WCA May 2007

Telecom News

than-expected market conditions – particularly in North America – and uncertainty among customers about the combination of the French and US equipment makers. Alcatel-Lucent said it plans to shed a total of 12,500 jobs, or 16% of its work force, over the next three years, instead of the 9,000 originally announced. The company currently has about 80,000 employees, inclu- ding some 21,500 across the United States. That total is down from about 88,000 at the time of the merger in September 2006, and reflects the recent sale of the company’s satellite, transport, and security operations to the Thales Group , of France, and the acquisition of the UMTS radio access business of Canada’s Nortel Networks Corporation . In other telecom news . . . VietnamPosts and Telecommuni- cations (VNPT) and Viettel , the two government-owned telecom operators, have joined an inter- national consortium to lay a $780 million fibre optic cable linking Asia and the US. Work on the cable, which will pass through a hub in Malaysia, was due to start by 1 st March, with completion slated for March 2008. The eight-firm consortium includes AT&T (US), CAT (Thailand), PLDT (Phillipines), REACH (Hong Kong), StarHub (Singapore), and Malaysia Telecom . The project took on a new urgency after an undersea earthquake off Taiwan late last year damaged cables in the area and cut off communications to and from Southeast Asia. The Spanish telecommunications giant Telefónica and two founda- tions run by the Hong Kong billionaire Li Ka-shing will join the financier Francis Leung in acquiring a 22.7% stake in Hong Kong’s largest phone company, PCCW . Telefónica is buying 8% of PCCW; the two foundations, 12%. Telefónica is already a partner with state-operated China Network Communications , which owns 19.9% of PCCW through a 5% holding in its China Netcom Group Corp (Hong Kong) unit, known as China Netcom . An official of the Spanish company said that, with the deal, Telefónica expects to strengthen the alliance with China Netcom. A benefit to Telefónica from the stronger alliance would be the right to exchange its shares in PCCW for shares in China Netcom. ✆ ✆

Rise of monopolies is blamed for dramatic slowing of broadband take-up across Europe The European Competitive Telecommunications Association (ECTA) reported a significant slowdown in broadband uptake across Europe, falling from 23% to only 7% growth in the half-year ended September 2006. The slowdown comes at a time when once again Europe is seeing the growth of telecommunication monopolies in key countries, a correlation ECTA believes is not coincidental. ECTA managing director Steen Clausen said, “[Our scorecard] shows that growth has stalled in a number of countries where we have seen the power of the incumbent on the increase, including Denmark and Belgium which experienced a paltry 3% growth in broadband penetration; and France, which has fallen to eighth place in Europe, well behind the United Kingdom. In contrast, in Germany, Deutsche Telekom ’s market share dropped below 50% for the first time, corresponding with a surge in growth in broadband penetration.” Europe includes some of the world’s leading broadband countries. However, its position could be put at risk if regulators do not act to re-enforce competition and open markets, ECTA warned. Mr Clausen said, “This is extremely disappointing news from some of the countries which have traditionally been at the forefront of Europe’s broadband revolution. Until recently, France was the poster child for broadband, with some of the most attractive triple-play packages in Europe. It now needs to be vigilant if it is to maintain its position.”

The winner: LG Electronics, for its low-cost 3G handset LG Electronics , of South Korea, has won a contest held by the GSM Association to identify the best low- cost handset for third-generation mobile phone networks, a source close to the project told Reuters in Amsterdam, Holland, on 6 th February. The winner was to be officially announced at the 3GSM World Congress 2007 between 12 th and 15 th February in Barcelona. Given this exposure at the industry’s premier mobile communications event , Seoul- based LG can expect to receive orders for several millions of the handsets by as many as a dozen mobile carriers. Reuters reported that the LG handset will cost around $100, breaking an important price barrier and probably boosting sales of 3G phones. Most 3G phones are much more expensive, and sluggish sales of the devices has held back the advance of such 3G network services as mobile Internet. The winning handset was certainly chosen by a jury of LG’s peers. Participants in the selection include Cingular , Globe Telecom , Hutchison 3G , KTF , MTN , Orange , Smart , Telecom Italia , Telefónica , Telenor , T-Mobile , and Vodafone . According to the GSM Association, taken together these operators have 620 million subscribers. LG is the No 5 mobile phone maker worldwide, behind Nokia (Finnish),

Motorola Inc (American), Samsung Electronics Co (South Korean), and Sony Ericsson (Japanese- Swedish). LG Electronics has been trying to regain its share of the global market after a slow 2006. 3GSM, the latest addition to the GSM family, enables the provision of mobile multimedia services. The technology on which these services are delivered is based on a GSM network enhanced with a wideband- CDMA (W-CDMA) air interface – the over-the-air transmission element. Global operators, in conjunction with the 3G Partnership Project standards organisation, have developed 3GSM as an open standard. The LG handset will be available to all members of the London-based GSM Association – most of the world’s carriers. In combination, Alcatel- Lucent is slow to find its feet In the first earnings report from the recently combined telecom equipment maker Alcatel-Lucent SA , the Paris- based company said on 9 th February that it planned to cut another 3,500 jobs in the wake of disappointing fourth- quarter results. The company posted a loss of $803 million for the October- December period, compared with a profit of $495 million for the same period of 2005. Revenue went down 15.8% to $5.74 billion. The company ascribed its losses to tougher-

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Wire & Cable ASIA – May/June 2007