What’s up with… Viavi & Spirent, Cellnex & Phoenix, Red Sea cables

• Viavi snaps up Spirent for £1bn 
• Cellnex sells Irish unit to Phoenix for €971m
• Four subsea cables are cut in the Red Sea

In today’s industry news roundup: Viavi Solutions is bulking up with the acquisitions of fellow test and measurement vendor Spirent Communications; Cellnex’s latest divestment sees it offload its business in Ireland to Phoenix Tower International for €971m; four subsea cables in the Red Sea are cut, causing internet traffic disruption; and much more! 

In what is a major M&A move in the test and measurement sector, Viavi Solutions has struck a deal to acquire Spirent Communications for £1bn in cash, the equivalent of 175 pence per Spirent share. The news sent Spirent share price soaring by more than 62% to 175.9 pence on the London Stock Exchange on Tuesday. According to documents filed with the London Stock Exchange, Viavi has been tracking Spirent for a few years and “has been impressed with the strategy employed by the Spirent Board and its management team in creating a well-balanced and diversified business with a global presence. Viavi views the Spirent Group as a provider of complementary products and services that address the test, assurance, and automation challenges of a new generation of technologies.” The two companies believe that “Spirent’s product offerings and technological assets are highly complementary and synergistic to Viavi’s existing portfolio, which will enable the Combined Group to deliver high performance, integrated solutions for networking and mission critical applications, including 5G and 6G wireless infrastructure.” The acquisition will be funded by Viavi’s existing cash, an $800m seven-year term loan from Wells Fargo Bank, and a $400m investment from Silver Lake in the form of a convertible note: In connection with the Silver Lake investment, Ken Hao, chairman and a managing partner of Silver Lake, will join the Viavi board of directors. Oleg Khaykin, president and CEO of Viavi, noted: “Viavi is proud to help enable its global customers to pursue innovation across the wide range of industries it serves. Combining our leading communications test and measurement and optical technologies and Spirent’s high-performance testing and assurance solutions is expected to deliver enhanced product solutions and applications, accelerate growth in new markets and strengthen innovation through expanded engineering and design capabilities. Further, we are uniting two teams with a shared passion for developing compelling and cutting-edge offerings for customers and a commitment to technological excellence. We are pleased to welcome a strategic, long-term investment from Silver Lake in connection with the acquisition. Silver Lake has an outstanding track record of supporting leading technology companies through both organic growth investments and scale acquisitions.” Viavi’s share price jumped by 7.9% to $10.50 following the news. For more on the deal, see this announcement. The news came as Spirent announced its full year financial results for 2023, including a near 22% year-on-year decline in revenues to $474.3m and a 65.1% drop in adjusted operating profit to $45.2m. Commenting on the results, Spirent CEO Eric Updyke noted: “As we progressed through 2023, the market landscape became increasingly challenging. The elevated prevailing interest rates and inflationary pressures impacted customers, especially those in the telecommunications sector. These customers responded by taking significant action, particularly in the second half of 2023, to cut costs and by reducing their capital expenditure to preserve cash. To help navigate these more challenging conditions, we accelerated our focus on non-telco end markets, we undertook cost-saving measures, which will continue to deliver savings in 2024 whilst continuing to make important R&D investments to maintain our technology leadership. As a result of these measures, we saw strategic progress in a number of areas. We signed important new 5G and Open RAN contracts, secured an important win in Financial Services and saw good order intake in Positioning and among our hyperscaler customers. As we start 2024, we will continue to protect and invest in our leading technologies to be best placed to support our customers. We expect that the current challenges for the telecoms industry will continue and it is difficult to predict how long they will last. Whilst we continue to believe the mid- to longer-term drivers for our business remain intact, as announced separately today, the board has concluded that the offer from Viavi should be recommended to shareholders given the value it places on our business.” 

European neutral network infrastructure giant Cellnex has sold yet more assets in a move to become more financially stable and maximise the value of its extensive tower and other infrastructure assets around Europe. The company has agreed to sell its business in Ireland, which includes 1,900 tower sites, to Phoenix Tower International for €971m. Cellnex CEO Marco Patuano noted that the sale “is one further step within the company’s ‘next chapter’, in line with our strategy, to achieve the goal of consolidating, simplifying our corporate structure and focusing our efforts in the existing growth opportunities in the main markets in which we operate.” The sale of the assets in Ireland follows other divestment moves in France and in the Nordics, where the company struck a deal to sell a 49% stake in its subsidiaries in Sweden and Denmark to infrastructure investment firm Stonepeak for €730m. The news came as Cellnex, which recently reported a 16% rise in annual revenues to €4bn, held its Capital Markets Day to provide an update on its strategy, which signals further M&A moves. The company noted that one of its four strategic pillars is to simplify its structure, and that it is “undertaking a strategic portfolio review to focus on core markets and businesses, and divest from non-core business lines that exhibit limited growth potential for the company. The aim is to reduce operational complexity, strength[en] the balance sheet, and enhance the credit rating, laying the ground for stronger results and future organic expansion, boosting an improvement in the shareholders’ return.”  

The conflict in the Middle East is having a growing impact on internet traffic routes. HGC Global Communications (formerly Hutchison Global Communications) has reported in this announcement and this update that four subsea cables running through the Red Sea, where Houthi militia have been targeting vessels and other assets and infrastructure, have been cut, affecting the flow of about 25% of the data traffic that runs between the Mediterranean Sea (Europe and Africa) and Asia. The four submarine cables affected are TGN-Eurasia (TGN-EA), the Seacom cable system, Asia-Africa-Europe 1 (AAE-1) and the Europe India Gateway (EIG). HGC Global Communications says it is diverting traffic via different routes. The cause of the cuts has not been revealed though several media outlets have noted that the Houthis have denied cutting the cables, though the damage may have been caused by a ship that was sunk by the militia.  

More bites taken out of a soured Apple… In addition to being hit with a €1.8bn antitrust fine by the European Commission (EC) following a long investigation that found the tech and digital services giant deliberately and determinedly used its dominant market position in the online services market to prevent and limit competition from music streaming services such as Spotify, the Cupertino company’s fortunes in China are also taking a battering as consumers spurn iPhones in favour of Huawei smartphones. First, Europe: The fine levied on Apple by the EC is four times more than had been expected. It took Apple by surprise and caused it real annoyance – for once. Commenting on the unexpectedly high penalty, the EC’s competition commissioner, Margrethe Vestager, said a smaller punishment would amount to “nothing more than the equivalent of a parking fine” and emphasised the €1.8bn was specifically designed “to act as a deterrent against a repetition of such practices by Apple or others” in future. She added, “I think it is important to see that if you are a company who is dominant and you do something illegal, it will be punished.” Acting on a complaint from Spotify, Vestager pointed out that “Apple’s conduct, which lasted for almost 10 years, may have led many iOS users to pay significantly higher prices for music streaming subscriptions. Apple’s rules ended up harming consumers. Critical information was withheld so that consumers could not effectively use or make informed choices.” The Verge has some interesting reactions to the decision. Apple says it will appeal, but EU law requires the company to pay the fine into an escrow account before any, inevitably lengthy, appeal can take place. Furthermore, despite the tough words and massive fine, the reality is the financial penalty is just 0.5% of Apple’s annual turnover. Despite the company’s fulminations, it’ll soon be forgotten. And now, to China where, according to figures from Hong Kong-headquartered Counterpoint Research, sales of Apple’s iPhone have dropped by a quarter during just the first six weeks of 2024. The fall is attributed to three main factors: Intensifying competition from Chinese domestic rivals; longer upgrade cycles as consumers hang onto their cash during China’s current economic downturn; and sentiment swings to favour home-grown Huawei’s premium smartphones over US imports. Huawei enjoyed a 64% increase in handset sales over the same period and increased its market share to 16.5% from 9.4% a year earlier. The improved figures put Huawei into second place in China’s handset league table behind top-ranked Vivo. Meanwhile, Apple’s share of the Chinese smartphone market fell to 15.7%, dropping the company to fourth place. During the early weeks of last year, Apple was in second place in the Chinese market and had a 19% market share. Counterpoint’s senior analyst, Mengmeng Zhang, said Apple “faced stiff competition at the high end from a resurgent Huawei while getting squeezed in the middle on aggressive pricing from the likes of OPPO, Vivo and Xiaomi.” It is evident though that China’s economic downtime is hitting the handsets market hard. It shrank by 7% during the first six weeks of 2024. Apple’s immediate reaction has been to cut the prices of some iPhone models by as much as 1,300 yuan ($180.68).

Telefónica has achieved an 8.6% reduction in energy consumption since 2015, despite traffic multiplying by 8.6 times in the period. According to the telco, it has implemented a total of 1,574 projects aimed at improving energy efficiency, which have helped it generate “recurring savings” of more than €2.2bn, more than 13,800 GWh of energy and 4 million tonnes of carbon dioxide equivilent since 2010. Telefónica attributed its progress to certain technological innovations, such as replacing copper with fibre optics, which is estimated to be 85% more efficient than legacy copper networks, and deploying 5G, which is estimated to be up to 90% more efficient than 4G. The operator group also aims to optimise energy consumption by up to 40% through the use of virtualisation, migration to the cloud, the implementation of power-saving features, and by using AI and machine learning (ML) platforms. Another effort that has helped the telco on its sustainability journey includes the renovation of power plants and air conditioning equipment, as well as embracing renewable energy sources for its operations and generating its own electricity. Based on these endeavours, Telefónica is confident that it will meet its climate action-related goals, which include achieving 100% renewable electricity consumption by 2030 in all markets and reducing operational emissions by 90% by the end of the decade compared to their level in 2015. Find out more.

Telecom Italia (TIM) has entered an expanded cloud services collaboration with VMware’s new parent, Broadcom, that gives the telco a set way to offer managed VMware Cloud Foundation (VCF) private cloud services, “including sovereign cloud services that support data residency and other jurisdictional controls.” The pair are aiming to help mutual enterprise customers with innovation by adopting VCF as their private cloud infrastructure. The business arm of TIM will offer a catalogue of services, called TIM Cloud Flex, to enable the creation of a private and hybrid cloud infrastructure “that is accessible, flexible and integrated between different cloud systems”. According to Elio Schiavo, chief enterprise and innovative solutions officer at TIM, the offering will allow customers to focus on “delivering their business priorities rather than running IT operations.” The Italian telco added that the cloud services within TIM Cloud Flex can also be combined with managed services and professional services, allowing customers to make use of “a scalable and versatile enterprise-grade cloud architecture that adapts to changing business requirements.” Find out more.

The Federal Communications Commission (FCC) keeps nudging the US Congress to do something before funding for its affordable broadband scheme runs out. FCC chair Jessica Rosenworcel has sent a letter to congressional leaders, urging for “immediate action” as current funding to connectivity providers under the Affordable Connectivity Program (ACP) will only be available until the end of April. The regulator added that if additional funding is not unlocked by the Congress, as many as 23 million participating households across the US will no longer be able to access affordable broadband, in addition to an enrolment “freeze” on more households that are unable to sign up to the scheme. According to a survey conducted by the agency, more than two-thirds of households currently benefitting from the ACP had “inconsistent or zero connectivity” prior to enrolling. Furthermore, the FCC has found that more than three-quarters of ACP households will experience service disruptions if the programme comes to an end. “I believe we have come too far with the ACP to turn back and lose the gains we have made connecting so many households across the country. Accordingly, the commission continues to stand ready to assist Congress with any efforts to fully fund the ACP into the future,” noted Rosenworcel. As per FCC’s proposal, an additional funding of $7bn should be unlocked by extending the ACP scheme. The FCC made a previous attempt at urging the Congress to allocate more funding in January.

BT has won a £26m contract from the UK government to deliver full fibre broadband to more than 650 primary schools in hard-to-reach areas across England. With funding from the UK’s Department for Education (DfE) and Department for Science, Innovation and Technology (DSIT), the UK’s incumbent telco will be tasked with providing ‘lighting fast’ broadband connectivity to schools, some of which will see speeds that are up to 500 times faster (considering that fibre-to-the-premises (FTTP) will be able to deliver 1000Mbit/s, compared with current connectivity options at certain educational institutions, such as ASDL broadband with speeds of 2.02Mbit/s). The aim of the project, which is part of the UK government’s ‘Project Gigabit’ programme, is to make the targeted schools “gigabit-capable” by December 2025. BT explained that it will work closely with infrastructure supplier Openreach for the initiative. “This investment will transform the learning experience for thousands of pupils, opening up opportunities for interactive lessons, collaborative projects with other schools and pupils anywhere in the world, as well access to an expanding online library of educational content and video,” said Ashish Gupta, managing director for the corporate and public sector at BT. Read more.

News about radical new approaches to innovative battery technologies keep, well, flooding in… One of the very latest is the announcement that an international team of researchers at the RMIT University (Royal Melbourne Institute of Technology) in Australia have invented aqueous energy storage devices or ‘water batteries’ – recyclable equipment that is completely safe and that can’t and won’t catch fire as lithium-ion batteries can and do. In the new batteries, the usual organic electrolytes are replaced with water and, it is claimed, can be mass manufactured quickly, easily and inexpensively. Lithium is not only potentially hazardous, both to people and the environment, it is also very expensive and supply chains can be subject to frequent disruption. The small amounts of other materials used in the water batteries include zinc and magnesium, which are abundantly available, cheap and nowhere near as toxic as rare earth materials. Magnesium in particular has a higher potential energy density and can thus enable faster charging times and better support for power-hungry devices and applications. Professor Tianyi Ma, one of the leaders of the RMIT team, said: “The batteries can be safely disassembled and the materials can be reused or recycled, which addresses end-of-life disposal challenges that consumers, industry, and governments globally face with current energy storage technology.” Experimentation by the research team has resulted in increased energy-storage capacity in the prototype batteries, together with an increased lifespan and improved performance overall. As reported by the scientific developments website Tech Explorer, most recently the team was able to solve the perennial problem of dendrites, the rigid spiky metallic needles that build up on a lithium surface and grow to penetrate into the solid electrolyte. Dendrites eventually become large enough to cross from one electrode to the other thus short-circuiting the battery cell and rendering it useless. The RMIT team solved the problem by using a protective layer of bismuth and its oxide to cover the relevant parts of the battery and thus prevent dendrite formation. The researchers say their water battery technology is already closing in on lithium-ion batteries in terms of energy density. The idea is to use the minimum amount of space per unit of power as possible and the team has succeeded in making a magnesium-ion water battery with an energy density of 75 watt-hours per kilogramme, which is up to 30% of that supplied by the latest Tesla car batteries. Research is now continuing to develop new nanomaterials for electrodes that are able to further increase their energy density. So far, magnesium seems to be the most promising material for water batteries. Professor Ma believes they could replace lead-acid batteries in the short term, within the next one to three years, and even replace lithium-ion batteries in the longer term of between five to 10 years. He said: “Our batteries now last significantly longer, comparable to the commercial lithium-ion batteries in the market, making them ideal for high-speed and intensive use in real-world applications. With impressive capacity and extended lifespan, we’ve not only advanced battery technology but also successfully integrated our design with solar panels, showcasing efficient and stable renewable energy storage.”

- The staff, TelecomTV