Headlines - August 20, 1999
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Bell Atlantic Plans to Seek Clearance to Enter New York’s Long Distance Market
Bell Atlantic Corp. is expected next month to seek clearance to offer long distance service in New York State. According to a report in the Wall Street Journal interactive edition, the baby bell’s abil9ity to sell long distance services could prompt competition for residential local telephone services in New York. It has completed a series of tests which prove its network are open to competitors, and state utilities regulators will meet on August 31 to hear final comments on Bell Atlantic’s proposals. The FCC would have 90 days to act on the applications, and if it approves the proposals, the company could begin offering long distance services in New York by the end of 1999. However, competitors AT&T and MCI WorldCom argue that the company is far from making the conditions to enter the long-distance market.
Nextel Makes $2.1 Billion Bid for Nextwave Telecom Inc.
Nextel Communications announced that it would pay at least $2.1 billion for radio spectrum owned by Nextwave Telecom Inc. if it can reach agreements with Nextwave’s creditors. In a filing with the Securities and Exchange Commission on Wednesday, August 18, Nextel said it would pay $1.59 billion in cash to resolve claims by Nextwave’s largest creditor, the Federal Communications Commission, on the licenses. In its initial bid, Nextel offered to pay $400 million to $500 million to additional creditors. Nextwave, which is based in Hawthorne, NY, filed for Chapter 11 bankruptcy in June 1998. The acquisition, if successful, would provide Nextel with more capacity to handle rapid customer growth.
Nortel Networks Wins $400 Million Contract to Expand Cable and Wireless PLC’s Network
Nortel Networks has been chosen as the exclusive systems integrator and prime contractor for a billion dollar global network expansion by Cable and Wireless PLC that will provide high-speed communications services to more than 40 cities in 13 countries. Nortel said the deal was worth $400 million.
GTE to Sell 126,410 of Phone Lines to Telephone USA and CenturyTel
Continuing in its initiative to sell about 1.6 million phone lines, GTE has reached an agreement to sell 126,410 phone lines to Telephone USA of Wisconsin and CenturyTel Inc. for $365 million. Under the terms of the two agreements, US Telephone will purchase 61,612 lines from GTE, while CenturyTel will, in a separate deal, acquire 64,798 access lines from GTE.
Quantum to lay off 13 Percent of Workforce
Quantum Corp. announced that it will lay off approximately 800 employees, or about 13 percent of its workforce, and take a $50 million charge for its second quarter ending September 26 to restructure its hard disk drive business to better compete in the sub-$700 computer market. The company sees the moves as a means to deal with the computer market taking a rapid move toward the low-cost PCs. Last week, Quantum’s chief executive said the company would no longer reduce prices to increase market share, and asked others in the industry to do the same, citing in particular Seagate Technology. However, Seagate has denied Quatnum’s claims that it is lowering prices to gain increased market share.
EARNINGS/STOCKS
Novell’s Third Quarter Profit Exceeds Estimates as Revenue Rises 20 Percent
Fueled by strong sales of its primary product, especially in the European market, Novell beat estimates with a 20 percent increase in third quarter sales. For the period ended July 31, the company had net income of $49.3 million, or 14 cents a diluted share, 86 percent higher than the $26.6 million, or seven cents a share, during the same quarter in 1998. Company revenue was $326.8 million, compared with $272 million in 1998. Novell said these results are a measure of the company’s positive turnaround phase and had consequently entered a new period of rapid growth.
EUROPE
Telia and Telenor to Divest Itself Norway, Sweden and Ireland Units to Ease Regulatory Approval of Proposed Merger
In the effort to gain regulatory approval of their proposed merger, Telia and Telenor have agreed to divest themselves of units in Norway, Sweden and Ireland, but it was not clear whether their actions would overcome concerns of European antitrust authorities. A spokesman said Telia has offered to unload Telia Norge in Norway, and Telenor has offered to divest itself of its activities in Sweden. These operations include Telenorida, partially owned by Tele Danmark and British Telecommunications, which own mobile phone operations in Ireland. However, Telia and Telenor stopped short of selling their cable television networks, which they want to develop as conduits for advanced telephone and Intertnet access.
NTL Inc. to Acquire Workplace Technologies of Britain for US$130 Million
NTL, which owns Britain’s largest cable company in terms of subscribers, announced that it would acquire Workplace Technologies for $130 million to enhance its range of Phone and Internet services for business customers. NTL, whose shareholders include France Telecom and the Microsoft Corp., will assume L20 million of the debt in Workplace, which designs voice, data video networks.
Sonera to Acquire 9.1 Percent Stake in Powertel
Sonera has acquired a 9.1 percent stake in United States Cellular phone operator, for $123 million. The company acquired the stake from Ericsson AB. Currently, Sonera holds a 19.4 percent stake of the Aerial Operating Company, which like Powertel is one of the top four United States Operators focusing on the global system for mobile telecommunications. Sonera plans to help Powertel, with 382,000 subscribers, introduce new services.
TIM and Telekom Austria to Invest $800 Million Czech Mobile GSM License
The MobilCzech consortium, which consists of Telecom Italia Mobile, Telekom Austria and local partners, plans to invest $800 million if it wins the tender for the Czech Republic’s third mobile license. MobilCzech said its objective is to have 1 million subscribers within 10 years and to raise overall Czech market penetration to 50 percent by 2007. If it wins the bid it plans to directly hire 2,300 employees and to indirectly create 20,000 jobs in related business areas. Also, it plans to create a foundation to spend up to 30 million over a 10-year period in postgraduate scholarships to Czech students.
French Mobile Phone Subscribers Rise to Nearly 15 Million in July
The number of mobile phone subscribers in France rose by 739,500 in July to nearly 15 million, the telecommunications regulatory authority said.
Tele Danmark Acquires Telenor’s Lokaldelen for 1.03 Billion Skr
Tele Danmark AS will acquire Telenor AS’ unit Lokaldelen, Sweden’s second largest phone book publisher, for 1.03 billion skr in cash. The purchase is part of Tele Danmark’s strategy to expand its Nordic activities.
Framatome Unit FCI to Cut 50 Jobs from in its European Reorganization
Framatome connector unit FCI said it will reorganize its European operations, which will lead to the loss of some 50 jobs in France and the transfer of personnel to other sites in the country. The reorganization of operations in Asia and the American continent began at the end of 1998.
TietoEnator to Acquire 20 Percent Stake of Finnish Digital Media Company Visual Systems
TietoEnator Corp. has agreed to acquire 20 percent of Finnish private company Oy Visual Systems Ltd. for an undisclosed sum. The two companies will cooperate in the provision of customized Internet-based operating tools for companies. Particular emphasis will be laid on the development of solutions that can be used from a mobile terminal, such as WAP phones.
FIBER OPTICS
Corning's Newest Optical-Fiber Plant Makes First Shipment
The growing worldwide market for optical fiber is now being served by Corning Inc.’s new fiber-producing plant. Corning announced that its fiber facility in Concord, North Carolina recently shipped its first fiber. Production will continue to be phased-in over the year 2000. When fully operational in late-2000, the Concord plant will boost Corning’s North American optical fiber-making capacity by about 50 percent. The company currently manufactures optical fiber at its facility in Wilmington, North Carolina, the largest fiber-producing plant in the world. It also has plants in the United Kingdom and Australia.
ITC DeltaCom Acquires Local Equipment Provider Scientific Telecom
ITC DeltaCom announced the formal acquisition of substantially all of the assets, including customer base, of Scientific Telecommunications of Greenwood Mississippi. ST is the largest and oldest privately owned telecommunications equipment provider in Mississippi and serves over 1,200 business customers across the state from branch locations in Tupelo, Hattiesburg, Jackson and Greenwood.
INTERNET/E-COMMERCE
New E-Commerce Consortium to Battle Internet Credit Card Fraud
A group of e-commerce companies have formed a joint consortium to help prevent credit card fraud by collecting data from online transactions. It is estimated that fraudulent Internet and electronic commerce transactions now account for as much as half of all credit card fraud. HNC Software, based in San Diego, CA, has joined forces with five providers of e-commerce services to combat resistance from merchants, whose concerns about competitors have overshadowed their worries about fraud. Through the formation of an industrywide group, the group plans to aggregate the data while ensuring that no individual customer information is disclosed. In the non-data world, the company has developed long-standing relationships with banks, which have provided with transaction records from m0ore than 260 million accounts. The data is added to a large database used to build detailed profiles of fraudulent activity. From there, each transaction is given a score from one to 1,000 that indicates the probability of fraud. Merchants can then set their own criteria for seeking additional information from customers.
WIRELESS
Netro Corporation Announces Initial Public Offering
Netro Corporation announced the initial public offering of its common stock on the Nasdaq National Market under the symbol "NTRO." The initial public offering price for 5,000,000 shares, all of which were offered by Netro Corporation, was $8 per share. Merrill Lynch & Co. is acting as lead manager for the offering and BancBoston Robertson Stephens and Dain Rauscher Wessels, a division of Dain Rauscher Incorporated, are acting as co-managers. The underwriters have been granted an option to purchase up to additional 750,000 shares of common stock to cover over-allotments, if any.
Motorola to Acquire Metrowerks for $95 Million
Motorola will acquire Metrowerks, a maker of software programming tools, for $95 million. The company plans to operate Metrowerks as a stand-alone unit and retain its current name and management.
Headlines - August 19, 1999
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AT&T Files Complaints State Regulators Accusing US West of Service Glitches
In the latest battle of between telecommunications titans to offer high-speed access, AT&T has filed a complaint in five states against US West accusing the Baby Bell of letting its core telecommunications network lapse in favor investors in high-speed Internet services. The long-distance giant has filed complaints with state regulators in Colorado, Arizona, Minnesota, New Mexico and Washington. These filings come only weeks after the Bell Company agreed to merge with Qwest Communications International Inc. Both AT&T and US West are competing in several markets to deliver broadband services to consumers through AT&T’s newly acquired cable television lines and US West through DSL service. AT&T has filed these regulatory measures as a last resort, arguing that US West’s service quality is not improving. In response to AT&T, US West said that there have been some problems with service, but it maintains that the service continues to improve, not deteriorate in the company’s 14-state territory. A US West executive argues that AT&T’s filings are nothing more than a means to divert attention away from their refusal to open its closed cable monopoly to rivals. However, AT&T argues that it should not be required to open its high-speed cable network to rival Internet providers.
Cisco to Acquire MaxComm Technologies for $143 Million in Stock
Cisco Systems has reached an agreement to acquire privately held MaxComm Technologies Inc., a developer of ADSL technology, for $143 million in stock. This acquisition furthers Cisco’s strategy to collaborate with its service provider customers to accelerate the delivery of broadband access to the home. Under the terms of the deal, shares of Cisco common stock with an aggregate value of approximately $143 million will be exchanged for all outstanding share and options of MaxComm. In connection with the acquisition, Cisco expects a one-time charge against after tax earnings of up to 2 cents per share for purchased in-process research and development expenses in the first quarter to October. The acquisition has met the approval of the boards of directors of both companies.
ASIA PACIFIC
Telstra Pre-Registration Draws 1.8 Million Offer Documents
Federal finance minister John Fahey said more than 1.8 million public offer documents have been reserved by Australians in the pre-registration phase of Telstra Corp. Ltd.’s second tranche share offer. In a recent statement, Fahey said more than 3.1 million public offer documents will be mailed out in September, with 1.3 million existing Telstra shareholders also to be automatically receive a public offer document.
Foreign Creditors Decide to Refrain from Taking Legal Action against Daewoo Group
Following a meeting between the company and 69 foreign creditor institutions, foreign creditors of Daewoo Group have decided to refrain from taking legal action against the chaebol. In addition, Daewoo said foreign creditor banks have formed an operating committee of nine banks to represent them in debt negotiations with the group. The nine banks include HSBC Holdings PLC, ABN Amro Bank NV, UBS AG, Chase Manhattan Bank, Citibank, and Bank of Tokyo Mitsubishi Ltd., Daichi Kangyo Bank, National Australia Bank Ltd. and Arab Bank Plc. It has asked foreign banks not to collect maturing loans until a detailed loan repayment is given in consultation with its financial advisor Lazard Freres. French bank Natexis has sued Daewoo Group in Hong Kong to retrieve loans worth US$10 million, but a Daewoo spokesperson maintains that this is an isolated case, and will not spread to other foreign banks. Included in its total foreign liabilities of US$9.94 billion, US$5.05 constitute loans from foreign financial institutions, which breaks down to US$470 million borrowed by Daewoo units at home, and $4.58 billion borrowed by overseas subsidiaries.
CABLE OPTICS
Time Warner and Scientific Atlanta Launch Digital Television Service in 18 of its 35 Systems Fitted with Digital Headends
Time Warner Cable and Scientific-Atlanta have launched joint digital services over Scientific Atlanta's Explorer 2000 digital, two-way STBs to paying customers in 18 of its CATV systems, giving millions of subscribers access to digital services over Time Warner's fiber optic networks. Included in the service area is 877,000 subscribers in Tampa Bay Florida, 326,000 subscribers in San Antonio Texas, 266,000 subscribers in Austin Texas and 337,000 subscribers in Oceanic Hawaii. Scientific Atlanta had installed digital head end equipment in more than 30 of Time Warner's largest systems, representing more than 60 percent of Time Warner's subscriber base. Therefore, when these systems are launched, more than 8 million of Time Warner's subscribers were expected to be able to receive digital services whilst the balance of Time Warner's 12.9 million customers would be able to receive digital services by the end of the year 2000. Jim McDonald, president and CEO of Scientific-Atlanta, said the two companies had pioneered interactive digital services in 1996.
EUROPE
Securior Shareholders to Form Alliance to End British Telecommunications’ Acquisition of Stake BT Cellnet Unit
Primary shareholder in British security company Securior Group are in the process of developing an alliance to block the $5.05 billion deal that Securior’s management has accepted from British Telecommunications for a 40 percent stake in Securior’s mobile phone unit BT Cellnet. Shareholders with more than 10 percent ownership of Securior’s shares have objected the sale. Also, a US fund manager is garnering support among shareholders representing an additional 10 percent of Securior to construct a consensus against selling at the $5.05 billion price. If the deal goes through, BT would gain control of BT Cellnet. The deal values cellnet at about L7.88 billion or L2, 370 per subscriber, significantly lower than the L3,169 per subscriber that Deutsche Telekom agreed to pay for One2One, a competitor with half of Cellnet’s subscribers.
Ericsson and Scania to Launch Joint Wireless Internet Product
LM Ericsson AB and Scania AB are currently developing a joint wireless Internet product tailored to the needs of the transport industry. Under the terms of the new accord, Ericsson will provide the system solutions for end to end mobile users, while Scania’s newly formed IT subsidiary Infotronics, will integrate the new features in their products and put them on the market. Ericsson predicts that the global market for Internet-based Intelligent Transport Services could be around $400 million within 15 years, while the market for fleet management and positioning services valued at $200 million in 1998, is predicted to grow 1.2 billion by 2002.
British Telecom’s Bonfield Would Not Rule Out Hostile Bid from AT&T
British Telecommunications chairman Peter Bonfield said he would not rule out the possibility of a hostile bid for the company from AT&T Corp. In extracts from an interview that appeared in German monthly magazine Manager, Bonfield said he expects further acquisitions and merger in the telecommunications sector in Europe during the next five years. But the consolidation process in the sector has reached a point where companies must consider carefully whether deals are worthwhile.
VersaTel Links Key Rotterdam Center to 2,200 km Fiber Optic Backbone
VersaTel has connected to its network of Rotterdam Centrum, a major business center in the Benelux and the second densest concentration of businesses in The Netherlands, with over 500 addressable customers in VersaTel's target market. VersaTel said the 20 km local access Rotterdam City ring would offer customers a direct fibre connection to its national broadband network.
France Telecom Acquired 10 Percent of NTL for US$1 Billion
France Telecom has acquired a 10 percent in NTL Inc. for US$1 billion on August 13 in a first stage of its US$5.5 billion investment to acquire 25 percent of NTL on July 26.
Eight Consortia Launch Bids for Czech Republic’s Third GSM Network
Bidding for the Czech Republic’s third GSM license has closed with eight consortia submitting bids, the Transport and Telecommunications Ministry said without naming any of the companies involved. The candidates include British Telecommunications PLC together with Telekomunikacni montaze Praha, France Telecom and Bonton, Mannesmann AG with Vivendi, the Novy mobile consortium of Telenor and Aliatel, and the CrysTel consortium of Vodafone Airtouch and GTS.
Deutsche Telekom’s Ricke to Head European Mobile Phone Holding
The head of Deutsche Telekom AG’s T-Mobil mobile phone unit, Kai Uwe Ricke, will head a European mobile phone holding which the company plans to launch. This move follows Deutsche Telekom’s recent acquisitions of majority stakes in the UK mobile phone company One2One and the Austrian mobile phone operator Max.mobil.
FIBER OPTICS
Level 3 Offers Private Line, Colocation, Internet, Dark Fiber and Managed Modem in Stamford
Level 3 Communications with begin providing select communications services from a new 12 employee, 23,000 sq. ft gateway facility at 21 Harbor View Street in the Stamford Connecticut metropolitan area, as part of its national city roll-out. Services to be offered to the Stamford community would include private lines, collocation, Internet access, IPCrossRoads, dark fiber and managed modem. IPCrossroads is designed to bring content provider and access providers more efficiently together.
INDIA
Private ISPs Cry Foul over MTNL, VSNL Rate Reduction
In a letter addressed to the Telecom Regulatory Authority of India (Trai), The Internet Service Providers Association of India (ISPAI) has alleged that Mahanagar Telephone Nigam Ltd. (MTNL) and Videsh Sanchar Nigam Ltd. (VSNL) are resorting to moves "which reek of cross-subsidization of their operations and not extending the benefits of lower tariffs to other ISPs." The letter, sent on August 12, comes in the wake of aggressive lowering of prices by both VSNL and MTNL, both of whom had resorted to tit for tat 15 per cent reductions across the board for their Internet service earlier this month. According to ISPAI, this rate cut "had created a situation which was against the level-paying field for private ISPs." There appears to be some merit in the ISPAI's argument. Compared to private ISPs, VSNL and MTNL do have a big competitive edge as MTNL owns the telecom network in Mumbai and Delhi, and VSNL is the monopoly Internet gateway provider so far. The bone of contention is that VSNL has a differential rate structure when it comes to selling a 2 Mbps port. For recognized educational institutions, government organizations and newspapers, VSNL charges a rate of INR 20.9 lakh per annum. For soft exporters VSNL bills INR 33.44 lakh per annum, and the figure goes up to INR 41. 8 lakh per annum for ISPs.
Telecom Regulatory Authority of India Asks Department of Telecommunications to Refund E-mail, Internet Operators
Telecom Regulatory Authority of India directed Department of Telecommunications not to charge E-mail and Internet service providers for all payments received on this count so far. Under section 13 of the TRAI Act, the authority directed the DoT to withdraw the circular of January 14, 1999, which levied a charge of INR 15,000 for fixed phone access to all Internet service providers through the issuance of the circular. The authority had sought clarification from the Government after the matter was brought to its notice by the Internet Service Providers Association of India (ISPAI) after the January order. The Department of Telecom later withdrew the circular in May last, but replaced the access charge with telephone rental, which was taken up with the authority by the association. The Internet Service Providers Association again approached the authority seeking urgent intervention after Mahanagar Telephone Nigam (MTNL) had combined the arrears of the access charge with regular bills and set a deadline to clear these dues.
Escotel, Srinivas Cellcom, BPL Compete for Stake of Skycell Project
Escotel, BPL Mobile and Srinivas Cellcom have evinced interest to buy the 40 percent stake of the Cromption Greaves in the Chennai cellular project Skycell, which was put up for sale through investment banker ABN-Amro. Following its decision to restructure the non-core areas such as cellular telephony, investment-banking sources said ABN Amro had received inquiries from at last three cellular companies after Cromption Greaves. Crompton Greaves had demanded over INR 2 billion for the 40.5 per cent stake for which it had reportedly invested INR 252 million at the time of project commission in 1994
Instrumentation Ltd. Wins INR 164 Million Order from Department of Telecommunications
Instrumentation Ltd. (IL) has won an INR 164 million order form the Department of Telecommunications (DoT) for supplying SBM-ML exchanges. The exchanges will be used for modernization and expansion of telecom facilities across the country.
Department of Telecommunications to Refer Six Month Extension to Reliance and Bharti Telelnet
The Department of Telecommunications (DoT) is likely to refer the issue of a six-month extension for two companies-Reliance for their basic service circle in Gujarat and Bharti Telelnet's BT Basic service project in Mahdya Pradesh-to the Attorney General (AG) for his advice. This has become necessary as both these companies have already got an extension-from February 1997 to September 1997, and under to September 1997, and under the New Telecom Policy of 1999 (NTP'99) any further extension can not be granted. Both companies have now demanded the extension on the grounds that they can not be penalized for signing the license agreements for their circles in advance before other companies. A six-month extension for Reliance works out to around INR 500 million while in the case of Bharti it is around INR 90 million.
INTERNET/E-COMMERCE
Fourth Quarter Page Views Reach 70 Million on Lycos Web Portal
Lycos Inc. reported that fourth quarter to July average daily page views on its online portal rose by 17 percent from the third quarter to more than 70 million, with registered users increasing by 20 percent to 32 million. The company reported pre expenses fourth quarter earnings per share of 1 cent, compared with a loss of 1 cent in the same quarter in 1998. Average daily page views rose 192 percent from 1998, and the portal’s audience reach, or penetration of total US Internet users almost doubled over the full year to 47.8 percent from 24.5 percent in its year to July 1998.
RCN to Launch Wireless E-Mail Service
RCN Corp. plans to launch to offer wireless e-mail to it plans to offer wireless e-mail to its Internet service customers over a small hand-held device provided by Research In Motion Ltd., a wireless data product manufacturer. The new service will enable customers to send, forward and reply to e-mail messages using the device. RCN plans to launch the service in the fall.
RCA to Begin Selling WebTV Receivers this fall
RCA plan to begin selling WebTV receivers this fall, however, executives said they will delay until next year the launch of a TV with built in WebTV capabilities. The company hopes to gain a lead over competitors such as Philips Electronics NV and Japan’s Sony Corp., the major providers of WebTV receivers. Unlike these companies, RCA, a unit of Thomson Multimedia of France, plans to offer a stand-alone WebTV Plus receiver for $249. The company plans to wait to launch the new product until Microsoft Corp., the owner of WebTV technology, completes an overhaul of the WebTV’s technical structure so it can be based on Microsoft’s Windows CE operating system. The new development, which will be completed late this year, will enable WebTV Plus devices to be upgraded to a future version of Windows CE with interactive TV-oriented features.
SOUTH AMERICA
Telefonica and Telecom Argentina to Break up Miniphone Cellphone Venture
Telefonica de Argentina and Telecom Argentina STET-France Telecom SA announced that they will split up its Miniphone SA cellphone venture and absorb assets into their own subsidiaries. In a recent statement to the bourse, the companies said the government granted Telecom Personal SA and Telefonica Comunicaciones Personales SA licenses in July to replace the Miniphone concession from October 1.
Headlines - August 18, 1999
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Consumer Groups Ask Federal Regulators to Stop AT&T’s Acquisition of MediaOne
Arguing that AT&T will gain monopoly status of the cable television and high-speed Internet service industry, three consumer groups have asked federal regulators to stop the long-distance giant’s bid to acquire MediaOne. Consumers Union, Consumer Federation of America and the Media Access Project joined in opposing the deal on grounds that it violates existing antitrust laws and federal rules that restrict the number of cable subscribers a single company can control. With a hold on such a large percentage of the market, AT&T could block new companies from gaining a foothold in the cable business, which already suffers from inadequate competition and high prices. The groups fear that the company would be able to increase cable rates even higher than they already are. Under a previous agreement reached in May, AT&T would acquire MediaOne, with 5 million customers in addition to the company’s 25 percent stake in cable systems owned by Time Warner Inc., the nation’s largest cable TV company. Combined with their recent acquisition of Tele-Communications Inc., AT&T would become the nation’s largest cable TV company, with a 57 percent market share of homes.
Lucent Technologies Continues Data Communications Buying Spree with Acquisition of Excel Switching for $1.7 Billion
The trend of the big veteran telecommunications players snatching up the little niche players continues as Lucent acquires yet another data networking company. This time, the telephone switch giant has reached an agreement to acquire Excel Switching Corporation of Hyannis, Mass, a developer of programmable switches, one of the fastest growing segments in the communications industry. Excel’s open, programmable switching platforms serve as a bridge between circuit and packet networks and enable service providers to quickly enter new markets with applications created by software developers around the world. Under the terms of the agreement, each share of Excel will be converted into .5580 shares of Lucent. Based on Lucent’s stock closing price of $66.50 on August 18, the transaction would be valued at $1.7 billion or $37 or per Excel share. The deal is expected to be completed during Lucent’s first fiscal quarter of 2000, which ends December 31, 1999, and is intended to be accounted for as a pooling of interests. Lucent expects the merger to be neutral to earnings in fiscal 2000.
Dell Computer Beats Expectations with a 47 Percent Rise in Second Quarter Earnings
Buoyed by strong sales of personal computers, Dell Computer Corp. beat Wall Street expectations with a 47 percent rise in second quarter earnings yesterday. Dell reported its results after the close of the stock market. In regular trading, its shares closed at $41.125, down 31.25 cents, which are about 25 percent below its 52-week high of $55. During after hours trading, the shares were quoted as high as $43.125. Also, the company claimed to have beaten out Compaq Computer Corp in sales. Following strong PC sales of Hewlett Packard and IBM, Dell’s results confirmed that the market is reacting to a strong growth in the PC sector and the firming of some prices. One thing that has contributed to the company’s growth is its direct sales model, in which builds each computer to order. However, IBM, Dell and Hewlett Packard benefited from the continuing troubles at Compaq Computer Corp. The company reported a 100 percent gain in the consumer products, and sales of network servers, work stations and storage products increased 85 percent from an already strong position it had in 1998.
ADSL
Turnstone Systems Launches Technology Advisory Board
Turnstone Systems has formed an advisory board consisting of Daniel D. Briere, president of TeleChoice; Reed E. Hundt, senior advisor on information industries to McKinsey & Company; John McQuillan, president of McQuillan Ventures and a partner at Institutional Venture Partners (IVP), and Dan Upp, vice president of technology strategy for TranSwitch. The advisory board will provide ongoing guidance regarding Turnstone's market strategy and business opportunities.
ASIA PACIFIC
Vodaphone Australia to Acquire Vodaphone NZ and Half of Vodaphone Fiji for 1.25 Billion Aud
Vodaphone Holdings Australia Pty Ltd. has entered into an agreement to acquire Vodaphone New Zealand and a 49 percent stake in Vodafone Fiji for around 1.25 billion aud. Vodafone Australia signed agreements with Vodafone Europe Holdings BV, an indirect wholly owned subsidiary of Vodafone AirTouch PLC, to acquire the entire issued share capital of Vodafone’s New Zealand operations and a 49 percent in Vodafone Fiji. Telecom Fiji will keep the remaining 51 percent of Vodafone Fiji. Vodafone Australia chief executive Brian Clark will continue to have responsibility for the regional group while John Rohan and Aslam Khan will remain managing directors of Vodafone New Zealand and Vodafone Fiji respectively.
BRAZIL
Globo Cabo and Microsoft Form Internet Services Venture
Microsoft Corp. and Organizacoes Globo have agreed to form an Internet services venture, with Microsoft taking a stake in the Brazilian company’s cable television unit Globo Cabo SA. In a recent statement, the companies said the alliance is aimed at development, delivery and operation of a set of joint services for personal computers and advanced digital television set-top boxes for Brazilian consumers. Globo and Microsoft initially will create a joint marketing and technology group to evaluate potential business opportunities, including the creation of a joint Internet portal that would merge the existing Microsoft MSN Brazil service and Globo’s portal Globo.com currently under development; interactive TV services based on advanced set-top boxes and the Microsoft TV platform; and providing Internet access services. Under the terms of the agreement, the companies will combine Organizacoes Globo’s news, sports, entertainment and educational content with Microsoft’s existing services including the MSN Hotmail web-based e-mail service, MSN Messenger Service, MSN Web Communities, MSN search and directory, and Microsoft Passport services. Microsoft will make a $126 million investment in Globo Cabo by acquiring newly issued ordinary and preferred shares at an average price of 60 cents per share. Following their initial investment, the next planned step in the alliance is the full scale launch of Virtua, Globo Cabo’s broadband high-speed Internet access service.
OpenROUTE Signed NEC do Brasil for Distribution in South America
OpenROUTE Networks has signed NEC do Brasil SA, a subsidiary of NEC Corp. as a value added reseller for Brazil and other South American countries. Bryan R. Holley, OpenROUTE President and Chief Executive Officer characterized NEC as "Far and away the most prestigious, and the largest distribution organization for new technology products in all of South America, enjoying unsurpassed relationships with Telecommunications carriers, Internet service providers, and major corporate customers throughout the region." NEC do Brasil is headquartered in Sao Paulo Brazil and is a subsidiary of NEC Corp.
INDIA
Qualcomm’s Technical Shortfalls Delay MTNL's Wireless Phone Network Expansion
Mahanagar Telephone Nigam's plan to expand its wireless in local loop-based phone network by 9,000 lines has come undone due to the failure of Qualcomm, the supplier of the code division multiple access (CDMA) technology having failed to meet the technical specifications. MTNL has been running a 1,000-line system to Delhi since 1996 and had placed an order for additional 9,000 lines on Indian Telephone Industries (ITI), which in turn purchased the system from Qualcomm. Tests conducted by MTNL on the Qualcomm wireless in Local loop (WLL) system installed in Delhi revealed major deviations in the performance of the equipment. MTNL is now stuck with a system that has numerous problems, as Qualcomm closed shop earlier this year in India and sold its entire infrastructure business to global telecom major Ericsson. The testing of the new equipment commenced in February this year. On March 19, MTNL formulated a report stating that deviations were noticed in 66 tests. These include the extremely critical redundancy test for call processing in case of failure of a call control processor (CCP). CCP failures affect the call origination and delivery, leading to system crash and rendering the entire network unoperational.
VSNL Launches First On Line Payment Gateway
Videsh Sanchar Nigam Ltd. (VSNL) has joined forces with Equifax Venture Infotek Ltd. (EVI) set up India's first on-line payment gateway. During the first phase identified utilizing the credit card network of MasterCard and Visa to facilitate transactions. In the second phase, however, VSNL proposes to extend the payment gateway through bank networks, agencies and merchants. This is provided that the network is agreeable and able to verify credit cards on-line. VSNL chairman-cum Managing director Amitab Kumar explained that these were not secure as credit card numbers were passed across the Internet, which was an open-user network. "At no point of time would VSNL subscribers need to pass on their credit card numbers on the network, as they will be given PIN numbers by EVI. This will ensure total security." Subscribers would have to take a print out of the Internet from VSNL's site and delivery the same by post or hand delivery. Industry sources said that VSNL was keen to involve the
Indian Banks Association's (IBA) sponsored Swadhan for extending the platform of electronic commerce in the country. IBA's shared payment network system (SPNS) currently operates off-line. However, India Switch company Pvt. Ltd. (ISC), representing 29 banked on SPES that links up 113 ATMs for cash withdrawals is confident that with banks like IDBI Bank and Citibank being on-line the country, the network can be extended across the nation. Ore importantly, IBA is moving for the need for banks to establish on-line connectivity.
INTERNET/E-COMMERCE
Cisco to Invest $50 Million in Akami Technologies
Cisco Systems Inc. has reached an agreement to invest $50 million in Akamai Technologies Inc. Under the terms of the agreement, which could be announced as early as today, Cisco will receive a stake of approximately 4 percent in closely held Akamai. Akamai, which is based in Cambridge, MA, develops technology that enables increased speed of web sites. With the burgeoning growth in the Internet, the company has gained customer contracts with major players such as Yahoo!, Apple Computer, and CNN.com Cisco’s investment would be the largest outside cash infusion for Akamai, which has already won financing from Battery Ventures and Polaris Ventures. Both companies have been discussing in developing a technology alliance for a long time.
Hewlett Packard and Oracle Launch Electronic Services Alliance
In the effort to gain a presence as a major Internet player, Hewlett Packard and Oracle Corp. have joined forces to develop and market electronic services. Under the terms of the agreement, Oracle will integrate new software technology from HP dubbed e-speak, into its Oracle 8I database. The two companies also plan to forma number of expert centers worldwide, devoted to assisting their customers develop e-services using the technology.
America Online Makes Foray into Interactive TV with Acquisition of Minority Stake in TiVo Inc.
In the effort to gain a foothold in the interactive television business, America Online has acquired a minority stake in TiVo Inc., a manufacturer of personal video recorder technology. This new venture comes after AOL’s chief technology officer Marc Andreesen, increased his personal investment in TiVo’s closest rival Replay Networks Inc. Although Aol would not divulge the size of its investment, the company said it plans to work with TiVo to combine AOL TV, an interactive television service under development, with TiVo’s technology.
SATELLITE
Iridium New Restructuring Filing Could Give Bondholders a 30 Percent stake in the Company
Yesterday Iridium had submitted a filing with the Securities and Exchange Commission that, if approved, could leave bondholders owning a third of the company. Under the terms of the newest restructuring proposal, bondholders will convert most of Iridium’s debt into equity. For holders of an additional $500 million in debt obligations, primarily Motorola, Iridium proposed handing over another 12 percent of the company. Motorola already has an 18 percent stake but that would get diluted somewhat due to the overall proposal. Also, the company plans to defer payment for some time to Motorola for its network oversight contract, but did not say how long. Iridium is also seeking extensions on syndicated bank loans that total $1.5 billion.
Headlines - August 17, 1999
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BRAZIL
CABLE OPTICS
EUROPE
INTERNET/E-COMMERCE
MEXICO
SOUTH AMERICA
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FCC Asks Federal Appeals Court to Block Portland from Requiring AT&T to Grant Competitors Access to Cable Lines
The Federal Communications Commission has asked a federal appeals court to block Portland, OR to open its high-speed wires to rival Internet service providers. Yesterday, the commission filed a friend-of-the-court brief asking the US Court of Appeals in San Francisco for the Ninth Circuit to overturn Portland’s measure to require AT&T to grant competitors like America Online access to their cable television lines. The brief is a reflection of Chairman Kennard’s belief that federal regulators, not local officials, should decide the matter and that is too early to impose these kind of requirements on AT&T or others that control broadband Internet access. In December Portland regulators imposed their requirement as a condition for local approval of AT&T’s acquisition of Tele-Communications Inc. As a result AT&T sued to have the condition lifted, but a federal judge ruled in Portland’s favor and AT&T appealed. Following this decision, Broward County, FL, has decided to require open access, and other communities will likely consider the issue as they decide to grant approvals for AT&T’s pending acquisition of Cable Television Company MediaOne Group. Local regulators argue that without conditions, AT&T could carry out an Internet access monopoly. Chairman Kennard has maintained that he wants to adopt a no-regulation policy for the Internet, over giving local government access to impose rules that could differ from community to community.
Hewlett Packard’s Earnings Beat Expectations; Files Registration for Initial Public Offering of Algient Unit
Hewlett Packard seems to be on a roll, as for the fourth consecutive quarter, the company has reported earnings that exceeded analyst’s estimates. Officials predict that the company would see 11 to 13 percent revenue growth in the next quarter. In addition, HP has filed a registration statement with the Securities and Exchange Commission for the initial public offering of its newly formed test and measurement and medical imaging subsidiary Aglient Technologies. With the anticipation of positive news, company shares rose $4.25 to $110.25. During the third fiscal quarter, which ended on July 31, HP reported earnings of $853 million, or 81 cents a diluted share, up 37 percent compared with $621 million, or 58 cents a share, in the same period of 1998. Company revenue rose 11 percent to $12.23 billion, compared with $10.98 billion in the third quarter of fiscal 1998.
WorldAccess Inc. to Acquire FaciliCom for $436 Million in Stock
As WorldAccess Inc. continues to develop itself as a major player in the long-distance telephone market, it has agreed to acquire phone company FaciliCom International for $436 million in stock. With this acquisition, the company would gain a presence in Europe, where the company operates a network. In addition to Europe the company operates in the US and owns interests in Trans-Atlantic cable systems. The sole focus of the company has been on the wholesale long-distance business, which in recent months has faced pricing pressure. WorldAccess acquisitions are similar to their major shareholder MCI WorldCom’s growth pattern, which has acquired a number of companies throughout the decade. The combined companies would have 1999 revenue of about $1.2 billion.
BRAZIL
Canbra Awards Nortel Networks US$500 Million Contract to Construct Brazil’s First Alternative Telecommunications Network
Canbra has awarded Nortel Networks a five-year, $500 million contract, for Unified Networks solutions to deliver advanced data and telephony services in Rio de Janeiro and 15 other East Coast and northern states in Brazil. Under the terms of the contract, Nortel Networks will design and build a turnkey network solution for Canbra, including Nortel Networks Proximity II and CDMAOne fixed wireless access equipment, digital switching systems, optical Internet solutions, PBX and call center equipment. Deployment of the system will begin immediately in Rio de Janeiro, Minas Gerais, and Bahia, followed by deployment in the other 13 states of Canbra’s region. Commercial service is scheduled to begin in the fourth quarter of 1999. Canbra was awarded a "mirror company" license to compete with Telemar, one of the companies formed as a result of the privatization of the former Telebras system. Upon completion of the network, it will reach 51 municipalities in an area, with a combined population of more than 87 million people, and approximately five million square km.
Universal Wireless Communications Consortium Hosts TDMA Wireless Symposiums in Latin America
The Universal Wireless Communications Consortium hosted two successful TDMA wireless symposiums in Brazil and Argentina. The one-day conferences, sponsored by Ericsson, Lucent Technologies and Nortel Networks, brought together over 150 attendees interested in TDMA and Wireless Intelligent Network standards development. Presentation topics included wireless data and PCS/1900 frequency band implementation as well as TDMA roaming panel discussion. Additionally, the symposiums highlighted presentations on TDMA’s evolution to 3G services. Presentations provided by Antel, AT&T Wireless, BCP Brazil, Ericsson, Lucent Technologies, Nortel Networks, Telecentro Oeste, Telecom Personal, TIW, TESS, and UniFon.
CABLE OPTICS
Cox Communications Completes Acquisition of TCA Cable
Cox Communications Inc. has completed its acquisition of TCA Cable TV Inc., which serves 883,000 customers in Texas, Louisiana, Arkansas and four other states. The transaction received final approval during a special meeting of TCA shareholders. Additionally, Cox will assume ownership of VPI Communications Inc., the nation’s largest third party turnkey advertising insertion provider, which serves 82 multiple system operators representing more than 3.5 million customers nationwide. Following the close of pending acquisitions, Cox will serve approximately 6 million customers nationwide, making it the fifth largest cable company.
EUROPE
SMi Holds Second Annual Event on Liberalization, Competition and Emerging Opportunities in the Irish Telecommunications Market
6th to 7th September, Radisson SAS St Helen's Hotel, Blackrock, Dublin Building the success of SMi's Irish-specific telecom conferences, SMi have produced a unique conference which explores the crucial issues surrounding Irish telecommunications since last December's deregulation and follows up the issues raised at last year's event. This is the ideal forum for discussion between the incumbent, competitor operators, service providers and the regulator in this newly-liberalized market As a senior industry executive, you will be aware of the importance and huge potential of the Irish market. It is therefore my pleasure to invite you to register for SMi's Irish Telecoms 99. As you can see from the brochure, key issues including regulation, Internet and e-commerce, global infrastructure, billing and interconnection will be covered. The conference enables you to network with key decision-makers in the Irish telecommunications sector. Attend to discover the potential and the realities of investment in Irish telecommunications and to match your organization's resources to the needs of the market. For more details check out www.smi-online.co.uk or phone +44 171 252 2222 or e-mail aglover@smiconferences.co.uk.
Pirelli Comes Closer to Acquiring Sitri Cable Operations for 2 Trillion Lire
Pirelli SpA is close to purchasing Sitri SpA’s cable operations for 2 trillion lire. According to a recent report in the La Stampa, Pirelli is the principal candidate to acquire Sitri cable operations and that Telecom Italia SpA wants to sell Sitri industrial activities before going ahead with plans to spin off its real estate holdings into the listed company.
Racal in Talks with Mannesmann to Sell Off its Telecommunications Operations
Racal Electronics PLC is holding detailed talks with several bidders, led by Mannesmann AG, about selling its telecommunications business for 750 million stg. Although the front runner appears to be Mannesmann, talks are also likely to be held with Energis PLC and Scottish Power PLC’s Scottish Telecom business, as well as US buyout specialties Callahan.
Deutsche Bank Ready to Allow Deutsche Telekom Veto Right on Later Cable Sale
Deutsche Bank AG is prepared to grant Deutsche Telekom AG the right to block the sale of cable operations to third party investors once an initial deal over divestment on the deal has been reached, as a concession aimed at speeding up agreement on the deal. A listing of the cable operations at a later date is also an option. The bank said it is interested in retaining the cable operations for no more than five years, and up to 10 billion DM will have to be invested in the network to allow Internet and telephone connections over the network.
Vodaphone in Talks to Acquire Scottish Telecom’s Mobile Phone Operations
Vodaphone Group PLC is in talks with Scottish Power PLC unit Scottish Telecom and Martin Dawes Communications about acquiring their joint venture mobile phone business for an estimated 300 million stg. The sale is likely to include a chain of 27 High Street shops, as well as 88,000 subscribers, and will act as a curtain raiser for the long-awaited announcement of the flotation of 25 percent of Scottish Telecom later in the year. Scottish Telecom has confirmed that talks were underway and a further announcement will be made in about a month.
INTERNET/E-COMMERCE
ExciteAtHome and Cox to Make $85 Million Joint Investment in Tickets.com
ExciteAtHome Corp. and a unit of Cox Enterprises will announce joint plans to invest $85 million in Tickets.com and set up marketing relationships with the Web ticket merchant. Already, ExciteAtHome has invested $15 million in Tickets.com and plans to invest another $40 million, pending regulatory approval that is expected in 30 days. Tickets.com is currently in registration for an initial public stock offering.
Cisco Systems to Acquire Calista Inc. for $55 Million in Stock
Cisco Systems Inc. will acquire privately held Calista Inc., a provider of Internet-based phone technology, for $55 million in stock. Calista, based in Bucks, England and San Jose, CA, develops technology that enables phone systems from different vendors to work together over network built on Internet standards. With this acquisition, Cisco will be able offer its customers the ability to transmit data, voice and video services across the Internet rather than over traditional phone lines.
MEXICO
ADC Telecommunications Provides HDTV Transmitter and Fiber-Optic Transport for the First Commercially Available Digital Service Offering in Latin America
ADC Telecommunications Inc. and Televisa, Mexico's largest television broadcaster announced the availability of high definition television (HDTV) transmission in Latin America. Prior to the implementation of this system, HDTV transmission was used only in trials. Televisa's HDTV broadcasts, supported by equipment from ADC, are the first commercially available in Latin America. The interoperability of ADC's broadcast products and cooperative effort among ADC's divisions and partners contributed to Televisa's successful implementation of this innovative service. The digital television (DTV) transmitter, digital audio and video patching, and fiber optics were supplied through ADC's Mexican subsidiary, ADC de Mexico, S.A. de C.V., and distributor, Dicimex, S.A. de C.V. In addition, ADC provided the digital uncompressed fiber optic transport between Televisa's transmission site in Cerro Tres Padres and its HDTV programming network in Mexico City. The ADC equipment used in the total solution purchased by Televisa includes a DT800 series solid-state UHF transmitter. The transmitter utilizes the ADC-built DT1A 8-VSB modulator, which processes information such as video and/or audio in a digital format. A fully redundant, dual fiber-optic ring using ADC's DV6000 product line transports the signal through Televisa's network in Mexico City feeding its transmitter site. Also, ADC's fiber-optic and copper patching products for both analog and digital video/audio signals are installed throughout Televisa's network.
SOUTH AMERICA
Telefonica Transfers 10 Percent of US$1.5 Billion US to South America Cable to IDT for $100 Million Capacity Purchase
Telefonica plans to transfer a 10 percent interest of the 75 percent share it owns with its South American affiliates in a US$1.5 billion cable link between the US and Central and South America to international operator IDT. In exchange, IDT will purchase US$100 million of capacity on the network over five years. In May 1999 it was agreed with TSSL, who will own 25 percent, that the cable be operational by the end of 2000. Also IDT, which earlier in 1999 began marketing an Internet access service aimed at 30 million potential Hispanic users in the US called Nuestra Voz, and Telefonica, which has a Web portal service called Ole, will offer Internet access, prepaid calling cards and other phone services to the same US Hispanic community. The links were originally part of a programme defined between Telefonica and MCIWorldCom when they signed up to a broad strategic alliance during 1998. The absence of any sign of implementation to date on MCIWorldCom's part appears to have frustrated
Telefonica, to the point of diverting its partnership activity to IDT.
Global Crossing Advances Completion of South American Crossing through New Agreements with Alcatel and IMPSAT
Global Crossing Ltd. has secured agreements with Alcatel and IMPSAT of Argentina directed at the rapid completion of Global Crossing’s extension of its Global Crossing Network to South America’s major cities. Under the terms of the agreement with Alcatel, Global Crossing’s marine division, Global Marine Systems Limited, will have an option to provide marine operations and a guarantee from Alcatel of US$100 million in contracts over the next five years. IMPSAT Corp. has agreed to provide infrastructure for the Trans-Andean terrestrial link of SAC. Also, Global Crossing will team with IMPSAT for the construction and provisioning of backhaul networks in all countries connected to Global Crossing’s South America system and in Venezuela. IMPSAT will purchase a minimum of $46 million in capacity on the Global Crossing network. Also, IMPSAT and Global Crossing will enter into a non-exclusive co-marketing agreement that will combine the Pan American distribution network of IMPSAT with the
Global Crossing Network. The Trans-Andean section will form the southernmost perimeter of SAC, connecting the SAC system between Los Toninas and Argentina on the Atlantic Coast and Valpraiso, Chile on the Pacific. As it crosses the continent, the system will pass through Buenos Aires, Rosario, Cordoba, and Mendoza in Argentina and Santiago in Chile.
Headlines - August 16, 1999
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BRAZIL
EUROPE
INDIA
INTERNET/E-COMMERCE
SOUTH AMERICA
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Justice Department and FBI Delay Approval of AT&T and British Telecom Venture to Investigate Possible National Security Issues
Fueled by concerns over national security and law enforcement, US officials have decided to launch a comprehensive investigation into the $10 billion joint venture between AT&T and British Telecommunications PLC. The FCC and the Department of Justice’s criminal division are holding talks with the companies to resolve concerns over their global joint venture. The government’s investigation appears to be part of a growing trend of law enforcement agencies weighing in on telecommunications deals. Traditionally the FC has overseen the approval of such deals; however, law enforcement agencies may want to ensure that they have access to telecom networks for approved wiretapping operations, and to protect US citizens from being monitored by foreign governments. The rise in foreign investments and the introduction of new telecommunications technologies has complicated law enforcement’s efforts to properly monitor and protect citizens. Although the investigation will not endanger the alliance, they are holding up its approval. Since the venture was launched in July 1998, the FCC has granted its approval, but is awaiting word from the Justice Department and FBI, which have been in talks with the two companies for two months. Neither company would comment on whether they are involved in talks with law enforcement agencies.
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Business Customers Feel Effects of MCI WorldCom’s Effort to Restore Stability of Frame Relay Network
In an effort to restore the stability of their key data network, MCI WorldCom shut down their network over the weekend, affecting some 3,000-business customers including America Online. During this time, MCI WorldCom engineers removed a new version of software by Lucent Technologies that is believed to have been causing problems to their frame relay network, which they have experienced since August 5. Although many of the largest companies have backup systems in the event of such problems, the shutdown caused a series of problems throughout the weekend. In addition to America Online, Chicago Board of Trade has felt the brunt of MCI WorldCom’s network problems, having to shut down its electronic trading system for more than 60 percent of its unusual operating hours since August 5. With that, CBOT lawyers are considering, among other options, severing the exchange’s ties with MCI WorldCom.
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Teleglobe’s Rapid Growth Begins to Worry Investors
Since it lost its monopoly status as Canada’s long-distance overseas carrier, Teleglobe has been on a fast growth track throughout the rest of the world. However, the company’s rapid growth is beginning to worry investors. One of the things that worried investors was the company’s warning that back office problems at its newly acquired Excel Communications unit would cut into 1999 earnings. In 1998, Excel was the fourth largest long-distance carrier by revenue in the US, and Teleglobe plans to expand the operation into other countries, but integration of the unit was a bit bumpy. In the meantime, Teleglobe launched a $5 billion expansion of its global network to meet the needs of the burgeoning growth of the Internet. Then on July 28, only eight days after closing a $1 billion long-term debt offering, the company warned that its second quarter earnings would come in at 10 cents a share, 33 percent below expectations. With this report, Teleglobe’s stock dropped 19 percent on the New York Stock Exchange the next day.
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Lucent Technologies to Acquire Xedia Corporation for $246 Million
As it continues to drive forward with its buying spree of data networking companies, Lucent Technologies has reached an agreement to acquire Xedia Corporation, a privately held developer of high-performance Internet access routers for wide area networks based in Acton, Mass, for 3.86 million shares of common stock. Based on Lucent’s closing share price on Thursday, August 12, the transaction would be worth approximately $246 million. Lucent expects the deal to be completed in the quarter ending December 31, 1999. The merger, which will account for as a pooling of interests, is expected to be neutral to earnings in fiscal 2000. Xedia’s customer base includes MCI WorldCom’s UUNET, PSINet, Concentric Network and Sprint. In addition, the company has well-developed relationships with Westcon, Verio and Copper Mountain.
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Raychem Shareholders Approve Acquisition by Tyco
On Friday, August 13, Raychem Corp’s shareholders gave their approval of Tyco’s acquisition of the company. Raychem, with annual revenues of approximately $1.8 billion, is an international designer, manufacturer and distributor of high-performance electronic products for OEM businesses and a broad range of specialized telecommunications, energy and industrial applications. Under the terms of the merger agreement, shareholders Raychem will receive cash, a fraction of a Tyco common share, or a combination of cash and a fraction of a Tyco common share, for each share of Raychem common stock. A total of approximately $1.435 billion in cash and 16.1 million Tyco shares will be issued as consideration.
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BRAZIL
Telefonica SA to Release First Half Earnings for Telesp Participacoes
Telefonica SA will release first-half earnings for its Sao Paulo State fixed telephony holding Telesp Participacoes SA and Cia Riograndense Telecoms. Earnings for Telefonica’s cellular operators Tele Sudeste Celular and Tele Leste Celular are scheduled for Monday, August 16.
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EUROPE
British Telecom and France Telecom Form Separate Joint Consortiums to Bid for Czech Republic’s Third GSM License
British Telecommunications and France Telecom have both formed separate consortiums to make a bid for the Czech Republic’s third GSM license. First, BT and Czech IT company Telekomunikanci Mantaze Praha are making a joint bid for the Czeh Republic’s third mobile phone license. BT said its share of the bid is 51 percent, while TMP’s share is 49 percent, giving the consortium’s total investment in the project at around 400 million stg. The license, which will be awarded for 18 million stg, requires the building of a national dual band system, allowing GSM 900 and 1800 phones to work over the same network. If granted the license, the consortium expects to roll out its service to 70 percent of the population by the end of 2000, with the possibility to increase that to 95 percent by the end of 2001. BT intends to expand into the Internet and multimedia sectors and into fixed line services following that sectors market liberalization in 2001. In the autumn the consortium will open an office in Prague. The Czech government is expected to announce the result of the license award in September. France Telecom has also set up an alliance with Czech media group Bonton to bid for the Czech Republic’s third GSM license. Bidding for the 900 and 1800 MHz license opened on July 21 and will close on Tuesday, with the winner to be announced by September 30.
Alcatel Wins EUR10 Million EU Provider Contract from MCI WorldCom
Alcatel has won a 10 million eur extension to an existing contract as the sole provider for MCI WorldCom installation unit MK International’s entire European cable and fiber optics networks. Currently, MCI WorldCom has networks in Germany, Benelux, France, Ireland, the UK Sweden and Switzerland. Alcatel has been MK International’s sole provider for two years.
Deutsche Bank Unit NetCologne to Launch Bid for Deutsche Telekom Regional Cable Network
Deutsche Bank AG unit DB Investor and private telecommunications operator NetCologne will make a joint bid for the Deutsche Telekom AG regional cable TV network in North Rhine Westphalia. If they are successful in winning the bid, the two companies will develop interactive services and high-speed Internet access on the network. DB Investor is bidding for all nine regional networks being sold by Deutsche Telekom.
Veba Denies Plans to Dismiss Alain Bandle from its Telecommunications Unit
In response to a recent report in Die Welt, Veba AG said it is not planning to dismiss the board of management’s member in charge of telecommunications Alain Bandle. According to the newspaper report, the step to dismiss Bandle was taken following continued difficulties at Veba’s telecommunications activities, which lead to the sale of its stake in Cable & Wireless PLC, it s decision to move out of the cable TV business as well as the sale of its Otelo Communications fixed telephone network operations to Mannesmann AG.
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INDIA
Delhi Court Dismisses TRAI Appeal
The Delhi High Court dismissed an application by the Telecom Regulatory Authority of India (TRAI) seeking to replace private telecom operators as appellant in the case where they had challenged an earlier order of the court curtailing jurisdiction of the regulatory body. TRAI filed the case to clarify its role and rationale as a regulatory authority.
Bharti Telecom Prepares to Expand Basic Telecommunications Services
Bharti Telecom is making efforts to expand basic services in north India and is planning to target several states in the region during the next round of bidding. On its list are Haryana, Punjab, Delhi, Uttar Pradesh (West), Rajasthan and even Andhra Pradesh and Karnataka from the south. It will not bid for weaker states like Orissa and Himachal Pradesh The company is waiting for the final recommendations of Telecom Regulatory Authority of India in the next round of bidding for cellular and basic circles slated later this year. The company has already commenced work and is setting up the required infrastructure in the region. Bharti Telenet, the basic service provider in Madhya Pradesh, has expanded its network in the state. It launched telephone services in Raipur and Jabalpur. Initially, 15,600 telephone lines will be offered in Raipur and 5,000 lines in Jabalpur.
Usha Martin to Offer Free Incoming Calls
Usha Martin Telecom, the cellular service provider for Calcutta, will not charge its subscribers for incoming calls from August 15 to December 15. This company is the first in India to offer this service to mobile customers. The Telecom Regulatory Authority of India had suggested free incoming calls to mobile subscribers in the New Telecom Policy, but the government had postponed this implementation to October this year. Usha Martin has continued to focus on enlarging its customer base even though it will face a revenue loss.
Iridium Reorganization Will Not Affect Indian Operations
Iridium India Telecom Ltd. assured its customers that there would be no interruption in Iridium's global service while Iridium LLC pursues a financial restructuring. Iridium India stated that this action would not affect Iridium's customers as the company continues to market and provide its services globally without interruption or diminution.
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INTERNET/E-COMMERCE
America Online and EMusic.com to Launch Joint Digital Music Accord
America Online will announce a joint venture with Emusic.com to supply AOL users with music for purchase and download over the Internet. This new three-year deal with EMusic, is AOL’s latest foray into the rapidly growing digital music sector. Under the terms of the agreement, Emusic will promote songs from its catalog of musicians users of AOL’s Spinner.com and Winamp music players, as well as the online provider’s ICQ chat service. The partnership is nonexclusive, allowing AOL to cut similar deals with other music sellers. At this time, however, no financial terms of the deal have been disclosed. EMusic will pay AOL a fixed marketing fee for the three years of the deal, plus a percentage of the transactions made through the service. Also, EMusic has agreed to sell warrants to AOL that will entitle the online provider to acquire a stake that amounts to about 10 percent of EMusic’s outstanding shares.
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SOUTH AMERICA
Foreign Investment in Chile Increased 110 Percent
New foreign investments in Chile totaled 6.521 billion in the first half of 1999, up 110.3 percent from 1998. Included in the total, 57.7 percent was from Spain and 26.9 percent from the US, with the main sectors targeted being electricity generation, gas, water, transport and telecommunications.
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