What’s up with… SK Telecom, Lumen, NTT Docomo

• AI fuels SK Telecom’s second-quarter growth
• Lumen Technologies cites AI as catalyst for $5bn in new business
• NTT Docomo invests in space infrastructure startup

In today’s industry news roundup: South Korea’s SK Telecom has reported sales and profit growth on the back of success in the consumer and enterprise sectors, with AI a notable driver of demand from business customers; AI is also a key driver of growing demand for networks services at US operator Lumen, which is building out data transport infrastructure to support datacentre interconnect and intercity demand; Japan’s NTT Docomo has invested in Japan’s answer to SpaceX; and much more!

Self-proclaimed AI company SK Telecom (SKT) is clearly doing something right… The South Korean operator has reported a 2.7% year-on-year increase in group revenues to 4.42tn Korean won (KRW) ($3.2bn) and a 16% increase in operating profit to KRW537.5bn ($390m) for the second quarter of this year. The operator said those gains were driven by “higher performance in the mobile and fixed telecommunications business of SKT and its major affiliates” and noted that revenues from enterprise customers grew by 11% year on year to KRW434.2bn ($315m) “fuelled by higher datacentre utilisation and increased cloud orders.” The operator ended June with 16.23 million 5G customers, accounting for 70% of its mobile customer base, as well as just over 7 million fixed broadband and 9.6 million pay-TV customers. SK Telecom noted that it “secured its first AI cloud order from domestic internet service providers” during the second quarter and “plans to scale up its AI cloud business significantly.” And that’s not just talk – the South Korean telco recently announced a $200m investment in Smart Global Holdings (SGH), a California-based company that designs, builds and manages high-performance computing systems that are used for AI workloads. That investment “aligns with SKT’s strategy to evolve and develop its existing datacentre business into an AI datacentre, which has recently seen a surge in demand.” The operator further noted that its “strategy is to build an AI value chain, including the AI datacentre and AI service, and to secure its business competitiveness based on the second quarter’s strong performance. The company has invested more than $300m since last year to secure a new AI growth engine, accelerating the expansion of the company’s global partnership in order to create tangible results in key areas of the AI business.” And there’s more to come, it seems: SK Telecom’s CFO, Kim Yang-seob, noted that the operator will “showcase our progress as an AI company in the second half of the year.” 

US network operator Lumen Technologies has secured $5bn in new business deals to help it address the major demand for connectivity fuelled by AI. The company explained that large companies are looking to expand their fibre capacity as it becomes “increasingly valuable and potentially limited” due to “booming AI needs”. One of these deals includes a recent collaboration with Microsoft that will see Lumen act as a “strategic supplier” for the tech giant’s network infrastructure needs driven by AI developments. Lumen is also engaged in active discussions with customers to secure another $7bn in sales opportunities. The company plans to “more than double its intercity network miles over the next five years, while also providing access to a significant amount of installed dark fibre”. “Our partners are turning to us because of our AI-ready infrastructure and expansive network. This is just the beginning of a significant opportunity for Lumen, one that will lead to one of the largest expansions of the internet ever,” noted Kate Johnson, president and CEO of the company. As part of its plan, Lumen has created a new Custom Networks division to provide customised network solutions, including dark fibre, custom fibre routes and digital services that connect companies’ datacentres to protect data and support AI-intensive workloads. This announcement comes shortly after Lumen and Corning struck a deal that will see the fibre maker reserve 10% of its global capacity for each of the next two years and enable the operator to build a new network to “interconnect AI-enabled datacentres”.

Japanese mobile giant NTT Docomo has invested an unspecified sum in space infrastructure developer Interstellar Technologies, a company that is aiming to become Japan’s first integrated “rocket and satellite business” and thus become the country’s equivalent to Elon Musk’s SpaceX. The investment came as part of Interstellar’s 3.1bn Japanese yen ($21.4m) Series E funding round, which takes the company’s total funding so far to 17bn yen ($118m). One of the company’s aims is to develop and launch satellites that enable direct-to-smartphone communications from space, a service that is soon to be launched by the likes of SpaceX’s Starlink and AST SpaceMobile (so Interstellar has a lot of catching up to do in terms of R&D and funding). For further details, see this press release. It’s also worth noting that NTT Docomo’s parent company, NTT Group, recently formed a space unit called NTT C89 to pull together its various assets, projects and plans associated with space, satellites and high-altitude platform station (HAPS) developments under one brand, so the relationship with Interstellar will also factor into that particular development – see NTT launches space unit.

Digital Catapult has launched an initiative to address the energy challenges across Open RAN operations and to aid the sustainability goals of telcos. The UK state-funded industry body unveiled in a statement that the Sonic (SmartRAN Open Networks Interoperability Centre) Labs Technology Access Programme will collaborate with “leading organisations” to significantly reduce the energy consumption of telecoms networks, which currently account for 90% of operators’ total energy usage. The scheme will involve five teams who will develop and implement new solutions and will break down network components to consider how energy usage in Open RAN operations can be optimised. The programme will also employ “cutting-edge AI and machine learning technologies” to enhance efficiency and performance of the networks. The programme, according to Digital Catapult, also helps to enhance telcos’ service delivery and operational efficiency, as Open RAN is expected to represent 20% to 30% of worldwide RAN revenues by 2028. The industry body plans to showcase the impact of the programme and the developed “pioneering solutions” in early 2025.

Bharti Airtel has reported improved results in its first quarter of fiscal year 2025 (ended 30 June 2024), with revenues up 2.8% year on year to 385.06bn rupees (US$4.6bn) and consolidated net profit growing more than twofold to 41.60bn rupees ($495.6m). The Indian telco giant attributed its performance to a number of factors, including a 26% increase in mobile data consumption, and adding 29.7 million 4G/5G data customers in the period (representing 73% of its overall mobile customer base). Providing a breakdown per division, Airtel reported a 10.1% year-on-year increase in revenues in its domestic market of India to 290.46bn rupees ($3.46bn) due to “strong and consistent performance across the portfolio”, while its Business unit revenues grew 8.3% to 54,765bn rupees ($652m) on the back of leveraging its converged portfolio. Airtel also reported a 17.6% in its Homes business to 13,670bn rupees ($162.8m) driven by “healthy customer additions”. The operator noted that it has also accelerated the expansion of its fixed wireless access (FWA) services to widen its addressable market. The company also rolled out an additional 6,300 towers and around 15,500 mobile broadband stations In the period to deliver “seamless connectivity and superior network experience”.

Application programming interfaces (APIs) and cooperation between providers on carrier-to-carrier functionality are “crucial” to the future of the wholesale telecom market, according to GlobalData. The data and analytics firm highlighted “fierce” competition in the wholesale market, which makes it challenging for players to achieve growth even in times where growth in demand is outstripping supply. “Not all wholesale buyers consume capacity in the same way, but our conversations with some of the largest buyers of wholesale telecoms services have reinforced the importance of an API-enabled buying process. Price and capacity in the right location are always important, but we have been told by leading companies that they increasingly will not work with companies that do not offer the right API-led buying process,” explained Gary Barton, research director for enterprise technology and services at GlobalData. The analyst house further noted that network APIs are not just about commercial models, as they also play “a foundational role in achieving consistent end-to-end functionality when multiple service provider networks are involved.” Furthermore, the rise of highly automated network-as-a-service (NaaS) solutions has “significantly increased the importance in maintaining control and visibility over data and applications” when multiple provider networks are involved. Barton explained telcos need to develop APIs that enable consistency of customer experience for network services that mirror the consistency experienced when buying public cloud services in multiple locations – which, he claimed, is not something that can be achieved by operators acting independently. “To deliver the experience that network service buyers want, there is a need for greater cooperation between service providers led by industry bodies, such as the MEF and GSMA”, noted Barton, adding that this will also help telcos defend against emerging competitors, such as hyperscalers. Find out more.

You had, no doubt, long sensed it in your waters, but now it’s official – Google operates an illegal monopoly. Or at least that’s the view of a US federal court, which has ruled that the big tech firm’s massive, and massively lucrative, search engine business is in violation of US antitrust legislation, Reuters has reported. Over the years, Google, whose parent company is Alphabet, has paid billions of dollars (estimated by prosecutors to be in excess of $10bn a year) to stitch-up the search engine market to its own immense benefit by paying the makers and providers of web browsers and smartphones to preinstall its apps so that, by default rather than user choice, its search results (and accompanying swathes of advertising) get pride of place on the screens of billions of devices. For example, Apple iPhones automatically default to Google Search in the Safari browser, which is used by most subscribers because it saves them having to perform a few more clicks to find an alternative source for the information they need. Google’s ruthless pursuit and maintenance of market domination has been so successful that it currently commands 90% of the online search market and an even more incredible 95% of the smartphone search market. The US Department of Justice (DoJ) has long been keen to clip Google’s wings but has struggled. This case began in 2020 and has taken so long not least because of Google’s incredibly determined and powerful lobbying paid for out of a fraction of its huge profits. This time though, over the course of a 10-week trial, the DoJ has finally succeeded in nailing its quarry and it did so under the provisions of antitrust legislation passed in the 19th century. How splendidly ironic. In a judgement issued on 5 August 2024, Washington, District of Columbia Judge Amit Mehta announced in a 277-page ruling that “Google is a monopolist, and it has acted as one to maintain its monopoly”. He added, "Even if a new entrant were positioned from a quality standpoint to bid for the default when an agreement expires, such a firm could compete only if it were prepared to pay partners upwards of billions of dollars in revenue share.” His ruling will almost certainly have an enormous impact on how, in near future, users find information online. Could it be that the days of Google’s infamously powerful algorithm, that puts the results it provides at the top of the on-screen pile to the detriment of all others search engines, are numbered? The DoJ is delighted with the judgement and the US Attorney General, Merrick Garland, called it an “historic win for the American people. No company – no matter how large or influential – is above the law. The Justice Department will continue to vigorously enforce our antitrust laws.” The DoJ is demanding “structural relief” in this case, which is legal-speak for the power to impose the mandatory breakup of Google into several component parts: However, that currently seems unlikely. The penalties to be imposed are to be decided at another hearing in a few months’ time and Alphabet must be worried that real change is coming. It came as no surprise to find that Google is to appeal the decision. In a statement the company wrote, “This decision recognises that Google offers the best search engine, but concludes that we shouldn’t be allowed to make it easily available.” Well that’s one way of spinning the story. Here’s another… Google’s lead lawyer, John Schmidtlein, argued that “Google is winning because it’s better” than other search engines, adding that Microsoft’s Bing is a serious rival (although usage figures disprove the assertion) and that Google faces immense competition from sites that provide specialised search capabilities for those users eeking particular goods or services, such as restaurants, flight and train timetables and so on. Really? Meanwhile, next month Google faces another US court hearing, this time about its advertising technologies. What’s more, in Europe, it has already been fined billions of euros for its monopolistic bent. US federal agencies have also filed lawsuits against other big tech companies, including Amazon and Meta: The Google ruling will be giving them food for thought.

Australian investment bank Macquarie is reportedly no longer interested in pursuing a majority stake in PlatformX, the UK broadband network wholesale business created earlier this year when telco TalkTalk Group (TTG) split itself into three separate businesses as part of its efforts to stave off bankruptcy. Speculation emerged earlier this year that Macquarie was lining up an investment in PlatformX, but UK newspaper The Telegraph reported that a deal worth up to £500m has been shelved, at least for the foreseeable future. That’s not TalkTalk’s only financial worry: The investment from Macquarie would have helped TalkTalk to refinance its £1bn debt pile but now alternative arrangements will need to be made to avoid defaulting on payments. TalkTalk founder Sir Charles Dunstone and some of the company’s other shareholders reportedly offered to pump £200m into the business and offer lenders security over assets worth about £200m, but that offer was reportedly rejected, though further discussions are ongoing. The telco is also under pressure from lenders to prove it is operating within the financial boundaries outlined in a £330m revolving credit facility. On that, ratings agency S&P expects TalkTalk to fail the test and potentially to default, which would allow lenders to seize control of the company. Ratings agency Fitch has already downgraded TalkTalk because of “imminent refinancing risks and weak financial flexibility to service upcoming debt maturities. Discussions on recapitalisation through a strategic investor have stalled and TTG is seeking capital from existing shareholders in conjunction with, highly likely, a material reduction in terms for creditors, given the material cash flow weakness. This would result in a distressed debt exchange (DDE) under Fitch's Corporate Rating Criteria. It is possible that TTG could secure funding from an existing or new strategic investor to facilitate a full refinancing but the proximity of debt maturities makes timely completion unlikely.” The omens are not good for the UK telco. 

- The staff, TelecomTV