Headlines - October 22, 1999
TOP STORIES
ASIA PACIFIC
EARNINGS/ STOCKS
EUROPE
FIBER OPTICS
MERGERS/ACQUISITIONS
MEXICO TELECOM
TOP STORIES
FCC’s New Rural Area Phone Initiative Could Increase Long Distance Rates
As part of its effort to revamp the system in preparation for widespread competition in the local telephone markets, the Federal Communications Commission voted to increase the subsidies that help make phone service available for rural and other expensive areas. As part of the plan, the commission more than doubled the money available to the big telephone companies such as regional Bells and GTE that serve rural customers and others in high-cost markets to $437 million from $207 million. One drawback of the measure its that it is likely to increase long-distance bills for consumers, but it is not clear how much. The commission used a new formula to determine which states should be eligible for the money and how much they should get. However, the commission decided to protect states that already had been receiving subsidies for a transitional period. Once that period ends, the pool of money is expected to shrink.
Deutsche Telekom to Acquire MediaOne’s European Assets for US$2 Billion
In an effort to regain its strong presence in the European telecom market, Deutsche Telekom will acquire MediaOne Group.’s cellular phone assets in Poland, Hungary and Russia for $2 billion. This would be one of Eastern Europe’s largest takeover deals to date. With the sale, Telekom will gain access to MediaOne International’s 49 percent stake in Westel 450 and Westel 900, which together control about two-thirds of Hungary’s booming cellular phone market. In addition, it will gain the company’s 22.5 percent stake in Polska Telefonia Cyfrowa, and its controlling interest in the Russian Telecom Development Corp. Upon completion of the deal, Deutsche Telekom will expand its growing portfolio in Central and Eastern Europe. This will be the second deal that the company has done with MediaOne. Previously Deutsche Telekom acquired the assets of One2One from Cable and Wireless PLC for 13.97 billion. Yesterday MediaOne shareholders agreed to be acquired by AT&T for $58 billion.
Nortel Networks Wins US$100 Million Contract from Pangea 1 Cable Project in Northern Europe and Scandinavia
Pangea has awarded Nortel Networks a US$100 million contract to provide electronics supporting the 5,000 km terrestrial portion of the 6,000 km Pangea 1 cable project serving Northern Europe and Scandinavia. Under the terms of the contract, Nortel will provide ring and span switching, interfaces at the STM 1, 4 and 16 levels, open interface optical clear channels at the 2.5 and 10 Gbps levels along with bandwidth management of these services. Upon completion, Pangea 1 will connect the UK, Netherlands, Germany, Denmark, Norway, Sweden and Finland via submarine and terrestrial rings, with an initial capacity of up of 160 Gpbs.
ASIA PACIFIC
NTT to Reorganize Operations through Layoffs in Local Units
In the effort to reorganize its operations, NTT announced that it would cut jobs in its local units beginning next year. Under the plan, NTT will transfer some employees to its affiliates and not fill the position of people who retire. The company would not specify how many positions would be eliminated.
EARNINGS/ STOCKS
Tyco International Reports Increase in Fourth Quarter Earnings Per Share and Cash Flow
Tyco International Ltd. reported that diluted earnings per share before extraordinary item, for its fourth quarter ended September 30, were 92 cents per share, compared to last year’s 25 cents per share. Income before extraordinary item rose $782.7 million, compared to last year’s $207 million. Sales for the quarter rose 22 percent to $6.22 billion compared with last year’s $5.11 billion. Last year’s results have been restated to reflect the mergers with AMP Inc. and US Surgical, which were accounted for as pooling of interests, and are before acquisition and other non-recurring charges and an extraordinary item. Tyco’s merger with AMP was completed on April 2, 1999. For fiscal 1999, the results of the periods prior to the merger have been restated to include the results of AMP. Tyco originally reported fiscal 1998 revenue of $12.31 billion, earnings before extraordinary item of $1.18 billion and diluted earnings per share of $2.02.
Mannesmann Shares Fall After $33 Billion Bid for Orange PLC
Only a day after Mannesmann reached an agreement to acquire the UK’s Orange PLC for $33 billion, company shares took a sharp nosedive. Company stock went down in Frankfurt 9.5 percent, to 143.50 euros, or $155.27, even as Klaus Esser, the chief executive, argued at a recent news conference against comparing the price for Orange with the $11.1 billion paid by the rival Deutsche Telekom for One 2 One, the number 4 British wireless operator. The bid was supported by Orange’s principal shareholder Hutchinson Whampoa Ltd., which controls 44.8 percent of Orange stock. With the deal, Whampoa will become the largest single shareholder in Mannesmann, with 10 percent of the stock and a board seat.
Philips Electronics Beats Expectations as Quarter Profit Doubles
Royal Philips Electronics reported that its profit more than doubled during the third quarter, beating analysts’ expectations. Profit jumped to 374 million euros, or US$403 million, from 147 million. Philips said this turnaround was a result of growth in its consumer products unit, along with gains in its Asian investments, especially its $1.6 billion investment in a joint venture with LG Group of South Korea to manufacture flat-panel computer and television monitors.
Nokia’s Third Quarter Profit Soars 38 Percent
Nokia reported that its third quarter profit rose 38 percent as new models of its cellular phones outsold the competition. Net income rose more than expected to 638 million euros, from 464 million euros in 1998.
EUROPE
Telefonica and ACEA to Invest Eur$200 Million in Rome Telecommunications Joint Venture
Telefonica SA’s fully-owned Telefonica Intercontinental SA unit and Italy’s Azienda Comunale Energia e Ambiente-Roma will invest 200 million eur in a Rome-based telecom venture. The joint venture will offer complete telecommunications services in Rome and the Lazio of Italy and the first phase of infrastructure implementation will be finished in January, with service to begin in the first quarter of 2000. ACEA is Italy’s fourth municipal utility, with operations in water treatment and electricity for 3.2 million clients in Rome.
France Telecom to Invest $137 Million in El Salvador Operations
France Telecom will invest US$137 million in a modernization plan in El Salvador to be implemented at the end of 1999. The company, which runs 449,920 lines out of a capacity for 537,240, started its El Salvador operations in September after buying a 51 percent stake in state telecommunications company Antel for US$275 million.
Opta Orders KPN to Charge Interconnection Fees to End-Users
Netherland’s telecommunications regulator Opta has ordered that Royal KPN NV pass the interconnection fees KPN is charged by mobile operators on to end-users. Opta argued that the new measure would lead to greater cost transparency for customers. It ruled that KPN and Libertel NV are parties occupying a position of considerable power on the mobile telephony market defined as having market shares of more than 25 percent. Under the new rule, both companies must provide other parties that do not have access to a mobile telephone network with special access on reasonable terms.
France Telecom Affiliate NTL to Seek UK UMTS License
NTL, an affiliate of France Telecom, plans to make a bid one of the UK’s Universal Mobile telephone services licenses. The government plans to conduct an auction for the next-generation mobile phone licenses early next year, after plans to auction five such licenses this summer were delayed by charges at the Department of Trade and Industry and by legal difficulties that have now been overcome.
UPC will not pay too High a Price for Deutsche Telekom’s Cable Operations
In the latest development on the Deutsche Telekom cable television sale, UPC said the company would not pay too high a price for Telekom’s regional cable operations, if the price prevents UPC from meeting its ROE targets. On the possible conditions Deutsche Telekom may attach to any successful bid, an UPC spokesman said that Deutsche Telekom had said in the past that it would want to retain a 25 percent stake in each of its nine regional cable operations.
FIBER OPTICS
Sycamore Networks Inc. Expects to Raise $280 Million in Initial Public Offering
Sycamore Networks, Inc. today announced the initial public offering o its common stock on the NASDAQ National Market under the symbol "SCMR." The initial public offering price for the 7.475 million shares, including shares issued as a result of the underwriters’ exercise of their over-allotment option, was $38 per share. Sycamore Networks, Inc offered all of the shares. The offering was led by Morgan Stanley Dean Witter, and co-managed by Lehman Brothers, J.P. Morgan & Co. and Dain Rauscher Wessels, a division of Dain Rauscher Incorporated. A copy of the final prospectus may be obtained from the offices of Morgan Stanley Dean Witter, 1585 Broadway, New York, NY 10036. The Company anticipates using net proceeds from the offering for general corporate purposes, including working capital and capital expenditures, and the repayment of certain indebtedness.
Network Plus Purchases 9,000 Route Fiber Miles from Florida East Coast Telecom
Furthering its strategy to expand its growing customer base, Network Plus Corp. has signed a $19 million agreement with Florida East Coast Telecom, an Orlando-based subsidiary of Florida East Coast Industries, to acquire an additional 9,106 miles of fiber optic cable in the Southeastern United States. This move boosts the company’s total fiber capacity 500 percent, expanding Network Plus’ suite of telecommunications services to business customers in 15 markets from Atlanta, Georgia to Miami, FL. Under the agreement, Network Plus will gain access to two diverse fiber routes from Atlanta to Miami. In Georgia, the cities that will be connected include Atlanta, Marietta, Roswell and Norcross. In Florida, Network Plus service will be available in areas including Miami, Fort Lauderdale, Boca Raton, West Palm Beach, Pompano Beach, Boynton Beach, Delray Beach and Deerfield Beach. Currently, Network Plus has branch sales locations in Atlanta, Georgia, and Fort Lauderdale, Jacksonville, and Orlando, FL.
Chello Broadband NV Reports Unprecedented Growth
Chello broadband nv has unveiled a new subscriber numbers for September, with 80,000 broadband Internet access subscribers in 5 countries across Europe, in France, Belgium, Austria, Norway and the Netherlands. Since the company’s launch in March, chello has increased its subscriber base by 122 percent, from 36,000 to 80,000 and the growth over the last quarter alone is 52 percent. Subject to the closure of UPC’s recent acquisitions, the total number of homes passed by UPC systems is now approximately 9.0 million homes.
Bermuda Telephone Company Turns Up First Deployment of Advanced Fiber Communications Access Solutions
Bermuda Telephone Company has turned up its first deployment of AFC multi-service access systems in Hamilton, Bermuda. The company is using AFC’s UMC1000 products to meet the requirements of its growing customer base throughout the island. AFC’s cabinets support SONET ring configurations consisting of about 2500 POTS and EBS lines using a GR-303 interface to replace older copper infrastructure. The RSC/1440 line outdoor cabinets are deployed in nearby suburbs and indoor rack-mounted systems are deployed in downtown Hamilton.
MERGERS/ACQUISITIONS
Netmanage to Acquire Wall Data for $94 Million in Cash
Netmanage Inc., a maker of network software, plans to acquire its competitor Wall Data Inc. for $94 million in cash. Following news of the bid, the shares of Wall Data soared 47 percent, gaining $2.71875 each, to $8.46875 in Nasdaq trading. Shares of Netmanage rose 43.25 cents, to $2.40623. Both companies will work to develop software that connect personal computers and work stations to larger servers and mainframe computers.
MEXICO TELECOM
Bell Atlantic, Motorola and Telefonica de Espana to Help Neuvo Group Iusacell Compete Against Telmex
To bolster competition in the Mexican telecommunications market, Bell Atlantic and Motorola and Telefonica de Espana are in talks with Nuevo Grupo Iusacell to help it compete against Telmex’s dominance in the Mexican telecom marketplace. Telefonica is looking to purchase four cellular companies in the affluent north of Mexico that are part or wholly owned by Motorola. If such a deal goes through, the company would combine these properties with Iusacell. With that in mind, Telefonica would get a stake in Iusacell, which would continue to be managed by Bell Atlantic, who owns a 40 percent stake in the company.
"Today in Telecom" is a publication of Information Gatekeepers Inc. ©1999. 214 Harvard Ave, Boston, MA 02134; Tel: 617-232-3111; Fax: 617-734-8562
Headlines - October 21, 1999
TOP STORIES
ADSL
BRAZIL
CABLE OPTICS
CHINA
EARNINGS/STOCKS
EMERGING MARKETS (UTILITIES IN TELECOM)
EUROPE
FIBER OPTICS
TOP STORIES
Congress Will Not Allow Baby Bells to Realign Accounting Standards
The House and Senate negotiators rejected a request from the Baby Bell phone companies to charge a set of detailed accounting requirements following an intensive lobbying campaign that set the Bells against almost every big player in the phone business. The Bell companies argue that federal standards impose an unfair burden and cost them $270 million a year. Long-distance carriers and consumer groups argue that the change would hinder competition and cost consumers billions of dollars in higher phone rates. The bill, which was passed yesterday, requires the FCC to see whether changes can be made to accounting rules to help the Bells without affecting the agency’s ability to set communications policy. Currently, the Bell companies, which have a monopoly of their markets, must keep financial records that conform to uniform accounting standards set by the federal government.
Bell Atlantic and Level 3 Communications Reach Common Ground over Reciprocal Compensation
Bell Atlantic and Level 3 Communications have finally ended a fierce battle over reciprocal compensation, payments paid between telephone companies for calls their customers make, including calls to dial up and surf the Internet, through new interconnection agreements in eight East Coast states and the District of Columbia. The three-year agreements apply in Massachusetts, New York, New Jersey, Pennsylvania, Maryland, Virginia, New Hampshire, Rhode Island and the District of Columbia. Rates paid by one company to the other will be reduced from eight tenths of a cent for each minute to three-tenths of a cent for 1999, and to just above one-tenth of a cent after 2000. The agreements apply retroactively to February 1999, settling previously disputed charges between the companies. Bell Atlantic and Level 3 Communications will construct more trunks over the next nine months to increase the capacity of their networks to pass calls over each other. In addition, the companies will increase the number of points at which their network connect by establishing interconnection points in each of the geographic areas served by Level 3.
IBM ‘s Stock Falls on Report of Low Revenue Gain
International Business Machines Corp. reported only a 5.2 percent revenue gain for the third quarter and warned earnings weakness through the end of the year. As a result of this news, company shares fell $7 in after-hours trading to $100 after closing in composite New York Exchange trading at $107, down 12.5 cents. Prior to the release of IBM’s earnings, the shares had risen $6.1875 to $112.75 in regular Big Board trading. One of the elements that contributed to low sales, the company argues was a result of customers concerns over potential Y2K computer problems. These concerns prompted the computer company to report that fourth quarter profit would be 15-20 cents a share below the same period in 1998.
Mannesmann to Acquire Orange PLC for $33 Billion
Furthering its effort to expand into the European telecommunications market, Mannesmann AG has reached an agreement to acquire Orange PLC for $33 billion, in stock and cash. The company said it would pay L16.29 for each Orange share, with L6.40 coming in cash and the rest of Mannesmann shares, a 21.6 percent premium to Orange’s closing share price on Monday, prior to the acquisition talks. With Orange, Mannesmann will gain a strong presence in three of Europe’s cellular markets, which could rival even wireless giant Vodafone Airtouch.
ADSL
Interspeed and Nomadix Launch New High-Speed ADSL Internet Access Service
Interspeed Inc. and Nomadix, Inc., a provider of broadband access and management systems, jointly reported successful interoperability and compatibility testing of Nomadix’ Universal Subscriber Gateway and the Interspeed 500. The Universal Subscriber gateway line consists of three products: the USG, USG for Hotels and USG for Multiple Dwelling Units (MDU). These products are tailored for the specific needs of the ISP, Hotel and MDU respectively. Nomadix’ Universal Subscriber Gateway (USG) is a new broadband hardware device that enables ISPs to seamlessly tap into the consumer broadband market. Nomadix will debut the USG family at the largest ISP tradeshow - ISPcon - in San Jose on October 26 in booth #2284.
BRAZIL
Anatel Approves Telefonica Celular and Americel Call Charge Increase
Anatel has authorized Americel SA and Telefonica Celular SA to raise their cellular call charges between 7.57 percent and 9.99 percent. Telefonica Celular was authorized to raise prices by 7.57 percent in the former Telecomunicacoes Brasilieras SA’s Band-A cellular telephony concession area 3, by 9.99 percent in area 6 and 9.97 percent in area 9. Telefonica Cellular operates Telerj Celular SA and Telest Celular SA in area 3, CRT Celular Participacoes SA in area 6 and Telebahia Celular SA and Telergripe Celular SA in area 9. Americel was authorized to raise prices 9.99 percent in its area 7 of the competitor Band-B digital cellular telephony market.
CABLE OPTICS
MediaOne Shareholders to Make Vote on AT&T’s Offer
Shareholders of MediaOne are set to make a vote on AT&T’s proposed $58 billion acquisition offer. In May, was successful in overriding Comcast Corp.’s bid for the company. Under the terms of the agreement, MediaOne shareholders were slated to receive 0.95 a share of AT&T stock as well as cash for a total value of $85 a share. The long-distance company offered MediaOne shareowners a collar to protect them against a 10 percent drop in AT&T stock to $51.30 a share.
Cox Communications Makes Entry into Business Telephone Market
Business customers in Orange County, Ca will soon have a new choice of phone service as Cox Communications rolls out local and long distance telephone services designed for business users. Specifically, Cox claims that business customers will save about 10-15 over regional Bell Company telephone services. Telephone services will be available to businesses from Newport Beach to San Clemente in a phased approach.
CHINA
China Telecom, China Unicom and Ministry of Information Industry Officials Will Deliver Keynote Addresses at China Telecom 2000 Conference, Nov. 2-3, 1999 in San Francisco
Top telecommunications officials from China Telecom, China Unicom and China's Ministry of Information Industry will deliver keynote addresses at the China Telecom 2000 - Conference on Chinese Internet and Broadband Markets, Hyatt at Fisherman's Wharf in San Francisco from November 2-3, 1999.
Mr. Chang Xiaobing, the Deputy Director General of the Telecommunications Bureau, Ministry of Information Industry of China will deliver the opening keynote address, on the current Internet development in China, government policies and challenges.
Mr. Li Xiaoming, Deputy Director General, Department of Data Communications of China Unicom will be the second keynote speaker. China Unicom is the second operator in China providing fixed, mobile, paging, VoIP, Internet and other value-added services. Mr. Li will speak on the future plans for the development of China Unicom's IP telephone and data communication networks and services. Mr. Lin Zhenhui, Deputy General Manager of Guangdong Mobile Communications Corp., China Telecom and former Deputy Director, Multimedia Communications Division, China Telecom will be the third keynote speaker. China Telecom is the dominant operator in China with the majority of market share in all service sectors. Mr. Lin will speak on China Telecom's VoIP deployment and future plans.
The aim of the conference is to provide an opportunity for foreign telecom and Internet companies to learn about the fastest-growing dynamic Chinese Internet and telecom markets and to explore business opportunities.
For additional information contact: Corey Hollister, Director of Events, IGI, Tel: 1-800-323-1088, or 1-617-232-3111, Fax: 1-617-734-8562, E-mail: corey@igigroup.com. You can view the conference program on IGI's Web: www.igigroup.com.
EARNINGS/STOCKS
Bell Atlantic, BellSouth and Sprint Meet Third Quarter Profit Estimates
Bell Atlantic and BellSouth, two of the nation’s largest local phone companies, reported a rise in third quarter profit, matching estimates with strong increases in sales of data, Internet and wireless services. Sprint, which had recently agreed to be acquired by MCI WorldCom, reported that profit fell 13 percent, in line with estimates, as losses widened at Global One joint venture and a new high-speed phone and data network. Shares of Bell Atlantic fell 12.5 cents, to $63.8125, while BellSouth rose 93.75 cents to $43.9375. And Sprint rose $1.125, to $64.9375.
America Online Exceeds Third Quarter Expectations and Acquires 5 Percent Stake in Gateway Inc.
Looking to expand its presence in the personal computer market, America Online capitalized on a better-than-expected earnings report by reaching a deal to invest $800 million in Gateway Inc., gaining a 5 percent stake in the personal computer maker. The investment, which will be made over a two-year period, will be paid in part with $180 million in America Online stock. In return, Gateway will offer America Online membership to new PC customers. Although there are several agreements that bundle America Online’s service with their new computers, this deal goes much further. Under the terms of the agreement, Gateway will move the 600,000 subscribers of its own subscribers of its own Internet access service, Gateway.net, to the AmericaOnline, who will then handle all network operations, billing and customer service functions.
EMERGING MARKETS (UTILITIES IN TELECOM)
UTC Fiber Rates Study finds that Telecom Competition is Not Significantly Decreasing High Capacity Retail Rates
The retail rates for high-capacity services are not decreasing, despite increasing competition. In some cases, they actually appear to be increasing. These are the preliminary results of a new United Telecom Council (UTC) fiber rates study. The syndicated research project, which examines the deployment of fiber networks in the United States, is designed to provide data useful to utility and pipeline companies, as well as their technology partners, that are evaluating business opportunities in the telecom markets. It examines the rates of long haul fiber-based services, dark fiber and rights-of-way in the United States. The 1999 study will also look at pricing trends that are occurring in the industry by comparing the results to those of UTC’s "1997 Market Rates of Fiber-Based Telecom Services in the U.S." study. The research is being conducted for UTC by KMI Corporation and includes interviews with local and long haul carriers, utilities who have entered the telecom market, as well as state and Federal government agencies. The research is still continuing and the final report is slated to be presented November 16 immediately following UTC’s Utilities Telecom Summit in Rancho Mirage, CA.
Utility Technology & Business Group’s UTECH '99 World Expo & Conference to Examine New Opportunities in Utility Business
Unprecedented opportunity is rocking the utility industry. Deregulation is coming, and convergence has already arrived. The lines that once stood between the electric, telecommunications, gas and water industries have all but disappeared. And as these industry segments become more and more interconnected, utility professionals must seek out the latest information about not only their own industry segment, but about each of the constantly evolving utility industries. UTECH ’99 is designed to focus on the critical business and technology issues that will drive the worldwide utility business ahead to the next millennium and beyond. Scheduled for November 15-17, 1999 in Philadelphia, Pennsylvania at the Philadelphia Marriott Hotel, UTECH refines and redefines the shape of today’s utility environment.
EUROPE
Telecom Italia Board to Approve Sitri Disposal
Telecom Italia SpA’s board of directors will meet to approve the disposal of Sitri SpA through the sale of its network construction businesses and the partial spin-off of the company’s property assets. The company said the board is in favor of the payment by Sitri of an extraordinary dividend worth about 920 billion lire.
Concert Venture Reports Positive Sales for First Year Operations
Concert, the joint venture between AT&T Corp. and British Telecommunications PLC, will have sales of about $10 billion during its first year of operations, BT chairman Peter Bonfield said on the sidelines of the Systems 99 technology conference in Munich, Germany. Following the Federal Communications Commission proper approval, the company will begin operations.
Mannesmann to Launch Bid for Swiss Cablecom
As it continues to flex its telecom takeover muscle, Mannesmann has entered the US$3 billion auction for Cablecom Holding of Switzerland. Other bidders in the auction include UK cable operator NTL Inc., UPN and US private equity group Blackstone. Cablecom’s shareholders are Swisscom AG, Siemens AG and Veba AG with one third each.
UPC to issue 1.0 Billion in Debt Securities
United Pan-European Communications plans to privately offer about US$1 billion in the equivalent of senior notes and senior discount notes. The proceeds from the issue will be used for general corporate purposes and to finance future acquisitions and other investments.
FIBER OPTICS
Alcatel Wins US$84 Million Contract for North Sea Links of the Pangea 1 Cable Project
Pangea Ltd. has awarded a contract valued at $84 million to Alcatel for the 957 km (595 mile) North Sea portion of the 6,000 km (3,720 mile) Pangea 1 cable project serving Northern Europe and Scandinavia, according to Joseph J. Kapusinsky, Pangea’s Senior Vice President, Engineering and Operations. The contract calls for two cables and related transmission equipment, one linking the U.K., and Denmark, and the other linking the U.K. and the Netherlands, Mr. Kapusinsky said. The system supports Pangea’s self-healing ring configuration that will serve the U.K., Netherlands, Germany, Denmark, Norway, Sweden and Finland beginning in the 4th quarter of 2000. "The fully funded Pangea 1 system will operate at an initial capacity of 160 Gpbs, Mr. Kapusinsky said. "Served cities include London, Amsterdam, Dusseldorf, Hamburg, Copenhagen, Malmo, Stockholm, Goteborg, Helsinki and Oslo."
International Fibercom Awarded $35 Million in New Contracts
International FiberCom Inc.’s Infrastructure Division was recently awarded new contract totaling more than $35 million. Services to be provided are expected to commence within 30 days and include the engineering and installation of fiber network segments and turnkey development of city-wide telecommunications networks for such major companies as AT&T Local Services, Next Link Communications, Comcast Communications and Cox Communications. These contracts are in addition to the recently announced contract to provide AT&T Broadband and Internet Services design and build services for the upgrade of more than 1000 miles in Oakland.
Level 3 International to Deploy Corning LEAF Optical Fiber in European Optical Ring Network
Level 3 International, a subsidiary of Level 3 Communications, Inc., will deploy upwards of 600,000 kilometers of Corning LEAF optical fiber in the first fiber installment of its advanced European high data rate network. Corning Cables, Corning Inc.’s European cabling division, will cable the total volume of LEAF fiber being supplied to the network. The initial phase of Level 3's European network will consist of two main fiber-optic rings. The first, which will be approximately 2,900 kilometers in length, will span London, Paris, Frankfurt, Amsterdam and Brussels. The second ring, which is projected to be about 2,600 kilometers long, will run through Berlin, Cologne, Dusseldorf, Frankfurt, Hamburg, Munich and Stuttgart. This contract follows a 1998 Corning announcement that Level 3 Communications Inc. would deploy over two million kilometers of Corning's LEAF fiber in its US nationwide network.
"Today in Telecom" is a publication of Information Gatekeepers Inc. ©1999. 214 Harvard Ave, Boston, MA 02134; Tel: 617-232-3111; Fax: 617-734-8562
Headlines - October 20, 1999
TOP STORIES
EARNINGS/STOCKS
EMERGING MARKETS (HOME NETWORKS)
EUROPE
INTERNET/E-COMMERCE
MEXICO
SOUTH AMERICA
WIRELESS
TOP STORIES
Mannesmann Makes Bid to Acquire Orange PLC for US$30 Billion
In what could be one of largest telecommunications takeovers in the world, and second largest in Europe after Olivetti SpA successful hostile takeover of Telecom Italia in Many, Mannesmann has made bid to acquire UK’s Orange PLC for US$30 billion in cash and stock. If the deal is successful, Mannesmann would be united with Orange, Bristol, England, giving the two mobile phone operators a strong presence in Germany, Italy, and the UK and total subscriber base of more than 10 million subscribers. It is predicted that the deal could spur on a telecommunications takeover wave as European phone companies make the effort to expand their size. Following France Telecom’s bid to acquire Germany’s E-Plus, former monopoly Deutsche Telekom said it would soon launch a deal to boost its presence in France.
Sprint Advances Broadband Content Strategy with Florida Launch, Addition of Two New Providers
Sprint today announced additional agreements with broadband content providers, furthering Sprint's strategy to deliver rich multimedia content and services to customers of Sprint's High Speed DSL service. Sprint's newest partners include ChannelSEEK and Orlando Sentinel Communications (OSC) and its sister company, Orlando Sentinel Interactive (OSI), the providers of www.orlandosentinel.com. The newest content partnership debut with today's rollout of Sprint High Speed DSL services in the Orlando, Fla., market. Sprint also offers its content-enriched High Speed DSL service in Charlottesville, Va., and Las Vegas, Nev. Sprint is continuing to work with other national and local content providers to deliver even more broadband applications that enable customers to take full advantage of their investment in DSL. Through a strategic agreement with Orlando Sentinel Communications, customers will be able to access Central Florida news, sports, weather, entertainment, dining and business information directly through a broadband window on their EarthLink Sprint Personal Start Page.
EARNINGS/STOCKS
Tellabs Reports Best Third Quarter in Company History
Tellabs Inc. reported that third quarter earnings for 1999 are the best in the company’s history. Sales for the third quarter, ended October 1, were $594,505,000, the highest for any quarter in the company’s history and up 38.8 percent from sales of $428,387,000 in the third quarter of 1998. These marks the 33rd consecutive quarter in which Tellabs’ sales surpassed prior-year levels. Sales for the first nine months of 1999 were $1,604,556,000, up 35.6 percent from sales of $1,182,877,000 in 1998.
ST Microelectronics Net Income Rises 33 Percent
As a result of efficiency gains and the recovery of the semiconductor industry, Franco-Italian chipmaker ST Microelectronics posted a 33 percent rise in net income for the third quarter. During the period the company earned $135.3 million, from $101.6 million in 1998. Revenue rose 22.6 percent to $1.3 billion. It has boosted its production scheme by increasing chip-making capacity in its factories in Rousset, France and Agrate, Italy.
Microsoft ‘s Third Quarter Profit Rises 33 Percent on Increased PC Shipments
Microsoft Corp. is feeling the benefits of increased personal computer shipments and demand for its software and services as its fiscal first quarter profit rose 30 percent, beating estimates. Company earnings rose to $2.19 billion, or 40 cents a share in the quarter ended September 30, from $1.68 billion, or 31 cents a share, in 1998, and revenue rose to $5.38 billion from $4.19 billion, beating forecasts of $5.2 billion. It is estimated that PC shipments will rise 25 percent this quarter from 1998, up from previous estimates of 19 percent.
Texas Instruments’ Earnings More than Double for Second Straight Quarter
Fueled by strong demand for its communications chips, Texas Instruments reported a positive second straight quarter as earnings more than doubled. Profit from operations rose to $337 million or 42 cents a share, from $164 million, or 21 cents in 1998. Revenue rose 13 percent to $2.39 billion from $2.11 billion. Analysts predicted that profit would reach 43 cents a share, including acquisition expenses.
Dell Computer Shares Drop 6.7 Percent on Rise of PC Chip Prices
As a result of rising chip prices for personal computers cutting into its fiscal third quarter, Dell Computer shares fell 6.7 percent. The stock fell 2 3/4 to 38 9/16 in trading of 80.6 million shares, making it’s the most active in US trading. Yesterday’s drop was the company’s largest since May 19. It is expected that profit will be cut by at least 2 cents a share. Prior to the warning, the average forecast was for earnings of 20 cents. In September, memory prices rose 30 percent after an earthquake disrupted manufacturing in Taiwan, where many computer parts are made.
EMERGING MARKETS (HOME NETWORKS)
3Com Introduces Fast Home Networking Technology for Multiple Computers
As the home networking market begins to gain steam, 3Com has begun shipping a fast home networking technology that will allow multiple users to connect to multiple computers over existing copper phone lines. HomeConnect Home Network Phoneline kits will enable users to share printers and files over both analog and digital phone lines at a rate it claims is 10 times faster than those offered by current home networking products. Through a joint alliance with Intel, 3Com plans to introduce a 10 Megabit home networking product by the end of this year. It worked with Microsoft Corp. to create the software for the product, which will be bundled with the second edition of Microsoft’s Windows98 software. The kits will be sold in stores through Dell Computer Corp. for $150 and supplementary kit to connect additional computers for $80 by early November.
EUROPE
Telecom Italia’s Tin.it Reaches 1 Million Internet Subscribers
Telecom Italia SpA reported that its Tin.it Internet service provider has over 1 million subscribers, representing an increase of 255 percent compared to the same data last year. It expects to have a total of 2 million Internet subscribers by the end of 1999. Italy’s Internet market is predicted to reach 9 percent by the end of the year compared to 4 percent at the end of 1998.
France Telecom Transfers Panafon Stake to France Telecom SA
France Telecom has transferred its 20 percent stake in Greek mobile phone operator Panafon to France Telecom from France Telecom Mobiles International, in order to be able to sell the holding more easily. The change does not constitute a shareholding structure change.
Warsaw Court Approves Vivendi and Elektrim Joint Telecom Venture
Vivendi’s telecommunications joint venture with Poland’s Elektrim Telekomunikacja has been approved by Warsaw’s regional court. The tribunal also rejected an attempt by Deutsche Telekom AG, which jointly owns with Elektrim the Era GSM network operator Polska Telefonica Cyfrowa, to block the transfer of Elektrim’s 51 percent stake in PTC to Elektrim Telekomuikacja. Vivendi is expected to take a 30 percent stake in the venture, with Elektrim holding the remaining 70 percent, while Vivendi’s in the venture is expected to rise to US$750 million.
Belgian Telecommunications Minister Plans Four 3rd Generation Mobile Licenses
Telecommunications minister Rik Daems is considering the award by the end of 2000 of four licenses for the third generation of mobile communication services. The four licenses would be put out to tender next spring and would likely go to the three present GSM operators plus a possible fourth challenger. The three existing mobile operators are Belgacom SA’s Proximus service, France Telecom’s Mobistar SA, and KPN Orange. Still, the ministry is in the process finalizing the exact number of licenses, how existing operators would finance their investment, national roaming, and the siting of aerials to meet environmental concerns.
INTERNET/E-COMMERCE
IBM turns to the Web to Boost Personal Computer Sales
Personal computer customers soon will have to go the web if they want to buy a computer from IBM. After Christmas, IBM will sell its Aptiva line of consumer desktop computers only on the Web. However, the company will continue to sell its Thinkpad laptops in retail stores, and will continue to sell corporate computers, one of its largest customer segments, through dealers and directly from the company. This new initiative is an effort to regain its stance that has been taken over by competitors such as Dell Computer and Gateway, who directly sell their computers to customers. IBM’s PC division lost $1billion in 1998 and $240 million in the first half of this year.
Williams Communications Expands IP Offering with Dedicated Internet Access Williams Communications Group. will expand its IP offering with a new dedicated Internet access at bandwidth options of T-1 and T-3. Dedicated Internet access is the first product in a planned suite of private label Internet transport services Williams Communications will be rolling out for its wholesale customers to market to their end-users. In January, Williams made its reentry into the IP transport market with the launch of ISP Transit services on its nationwide fiber optic network. The company’s Internet strategy is to deliver a suite of Internet services by combining traditional wholesale products such as high bandwidth peering and transit, with a full-service for carriers under their own brands. Potential customers of William Communications’ IP network services include ISPs, resellers, network service provider, ILECs, CLECs, International Post Telephone and Telegraph administrations and other operators.who require T-1 or higher connectivity to the Internet for their end-users.
Entrade Inc. to Acquire Nationwide Auction for $50 Million
In an effort to expand its online services, Entrade Inc., an Internet commerce and auction company has reached an agreement to acquire the closely held Nationwide Auction Systems for approximately $50 million in cash and stock. Nationwide Auction, based in City of Industry, CA, is the nation’s largest volume public auction company that sells surplus property like vehicles and construction equipment from municipalities, law enforcement agencies, corporations and utility companies. It currently has 250,000 registered bidders.
MEXICO
Telmex and Microsoft to Launch Joint Latin American Internet Portal Venture
Telmex and Microsoft Corp. have signed a joint venture to create and operate a Spanish language Internet portal in Latin America, which will combine Telmex’s infrastructure in the region and Microsoft’s content and services, such as Hotmail free email service. Although neither company would not disclose the details of the venture’s size, Telmex and Microsoft will jointly own the venture. It will have offices in Argentina, Chile, Colombia, Central America, Mexico, the US and Venezuela. Separately, America Online and the Cisneros Group plan to launch a similar local Internet access service in Latin America later this year while Yahoo has introduced regional portals in Mexico and Brazil.
SOUTH AMERICA
BellSouth Receives Approval to Offer Fixed-Line Telephony
BellSouth is continuing to expand its focus on the Latin American telecommunications market as it and other American telecommunications companies have been granted permission to provide fixed-line local, long-distance and international telephony services. According to a recent statement by Argentina’s telecommunications ministry, BellSouth heads the Cia de Telfona del Plata consortium, which was cleared to offer the services along with Cia de telecommunications Integrales, led by CTI.
WIRELESS
Motorola Upgrades Speed of PalmPilot Chips
Motorola Inc. has upgraded the speed of its DragonBall microprocessors, which are used in 3Com Corp. unit Palm Computing Inc.’s PalmPilots and other handheld devices. The company’s semiconductor products segment will begin shipping 33 MHz version of its DragonBall processor in January.
"Today in Telecom" is a publication of Information Gatekeepers Inc. ©1999. 214 Harvard Ave, Boston, MA 02134; Tel: 617-232-3111; Fax: 617-734-8562
Headlines - October 19, 1999
TOP STORIES
ADSL
ASIA PACIFIC
CONFERENCES
EARNINGS/STOCKS
EUROPE
INDIA
TOP STORIES
SBC Steps up ADSL Deployment Plans to Compete with AT&T’s Cable Television Internet Access Initiative
To propel itself in the lead over AT&T’s effort to offer high-speed Internet access, SBC Communications launched a $6 billion program to transform the company over the next three years by increasing the speed of its DSL services. Its aim to make DSL access available to nearly all its customers and create a platform to deliver broadband powered services. The initiative called ‘Project Pronto’ is the first of many planned by SBC. One of the main elements of the program is to provide an estimated 77 million people, including about 80 percent of its Ameritech, Nevada Bell, Pacific Bell, SNET and Southwestern Bell customers, with upgraded voice, data and video services via DSL by the end of 2002. AT&T has spent billions of dollars to use cable television lines to deliver local and long-distance telephone service, video programming and high-speed Internet access to consumers through its acquisition of Telecommunications and MediaOne Group.
France Telecom Acquires Majority Stake in E-Plus for US$9.05 Billion
France Telecom’s attack on former partner Deutsche Telekom, who had a falling out last May when the former German monopoly launched a failed bid to save Telecom Italia from the clutches of Olivetti, has reached an agreement to acquire E-Plus, Germany’s number three phone company, for $9.05 billion. It will acquire the 60 percent stake in E-Plus from RWE AG and Veba AG, to German utility companies. Deutsche Telekom is trying to keep its number two ranking after Mannesmann AG stole the top spot two years ago.
Nortel Networks to Acquire Clarify Inc. for $2.1 Billion in Stock
Nortel Networks Corp. has reached an agreement to acquire Clairfy Inc., a software company that specializes in products for electronic business, for $2.1 billion in stock. Under the terms of the agreement, Nortel will exchange 1.3 shares for each Clarify share and stock option. The swap values Clarify at $68.09 a share, 50 percent more than today’s close. Upon completion of the deal, Nortel plans to use Clarify to add electronic business services to its roster.
Bell Atlantic and Rudin Management Join Forces to Wire Manhattan Office Buildings
A new trend in the telecommunications business is on the horizon between carriers and real estate companies. Today, Rudin Management and Bell Atlantic launched a joint initiative to upgrade its telecommunications network in venerable buildings owned by Rudin and occupied by some of the world’s largest and most influential finance, technology, entertainment and media companies. Bell Atlantic is upgrading its communications systems in 14 Rudin buildings to improve overall network reliability. As part of the overall upgrade, Bell Atlantic will install fiber in all of its buildings. In addition, the two companies will install advanced communications technology at the new Reuters building currently under construction at 3 Times Square.
ADSL
RC Networks and Globelink Sign Agreement to Deploy DSL Technology in China
RC Networks Inc., a provider of high-speed Internet access products for the multi-tenant unit (MTU) market, have secured a multi-year distribution agreement with Globelink LLC, an international telecommunications services company, based in San Diego. Under terms of the agreement, RC Networks will provide its RC8000 line of products to Globelink, which will handle the marketing, sales, installation and technical support of these products in China. RC Networks will continue to manage product development and manufacturing of the RC8000. The potential value of the agreement is more than $15 million, with a first order shipping in November. Globelink, which has affiliates in five major Chinese markets, will sell the access concentrator products to various ISPs and telecom carriers in that country who have recognized the competitive advantage of providing DSL services. The RC8000 products were recently showcased at the China Hi-Tech Fair held in Shenzhen from October 5-10.
PairGain Continues Successful G.Lite Interoperability Testing
PairGain Technologies Inc. has successfully completed multi-vendor G.Lite interoperability tests with several companies, including: Analog Devices; Aware Inc.; Centillium Communications; Conexant Systems; Globespan, and Integrated Telecom Express. Recent interoperability testing included full rate ADSL and G.Lite configurations. PairGain’s Avidia System integrated DSL access switch demonstrated interoperability with CPE prototypes from each company, while PairGain’s Megabit Modems demonstrated compatibility with central office prototypes. In addition, PairGain achieved interoperability with Lucent Technologies Microelectronics Group’s client modem chip set solution in June of this year and with CO and CPE evaluation modules from Texas Instruments last January.
ASIA PACIFIC
MCI WorldCom and Mori Building to Construct Fiber Optic Network in Central Tokyo
MCI WorldCom has reached an agreement with Mori Building Co. Ltd. to build a high-capacity fiber optic network in central Tokyo in a joint investment totaling about 10 billion yen. Under the terms of the agreement, MCI WorldCom’s wholly owned unit MCI WorldCom Japan will provide high-speed telecommunications networks for 10 buildings owned by Mori Building in January 2000. Upon completion of the network, tenants will have access to a wide range of telecommunications services including Internet and phone service.
CONFERENCES
2nd Annual Fibre Channel Technologies Conference and Expo to Promote Industry Awareness at Crown Plaza Hotel in San Jose, CA, USA, November 2-4
The Fibre Channel Technologies Conference (FCTC) and Expo announced that its FCTC99 Conference will take place at the Crown Plaza Hotel in San Jose, CA, USA, November 2 through 4, 1999. FCTC99 is entirely devoted to Fibre Channel technologies. It targets video, graphic and mass data transfer applications. Its goals are to provide an up-to-date industry view of the state of fibre channel solutions and technology, to provide better understanding of user requirements and needs, and address how to determine what needs to be done to address future needs and applications. Lead conference sponsors are Computer Technology Review, Storage Inc., and Storage Management Solutions; co-sponsors are Business Solutions, Mass Storage News, Performance Computing, and Server/Workstation Expert; corporate sponsors are Legato Systems and Mercury Computer Systems. Some of the exhibitors will include such companies as ADIC, Ancor Communications, Ancot, Ark Research, Asahi Glass Company, ATTO Technology, Seagate Software and Hewlett Packard to name just a few.
EARNINGS/STOCKS
Xerox’s Third Quarter Profit Plummets 11 Percent
Following its warning that its third quarter profit would be less than desired, Xerox’s net income fell 11 percent, to $339 million, or 47 cents a diluted share, compared with $381 million, or 47 cents a share in 1998. Until the company’s warning on October 8, analysts had expected third quarter earnings to be 58 cents a share. Company revenue was flat, rising to just $4.63 billion from $4.61 billion. And the company offered no resolution to turn the ship around. During a analyst conference call yesterday, Xerox’s chief executive Richard Thoman, and its chief financial officer, Barry D. Romeril, reported that fourth quarter results would be 20 percent less than those in the quarter a year earlier and that the first half of 2000 does not look good either. In response to this rather gloomy outlook, analysts, who had already lowered their fourth quarter estimates to 82 cents a share from 92 cents, were prompted to lower their estimates to less than 70 cents a share.
EUROPE
Marconi Wins L32 Million WDM Contract from Telecom Italia
Only a week after it unveiled its new tunable laser technology at the Telecom ’99 trade fair in Geneva, Marconi has been awarded a L32 million WDM contract from Telecom Italia to supply to core transmission equipment for a new, high-bandwidth trunk network serving the entire country. This is the first phase of three-year agreement, which is likely to be worth up to L100 million to Marconi. Upon completion of the project, Telecom Italia will increase its bandwidth capacity along 10,000 km of existing fiber optic cable by using Marconi’s latest generation of SDH and WDM technologies. Current transmission speeds of 2.5 Gbps on most of the existing national network will be boosted by a factor of 10, to 25 Gbps. On main trunk routes between cities and business centers, it may be increased by 40 times, to 100 Gbps.
KPN Expects to Launch IPO Before End of Year, but Won’t Sell Stake in Infonet
Royal KPN expects to sell its shares in its joint KPN Qwest joint venture, KPNQwest before the end of the year. An initial public offering of shares with listing in New York and Amsterdam will most likely take place this year. Also, a portion of the KPNQwest shares offered will be reserved for KPN, Qwest and KPNQwest employees. Separately, the company said it would not sell its 18.7 percent stake in Infonet Services Corp. in Infonet’s upcoming initial public offering. According to an Infonet filing with the US Securities and Exchange Commission, the company paid 40 million and 1,600 "B" shares in total to KPN, Telia AB and Swisscom AG for access to their international clients. Telia and Swisscom also each hold 18.7 percent of Infonet. Further, Infonet has an option until 2002 to acquire the current assets of AT&T-Unisource Communication Services, the failed joint venture of Telia, Swisscom, KPN and AT&T.
Telecom Italia, Tecnost and Olivetti Sharply Lower on Renewed Selling
Telecosdm Italia SpA, Tecnost SpA and Olivetti SpA extended morning losses on renewed selling, as US investors entered the market. At 1:46 PM, yesterday, Telecom Italia was down 0.28 eur or 3.33 percent at 8.14 at 2.00. The Mibtel fell 131 points or 0.55 percent to 23,705. A dealer at a major Milanese brokerage said the new wave of selling is due to US traders coming on the market.
KPN and OTE Enter Talks with Cable & Wireless to Acquire 49 Percent Stake in Bulgaria’s Mobikom
Royal KPN and its Greek partner Hellenic Telecommunications SA are in talks with Cable & Wireless PLC to acquire the company’s stake in the Bulgarian mobile operator Mobikom. Yesterday, the Bulgarian government approved of KPN and OTE’s purchase of a 51 percent stake in Mobikom. In addition to the Mobikom stake, KPN and OTE will acquire 51 percent of Bulgarian Telecommunications Co and the second Bulgarian GSM license for a total price of US$510 million and an additional investment of US$200 million over the next three years in the networks. Under the agreement between KPN and OTE, KPN will hold 60 percent of the new GSM license and 20 percent of the fixed network at BTC.
INDIA
Arya Communications to Introduce Global Positioning System
Arya Communications & Electronics Services Ltd. is planning to introduce vehicle tracking systems using global positioning system (GPS) and mobile radio trunking. The vehicle tracking systems have already been launched in Delhi on a trial basis and will be brought to Mumbai and Chennai shortly.
TRAI Asks for Expanded Powers
The Telecom Regulatory Authority of India (TRAI) will approach the new government for changes in the TRAI Act, in order to provide more teeth to it. If the government is keen to strengthen TRAI, it will have to ensure that the regulator's role as a dispute settlement and recommendatory authority between the licensor and the licensee is restored, a TRAI official said. According to legal opinion, TRAI's role as an 'arbitrator' is not in conformity with the TRAI Act. And as of now, it has been reduced to nothing more than a tariff-wetting authority.
Telecom Sector Nearly Y2K Compliant
The telecom sector in the country is now very close to achieving full Y2K compliance. In the Department of Telecommunications (DoT), all 25,681 local switching, 386 trunk, 26 transmission systems and other systems like satellite, public data networks, intelligent network, network management, telex are already Y2K ready. The implementation action is under progress in the remaining 103 switching (C-DOT) systems and 56 computer application systems. Videsh Sanchar Nigam Ltd., has carried out Y2K compliance implementation in 4 international gateway exchanges, 1 telex exchange, 8 Internet servers and claims all other systems are Y2K compliant. Other state-owned companies, namely, Mahanagar Nigam Ltd., TCIL, ITI and HTL are already Y2K compliant. Among 106 private telecom operators, 72 have reported Y2K compliance, the remaining 34 are expected to become Y2K compliant by month end.
Note: Due to technical difficulties beyond our control, the transmission of yesterday's Today in Telecom was delayed until this morning. We have since fixed the problem, and we apologize for any inconvenience this may have caused you. I am happy to say that the service has reached its one year anniversary, and will continue to grow with new features as time goes on. So, please spread the word about the service, which it seems to me from the responses I have been receiving, you all have been.
Thanks,
Sean Buckley
Managing Editor Today in Telecom
"Today in Telecom" is a publication of Information Gatekeepers Inc. @1999. 214 Harvard Ave, Boston, MA 02134; Tel: 617-232-3111; Fax: 617-734-8562
Headlines - October 18, 1999
TOP STORIES
ATM BROADBAND
EARNINGS/STOCKS
EUROPE
INDIA
INTERNET/E-COMMERCE
MARKET INTELLIGENCE
MERGERS/ACQUISITIONS
SOUTH AMERICA
UTILTIES
TOP STORIES
Winstar Wins $98 Million Contract to Provide Broadband Package to Cignal Global Communications
Winstar Communications Inc. has been awarded a multi-year $98 million contract from Cignal Global Communications, Inc., an enhanced service provider offering a wide range of global value-added services. Winstar is providing Cignal with a complete communications package that includes local and intercity end-to-end broadband capacity; high-speed Internet access; network design and equipment; and Web hosting. Cignal will utilize this combination of services as a platform to rapidly build enhanced IP and ATM services for its customers. Additionally, Winstar and Cignal will jointly develop next-generation media distribution services for Web content players and ISPs on a global basis. Planned services will feature the ubiquity and functionality of IP with the manageability and QoS of ATM as well as advanced IP protocols.
Global Crossing to Deploy Pirelli’s Open Architecture DWDM System in North American Segment
Global Crossing will deploy Pirelli’s DWDM system on Global Crossing’s North American Crossing network, constituting one of the largest deployments of DWDM technology in North America. North American Crossing, formerly the Frontier Optronics Network, spans 20,000 miles from coast to coast and connects 120 of the country’s largest markets. The Pirelli system enables the carrier to carry out a range of network business strategies, running multiple data rates across the optical system for SONET, ATM, frame relay, and Internet Protocol. It is capable of transmission at both OC-48 and OC-192 levels and is compatible with a number of fiber types such as non-zero dispersion-shifted fiber, dispersion shifted fiber and conventional single-mode fiber. The North American Crossing features Pirelli’s WaveMux DWDM platform with Hitachi AMN 5192 SONET OC-192 terminals, a result of successful interoperability testing in May.
ATM BROADBAND
ADC's Cellworx STN Purchased by Advanced Systems Technology Inc. for US Army ATM Virtual Path Ring Network
Advanced Systems Technology will deploy ADC’s Cellworx STN in a US Army base's fiber optic network. The initial $2 million order, for an eight node Cellworx ring and systems integration services, will satisfy the Army's requirement to develop a connectivity approach that would maximize the current fiber optic network. The Cellworx STN will be used as the Army's survivable backbone for real-time broadcast digital video, virtual private network LAN services, and T1 services. ADC's AccessPoint will be used in the network as the digital video access device. The AccessPoint will provide MPEG-2 compression of the analog video feeds with direct access to the Cellworx ATM backbone for distribution and routing. Future enhancements include distributed video multicasting as well as native digital video transport.
EARNINGS/STOCKS
Nextel Reports Positive Third Quarter Results
Nextel Communications Inc. reported its financial results for the third quarter of 1999, including a record 528,500 quarterly global digital subscriber additions, continued strength in domestic monthly average revenue per subscriber of approximately $74, and a 61% increase in consolidated operating cash flow to $175 million as compared to $109 million in the second quarter of 1999. Domestic operating cash flow increased 30 times to $210 million as compared with last year's third quarter operating cash flow of $7 million and was 36 percent greater than second quarter's domestic operating cash flow of $155 million. Nextel added approximately 458,000 domestic digital net subscribers during the third quarter, for a total of approximately 4,050,900 domestic digital subscriber units in service at September 30, 1999. This represents a 68 percent increase over the 2,417,400 domestic digital subscribers in the third quarter of 1998. The domestic monthly average digital churn rate for the third quarter remained at approximately 2 percent. International operations added approximately 70,500 proportionate digital subscribers during the third quarter, based upon ownership interests, ending the quarter with approximately 319,200 proportionate subscribers. Total digital subscribers for Nextel International and its affiliates in all managed and minority interest operations surpassed the one-millionth subscriber threshold at 1,011,200 as of September 30, 1999. On a global basis, Nextel added approximately 528,500 digital proportionate subscribers, ending the third quarter with approximately 4,370,100 global digital proportionate subscriber units in service.
EUROPE
Deutsche Telekom Offered 35 Billion DM for Cable Network by Foreign Bidders
Since it announced that it would sell of its cable television assets, Deutsche Telekom has been offered approximately 35 billion DM the networks. Following the first round of the bidding process, a number of US telecom companies were prepared to bid aggressively for parts of the cable network in order to enter the German telecom market. Their bids were substantially higher than bids from other German telecommunications companies Mannesmann AG and Viag. According to those close to the situation, the emergence of foreign bidders creates a political dilemma because foreign network operators would hold a significant part of the German telecommunications infrastructure. Last week, Deutsche Telekom invited nine consortia to proceed to the next round of bidding. Among those companies are US Group Callahan, US/UK cable network operator UPC, UK cable TV operator NTL, News Corp., Microsoft Corp. and Deutsche Bank AG’s DB Investor.
Softbank Makes Strategic Investment in Internet-Based Service Provider Cognotec
Japanese Internet company Softbank Corp has made a US$20 million strategic investment to gain a 10 percent interest in leading e-commerce solutions provider Cognotec. Softbank is the largest shareholder in Yahoo! and E*Trade. Its decision to invest in Cognotec is powerful endorsement of Softbank's belief that Cognotec's Internet technology-based trading service, AutoDeal LITE, is the trading model of the future for the global foreign exchange market. More than twenty banks have already made the decision to use the Cognotec AutoDeal LITE service, which was recently launched, to enhance their E-commerce trading abilities. Softbank is already a partner with Cognotec in FOREXBANK, a joint venture launched earlier this year, which distributes Cognotec's internet trading service to Japanese and Korean banks and other financial institutions. The investment by Softbank comes in the wake of a significant investment by Warburg, Pincus & Co, the leading global investor in technology companies,
in 1998.
British Telecom’s Cellnet Unit Signs Wireless Supply Agreement with Nortel Networks
BT Cellnet will distribute the Nortel Networks PicoNode in-building GSM solution throughout the UK under terms of a multi-million dollar supply agreement, the first-ever between the two companies for wireless equipment. The Nortel Networks PicoNode solution provides corporate users a single mobile phone for calls inside and outside the corporate environment, enabling true fixed/mobile convergence for increased productivity and efficiency. BT Cellnet has announced a new corporate mobile telephony service called Mobile Extension InSite that will be based on the Nortel Networks PicoNode. The Nortel Networks PicoNode incorporates a base transceiver station, a base station controller and a mobile switching center into a single cabinet slightly larger than a personal computer. It provides GSM call switching, near landline-quality voice service and integrated PBX features in a compact package suitable for corporate environments.
Proxima Systems Launches Mystral Billing System in Europe and the United Kingdom
Proxima Systems Ltd. has launched its Mystral billing system to meet the needs of multiple service operators in the UK and Europe. Mystral represents the first product to market resulting from Proxima's ongoing research and development project code-named ProMedia. Unlike other 'convergent' customer management and billing products which are modifications of legacy architectures originally intended for a single business line, Mystral is built from the ground up using object-oriented technology to support multiple combinations of telephony, cable and Internet products and services. Mystral features an open customer-centric architecture within a flexible modular approach that enables telecommunications operators to adapt the software to their current or future business processes, improve customer service, and expand business lines in order to remain competitive. The software is year-2000 compliant and available in a single internationally localized version with dynamic support for multiple European languages and currencies, as well as local formats, laws and regulations.
INDIA
DoT Permits Phone Registration Charges Discounts
In order to match discounts offered by private operators, the Department of Telecommunications (DoT) has approved a new measure that will reduce the price of registration charges for new basic telephone connections. The registration charges have been cut drastically from INR 3000 up to INR 500. The DoT has empowered the chief general managers of the telecom circles to fix the levels in their areas. They have also been given the permission to offer higher commissions to the domestic long-distance public phone booths.
Communications Minister, Ram Vilas Paswan Makes Push to Bring Telecom Services to Villages
Communications minister, Ram Vilas Paswan, who took charge with the new government coming into force, said his focus would be on expanding telecom and postal facilities in rural and remote areas. Cyber cafes and Internet facilities would be soon set up in rural areas and small towns all over the country. All villages would be covered through reliable transmission media by 2002. Meanwhile, the Department of Telecommunications assured the private community that the New Telecom Policy would be put up before the Cabinet shortly.
Federation of Indian Chambers of Commerce & Industry Urges for More Powers to TRAI
The Federation of Indian Chambers of Commerce & Industry (Ficci), an industrial body, warned that a majority of foreign players may decide against paying license fees unless the Telecom Regulatory Authority of India (TRAI) was given the same powers as the Insurance Regulatory Authority of India. Ficci president Sudhir Jalan, during its meeting with the Prime Minister, had sought amendments to the TRAI Act. Jalan warned that the continuous wrangle between TRAI and state-owned Mahanagar Telephone Nigam Ltd. was clearly dissuading foreign investors, with its patience running out.
Telstra V-Comm May Invest in Two Internet Firms
Telstra V-Comm is eyeing investments in two Internet protocol solution providers. The company is a joint venture between Videsh Sanchar Nigam Ltd. Telstra, and Infrastructure Leasing and Financial Services. One company is learnt to be in Pune, while the other is located at Bangalore.
Tata Consultancy Services in Talks with ISPs
Tata Consultancy Services is negotiating with ISPs in India, offering them itsinteractive TV technology that would enable subscribers to use their monitors as televisions. TCS would license the ISPs to use the software as a value-added service for its subscribers, who could use this for both the video facility and for viewing the on-line data.
INTERNET/E-COMMERCE
E*TRADE Expands Relationship in Germany to Capitalize on Market's Growing Online Investing Opportunities
E*TRADE Group Inc. is expanding its current licensing agreement in Germany with the creation of a new joint venture that will capitalize on that market's strong growth opportunities in electronic personal financial services. E*TRADE will retain major control in the new joint venture -- E*TRADE Germany AG -- which will include Berliner Effektenbank AG and New York Broker Germany AG. Terms of the transaction were not disclosed.
National 'Head Start' Selects Global Crossing for Dedicated Internet
Global Crossing Ltd. announced that the Virginia-based National Head Start Association (NHSA) has selected Global Crossing to offer dedicated Internet, local and long distance telephone services. Under the agreement Global Crossing will offer data communication services to interconnect the more than 2,000 NHSA centers nationwide. Under the agreement, Global Crossing is donating approximately 1,000 refurbished computers that will be set up in Head Start classrooms across the country. Those computers will provide access to Global Crossing's PriorityConnect dedicated Internet service which offers unsurpassed network speed, scalability and reliability through the company's 20,000 miles of fiber optic cable that connects more than 120 major U.S. cities. This North American Crossing includes a Cisco-powered Internet Protocol (IP) network operating at OC-48 (2.5 Gbps) and will facilitate increased connectivity and data-transfer capabilities between the hundreds of Head Start centers across the country.
NetAid Web Site Generates Over 40 Million Web Hits During Initial Launch
Cisco Systems Inc. reported that the Internet broadcast of the NetAid concerts in Geneva, London and New Jersey on October 9, 1999 set a new world record for the largest Internet broadcast event for a single day. More than 2.4 million streams of the NetAid concerts were seen on www.netaid.org. The concerts served as the kick-off for NetAid, a long-term initiative developed by Cisco and the United Nations Development Program to help eradicate extreme poverty. The event marked a key milestone when more than one thousand philanthropic organizations signed up on the web site to become part of the ongoing NetAid project.
MARKET INTELLIGENCE
IDC Predicts Corporate eLearning Market Will Reach $7.1 Billion by 2002
The corporate training market is experiencing explosive growth, and in particular the corporate elearning market has grown rapidly over its short life span. International Data Corporation (IDC) predicts the corporate elearning market will surpass $7.1 billion by 2002. The IT workforce shortage is a key factor in the increased need for corporate training. There is a current shortage of more than 1 million IT workers worldwide. "The number of openings in Europe for IT workers is projected to exceed 1 million in 2002. In the United States, over 722,000 positions will be opened in 1999 and almost 850,000 in 2002," according to H. Michael Boyd, Ph.D., manager for IDC's Resourcing Strategies research program.
MERGERS/ACQUISITIONS
Lucent Technologies and INS Complete Merger to Form Global Network Consulting and Professional Services
Creating the most comprehensive services portfolio in communications networking, Lucent Technologies has completed its merger with International Network Services. With the addition of INS, Lucent now has a force of 5,500 experienced service professionals specializing in communications consulting, intelligent maintenance and management solutions for next generation networks. On Friday, October 15, INS shareowners approved the merger with more than 99 percent of the votes cast in favor of the transaction. Under terms of the agreement, each share of INS will be converted into 0.8473 shares of Lucent. In the last three months, INS has added 113 new clients and signed on more than 300 new employees as it prepared to join Lucent. The new NetCare Professional Services organization, joins Lucent NetCare people across the company to serve more than 10,000 enterprise and service provider clients in more than 90 countries worldwide.
Tyco Registration Statement Declared Effective by SEC
Tyco International Ltd. and AFC Cable Systems, Inc. on Friday, October 15, the Securities and Exchange Commission notified Tyco that the registration statement for Tyco's acquisition of AFC was declared effective. The date for the AFC shareholder vote has been set for November 22, 1999. Under the terms of the merger agreement, AFC shareholders will receive a fraction of a Tyco share worth $45.00. The fraction will be determined by dividing $45.00 by the average of the volume weighted average prices of Tyco shares on the New York Stock Exchange for the five consecutive trading days beginning on November 10, 1999 and ending on November 16, 1999, subject to the provisions of the merger agreement.
SOUTH AMERICA
Lineo Inc. Penetrates Latin America’s Residential Internet Market
Lineo Inc. announced that Embrowser, Lineo's embedded micro Web browser, and DR DOS, one of Lineo's embedded operating system platforms, have been selected for Multicode's iMigo, a Latin American-bound Internet set-top device that provides browsing and e-mail over televisions. Lineo's embedded browser and embedded OS provide Multicode with a software solution that is easy to customize and far less expensive than alternative solutions. End users of Multicode's iMigo will be able to connect their homes to the Internet for a fraction of the cost of a full desktop system, allowing a much larger number of Latin Americans to benefit from the information and communication vehicles on the Internet. Multicode's iMigo is scheduled to begin shipping as early as January 2000. The base price of the iMigo to ISPs will be US$199. Multicode's business models calls for ISPs to resell the product for US$120, subsidizing the difference with ongoing ISP connection contracts. Multicode's iMigo will be available in both Spanish and English.
UTILTIES
Lucent's Kenan Systems Introduces Arbor/Energy Billing and Customer Care Solution for Utilities and Energy Service Providers
Lucent Technologies’ Kenan Systems has introduced its new Arbor/Energy solution for billing, customer care, order management and customer analysis for utilities and energy service providers worldwide. Kenan Systems also announced an industry alliance program, managed by its new Energy and Utilities Business Unit, which provides the industry focus and expertise required by utilities and energy service providers. Kenan Systems' Arbor/Energy solution combines multi-service capabilities and a scalable, product-centric architecture to deliver strategic flexibility, rapid time to market and increasing value over time. The Arbor/Energy Solution is designed as a multi-service solution to handle gas, electric, water, value-added services, and optionally voice and data communications.
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