WCA November 2007

Telecom news

The Paris-based telecom equip- ment maker Alcatel-Lucent on 13 th September issued its third profit warning of the year, causing its shares to immediately slide as much as 14% in Paris trading. Blaming weakness in its wireless network business, Alcatel-Lucent forecast third-quarter operating profit at ‘around break-even’, and full-year revenues as ‘flat or slightly up’. Since concluding its transatlantic merger less than a year before, the French-American combine had shed more than 40% of its market capitalisation. Writing in Business Week (13 th Sep- tember), Paris bureau chief Carol Matlack noted that, five years after the telecom crash, Alcatel and Lucent had ‘looked to be back on track in 2006’, with combined sales of $25.3 billion at current rates and $724 million in net earnings. Now, a London-based analyst predicted to BW , the company will likely show a net loss for 2007 of $1.6 billion, on a 3.2% decline in revenues to $24.49 billion. By comparison, Ms Matlack wrote, market watcher Infonetics Research forecast growth in the global market for tele- communications equipment of 4% in 2007, to $225 billion. As consumer product prices continue to rise in China, tele- communications companies have raised their international long- distance calling rates by more than 300% in some cases. According to Shanghai’s Oriental Morning Post (20 th August), China Unicom, China Netcom, and China Telecom have all announced substantial increases in their mainland international call rates. The newspaper reported that the China Telecom increases that took effect on 1 st September for 47 countries and regions range from (approximately) $0.59 to $1.94 per minute, for a maximum increase of 329%. The new China Unicom rates that commenced 1 st June were up over 200%. A Dow Jones report of 31 st August gave Chunghwa Telecom’s first- half audited net profit as $774 million, representing a 10.9% rise from $671 million in the year- earlier period. The report said the result was in line with the unaudited net profit of $743.9 million the company posted in July. Dow Jones added that the firm’s

✆

On 5 th September the European Competitive Telecommunications Association (ECTA) published the results of its latest bi-annual broadband scorecard, showing that broadband penetration in the European Union has reached an all-time high and has drawn even with Japan and the US. The 16% growth achieved in the EU was attributed largely to increased competition from new-entrant telecom providers using LLU (local loop unbundling), cable, and alternative technologies. The favourable results followed a slowdown in growth recorded for the previous six-month period. ECTA reported from Brussels that eight EU countries now have broadband penetration levels above 20%, with Northern Europe leading the field. The Netherlands has the highest penetration (33%), followed by Denmark, Finland, and Sweden. For the first time, average penetration in the EU15 countries is, at 19.9%, comparable with the average penetration of 20.2% in Japan and 19.6% in the US. (Data as of December 2006 from the Paris-based Organisation for Economic Cooperation and Development [OECD].) [Note: EU15 comprises the following countries: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, Sweden, and the United Kingdom. These were the 15 members of the European Union prior to the accession of 10 more countries in May 2004.] Key findings of the most recent ECTA broadband scorecard are: total broadband lines increased by 16% in the six months to September, from 73 million lines in the third quarter of 2006 to 84 million lines in the first quarter of 2007 northern European countries remain world leaders in broadband. At the other end of the scale, penetration in Greece, Poland, Slovakia, and Cyprus remained below 10% in the EU15, growth was particularly strong in Germany (an estimated 20%), Ireland (38%), and Greece (69%, although from a particularly low base). Growth was less than 10% in Finland, Belgium, and Portugal countries with the highest levels of broadband penetration in Europe could be characterised as having strong competition through a combination of LLU and cable. Lower-ranked countries often lacked significant unbundling competition • incumbents’ market share of the overall retail broadband market in the EU stayed static at 46% and, when re-sale services are taken into account, remained at more than half of total broadband lines. In Italy the incumbents’ market share remained at a very high 70% DSL (digital subscriber line) maintained its share of the European market at 83% (slightly above the third quarter of 2006), while cable remained at 15% of end-user retail connections overall, compared with the previous period there was a dramatic increase in full unbundling, while bitstream declined as competitors climbed the ladder of investment • • • • • • With competition reviving broadband growth in Europe, the European Union closes the gap with Japan and the US

✆

Elsewhere in telecom . . .

in industrial countries, have both kinds of service. The increase is most evident in developing countries that have been able to offer cellular service at lower rates than fixed-line to tens of millions of people. As a result, the ITU said 61% of the world’s mobile subscribers are in developing countries. China and India together added almost 200 million mobile sub- scribers to the global total in the first three months of 2007.

Telephone service has quadrupled worldwide over the past decade to 4 billion lines, according to a report published 4 th September by the International Telecommunication Union, a UN agency. The ITU counted 1.27 billion fixed lines and 2.68 billion mobile accounts, but notes that the total number of users is uncertain because many people, particularly

✆

✆

29

Wire & Cable ASIA – November/December 2007