WCA July 2007

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Telecom News
28 Wire & Cable ASIA – July/August 2007
In other telecom news . . .
Indian regulators have approved
Vodafone’s $11.1 billion purchase
of a majority stake in Hutchison
Essar. The British company will
buy Hong Kong-based Hutchison
Telecommunications’ 52% holding
in the Indian mobile company
and also gain control of another
15% stake separately owned by
Indian investors.
Officials in New Delhi had held up
approval until they were satisfied
the deal did not violate Indian
investment rules, nor place too
much of Hutchison in foreign
hands. Vodafone Group, the
largest mobile telecommunications
network company in the world, is
looking to emerging economies
like India for earnings growth as
the markets of the US and Europe
become saturated.
Paris-based Alcatel-Lucent on
25th April warned of continued
losses and weak sales, casting
doubt about the long-term outlook
for the world’s biggest telephone
equipment maker. Four months
after completion of its transatlantic
merger, Alcatel-Lucent said first-
quarter operating losses would
be about $353 million and that
sales would drop about 12%
to $5.3 billion – the second
consecutive quarterly decline.
While an immediate drop in share
prices was quickly recouped, reflec-
ting upbeat investor sentiment
about the company’s orders and
growth, even so analysts said the
results showed that the combination
of Alcatel, of Paris, and Lucent
(Murray Hill, New Jersey) was hurt
by overlapping product lines and
weak demand for wireless tele-
com equipment in a fast-changing
market. Official results, including
an outlook for the full year, were
released on 11th May.
Telecom New Zealand has com-
menced work on a $6.1 million
project that will complete a fibre
optic ‘ring’ around the Coromandel
Peninsula, with telecom traffic
scheduled to commence early
in 2008.
The fibre optic cable is being laid
alongside a state highway by
methods including mole-ploughing,
rock-sawing, and directional dril-
ling, in an initial phase expected
to be completed by September.
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The second phase of the project
will involve the installation of a
series of STM64 terminals at
telephone exchanges in 10 centres
around the fibre ring.
The terminals would handle
communications traffic at up to 10
Gigabits per second and provide up
to 64 times the capacity possible
on the existing core network, as
well as boost the strength of the
core network for those centres with
major traffic directed over it.
On 11th April, project planner Mark
Fendall said: “The new network
will be self-healing in the sense
that it provides the ability to re-
route traffic between centres on
the ring and thereby reduce the
risk of service disruption if there is
damage to the fibre optic cable.”
In the wake of its fourth-quarter
2006 loss of nearly $1.18 billion,
Deutsche Telekom is looking
abroad for growth and will shed
units related to its core business.
The German company said that
about 500,000 customers dropped
its services in the quarter, handing
it the first quarterly loss in two
years. Telekom, which earned $4.2
billion in the year, down 43% from
$7.4 billion in 2005, will move as
many as 50,000 jobs from its fixed-
line business, T-Com, into new
‘independent subsidiaries’ that
would bring employee compen-
sation ‘into line with the market.’
The new companies will handle
technical services, company call
centres, and customer relations,
Telekom said. The work-week will
also increase to 38 hours, from
34: a step that has already been
taken by a great many German
companies as well as in the
country’s public sector.
BCE, the parent of Bell Canada, said
on 17th April that it was considering
going private with three Canadian
pension funds and a private equity
group. The announcement by BCE,
the largest telecommunications
company in Canada, came after
reports that its principal stockholder,
the Ontario Teachers’ Pension
Plan, was forming a consortium to
make a similar bid. BCE has a
market value of $27.54 billion.
A buyout of the 127-year-old
company would be the largest
ever attempted in Canada and
could reach $45 billion. Because
Canadian law limits foreign
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ownership of telecoms to 46.67%
of voting equity, Kohlberg Kravis
Roberts, the private equity firm,
is a minority partner in the bidding
group. Recent foreign takeovers
of Canadian companies in the
steel and mining industries
have made foreign ownership
a sensitive issue in the country.
The consortium, led by the Canada
Pension Plan Investment Board,
emphasised its predominantly
Canadian composition.
French, British, and Dutch citizens
who bought Vivendi shares in
the period during which the French
media-to-telecom group was near-
ing collapse will be permitted to
join a US class action against
the company brought by Vivendi
shareholders. The relevant time
frame, as determined by a federal
judge in New York, is 30th October
2000-14th August 2002. The suit
was initiated in July 2002 by two
French shareholders who claimed
that Vivendi executives offered
false information to conceal the
company’s financial condition.
The Paris-based company, which
promptly dismissed its chairman
and began a severe restructuring,
is entitled to appeal the ruling.
To help relieve telecom operators
of heavy costs and facilitate
their expansion into rural areas
of India, the country’s telecom
regulator has recommended that
companies be permitted to share
such infrastructure as mobile phone
towers. On 11th April the Telecom
Regulatory Authority of India
(TRAI) said it had submitted its
infrastructure-sharing proposals to
the Department of Telecommuni-
cations, which must give final
approval. TRAI estimates that India
– the world’s fastest-growing mobile
phone market – will require about
330,000 towers by 2010, more than
triple the 100,000 now in service.
South Korea’s largest wireless
carrier, SK Telecom, has been
expanding its overseas operations,
entering the US as well as China,
Vietnam, and Mongolia as it
seeks to develop revenue sources
beyond the saturated home
market. Four out of five people in
South Korea carry mobile phones.
The company said on 9th April
that its overseas operations could
reach the break-even point in
four to five years, helped by the
increasing popularity of its mobile
convergence services.
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