent controller] and ULPI interface for massive MIMO could result in more favourable results, and an inflection point could happen between 2027 and 2028,” explained Ali. Read more.

Equinix is adding AI supercomputing to its portfolio of datacentres through a new partnership with leading market player Nvidia. It has made a new, fully managed private cloud service available to enterprises, to allow them to build and run custom generative AI (GenAI) models by acquiring and managing their own Nvidia DGX (an AI development platform) supercomputing infrastructure. This means customers can operate their AI infrastructure in close proximity to their data, and can quickly retrieve GenAI information across corporate wide area networks (WANs). According to Equinix, the service also delivers high-speed private network access to global network service providers, and offers “private, high-bandwidth interconnections to cloud services and enterprise service providers”, which is set to “facilitate AI workloads while meeting data security and compliance requirements”. The company explained that early-access companies in biopharma, financial services, software, automotive and retail are already using the solution to build AI centres of excellence and enable a wide range of rapidly developing large language model (LLM) use cases. Examples include faster time-to-market for new medications, developing AI co-pilots for customer service agents and building virtual productivity assistants. “To harness the incredible potential of generative AI, enterprises need adaptable, scalable hybrid infrastructure in their local markets to bring AI supercomputing to their data,” explained Charles Meyers, president and CEO of Equinix. “Our new service provides customers [with] a fast and cost-effective way to adopt advanced AI infrastructure that’s operated and managed by experts globally,” he added. Find out more.

The internet of things (IoT) market in Europe is set to withstand ongoing global uncertainty, with the latest figures from IDC suggesting that investments from European organisations into IoT-related solutions will exceed $260bn in 2024. Spending growth is expected to gradually pick up momentum this year and beyond, along with the recovery of the European economy. IoT investments in the region are forecast to increase by a compound annual growth rate (CAGR) of 11.8%, hitting nearly $368bn by 2027. The research team at IDC pointed out that while growth of the IoT market has been hampered by geopolitical and macroeconomic factors during the past two years, IoT products and services act as “a catalyst for businesses to undertake digital transformation initiatives”, enabling operational efficiency and, as a result, reducing costs and improving customer experience. IDC expects European IoT spending to be largely driven by investments from the manufacturing, utilities and professional services sectors, and believes spending on software will see the fastest growth by 2027. In addition, investments in low-power, wide-area networks are set for “significant growth” in the period, as they offer “power-efficient, long-range, and cost-effective connectivity” for IoT devices, such as smart meters and asset trackers, that only require “infrequent transmission of small amounts of data”.

Finnish operator Elisa has signed a €40m contract with domestic energy and telecommunication services provider Voimatel to build a fibre optic network by deploying fibre connections that serve small homes across the country. According to Sami Rajamäki, VP for network services at Elisa, the most popular options for home connectivity in Finland are 5G and optical fibre, hence why the telco is eyeing to systematically expand both network types. The company added that its fibre network is available to more than a million households in the country, while its 5G network covers more than 92% of domestic premises. You can find out more from Elisa’s statement, available in Finnish here.

Telcos around the world are making strides to capitalise on their assets, with the latest example coming in the form of an agreement by Tigo Colombia, a subsidiary of Latin American telco group Millicom, to sell around 1,100 wireless communications towers to US private equity firm KKR (Kohlberg Kravis Roberts) for an undisclosed sum. Under the terms of the deal, announced by Millicom, KKR will lease towers back to the Colombian telco to support its wireless networks in the long term. Millicom’s CEO and chairman, Mauricio Ramos, described the move as “another step towards crystallising the value of our tower sites across Latin America, simplifying our business, and allowing us to focus on servicing our customers.” Furthermore, the agreed sale will enhance the telco’s “operational and capital efficiency in Colombia,” with long-term lease obligations denominated in Colombian pesos, which is aligned with the company’s objective of increasing its proportion of financing in local currency. As for KKR, the deal should not come as a surprise, as the investment company has already made a number of inroads into the telco sector. The most significant move is the agreed takeover of NetCo, the fixed line network business of Telecom Italia, but KKR has has form with purchasing telecoms towers, including a deal with Vodafone for a 50% share in Vantage Towers (in co-ownership with Global Infrastructure Partners – GIP) and an agreement with Telefónica for up to a 40% ownership stake in Telxius.

- The staff, TelecomTV