WCA January 2008

Telecom news

California. According to a 24 th October Associated Press report on the so- called concierge services bestowed by some 5% of US businesses, perhaps no company pampers its employees as much as Google. In addition to comfortable, free transport to and from the office, Google attaches enjoy ‘a diverse menu of perquisites that includes free car washes, oil changes, massages, haircuts, dry cleaning, child care, and on-site medical care.’

Spain in Italy: Telefónica and Italian friends purchase the Pirelli stake in Telecom Italia

On 25 th October, Italian investors and Spain’s Telefónica SA completed their acquisition of an indirect controlling stake in Telecom Italia, whereby the Spanish telecom giant secured a foothold in Italy’s dominant phone company. Telefónica; the banks Intesa Sanpaolo and Mediobanca; insurer Generali; and the holding company Sintonia bought an 18% stake in Europe’s fifth-largest telecommunications company from Pirelli SpA for $5.95 billion. It is believed that the sale will give Pirelli’s net financial position a $4.76 billion boost. Together with other, direct, holdings in Italy’s former telecom monopoly, which has the largest user base in that country, the former Pirelli stake will go to make up the new holding company Telco, which will own 23.6% of Telecom Italia. Telefónica, one of the largest fixed-line and mobile telecommunications companies in the world, will pay $3.3 billion for 42.3% of Telco. The Spanish group will get 9.9% of the voting shares of Telecom Italia. As reported from Milan by Mathias Wildt, of Reuters, Telecom Italia has said that the purchase could lead to cooperation between itself and Telefónica on purchasing, selling new services in the countries where they both operate, and jointly expanding in new markets. Announced in May, the accord was delayed for a review by the telecom regulator of Brazil, where both Telecom Italia and Telefónica are the owners of mobile phone operators. The Brazilian regulator approved the deal announced in October but with restrictions, saying the two companies must continue to operate separately in Brazil.

Nokia sees a huge rise in profit on mobile- device margins

Nokia Corp, the world’s largest mobile phone maker, on 18 th October, posted an 85% jump in third-quarter profit as the Finnish equipment giant continued to gain market share. Reporting from London for MarketWatch, senior correspondent Aude J Lagorce noted that the operating margin at the company’s mobile-device business advanced to 22.6% from 13.1% a year earlier, evidence that Nokia ‘has found a sweet spot’ between volume growth and profitability. Nokia’s results were impressive across the board. Net income improved to $2.2 billion from $1.22 billion a year earlier, topping the averaged forecast of seven analysts polled by Dow Jones Newswires. Sales rose 28% to $18.6 billion as Nokia shipped 111.7 million phones in the quarter, up 26% from a year earlier. Summing up the Finnish vendor’s accomplishment, Ms Lagorce observed that, over the past two quarters, Nokia has shown ‘it can sell more handsets, raise profit, and gain market share even as it continues an expansion into emerging markets, where consumers pay as little as $20 for a phone.’ The Nokia results took a number of industry observers by surprise. According to Neil Mawston, associate director in the wireless practice of Strategy Analytics, the strength of the operating margin in the mobile-devices division constituted the biggest positive surprise. Carolina Milanesi, research director in the mobile-devices practice of Gartner, told MarketWatch “[Nokia] has done quite a lot of work on reducing costs, and that’s really trickling through to the bottom line.” Nokia said its market share improved to 39% from 38% in the second quarter and 36% in third-quarter 2006. The increase was driven by North America and, to a lesser degree, the Asia Pacific region and China.

Is Google – or is Google not – incubating a ‘Gphone’? Rumours of a phone forthcoming from Google Inc have circulated since at least late 2004. Recently, the rumours have intensified. But, notes Elinor Mills of CNet, ‘searching for the Google phone is a lot like hunting for Bigfoot.’ Presuming the search giant is working on a phone, what might the instrument look like? Ms Mills suggests that, unlike Apple’s iPhone, the Gphone probably will not be an actual hardware device. The experts she has consulted say it is more likely to be a bundle of software and supporting infrastructure that allows a phone manufactured by someone else to access Google services. (‘In Search of the Google Phone,’ CNET News.com, 24 th October) Projections beyond that are largely, and necessarily, speculative. But among Ms Mills’s respondents is the author Stephen Arnold (The Google Legacy and a new book, Google Version 2.0: the Calculating Predator), a long-time close observer of the Internet search leader and its unconventional corporate culture. (The company counsels its employees, ‘Don’t be evil.’) Mr Arnold has researched Google’s patents and found more than a dozen that relate to mobile telephony. In his opinion, Google is likely to partner with France Telecom’s mobile telephony division Orange and KDDI in Japan. “There is going to be a Google phone as

a reference device, probably more than one,” Mr Arnold told CNET News.com. “They will hook into the Googleplex to deliver functionality that ranges from ‘search without search’ [information that anticipates what someone may be looking for], to mapping and calendar services. Google is positioned to move different ways in response to market behaviour.” A UBS analysis accessed by CNet projected that, by the end of 2007, Taiwanese handset maker HTC will have shipped 50,000 or so handsets to developers with the Gphone operating system. Ms Mills observed: “That’s a sliver of the nearly 1.4 million iPhones that have been sold so far, of course. But it’s a start.” For Google to offer a low-cost or subsidised device would fit in with the company’s strategy to leapfrog with wireless technology in emerging markets, said analysts consulted by CNet. Charles Glovin, a senior analyst in the telecom research group of Forrester Research (Cambridge, Massachusetts), told Ms Mills: “There are going to be a billion or more mobile-phone subscribers in the next few years, and these are people who not only have never used a mobile phone before, but also have never used the Internet before. Their first experience of the Internet is likely to be on a mobile phone, not a PC.” May the Gphone, if it materialises, make its users as happy as the workforce at Google Inc headquarters in Mountain View, ✆

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Wire & Cable ASIA – January/February 2008