April 2,1999
FCC Publicly Encourages SBC Communications and Ameritech to Lay Down Terms Pro-Competition
In a letter to the chairmen of Ameritech and SBC Communications, FCC Chairman William Kennard encouraged them to help the commission draft terms to promote competition as a condition to approve the companies' $62 billion merger. Kennard expressed his concern over whether the merger would serve the public interest; however, he did not say that he would prefer to dismiss the merger outright. The commissioner seemed to indicate that the commission would approve the deal without conditions. The commission's staff wanted assurances that the merger would not impede with the companies' ability to open their networks to competitors. One of the interesting aspects of the letter was that it was made public at all. The FCC has in the past tried to keep its talks whose mergers it is considering from the public, which has led to open criticism on the commission. For example, when the commission approved the merger of Bell Atlantic Corp. and Nynex in 1997, much of the pro-competition competition conditions were negotiated in private. As a result of this, critics accused the commission of using the merger-review process as a tool to advance its regulatory agenda in ways it could not otherwise. Following the Justice Department's approval of the merger last week, some communications experts in Washington believe that the commission will most likely approve the merger.
Cable Television Rates to Be Officially Deregulated Today; Will Continue to Face Growing Satellite Competition
Facing growing satellite competition, industry executives will hold prices increases to only 4 percent and 5 percent, in line with average increases in 1998 and 1997 despite that cable-television rates will be officially regulated beginning today, when rates were still regulated. Along with increased satellite competition, cable companies can't afford to put off customers with higher rates as they move to offer digital services. Leading the path of rapid consolidation in the industry is AT&T who recently acquired Tele-Communications, followed by Comcast's purchase of MediaOne Group for $48 billion in stock. This merger frenzy, which will likely continue, has pushed up the cost of cable subscribers in the open market to more than $4,000 per customer. Tele-Communications expects to raise its cable rates by only 4% this year. Several other cable companies including MediaOne, Comcast and Time Warner say they expect to exercise similar restraint in future rate increases. Although FCC Chairman William Kennard has heard promises from the industry to keep rates down, he contended that if the cable companies hit customers with high prices then the commission will place the industry back under regulation.
PanAmSat Stock Plunges 17 Percent in Response to Satellite Deployment Problems; Plans Expansion of Satellite Services in Latin America
The shares in PanAmSat Corp. plummeted 17% after the company disclosed a reshuffling of satellites and orbits that is expected to curtail potential revenue growth next year. The company has been hindered by a series of satellite malfunctions that have crippled its planned capacity. This is the second time in eight months that technical problems forced the company to change its deployment and growth plans. PanAmSat's revised plan calls for the company's Galaxy XI satellite, to be relocated in its orbit more than 22,000 miles above the earth to serve its long-term replacement for another Galaxy spacecraft that is operating on backup and control systems. In related news the company has designated its new international satellite to provide video, audio and telecommunications services throughout the Americas and Europe upon launch during the first quarter of 2000. The satellite, which is now called PAS-9 and is already under construction, will offer significant expansion capabilities in Latin America and also will serve as the permanent platform for Sky's direct-to-home television service in Mexico. PAS-9 will become the company's 23rd satellite worldwide and its eighth serving Latin America upon its launch in 2000. Located over the Atlantic Ocean Region, the high-powered satellite will contain multiple C-band and Ku-Band transponders. PAS-9, an HS 601 HP spacecraft, is one of three satellites that were ordered from Hughes Space and Communications Co. in October 1998.
China and U.S. Sign Pact For Use of U.S. CDMA Technology; Motorola and Lucent to Sign Deal with China's Great Wall
To help facilitate the opening of the Chinese telecommunications market, the United States and China signed an agreement on the commercial use of U.S. digital telecommunications technology in China yesterday in Guangzhou. U.S. Secretary of Commerce William Daley said the agreement was on the commercial use of the code division multiple access technology was reached in a meeting with China's Information Minister Wu Jichuan. Motorola Inc., Hewlett-Packard Co., International Business Machines Corp., and Compaq Computer also signed the pact. The pact will allow companies to introduce CDMA networks across China. However, Daley said it is unlikely China will hammer out a deal on its entry into the World Trade Organization during Chinese Premier Zhu Rongji's April 6-14 trip to the U.S. There are some differences between the two countries over issues such as antidumping, the opening of the agricultural products market and the large U.S. trade deficit with China. In Beijing, Daley met with Zhu and State Councilor Wu Yi to discuss infrastructure market opportunities for U.S. companies.
Cellular Telecommunications Industry Association Reports That U.S. Mobile Phone Subscribers Rose 25 Percent in 1999
The number of mobile telephone users in the U.S. rose 25 percent last year to 69.2 million people, according the Cellular Telecommunications Industry Association. The increase, which is the industry's largest one-year gain, was driven by fierce competition that continues to drive down monthly charges. Of the 69.2 million customers, nearly 28 percent subscribed to the newer digital mobile phone service, which offers improved sound quality and more features. Further, the number of mobile phone customers surpassed the number of cable TV customers in the U.S., which are now at 67 million.
Lucent Technologies Signs $175 Million Agreement With Home Depot for Wireless Systems in 750 Stores
Lucent Technologies has signed a five-year, $175 million agreement with Home Depot to provide the world's largest home improvement retailer with telecommunications equipment and software for 750 new stores. The agreement calls for Lucent to install its DEFINITY Wireless Business System in all new stores. The system's multiple phone lines and conference, transfer, hold and display capabilities allow Home Depot associates to check inventory and prices or consult with in-store experts without losing contact with the customer. The wireless system will be integrated with Lucent's DEFINITY ProLogix Solutions switch, which will act as a server for in-building wireless service. In addition, the agreement includes all wiring , and multi-year maintenance agreements with Lucent NetCare for 24-hour, 7 days a week support that includes installation, repairs and remote monitoring and diagnostics using Lucent's Bell Labs-designed Expert Systems.
Federal Sources Studies Project 34 Percent Growth for Sales of Electronic Government Goods and Services to Federal Government From 1999 to 2003 and 26 Percent Rise High-Speed Internet
Federal Sources Inc. projects the federal market for electronic government will rise to $9.2 billion during the period 1999 to 2003, a compound annual rate increase 34 percent. FSI also forecasts a 26 percent rise in the government's investment in high forecasts a 26 percent rise in the government's investment in high-speed networking and $5.6 billion market during the same period. The details are contained in two recently completed studies. The first is titled Electronic Government and the second Advanced Internet Products and Services for the Federal Government. In the Internet study, Among items in the EG report, are electronic data interchange, card-based technologies, and electronic government web-site activity. FSI shows how the federal government will increase its investment in high-speed networking 3.8 times in the next five years.
UPC Acquires Time Warner Cable France for $71 Million
United Pan-Europe Communications NV has acquired Time Warner Cable France, which controls three cable TV systems in the suburbs of Paris and Lyon and the city of Limoges, for $71 million.
Microsoft to Acquire 2.5 Percent Stake in Portugal Telecom's TV Cable for $38.6 Million
Microsoft Corp. will acquire a 2.5 percent stake in TV Cabo, Portugal Telecom SA's cable and satellite television services company for $38.6 million. TV Cabo plans to launch broadband Internet services to residential customers later this year. As part of the agreement, the two companies will jointly develop interactive video and data services.
Cable & Wireless Files Suit Against MCI WorldCom Over Internet Business
Cable & Wireless PLC has filed a suit against MCI WorldCom on grounds MCI failed to honor the terms of an agreement under which C&W acquired MCI's Internet business for $1.75 billion. The suit, entered in the Federal Court of Delaware, sought unspecified monetary damages for what C&W said had been MCI's failure to transfer its Internet customer base. In addition, the company said that MCI impeded C&W's ability to operate the Internet business and of having targeted MCI Internet customers for marketing purposes.
CTRC Imposes Marketing Rules on Canadian Cable Companies
Yesterday the CRTC issued a letter to the cable companies setting out marketing rules they must abide by in cases where a customer has been chosen to subscribe to services provided by a competitor. Under this new rule, customers who cancel their cable service or have given another company the authorization to do so on their behalf, should not be contacted by the cable company to market its services. The restriction will generally be in effect for a period of 90 days following cancellation.
Telecom Italia Raises Stake in Two Brazilian Mobile Phone Firms
Telecom Italia has increased its stake in the ordinary voting capital of the Brazilian mobile companies Tele Celular Sul Participacoes SA and Tele Nordeste Celular Paricipacoes SA to 51.790 percent from 25.895 percent for US$246.25 million. The stakes were bought from UGB Pariticipacoes, which is controlled at 60 percent by Grupo Globo and 40 percent by the Bradesco banking group. BITEL's stake in the two mobile companies represent 19.26 percent of the overall capital.
British Telecom Reduces Cost of Calls From Mobile Phones by More Than 25 Percent on Average
British Telecommunications PLC will reduce the cost of mobile phone calls by an average of more than 25 percent. The reductions come in from April 30 and vary depending on the mobile network being called and the time of day. All prices have been reduced, the wide variation reflecting the termination rates that BT is charged by the mobile operators. The termination rates are set independently by the mobile operators themselves, within the constraints set by the MMC.
Motorola Wins $27 Million GSM Mobile Network Extension Contract From UAE's Etisalat
Motorola Inc, has won a $27 million usd contract from the United Arag Emirates' national telecommunications operator Etisalat to extend the GSM mobile telephone network in the UAE. The contract covers the expansion of the network in Sharjah and other northern emirates and runs until the end of the year. As part of the agreement, Motorola will supply base transceiver stations in a bid to increase capacity and coverage.
April 1,1999
Yahoo to Acquire Broadcast.com for $5.6 Billion in Stock
Yahoo Inc. has agreed to acquire Broadcast.com for $5.6 billion in stock. Under the terms of the agreement, Yahoo has agreed to pay $130 a share for Broadcast.com stock, a 10 percent premium over yesterday's closing price of 118 3/6 on the NASDAQ Stock Market. Shares of Broadcast.com had run up in recent days on reports that the two companies were talking about a deal. Broadcom investors will receive .77 of a Yahoo share for each Broadcast.com share. This acquisition is Yahoo's second this year. Previously, the company acquired GeoCities for $4.58 billion in January. Representatives of Broadcast.com see the deal as a means to gain access to a larger range of users, since Yahoo attracts 50 million users to its site a month.
AT&T Proposes Deal to Chinese Government to Build and Operate Shanghai Telecommunications Network
AT&T is close to closing a deal with the Chinese government to build and operate a telecommunications network in Shanghai's Pudong district. This would be the first time the mainland has formally allowed a foreign company to operate domestic telecommunications services. A U.S. industry official described the proposed deal as a "breakthrough," adding that it could be announced during Premier Zhu Rongji's visit to the U.S. next week. The proposed deal would allow AT&T to build and operate 20 years a system in the business district of Pudong. An AT&T company official was quoted as saying talks are ongoing and an announcement will be made soon.
MCI WorldCom Wins $150 Million Contract from U.S. Department of Agriculture
MCI WorldCom has won a $150 contract from the U.S. Department of Agriculture to be its telecommunications services provider under the FTS2001 program. Under the terms of the multi-year agreement MCI WorldCom will provide a full range of services including voice, data and Internet to the agriculture department's 29 agencies.
Mitsubishi Electric to Cut 10 Percent of its Global Workforce
As a result of Japan's prolonged recession, Mitsubishi Electric Corp. plans to cut 10 percent of its global workforce in an effort to eliminate growing losses. The company plans to eliminate 14,500 jobs over the next three years, in addition to planned cuts of 2,600 this year. In Japan, Mitsubishi will cut 8,400 jobs in by the end of March 2002 and cut 6,100 jobs at overseas subsidiaries. Currently, Mitsubishi employs 146,000 people worldwide. Mitsubishi said the plan, unveiled on the last day of Japan's fiscal year, would help cut costs and improve profits over the next three years.
European Commission Clears Joint Venture Between France Telecom, Deutsche Telekom and Energis
The European Commission has cleared a 50:50 joint venture agreement between DTFT Ltd., a joint venture between France Telecom and Deutsche Telekom AG, and Energis PLC, the UK carrier formerly owned by the National Grid Group PLC. The new venture, MetroHoldings Limited, plans to build metropolitan area telecommunication networks in the UK, starting with a fiber optic network in the city of London. It intends to provide its entire transmission capacity to Energis and DTFT for sale to end-users. The new network will extend Energis' existing national network and create direct links with business customers. However, the parties will compete with each other for the provision of telecommunication services to end-users and seek to brand and differentiate their products. Upon approval of the venture, the European Commission said it considers the new venture will not win more than 5 percent of market share, on an already highly liberalized and competitive market, which has six separate fixed networks and over 140 other licensed operators.
Massachusetts Turnpike Board Approves Fiber Optic Line Deal with Level 3 Communications as Part of Toll Abolishment Plan
The Massachusetts Turnpike Authority has approved a $48 million deal with Level 3 Communications to allow the company to lay fiber-optic lines along the highway for the transmission of voice, data and video signals. Just last week the authority signed an agreement with Williams Communications to place up to three one-inch diameter communications ducts from Boston to the New York border. Under the terms of this latest agreement, Level 3 will lay a total of 22 of the ducts along the turnpike from Boston out to route 128, with 12 of them running all the way to New York. It is estimated that the deal would be worth a minimum of $48 million over its 25-year life. As both companies put their respective fiber lines into service, the Turnpike Authority will receive a portion of the annual revenue. The total cost of laying the fiber optic cable will take about a year at an estimated cost of $60 million or more. Each of the small ducts to be laid by Williams and Level 3 will initially hold 96
separate fiber-optic strands. This deal is part of the authority's overall plan to abolish tolls along the western part of the highway by 2007.
Italy's Consob Asks Explanation on Olivetti's Sales of Telecom Italia Shares
Italy's market regulator Consob asked Olivetti S.p.A to explain rapidly the reasons for the sale of 24.4 million Telecom Italia S.p.A shares yesterday. A Consob spokesman should have released its statement yesterday. Separately, Telecom Italia chief executive Franco Bernabe said Olivetti "are not capable of generating value with credible industrial plans to they push down the share price of their target by putting millions of share on the market." In addition, Olivetti's move was made to discredit Telecom Italia's image, and, in doing so, is seriously damaging shareholders and the market.
Germany's ELSA Fiscal Year Net Loss of 5.9 Million DM For 1998
ESLA AG had posted a net loss of 5.9 million dm in 1998 compared with a loss of 7.3 million DM in 1997. ELSA attributed the loss to the Asian crisis, falling industry prices on PC components, industry competition, consolidation in the company and start-up costs related to expansion of its business in Asia. Total 1998 sales rose 4.5 percent to 299.5 million dm, 213.5 million of which came from PC components for computer graphic applications. In addition, ELSA said that its successful public listing on the Frankfurt stock exchange's new market for aggressive growth stocks enabled it to cut its debt to 2.7 million DM from 45.3 million previously.
VeriSign, Inc. Announces Two-for-One Stock Split
VeriSign, Inc.'s board of directors have approved a two-for-one split of its common stock. Stockholders will receive one additional share for every share held on record date of May 14, 1999. The stock split requires stockholder approval of an increase in the company's authorized number of shares at its 1999 Annual Meeting of Stockholders. The payable date will be after the close of market on May 28, 1999, following stockholder approval. The company's stock will begin trading on a split-adjusted basis on May 31, 1999.
March 31,1999
Europe's Telecommunications Commission Approves AT&T's $3 Billion Venture With British Telecommunications
Europe's Telecommunications commission has granted approval for AT&T's $3 billion joint venture with British Telecommunications after AT&T agreed to reduce its British operations. AT&T will sell its ACC long-distance unit in Britain and take steps to insure that it does not use its 22 percent stake in Telewest Communications PLC to have an unfair advantage in the British market. In addition, AT&T will sell its stake in Mannesmann Arcor, a German phone venture with Mannesmann A.G. The combined venture will provide voice, data and Internet services to multinational businesses and compete against rivals including MCI WorldCom and the Global One Alliance involving Deutsche Telekom A.G., France Telecom SA and the Sprint Corp. However, the steps AT&T is taking to gain European approval will not hurt the venture's operations.
Microsoft to Reorganize Into Five Separate Business Groups
Microsoft Corp. announced yesterday that it will reorganize into five business groups focused on customer segments, including business users, consumers and developers and an Internet division. The company will also establish a home and retail products division, and will focus on consumer-targeted products like games, input devices and Microsoft home software. Senior Vice President Jim Allchin will head both the business and enterprise and consumer Windows groups, and Brad Chase, a vice president at Microsoft, will head the consumer and commerce group, which will be responsible for the company's Internet properties. The business productivity group will be headed by Bob Muglia, senior vice president and Paul Martiz, group vice president will be responsible for the developer group. In addition, chief financial officer Greg Maffei will be given the added responsibility of the company's procurement and real estate. Microsoft sees the reorganization as a means to help the company focus on
its priorities of making its Windows 2000 operating system more reliable and able to serve a large number of users, developing e-commerce infrastructure and products and developing a new generation of PCs that are easier to use.
Lucent Technologies to Provide $100 Million in New Power Technology to Sun Microsystems, Ascend and Intel
Lucent Technologies will provide $100 million worth of its Titania power products to Sun Microsystems, Ascend and Intel for their next-generation servers and microprocessors. This new power technology platform can enable higher performance for next-generation communications systems, eliminating power as the weak link for the faster, more reliable systems currently on the drawing boards of computer makers. Lucent will produce this power technology in its new division in Austin, Texas. In addition, the company plans to use Titania power products for its next-generation wireless networks. Lucent also introduced a new power product line, called the Austin Series Power Modules, to address the needs of digital signal processor and controller chip manufacturers for wireless infrastructure, Internet telephony server and digital modem applications.
Telecom Italia Stocks Rise After Olivetti Raises Takeover Bid by 15 Percent
The battle for control of Telecom Italia escalated yesterday after Olivetti raised its stock bid by 15 percent. Telecom Italia's stock rose more than 5 percent after Olivetti made its new offer of $65 billion in cash and securities, or 11.5 euros a share. The stock went above the previous bid of 10 euros a share, before drifting back to 9.95 euros. Olivetti recast its offer Monday in response to Telecom's own bid of cash, rather than stock, for its cellular telephone unit, TIM. Olivetti's bid now consists of $39 billion in cash, $16.4 billion in bonds and the rest in shares in Olivetti's Tecnost systems unit, the vehicle for the takeover.
China's Zhu Supports CDMA Nationwide in a Bid to Liberalize China's Telecommunications Market; U.S. Commerce Secretary William Daley May Announce Deal
Premier Zhu Rongji has shown support allowing CDMA mobile phone systems nationwide in a bid to liberalize China's telecommunications market. U.S. Commerce Secretary William Daley will meet with Minister of Information Industry Wu Jichuan on Thursday morning and may announce important deals at the Guangzhou airport that afternoon. Daley was slated to preside over the signing of Lucent Technologies and Motorola Inc's $500 million sale of CDMA technology to a Chinese telecommunications company. However, as Washington trade officials learned of Great Wall's powerful backer, Mr. Daley's presence at the signing was quickly nixed. Zhu's support increases the chances of U.S. mobile phone companies securing billions of dollars worth of contracts in China. CDMA trials are taking place in Beijing, Shanghai, Xian and Guangzhou.
Lucent Technologies Awarded $36 Million Contract From Telecom Italia Brazil Mobile Phone Unit
Lucent Technologies has been awarded a $36 million contract from Telecom Italia SpA's Telecelular Sul unit to expand existing digital and analog networks in the state of Panama. The network will support 225,000 digital mobile customers and 165,000 analog mobile phone users in the expanding markets in Curitiba, including the greater Curitiba Area and the cities along Panama seashores. The expansion will be concluded by the end of this year. The new network will be based on Lucent's wireless phone system, the Autoplex 1000, with Series II radio-based stations and TDMA technology, which works in conjunction with Lucent's 5ESS switching platform. As part of the agreement, Lucent will provide technical support and assistance.
Compaq Computer Corp. Plans to Sign Contracts With Distributors to Make PCs to Order
In an effort to facilitate stronger sales, Compaq Computer Corp. executives intends to sign contracts with its distributors to manufacture personal computers to order, a move the company hopes will reduce costs and improve of its Prosignia line. The company will contract distributors like Tech Data Corp. and Ingram Micro Inc. to make PCs to order, along the same lines as competitors like Dell Computer Corp. and Gateway 2000 Inc. To facilitate growth of the venture, Compaq will pay 2-4 percent in additional fees to distributors who sell the products, as an incentive to hold more inventory, and will maintain a percentage of its sales through distributors who stand to lose business as Compaq shifts to direct sales. Last month Compaq's sales to small and medium sized businesses were lower than expected in January. Executives said that direct sales are about 15 million a day worldwide. About 70 percent of the sales through its online store are new Compaq customers, and roughly half are new customer that have switched from Dell or Gateway. In another move to reduce costs and increase sales, the company also plans to sell the Prosignia through retailers.
Motorola Wins $75 Million Contract From Hutchinson Telecommunications to Expand Cellular Networks in Hong Kong
Motorola has won a $75 million contract from Hutchinson Telecommunications to expand two digital cellular networks in Hong Kong. In total, the two network expansions will increase Hutchinson's network coverage and subscriber capacity by sixty percent and will provide cellular subscriber to 1.5 million people. Deployment of Motorola NSS's SC and M-Cell series base stations will begin immediately with completion of the entire expansion project expected during the fourth quarter of this year. The CDMA system slated to be expanded was the world's first commercial CDMA cellular phone network and was launched by Hutchinson Telecom with Motorola's cell site and network equipment in September of 1995. The second network, built by Motorola in 1994, includes NSS's GSM equipment.
Time Warner Inc. May Float Some Internet Operations
Time Warner Inc. is considering a plan to turn some of its Internet holdings into a separate public company. The strategy has been the subject of considerable internal debate, and an offerings not imminent. However, Time Warner chairman Gerald Levin addressed the issue of a possible stock offering on the company's own CNNfn business-new cable network last week. The company's chief financial officer, Richard Bressler, played down Levin's comments, and said an Internet stock offering is not being actively considered right now. Further, Bressler said that before any offering would be considered, Time Warner would first build several "vertical portals," far-reaching web sites that take advantage of the company's abundance of content.
British Telecommunications to Abandon Reconnection Charge for Residential Customers
British Telecommunications PLC announced that from April 1 it will abandon the 9.99 stg reconnection charge for residential customers. Taking over an existing BT residential line will now be free, even if there is a break in service. At the same time, BT is cutting the cost of installing an updated residential line form 116.33 stg to 99.00 stg. Special offers on second lines and digital services also start on April 1. As part of its international rate reduction plan, BT is cutting the cost of calling Malaysia by between 12 and 21 percent and Hong Kong by up to 25 percent from April 1.
Dutch Telecom Authority Unbundles Local Loop in Move Expected to Spur VersaTel's Growth
VersaTel Telecom International N.V. said the decision by Dutch regulator OPTA to unbundle the local telephone loop in the Netherlands gives the Company independence from KPN telephone's interconnect scarcity and will spur its core growth. Marc van der Heijden, VersaTel's Director of Legal Affairs, said that allowing VersaTel direct access to the local loop, bypassing KPN's interconnects, is also expected to speed the company's roll-out of broadband access to its core market of small-and-medium business in the Benelux region. VersaTel is already building local access connections in business parks, and intends to use direct point-to-multipoint broadband radio links as soon as it obtains the necessary licenses. OPTA ruled in a dispute last week that KPN, the former Dutch telephone monopoly, must provide VersaTel with roughly twice the interconnect capacity it had previously offered. If no current capacity existed, the agency said, KPN must provide virtual access, throw open its entire
network, and bear the costs itself.
AboveNet Communications Inc. Announces Two-For-One Stock Split
AboveNet Communications Inc. announced a two-for-one stock split of the company's outstanding shares of common stock. The stock split will be effected in the form of a stock dividend and will entitle each stockholder of record on April 14, 1999 to receive one share for every outstanding share common stock held on the record date. The stock dividend will be distributed on May 7, 1999.
Brazil's Telefonica and Telerj Fined $3 Million for Poor Service
Brazil's Telefonica and Telerj operations were fined a total of $3 million for failing to meet service targets agreed during last year's Telecommunicacoes Brasileiras SA privatization, according to the justice ministry. The ministry said at the weekend that Telefonicas, formerly Telesp, and Telerj failed to meet targets to install 130,000 and 70,000 new lines respectively in their concession areas of Sao Paulo and Rio de Janeiro. Justice Minister Renan Calheiros said: "These companies should know that they cannot come to Brazil and do what they want. They will have to respect consumer rights. If the reoffend they could suffer administrative intervention, even including the withdrawal of their concessions."
March 30,1999
Lucent Wins $1 Billion Equipment Contract to Upgrade AT&T's Wireless Networks
Lucent Technologies Inc. has won a $1 billion equipment supply contract to upgrade AT&T's wireless phone network. Under the terms of the four-year contract, Lucent will help AT&T to build wireless networks in new markets and add equipment to improve service in existing markets. Lucent will help AT&T modernize its network to provide services such as wireless Internet access. Further, Lucent will help AT&T lay the groundwork for building an advanced wireless network that satisfies the international standards for so-called third-generation wireless networks. In response to AT&T's Digital One Rate wireless pricing plan and a surge in subscribers, the company's network has come under strain in such markets as New York City, suburban Chicago and Washington. Lucent's contract with AT&T represents a big victory over its rival Ericsson A.B. of Sweden. Shares of Lucent rose $7.875, to $109.9375
MCI WorldCom Invests $200 Million Handful of Wireless Cable Companies
To gain a foothold in the wireless cable market, MCI WorldCom has invested about $200 million in four companies that could lead to the company gaining control of the ventures. The companies, which include CAI Wireless Systems Inc., People's Choice TV Corp., CS Wireless Systems and Wireless One Inc., are creating a broadband pipeline offering high-speed Internet access and video transmission. The wireless technology employed by these companies is called Multichannel Distribution Service or MMDS. MCI sees these purchases as a means to bypass purchasing the "last mile" of local connection from one of the Baby Bell regional operating companies to offer a direct connection to the home. Initially, the companies that MCI is investing in attempted to offer cable-television service through wireless technology, but competition proved too great and most of the companies incurred significant debt. Analysts see MCI WorldCom's move to purchase stakes in these companies as means to later acq!
uire control of their assets and technology.
Olivetti Steps Up Bid for Telecom Italia to $64.7 Billion
Olivetti S.p.A. has raised its hostile takeover bid for Telecom Italia S.p.A by 15 percent, to 60.4 billion euros, or about US$64.7 billion. The newest bid, which was announced by Olivetti's chief executive, Roberto Colaninno is worth 11.5 euros, or about $11.93, a share in cash, stock and bonds. This bid came on the same day that European Union's top antitrust regulator expressed concern about measures Telecom Italia has proposed at fending off Olivetti's hostile takeover. The new offer will pay 6.92 euros in cash for each Telecom Italia share, 2.90 euros worth of bonds for each share, and three shares in its Tecnost S.p.A unit for every five shares. Olivetti SpA's advisors have secured more than 22.5 billion eur in financing as part of its takeover bid for Telecom Italia SpA. The syndicated loan is the largest ever made on financial markets and that primary European, US and Asian banks participated in the operation.
Computer Associates to Acquire Rival Platinum Technology for $3.5 Billion
Computer Associates International Inc. agreed to purchase a rival, Platinum Technology Inc., for about $3.5 million in cash, bolstering its fledgling service business help counter slower corporate sales. Computer Associates would pay $29.95 for each share of Platinum, which makes software and helps companies run their information systems. Based in Islandia, Computer Associates has been purchasing companies that set up and run computer systems as demand ebbs for its software used to manage computer networks at large-sized companies. The company is also facing increased competition from competitors such as BMC Software Inc. Upon completion of the deal, Computer Associates plans to link its products with Platinum Technology's consulting services, especially in Europe. Computer Associates, which initiated talks about a week ago, will pay for the acquisition through a $4.5 billion credit line with Credit Suisse First Boston Group, and will pay the loan back in about four years.
Electronic Data Signs $466 Million Contract with ENI SpA
The Electronic Data Systems Corporation has signed a $466 million contract with ENI SpA of Italy. In Italy, E.D.S. will provide a broad array of information technology services to ENI over five years, including data center and client server operations, and distributed systems management for technology and communications. In Australia, the five-year contract would be with the Australian Taxation Office for most of its information technology activities.
Shaw Communications to Purchase Two Cable Systems in Nova Scotia for US $111 Million
Shaw Communications will purchase a 75 percent stake in Access Communications Inc. of Nova Scotia, and all of Access Television Bedford/Sackville Ltd. for US$111 million, to expand in eastern Canada. Under the terms of the deal, Shaw would issue two million class B non-voting share valued at C$82.5 million, pay C$44.5 million in cash and assume C$40 million in debt. Shaw is purchasing the cable systems from one of its directors, Charles V. Keating of Nova Scotia.
DirectWeb Inc. Announces 25,000 Computer Give Away Incentive to New Customers
DirectWeb Inc., a start-up based in Mount Laurel, NJ, plans to unveil a giveaway of 25,000 PCs in the Philadelphia area as an incentive to sign up for Direct Web's unlimited Internet service at a cost of $19.95 to $49.95 a month. DirectWeb will give consumers a free PC assembled by PC distributor Ingram Micro Inc. The company's plans are part of the latest trend in which companies distribute free PCs in order to win customers for Internet service. Previously, Free-PC.com, a Pasadena, CA startup, announced plans to give away PCs to users who agreed to use the company's Internet service, divulge personal information and view advertising. And Microworkz Computer Corp. announced their plans to sell a PC for $299 beginning in April that includes a free year of Internet service. Unlike other companies, DirectWeb will not require customers to view advertising or ask them for marketing-related information.
India to Unveil New Telecommunications Reform Plan
India has introduced a new telecommunications reform plan designed to ease the financial burden of investors, promote greater competition and strengthen an independent regulator in a bid to unlock billion of dollars of stalled foreign investment. The new policy seeks to put back on track a privatization effort crucial to India's free-market reforms that has been mired in controversy since New Delhi decided to break the state's monopoly on telephone services. Under the new policy, announced on Friday, India plans to switch from competitive bidding to a system in which investors will pay an entry fee determined by the market regulator and operate on a revenue-sharing agreement with the government. Initially, the new system will apply only in regions where the government has no commitment to licenses or where the licensed companies are ready to vacate.
Williams Communications Lights Atlanta to Miami Segment of its Fiber Optic Network
Williams Communications has lit an additional 700 miles along a key southern segment linking Atlanta and Miami via Jacksonville, FL, on its nationwide fiber optic network. To date, Williams' nationwide fiber-optic network has more than 17,600 route miles in service, 20,000 miles of fiber in the ground and plans to 32,000 route miles connecting 125 cities by the end of 2000.
Alcatel to Lead 1999 ADSL Market, According to New Report by Allied Business Intelligence
According to a new report by Allied Business Intelligence, Inc., the entire US market for ADSL equipment will be $346 million in 1999. This includes line cards, digital subscriber line access multiplexers, and customer premises equipment. The report, The ADSL Broadband Solution: Subscribers, Equipment and Chipsets in the US Market 1998 - 2004, forecasts the US market for CPE, line cards, DSLAMs, and chipsets from 1998 through 2004. The three top players in the 1999 digital subscriber line equipment market will be Alcatel, the Fujitsu Network Communications Orckit Communications alliance, and Cisco Systems. Alcatel will have a 69.1 percent share of the US market, with $135 million in sales. FNC/Orckit will be next, with 24.4 percent or $84 million. Cisco will follow with 19.5 percent or $67 million. Other manufacturers will sell a combined 17.0 percent or $59 million.
Microsoft Launches Trials for ADSL Access in Four U.S. Cities
Microsoft Corp. began trial of its DSL service in four U.S. cities, including Atlanta and Seattle with Chicago and San Diego soon to follow. The service is scheduled to be offered in at least 20 major U.S. cities by fall. MSN Internet access provides customers with Web access at speeds of up to 8 Mbps. The new consumer grade service complements Microsoft's recent alliance with Rhythms NetConnections Inc. to provide Rhythm's customers -- mainly enterprise and small-business users -- with access to a wide range of services via a co-branded portal in MSN.
Yahoo Shares Were Lower After BancBoston Analyst Cautions Buyers
Yahoo Inc.'s shares were lower after BancBoston Robertson Stephens analyst Keith Benjamin recommended investors hold off purchases of the company's shares. Yesterday, Yahoo's shares at 11:29 AM were 3-3/8 lower at 175-5/8, while the Nasdaq composite index was up 1.63 points at 2.463.43. Benjamin has been concerned that Yahoo may find it challenging to expand its services fast enough internally to evolve from premier portal to a network along the lines of America Online Inc., and added acquiring Broadcast.com Inc. could help.
Telefonica Wins Mobile Telephone License in Guatemala
Telefonica has won a mobile telephone license in Guatemala, which will permit the company to develop a full range of services as the Central American country's second telecommunications operator. Telefonica Centroamerica, a member of the Telefonica Group, paid $33 million for the 15 MHz Band B license for Personal Communications services, at a public auction held by the Guatemalan government. The Telefonica Group's track record in the region will allow it to develop a strategy as a second operator in mobile and fixed long-distance telephony, as well as in high-growth segments of the residential market and in value-added services. All these services will be offered by a single company, Telefonica Guatemala, a unit of Telefonica Centroamerica. Telefonica recently acquired a Guatemalan telecommunications company which had all the necessary licenses except one in cellular telephony.
March 29,1999
Iridium Receives 60-Day Waiver From Lenders; CFO Roy Grant to Resign
Iridium announced today that it has received a 60-day waiver from its lenders under its $800 million Senior Secured Credit Facility of the financial covenants relating to customers and revenues. These minimum subscriber and revenue covenants required Iridium to have cash revenues of at least $4 million, cumulative accrued revenues of at least $30 million, at least 27,000 Iridium World Satellite Service customers and at least 52,000 total customers. Under the terms of the waiver, Iridium is required to meet these customer levels and revenues by May 31, 1999. The company believes that the slower than expected customer ramp-up and revenue generation have been the result of problems with the initial availability of customer equipment and the availability of fully-trained service providers and sales personnel. In related news Roy T. Grant, vice president and chief financial officer for Iridium LLC has announced today his plans to resign his post at Iridium for personal reasons effective April 16. The company has begun a search for Mr. Grant's successor, which it expects to complete at the time of Mr. Grants departure.
Amazon.com to Enter Online Auction Market
To compete with other Internet-commerce companies such as eBay, Amazon.com will begin offering its own on-line auction service. This is the company's fourth major business expansion to be initiated in the past year. Since its inception in 1995 as an on-line book retailer, the company has added music and video offerings, launched a "Shop the Web" service that enables customers to order merchandise from other vendors. Chief Executive Jeff Bezos said in a draft letter to its customers that the new auction service will let people buy and sell anything at Amazon.com, including rare books and signed first editions, rare music, vintage toys, antiques sports memorabilia and collectibles. The letter will be posted on the Amazon.com Web site within the next week or two. Further, the company has singed up at least 117 smaller business that will hold auctions on its web site, including 11 companies specializing in collectibles, nine in electronics and photo gear and 24 in clothing and jew!elry. Customers will be able to access all these auctions from Amazon's own home page on the Web.
Computer Virus Named "Melissa" Plagues Computers Worldwide
Over the weekend a computer virus named Melissa had plagued computer users around the world. The virus affects personal computer that have Microsoft Corp.'s Word software and its mail programs, Outlook or Outlook Express. Once activated by users, the virus causes each PC to send 50 copies of a message containing a list of pornographic World Wide Web sites, generating a flood of traffic that brought many corporate e-mail systems to a standstill on Friday. Melissa causes no direct damage to infected PCs and, once it has been activated, can be deleted by using a software utility that is now widely available. The virus exploits a mailing-list feature in the Microsoft programs to generate messages that appear to recipients to come from a friend or associate. The subject line of the message begins with "important message from" followed by the name of the person who unwittingly passed on the message.
Intel Reduces Y2K Cost Estimate
Intel Corp. has lowered its estimate of Year 2000 remediation costs to $175 million from the $250 million originally projected. Intel said a greater-than-expected percentage of manufacturing systems needed no remediation and the costs to fix others were lower than anticipated. So far, Intel has spend $42 million on Year 2000 costs, covering payroll for redeployed employees, consultants, software and hardware upgrades. As of December, 99% of Intel's critical manufacturing systems and 86% of its critical non manufacturing systems were Y2K compliant.
Telecom Italia to Purchase Remaining Stake in Telecom Italia Mobile SpA for Nearly $25 Billion in Cash to Fend off Olivetti SpA
In another move to fend off Olivett SpA's hostile takeover bid, Telecom Italia will purchase the remaining 40% stake in its cellular-phone unit, Telecom Italia Mobile SpA, rather than acquire it through a stock swap. On Saturday, Telecom Italia Chief Executive Franco Bernabe asked his board to purchase the 40% of TIM that Telecom Italia does not already own through a cash offer rather than through a stock swap. The move came only a day after Olivetti said the $24.2 billion bank loan to help finance its bid for Telecom Italia was "significantly" oversubscribed. The announcement was significant because many investors, particularly arbitrageurs, doubted Olivetti's ability to raise such a large amount of money when the bid was first unveiled.
CyberSafe Corp. to Acquire Centrax Corp. for $20 Million in Stock
CyberSafe Corp., a maker of network-security software based in Seattle, will acquire San Diego-based Centrax Corp. for stock valued at more than $20 million. Centrax, also closely held, makes software for detecting unauthorized intrusions into computer networks.
Telenor, Telia Merger Agreement Faces Further Delays
Telenor AS and Telia AB will not be ready to sign their proposed merger agreement this week, according to Norway's transport and communications ministry. The two parties were originally expected to conclude the agreement in mid-March, but are understood to have been delayed due to the complexity of the deal and disagreements over the placement of the head offices for the various businesses.
Alcatel to Purchase Indian Venture for 352 Million Rupees
Alcatel CIT will purchase a 49 percent stake in Alcatel Modi Network Systems Ltd. from its joint venture partner, ModiCorp, for 16 rupees per share. Alcatel Modi Network Systems will become a wholly owned subsidiary of Alcatel after the acquisition for 352.8 million rupees. Further details will be announced during the Alcatel's president's visit to India in a few weeks. Business for the joint venture has been "seasonal and uneven" because it depended primarily on orders from the department of telecommunications.
Microsoft Acquires Numinous Technologies Inc.
Microsoft Corp. has acquired Numinous Technologies Inc., a start-up software company funded by the Washington Research Foundation. Terms of the deal were not disclosed. Numinous, which develops graphics software, will be folded into Microsoft's research group.
KPN Acquires 49 Percent Stake in Hungary's PT Invest, Raises Stake in Pantel
Royal KPN NV has acquired a 49 percent stake in PT Invest, a Hungarian holding company which holds a 25.9 percent interest in Hungarian telecommunications company Pantel. KPN holds a 49 percent stake in Pantel, while the remaining 25.1 percent of Pantel is owned by the Hungarian State railway company MAV. At this time, no financial details were disclosed.
Mexico's Televisa to Reduce Via Digital Stake to 11.5 Percent from 17 Percent
Mexican media company Televisa plans to reduce its stake in Telefonica SA unit Via Digital SA to 11.5 percent from 17 percent, according to a report in the La Gaceta de los Negocios financial daily. La Gaceta said Televisa will reduce its stake by not subscribing to the 40 billion ptas capital increase currently underway.
France Telecom's Itineris Claims Over Six Million Subscribers
Intineris, France Telecom's mobile telephone service, has gained more than 6 million clients. In December, the company announced it had more than 5 million clients. |
