Headline - October 29, 1999
TOP STORIES
ADSL
BRAZIL
EMERGING MARKETS (GIGABIT ETHERNET)
EUROPE
FIBER OPTICS
MEXICO TELECOM
SUBMARINE FIBER OPTICS
WIRELESS PCS
TOP STORIES
Arizona Consumers Council Argue FCC Ruling Does Not Address Rural Areas
The Arizona Consumers Council argues that Federal Communications Commission has left rural consumers behind by failing to support funding that ensures rural America receives the telecommunications services it needs. " The Universal Service Fund was created to offset the expense of providing telephone service to high-cost areas, which includes huge areas of the Southwest," said ACC President Al Sterman." But times have changed. This is the Internet economy. That is why Congress has said that rural consumers must be guaranteed the same basic telecommunications services as urban Americans, and today that means more than just plain old telephone service. But the FCC is not doing its share to make that happen.
Tyco Submarine Systems Launches ‘SEASHORE South America’ Maintenance Program
Tyco Submarine Systems Ltd. America Maintenance Program, has introduced SEASHORE South America is a continuation of the private maintenance programs that TSSL began to offer with the recent announcement of SEASHORE Atlantic. The global SEASHORE Maintenance Programs are being rolled out in response to the expressed maintenance needs of the marketplace. In related news, Telefonica Internationale SA signed a US$125 million, five-year agreement for SEASHORE South America maintenance SAM-I. Sam-I is an undersea fiber optic network that rings all of South America and is currently being installed by TSSL for Telefonica. TSSL previously announced an equity investment in the Sam-I system. By contracting with TSSL for this five-year maintenance program, Telefonica is the first South American cable system owner to participate in SEASHORE South America.
Ameritech Completes Digital Migration of Telephone Networks in Ohio
With the cutover this week of a new telephone switching station in the Cleveland suburb of Rocky River and activation earlier this month of a new switch in Columbus, Ameritech’s call routing network in Ohio is 100 percent digital. As part of its 1994 Advantage Ohio program, Ameritech committed to upgrade its telecommunications network in Ohio to all digital switching before the year 2000. Besides the all-digital switching network, Ameritech also has invested in thousands of miles of fiber optic cable and technology to enhance the quality of voice and data communications. Advanced call processing equipment will replace analog equipment and will handle existing customer phone lines in Columbus and Cleveland. The new digital switch in Columbus was installed on October 16, while the Cleveland area switch will go into service in Rocky River on October 30.
ADSL
Turnstone and Sunrise Telecom Introduces Automated, Two-Ended DSL Service Testing
Turnstone Systems announced today that the Copper CrossConnect CX100 local loop management platform will be interoperable with SunSet xDSL hand-held test sets from Sunrise Telecom Inc., of San Jose, California. By enabling automated, two-ended wideband testing for the first time, Turnstone and Sunrise Telecom will make DSL service deployment and maintenance more cost-, labor- and time-efficient. With this new protocol, developed jointly by the two companies, service providers will be able to perform many advanced diagnostics completely from the customer premise that previously also required visits to the CO. The Copper CrossConnect CX100 and the Sunrise Telecom solution will automatically detect and communicate with each other, reducing the need for field technicians to coordinate in real time with Network Operations Center (NOC) personnel to perform advanced tests.
NorthPoint Communications Unveils DSL Network Expansion Plans
NorthPoint Communications plans to extend its national DSL network to more than 50 percent of all businesses and nearly 45 percent of all homes in the United States by the end of 2000. The company plans to expand its network to serve subscribers in 32 new markets, increasing its presence to a total of 60 major metropolitan areas and 110 MSAs. Upon completion of the network build, NorthPoint’s DSL network will pass 80 percent of all businesses and 75 percent of homes in the markets it serves.
BRAZIL
MCI’s Embratel Profit Jumps 16.4 Percent during the Third Quarter
South America continues to be a profitable market for MCI WorldCom as net revenues for its Embratel unit increase 16.4 percent in the third quarter to R$1.280 million from 1998. Revenues from national long distance telephone business was almost unchanged from a year earlier at R$233 million, but increased 3.2 percent from the second quarter. And revenues from international long distance telephone business was almost unchanged from a year earlier at R$233 million, but increased 3.2 percent from the second quarter. After showing a net loss of R$69 million in the first quarter of 1999 and a net profit of 77.4 million R in the second quarter, the net profit in the nine months to September totalled R$218.106 million.
EMERGING MARKETS (GIGABIT ETHERNET)
Brtitish Telecom Demonstrates Gigabit Ethernet Over DWDM
British Telecom recently demonstrated one of the first Gigabit Ethernet links running over DWDM equipment on its LEAnet IP testbed network. The network link operates between BT’s advanced communications and technology center at Adastral Park, Martlessham, and Cambridge. BT will be making the link available for experimental purposes to major technology players in Cambridge, including members of the Cambridge Network and the University. Testing on the link began in July 1999. It uses Lucent’s WaveStar OLS 80 Gpbs DWDM and Gigabit Ethernet optical transponder units. DWDM nodes are located at Adastral Park and Cambridge, allowing the connection of a pair of gigabit routers over the 170-km link. The current link speed being deployed is 1.25 Gpbs, giving 10 Gbps of useful native Ethernet per channel on the DWDM system, providing a total of useful data speed for the single fiber strand of 16 Gbps.
EUROPE
Ericsson Wins Internet Network Contract from Netia
Ericsson has won a strategic contract to provide Netia with a countrywide IP service production network, under which Ericsson will supply all the components for a complete Internet service production network, under which Ericsson will supply all the components for a full-figured Internet service network. Ericson’s local subsidiary, Ericsson Sp.zoo will provide the system in cooperation with local software producers.
Deutsche Telekom’s Net Income Falls 19 Percent as Result of Low Profit Margins in Fixed Net Business
As a result of 19 percent drop in net profits in its fixed net business, Deutsche Telekom to 1.25 billion eur. Sales in the period declined by 3 percent to 25.5 billion eur. The previous year’s figure includes 250 million eur resulting from billing services for its competitors which are no longer recorded as sales, which was considerably less pronounced that in the first half of this year.
Terra Networks Share Offer to be Priced Between 10-11 Eur Per Share
Telefonica SA’s indicative price range for the initial public offering of its Terra Networks SA Internet unit is 10.12-11.81 eur per share. The price range values the unit at 2.833 billion to 3.306 billion eur, and will be placed on the Madrid and Nasdaq stock exchanges.
France Telecom’s Wanadoo to Reach 1 Million Subscriber Target by the End of Year
France Telecom’s ISP, Wanadoo, currently has 950,000 subscribers, compared with 500,000 at the end of 1998, and is on track to meet its target of 1 million subscribers by the end of the year. Wanadoo currently services 38 percent of the French market for ISPs. In addition, the company launched a new rate structure for Internet customers, which will combine the charge for telephony costs and the charge for access to the Internet. Under the new plan, three hours of Internet communication will cost 39 ffr per month, 10 hours will cost 99 ffr, and 18 hours will cost 159 ffr.
TVN Seeks TKP’s Stake of Canal+ Polska
Stakes in Canals+’s Polska service and its Polish digital bundle program Cyfra+, both held by Telewizyjna Korporacja Partycypacyja, are being sought by private television station TVN through talks with TVP. Private television station Polsat is also in talks to acquire a stake. TKP’s cumulative losses this year amount to US$100 million, and it is heavily investing in Cyfra+ to face competition from United Pan Europe Communications NV’s Wizja TV.
FIBER OPTICS
Splitrock to Deploy Nortel Networks’ Optical Networking Equipment in Network Expansion
Splitrock Services Inc. plans to deploy $129 million worth in dial access and optical networking equipment made by Nortel Networks. The integration of this equipment is part of a major network expansion that is taking place over the next 18 months. The expansion will more than quadruple the capacity of Splitrock's nationwide broadband network and position the company to meet the growing demands for value-added services in the new Internet economy. Splitrock's buildup, which is already underway, is planned for completion in the first quarter of 2001. It is implementing a new high-capacity fiber backbone through acquiring long-term rights to use approximately 15,000 route miles and up to 16 dark fiber strands from Level 3 Communications. The integration of Nortel Networks' CVX 1800 dial access switches and OPTera LH high-capacity backbone networking equipment represents strategic equipment acquisitions in this phase of its broadband network expansion.
MEXICO TELECOM
TELMEX Completes Acquisition of Cellular Communications of Puerto Rico
Telmex has completed its acquisition of Cellular Communications of Puerto Rico along with SBC Communications Inc. and have received approval by regulatory agencies to complete this acquisition. Both companies will have a 50 percent stake in the company. Cellular Communications of Puerto Rico is a major wireless provider in Puerto Rico and the US Virgin Islands with more than 375,000 customers. The company will continue operating under the Cellular One brand and SBC will handle day-to-day operations.
SUBMARINE FIBER OPTICS
VIA NET.WORKS to Gain Access to 3,000 Km of iaxis’ Pan European Network
VIA NET.WORKS has signed an agreement with iaxis to gain access to the first phase of iaxisenroute, which spans 3,000 km and encompasses London, Paris, Strasbourg, Frankfurt, Dusseldorf, Amsterdam, Rotterdam, Antwerp and Brussels. VIA also plans to take capacity on second and third phases of iaxisenroute as they go live, expanding VIA’s network reach an additional 5,000 km throughout Europe. VIA owns and operates locally managed ISPs throughout Europe and Latin America.
WIRELESS PCS
Triton PCS Prices Initial Public Offering at $18 Per Share
Triton PCS Holdings Inc. has priced its initial public offering of 10,000,000 shares of Class A common stock at $18 per share. The shares will commence trading tomorrow on the Nasdaq National Market under the symbol TPCS. Triton PCS, a member of the AT&T wireless services Inc. network of affiliates, is building and operating a digital wireless network in a licensed area covering 13 million people in Virginia, North Carolina, South Carolina, northern Georgia and northeastern Tennessee.
"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
Headline - October 28, 1999
TOP STORIES
COMPUTERS
EUROPE
FIBER OPTICS
MERGERS/ACQUISITIONS
SOUTH AMERICA
TOP STORIES
SBC and Global Crossing Make Strong Showing in Third Quarter
SBC Communication and Global Crossing have both exceeded expectations for the third quarter. SBC contributed the strong showing to a growth in data, wireless and international services. The baby bell, which completed its acquisition of Ameritech Corp. on October 8, earned $1.1 billion, or 33 cents a diluted share. Profit was down from $1.9 billion or 58 cents a share in 1998. Revenue for the newly combined company increased 9.4 percent to $12.5 billion from $114.4 billion. Global Crossing posted a smaller, but expected third-quarter loss as revenue rose 7.5 percent, following acquisitions of Frontier Corp. and Global Marine Systems. Third quarter loss for the Bermuda-based submarine fiber optic network developer reported third quarter proforma loss was $34.1 million cents a share, compared with $11.7 million or 2 cents a share in 1998.
Hewlett Packard’s Stock Falls 12 Percent on Concerns over Slower Sales and Low Profit Forecasts
In the wake of a poor earnings report for the fourth quarter, Hewlett Packard’s stock plummeted 12 percent today. On October 1, the company intimated that sales growth may be slow but still expected to meet earnings projections. On the New York Stock Exchange, Hewlett Packard shares fell $9.625, or 12.6 percent, to close at $67. Since July, company shares have fallen 41 percent from a record $118.4375 in July gaining just 3 percent so far in 1999. In its October warning, Hewlett Packard announced its fourth quarter revenue would fall at the lower end of the estimates as a result of slow sales of its Unix servers and the disruption of its parts supply pipeline following the Taiwan earthquake. Newly appointed chief executive, Carly Fiorina blamed much of the blame on the company’s North American sales force.
China Netcom Could Make Competition in China’s Telecom Market a Reality
In what may be a precursor to real competition in China’s telecommunications market, which has been dominated by state-owned China Telecom, China Netcom, will begin operations today. China Netcom, which was formed by several government agencies earlier this year as a competitor to state-owned China Telecom Corp. As part of its initial service rollout, the company will begin selling prepaid phone cards today in Beijing, Shanghai and Guangzhou. The cards, which will cost between $6 and $60, use Internet protocol technology to provide long-distance phone service via the Internet. This is not the first company formed to rival China Telecom. Previously, several government industries set up China United Telecommunications Corp., or Unicom. However, Unicom was held back by management conflicts and government intervention, gaining only 5 percent of China’s mobile phone market and almost none of its fixed-line market. There are a few things that China Netcom has in its favor, First, the company has the support from four government agencies. Second, it will be headed by a well-known Internet entrepreneur who has been given a free reign to run the company, And, third, it will bypass traditional fixed-line and mobile network by providing voice network over a fiber optic backbone connecting 15 cities.
COMPUTERS
Oracle’s New Computer Company to Rival Microsoft’s Dominance Over the Personal Computer Software Market
In the effort to break Microsoft’s dominance in the personal computer software business, Oracle Corp. plans to launch a company that will sell $199 network computers using the Linux operating system, Netscape Navigator Web browser and an Intel microprocessor. The company is likely to sell its share in an initial public stock offering, but would not give a specific timetable.
EUROPE
Eastern European GSM Operator Awards Expansion Contract to Nortel Networks
PTK Centertel has awarded a US$11 million expansion contract to Nortel Networks to prepare for dual band GSM 900/1800 operation. PTK Centertel was awarded a GSM 900 license in July. Nortel Networks will supply, install and commission radio base station equipment, including S8000 base transceiver stations, in Krakow, Katowice, Wroclaw and Poznan. The dual band 900/1800 network is expected to be in service by March 2000. This latest award, combined with an original equipment and services agreement from September 1997, brings PTK Centertel's three-year investment in Nortel Networks wireless infrastructure equipment to more than US$ 60 million.
Motorola Acquires Olicom’s Stake in Digianswer
Motorola has acquired Olicom’s majority stake in Digianswer, a Danish high-tech start-up. Financial details of the deal were not announced. Digianswer is one of the major forces behind Bluetooth wireless technology and a supplier of technology and products for local wireless communication between telephony equipment, computers and other electronic devices.
Analyst Predicts KPN Investors will Benefit from KPNQwest IPO
Royal KPN investors benefit from the initial public offering of KPN Qwest, as KPN will create a value of almost 3 billion eur for its shareholders through the IPO, according to analyst Henk van de Meent of De Nationale Investeringsbank. The venture has implied a valuation of around 8.5 billion eur. As a result of KPN’s anticipation of 350 million in revenues for the company’s first year of operation, and annual growth of 40 percent, the joint venture is valued quite aggressively. Further, the listing of KPN Qwest will give KPN valuable experience in how investors perceive KPN’s subdivisions and participation.
Pirelli Still Undecided on Sitri Acquisition
Pirelli SpA chairman Marco Tronchetti Provera said the company has not yet decided whether or not to acquire Sitri SpA. Sitri is controlled by Telecom Italia whose board gave a mandate last week to its chairman and chief executive officer Roberto Colannino to proceed with the sale of the with the sale of the industrial activities of Sitri.
FIBER OPTICS
StorageNetworks to Purchase $96 Million in Dark Fiber Capacity from Metromedia Fiber Network
As it continues to expand its global data storage network, StorageNetworks has signed a 20-year, $96 million, fiber lease agreement with Metromedia Fiber Network. Under the terms of the agreement, MFN will provide StorageNetworks with access to its dark fiber optic worldwide infrastructure. StorageNetworks’ StoragePOPs offer customers access to unlimited data storage capacity and capabilities. With StorageNetworks’ service, customers can simply plug their server into a jack in the wall and have immediate access to its Global Data Storage Network.
MERGERS/ACQUISITIONS
Tyco International to Acquire Praegitizer Industries Inc. for $72 Million
Tyco International Ltd. and Praegetizer Industries Inc. have entered into a definitive merger agreement under which Tyco will acquire, for cash, all of the outstanding common shares of Praegitzer at a price of $5.50 a share. Under the terms of the agreement, a subsidiary of Tyco will shortly commence a tender offer to purchase all of Praegitzer’s 13,129,751 shares of common stock for $5.50 per share in cash, for a total of $72 million. A merger in which each of the remaining shares of Praegitzer will be exchanged for $5.50 in cash will follow the tender offer.
Exodus Communications to Acquire Service Metrics for $280 Million in Stock
In an effort to step up its effort to examine the performance of its Web sites through its data centers, Exodus Communications has reached an agreement to acquire Service Metrics for $280 million in stock. Service Metrics, based in Boulder, CO, will become a subsidiary of Exodus. Exodus, which has data centers that run Internet sites for large companies, will add Service Metrics’ 60 employees to its 1,200 employees.
Micron Electronics to Acquire Web Hosting Provider Lightrealm Inc.
One week after introducing "Subscription Computing" and citing Web hosting as a core business, Micron Electronics Inc. announced a non-binding letter of intent to acquire Lightrealm, Inc., a Kirkland, Washington-based Web hosting and Internet access company. With the completion of this acquisition, Micron Electronics will rank as one of the top five Web hosting providers in the United States, based on number of paid accounts. Once the transaction is consummated, Micron Electronics, through a wholly owned subsidiary, will acquire all of the outstanding stock of Lightrealm in exchange for an undisclosed amount of cash. The transaction is subject to execution of a definitive agreement and approval by Micron's Board of Directors. A definitive agreement is expected by December 1, 1999.
SOUTH AMERICA
BellSouth Wins Wireless License to Operate in Guatemala
A consortium led by BellSouth has submitted the winning bid at auction for a license to provide wireless communications service to Guatemala. BellSouth and its partner, Panama-based Multi Holding Corp., submitted the winning bid of US$26 million for a nationwide license to provide wireless communications service. BellSouth expects to begin service to Guatemala by mid-2000 under the BellSouth brand. The addition of the new license for Guatemala gives BellSouth and its partner’s wireless communications licenses now covering a total population in Latin America of nearly 174 million. Under the terms of the agreement, BellSouth will own a 60 percent stake in the operation, and its partner will own the remaining 40 percent. MHC and BellSouth already jointly own and operate BSC de Panama, a company providing cellular service under the BellSoutch brand to more than 100,000 customers in Panama.
Telefonica’s CTC Nine Months Net Loss Due to Tariff Changes
As a result of tariff changes, Telefonica SA unit Cia de Telecommunicaciones de Chile reported that its 15.487 billion peso loss in the nine months to September 30 was due mainly to the reduction in regulated earnings resulting from the new tariff structure from May 5, and the impact of the peso’s devaluation. The loss compared with a net profit of 94.860 billion a year earlier. Sales rose to 630.371 billion from 548.696 billion, with operating profit easing to 118.114 billion pesos from 182.420 billion. CTC’s new tariff structure, imposed for the next five years by the telecommunications regulator Subtel, reduced its fixed rate per line by an average of 11 percent, and cut its rates per minute by 13.7 percent for telephone calls and by 63 percent for Internet access. By the end of September, CTC had 2.672 million fixed telephone lines in services, 2.4 percent more than in 1998. Its subsidiary Telefonica Movil had 1.021 million phones in service, 118.9 percent more than in 1998, and achieved net profit of 9.344 billion pesos, 57 percent more than in the first nine months of 1998.
"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
Headline - October 27, 1999
TOP STORIES
ADSL
ATM/BROADBAND NETWORKING
COMPUTERS
FIBER OPTICS
BRAZIL
EMERGING TELECOM STARTUPS
EUROPE
INDIA
INTERNET/E-COMMERCE
SOUTH AMERICA
TOP STORIES
Lucent Technologies Revenues Increases 23 Percent, but Corporate Sales Remain Flat
In response to new wave of telecom operators upgrading their respective networks, Lucent Technologies reported that revenues for its fourth fiscal quarter increased 23 percent to a record $10.575 billion. Although the outlook overall was positive, its corporate sales remained relatively flat as a result of poor performance of its Systimax business, which provides campus wiring for buildings and corporate campuses. Revenues in the fiscal 1998 period were $8.574 billion. Net income increased 50 percent over the year-ago quarter to $972 million or 31 cents a share, excluding one-time events Net income for the year-ago quarter was $647 million or 21 cents a share, excluding one-time events. For the fiscal year ended September 30, 1999, revenues increased 20 percent to $38.303 billion. This compares with revenues of $31.806 billion in fiscal 1998. Net income rose 46 percent to $3.833 billion or $1.22 a share for the fiscal year, excluding one-time events. This compares with net income of $2.619 billion or 86 cents a share for fiscal 1998, excluding one-time events.
Nortel Networks Beats Analysts Estimates with 61 Percent Jump in Net Income
Fueled by positive sales to telephone and Internet Service Providers, Nortel Networks has beaten analyst expectations for the third quarter with a 61 percent jump in net income. Company revenue increased 30 percent to US$5.39 billion for the third quarter of 1999 from US$4.14 billion for the same period in 1998. Net earnings from operations applicable to common shares for the quarter were US$380 million, or US$0.28 per share, compared to US$236 million, or US$0.21 per share, for the same period in 1998, an increase in EPS from operations of 33 percent. Including Acquisition Related Costs and one-time gains and charges, Nortel Networks recorded net earnings applicable to common shares in the third quarter of 1999 of US$1 million or less than US$0.01 per share.
ADSL
Puerto Rico Telephone to Deploy PairGain’s HiGain Solitaire HDSL2 Solution
PairGain Technologies Inc. announced the sale of its HiGain Solitaire&Mac250; HDSL2 solution to Puerto Rico Telephone (PRT), the only full service telecommunications provider in Puerto Rico. PRT is the first incumbent carrier to undertake a major deployment of next generation HDSL2 technology and plans to use HiGain Solitaire throughout the islands public school system to give students and teachers high-speed Internet access. By projects completion next year, approximately 1,500 schools in the Puerto Rico public school system will have high-speed access to the Internet, as well as voice, video and data connectivity. Thousands of elementary and high school students will benefit from the HiGain Solitaire implementation. The first phase of the PRT school project is scheduled for completion by the end of the year. PRT also plans additional HDSL2 deployment using HiGain Solitaire for business customers around the island of Puerto Rico.
ATM/BROADBAND NETWORKING
Praxon and ALTA Make Joint Effort to Promote ATM in the Local Loop
Praxon Inc. has joined the ATM Local Telephony Alliance (ALTA). ALTA is an industry forum of hardware manufacturers and service providers that was established to accelerate the development and deployment of ATM at the local exchange. ALTA is committed to the development of cost-effective, fully integrated local exchange services using ATM. Praxon's Phone Data eXchange integrates voice, data networking, messaging and high-speed Internet access in an all-inclusive customer-premise solution. This Integrated Business Communications solution enables small and medium size businesses to improve their communications capabilities and reduce costs. The Phone Data eXchange is available for ISDN, T1 and analog. ALTA members include 2nd Century Communications, Accelerated Networks Inc., Advanced Fibre Communications, Advanced Switching Communications, BroadBand Technologies, Convergent Networks, Entrata Communications Corporation, General DataComm Inc., Odetics Inc., Mariposa Technology Inc., Memotec Communications Inc., Newbridge Networks, Praxon Inc., Rhythms NetConnections Inc., Sonoma Systems, TeleHub Network Services, TeraBridge Technologies, Unisphere Solutions Inc, VINA Technologies, and Woodwind Communications Systems.
COMPUTERS
Compaq Computer’s Third Quarter Earnings Beat Forecasts, but Struggled in Corporate Personal Computer Market
In the face of rocky times, Compaq Computer beat third quarter expectations with net income of $140 million. Company earnings increased 22 percent from $115 million, or seven cents a share in 1998. The earnings included a gain of $1.2 billion on the sale of businesses, partially offset by a one-time charge of $868 million for restructuring and layoffs. Excluding these items, the company earned $117 million, or seven cents a share, beating estimates of five cents a share. Company sales totaled $9.21 billion, up 4.7 percent from $8.79 billion, reflecting a 2 percent gain in its core North American and European markets.
FIBER OPTICS
Qwest Communications Reports First Billion Dollar Revenue Quarter And Continued Strong EBITDA Growth
Qwest Communications International Inc. reported that for the first time the company has recorded revenue for a quarter in excess of one billion dollars. For the tenth consecutive quarter the company met or exceeded the consensus of analysts' estimates. The $1.02 billion in total revenue for the quarter reflects a 26 percent increase over the same period in 1998, while communications services revenue grew 69 percent. The strong revenue results were achieved during the quarter despite the expected decline in construction services revenue as a result of the mid-year completion of 18,500 miles of the company's U.S. network. Construction services accounted for less than two percent of total revenue for the quarter and were combined with communications services.
Viatel Launches CityConex Broadband Service for Western European Businesses
The desire to bypass the dominant local incumbent carriers is spreading over to European soil as Viatel Inc. launches a new offering in Western Europe called CityConex, offering the European business community high-speed broadband connections between office buildings. The offering is available within and between cities that are currently linked to Viatel’s Circe Pan-European Networks, which will connect over 40 major business centers on the continent. For example within or between a "Circe City" such as Brussels and Antwerp, Belgium, the monthly costs for an E1 connection would be 2,000 euros, building to building. A connection of two E1s would cost 3,700 euros a month. A 10 Mbps LAN-to-LAN connection would also cost 3,700 euros a month. Viatel will also install the equipment on both ends for a mere 1,500 euros but will waive the installation fee contracts of five or more years in duration over a three-year contract.
BRAZIL
Embratel Reports 3Q99 Revenues of R$1.3 Billion and Data Revenues Rose 36.5 Percent Year-over-Year
Embratel Participacoes SA the company that holds 98.8 percent of Empresa Brasileira de Telecomunicacoes S.A. ("Embratel"), announced highlights of results for the quarter ending September 30, 1999. Embratel Participacoes' net revenues of R$ 1,280 million rose 16.4 percent versus the third quarter of 1998 with strong growth in data revenues. Net income was R$ 209 million (R$ 0.63 per 1000 shares) compared to a R$ 237 million loss (R$ 0.71 per 1000 shares) in the third quarter of 1998. Domestic long-distance revenues of R$ 1,051 million rose 10.4 percent compared to the third quarter of 1998 and increased 4 percent compared to the second quarter of 1999. Domestic voice revenues were impacted by the introduction of the new numbering plan and the start of a partial competitive environment. The application of the escape code reduced Embratel's advantage of a single national access code capable of carrying all long distance national and international calls and the perpetuation of several "closed numbering areas" ("Area de Numeracao Fechada - ANUF"), enabled the coexistence of both the old and new numbering systems. Both the escape code and the ANUFs are in a phase-out period due to be largely terminated by November 30, 1999. Contributing to the domestic long distance performance were revenues from fixed-to-cellular calls, which Embratel began to receive from July 3rd onwards.
EMERGING TELECOM STARTUPS
dba Communications to Acquire 120,092 Access Lines in Oklahoma
dba Communications, LLC, a privately held new entrant in the telecommunications industry, reported that the company will purchase 120,092 (YE'98) access lines in Oklahoma from GTE. On September 7, 1999, dba agreed to purchase 399,084 (YE'98) access lines in New Mexico and Texas from GTE. Pending federal and state approvals, dba Communications will own approximately 520,000 (YE'98) access lines in New Mexico, Texas and Oklahoma. The total value of the three-state purchase by dba is approximately $1.7 billion. The Oklahoma transaction will include approximately 140 employees located in Oklahoma, all of whom will become employees of dba Communications once the sale is complete.
EUROPE
Allen Telecom Acquires Minority Interest in Its Mikom Subsidiary
Allen Telecom Inc. will acquire the 26 percent minority interest in its Mikom GmbH subsidiary based in Buchdorf, Germany together with most of the shares in two related European entities. The purchase prices for the respective companies' shares, which were not disclosed, include both fixed and contingent amounts. A portion of the purchase prices has been paid, with the balance to be paid over a period of approximately one-year. No changes in management of the companies are planned or anticipated.
Societe Europeenne de Communication SA Launches Prepaid Calling Card in France
Societe Europeenne de Communication ("SEC"), an alternative European telecommunications provider, today announced the recent launch of a prepaid calling card offering in France by C3, a wholly owned subsidiary, which is complementary to the fixed telephony service currently provided by Tele2 France. The prepaid offering leverages the extensive Tele2 network and buying power to offer customers, on average, the lowest cost calls across the world. Customers can purchase the prepaid calling cards easily as they are currently distributed through more than 5,000 retail outlets in France. As calls are limited to the amount prepaid, no credit checks are required making the Tele2 France network accessible to a larger market segment. Furthermore, the Company has the cost benefit of not having to bill its customers and also avoids the associated exposure to the recovery of bad debts.
Symbol Technologies Opens EMEA Training Facilities in the UK
Symbol technologies, market leader in wireless networks and barcode scanners, today announced the opening of its new EMEA training center at its international headquarters near Reading in the UK. Newly appointed Wes Wisham, training manager for EMEA division will run the center. The new offices are part of Symbol’s strategy for major investment in training for associates, partners, customers and suppliers to maximize the use of its products. Training will be held countrywide throughout Europe, Middle East and Africa, bringing students up to date with Symbol's latest technology. The EMEA training center classrooms include educational initiatives using new technology in the classrooms, utilizing Symbol’s new NetVision suite and SPT 1740, showing scanning, wireless LAN and personal computer technology. In the US the courses are being registered for accreditation for university degrees, this is also being investigated in the UK.
Galileo Communications Launches New Venture in FRANCE: Centre Internet Europeen
Signaling its continued aggressive expansion in the European e-commerce market, Galileo Communications Ltd. announced a major agreement In the latest demonstration of its strategy to work with front rank European eCommerce leaders, Galileo acquired Centre Internet Europeen (CIE) ( http://www.cie.fr ) one of France's foremost high-end Internet Service Organisations (ISOs). Through this and similar accords in other European nations, Galileo has set the benchmark for Europe's eCommerce future, deploying its strategy to create a single European eCommerce brand delivered locally through market-leading ISOs. In every instance, Galileo offers tailored eCommerce platforms capable of meeting the precise business, cultural and linguistic needs of large and mid-sized customers in each country.
INDIA
Government Set to Amend TRAI Act
The government is set to amend the TRAI Act to send the right signals to foreign investors. Prime Minister Vajpayee is also keen on pushing the economic agenda. A recent spat between the Department of Telecommunications (DoT) and the Telecom Regulatory Authority of India (TRAI) has already created enough confusion among global investors. The amendment to TRAI Act has assumed urgency in view of the fact that the private operators will have to pay $750 million as outstanding license fees in the next four months in order to be eligible for the revenue-sharing regime. Once the companies migrate, they will have to bring in additional US$500 million as a starter for entering other circles. Many foreign partners in the telecom ventures are withholding the investment because of the present state of confusion.
IT Ministry to Stay Out of Telecom Minister's Turf
The newly created information technology (IT) ministry will promote Internet, e-commerce and knowledge-based industries without stepping on the toes of other ministries. In other words, there will be no overlap between the IT and the communications ministry. Only the Department of Electronics will come under the IT ministry. The new ministry will focus only on promoting Internet and knowledge-based industries. However, the licensing functions relating to Internet will remain with the communications ministry. It has been made clear that none of the existing functions of the communications ministry will be transferred to the IT ministry.
VSNL Pulls up International Carriers for Payment Delay
Videsh Sanchar Nigam Ltd. (VSNL) is pushing for recovering dues from some international carriers, including British Telecom. It is learnt that these carriers have not settled their dues, which could run into millions of dollars for a considerable amount of time. This has sent alarm bells ringing across VSNL, and the company CMDS K Gupta is believed to have warned the international operators against further delay. The ambiguity on the anticipated accounting rates could be leading to delays in payment, sources pointed out. Following the recent 28 per cent cut in international telephone rates, VSNL has been facing a squeeze on its bottom line, as the growth in traffic volume has not been commensurate with the cut in rates.
MTNL to Cancel Interconnection Links to Three Cellular Operators
Mahanagar Telephone Nigam Ltd. (MTNL) has decided to withdraw interconnection facilities to three cellular operators - Hutchinson Max, BPL Mobile and Bharti Telecom - because they have not paid the security deposit for the interconnection. MTNL is waiting for the final approval from the communications ministry. The cellular operators will have to make a security deposit of about INR 26 million to MTNL. However, the three operators in question have not deposited any security for the last four years, despite repeated reminders.
VSNL Forecasts a 1 Million Net Subscribers by 2001
Videsh Sanchar Nigam Ltd. (VSNL) is expecting its Internet subsidiary – VSNL Seamless Services - to notch up an account base of 1 million subscribers by April 2001. VSNL's Internet business is expected to have an account base of 400,000 by the end of this fiscal year. VSNL will soon hold a national license for operating its Internet services, and this in turn will lead to a sharp increase in its subscriber base. It is currently offering these services in four metros, besides Bangalore and Pune, with about 144,000 accounts at the end of September 1998.
Satyam Infoway to Sell Warrants to Parent Company and CDC
Internet service provider Satyam Infoway will be selling warrants representing equity shares to parent Satyam Computer Services and UK-based Commonwealth Development Corporation (CDC). While Satyam Computer will be eligible to buy 150,000 shares, CDC will buy 600,000 shares. The Satyam Infoway shares will be issued to the two companies at a 66 per cent discounted price of US$11.8 per share.
INTERNET/E-COMMERCE
eBay’s Third Quarter Revenue Jumps, but Investors are Concerned Over Costs
Online auctioneer eBay reported a rise in third quarter revenue against slim profits. During after hour trading yesterday, its stock price declined in response to investors concerns over the company’s computer programs. During the quarter, revenue was $58.5 million, an increase from $21.7 million in1998. Company income was $1.4 million, or one cent a diluted share, compared with $461,000, or one cent a diluted share.
SOUTH AMERICA
Latin America to See US$740 Million Cable Modem Industry By 2003
Driven by key changes in regulatory framework and increased coverage, revenues from the cable modem industry are expected to grow from US$23 million to US$740 million in Latin America by 2003. In the report Latin America Cable & Satellite Television and Telecommunications Markets: 1999, The Strategis Group projects that cable modem subscribers in the region will grow from less than 54,000 today to more than 1.2 million by 2003. As new services are deployed, there will be a major shift in revenue distribution. Currently Argentina, Mexico and Venezuela are the main players and have fewer than 40,000 subscribers combined. However, Brazil's cable modem market is expected to explode over the projection period from a negligible number of subscribers today to 250,000 subscribers in 2003, accounting for more than 12 percent of total regional revenues. Argentina will increase current dominating share of revenues from 40 percent to almost 60 percent by the end of the projection period. The Strategis Group projects that by end-year 2003, 84 percent of Latin America's cable modem market will come from Argentina, Brazil and Mexico.
"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
Headline - October 26, 1999
TOP STORIES
BRAZIL
CHINA
EUROPE
FIBER OPTICS
INDIA
INTERNET/E-COMMERCE
SOUTH AMERICA
WIRELESS
TOP STORIES
GTE Files Antitrust Suit Against AT&T, Comcast and Excite At Home Over Cable Access
In the latest salvo fired in the battle over open access to cable operator’s lines, GTE filed an antitrust suit against AT&T Corp., Comcast Corp. and Excite At Home. The lawsuit, filed in federal court in Pittsburgh, alleges that the defendants illegally exploit their economic power to force consumers to subscribe to Excite At Home, an Internet service provider affiliated with the cable industry, when a consumer purchases a cable modem service for high-speed Internet access. So far, cable companies have refused to open their networks to rival operators and ISPs. However, in AT&T’s case, the regulators are on their side. The FCC said it won’t require AT&T to require the long-distance giant to provide competitors equal access to its cable networks as it offers Excite At Home. Even if the relationships that the cable television industry has with Excite At Home and Time Warner Inc.’s Roadrunner service, GTE would still have to prove through a series of test that illustrate that there is actually an anticompetitive effect on the market.
Excite At Home to Acquire Bluemountain.com for $788 Million in Stock
Making its foray into the lucrative e-commerce market, Excite AT Home will acquire Bluemountain.com, a popular electronic greeting card site, for $788 million in cash and stock. To fund the transaction, Excite At Home will issue 11 million share of stock valued at about $438 million and pay $350 million in cash for the card site of Blue Mountain Arts Publishing. Also, it would later pay about $270 million more in stock if the site reached traffic and other performance goals. Upon completion of the deal, Excite plans to sell ads on the site that it expects to gain $25 million in revenue next year and $100 million in 2002. In addition, it struck a distribution agreement with Proflowers.com, Dan’s Chocolates and Lucidity Inc., a gift certificate service. Excite will receive $34 million in advertising fees over a three-year period and some stock warrants in Proflowers and Lucidity.
AT&T’s Profit Drops 18 Percent in Third Quarter
As a result of declining long-distance rates and charges related to its transformation into the cable television industry, AT&T Corp. reported that its third quarter profit fell 18 percent. The company’s performance in its cable and Internet unit has fallen short of its forecasts. When AT&T acquire Tele-Communications Inc. in January for $54 billion, it issued 644 million new shares, a move that was expected to dilute earnings. Company executives bullishly predicted that TCI would immediately deliver operating cash flow gains in the high single digits. However, costs to create its cable and Internet units are higher than originally expected. In response to the higher than expected costs AT&T’s cash flow fell 2.2 percent in the third quarter and is likely to remain flat for the full year. On a more positive note, revenue from the company’s wireless unit rose 44 percent during the quarter. During the quarter it only signed up only 269,000 new subscribers, in contrast to other quarters when the company signed up as many as 400,000 new subscribers. As a result of system capacity problems, the carrier cut back its wireless advertising in many markets.
Microsoft to Acquire 29.9 Percent Stake in Telewest for $3 Billion in Stock
Microsoft Corp. will pay 3 billion in a share swap deal with MediaOne Group Inc. to purchase the latter’s 29.9 percent stake in Telewest Communications PLC. MediaOne currently holds 638.35 million Telewest shares.
BRAZIL
Tess Receives Authorization from Anatel to Raise Cell Phone Rates 9.31 Percent
Anatel has authorized Tess, which operates cellular telephony services in area 2 of the Band-B, to raise its telephone prices 9.31 percent.
CHINA
China Government Drafts Rules to Open Up Internet Sector
Following MII Minister’s ban on foreign investment in China’s Internet sector last month, the Chinese government is in the process of drafting new regulations aimed at gradually opening up its Internet market to foreign investment. Zhang Cunjiang, a telecommunications official with the Ministry of Information, however reiterated earlier warnings to foreigners investing in China’s Internet market that they are risking their money by flouting a government ban. Zhang did not give a timetable for when the new regulations will be in place.
Chinese Students Build First Virtual Community on ChinaRen.com
ChinaRen Inc., a Fremont, Ca based Internet portal company founded by three Stanford graduates, has launched its BETA community site on CERNET, the China Educational Research Network in Beijing. ChinaRen, of which "Ren" stands for "people" in Chinese, plans to capture the vast consumer e-commerce market in Asia by building a consumer community portal and then selling goods and services to its members through localized e-commerce models. Since its initial launch on August 28, 1999, ChinaRen has signed up 30,000 plus registered users and generated 400K plus daily page views.
EUROPE
Telecom Italia’s Main Shareholder to Propose 630-830 Billion Lire Capital Increase
Olivetti SpA’s main shareholder Bell SA will propose a 630-830 billion lire capital increase at its next shareholder meeting, which is expected to take place in the first week of November. The capital increase will be made through a subordinated bond issue, leaving the holding’s bank debt unchanged at 1.388 trillion lire but raise its shareholder equity to 2.063-2.263 trillion.
America Online and British Telecom Close to Unmetered Internet Access Agreement
America Online is close to reaching an agreement with British Telecommunications PLC that would grant its subscribers unmetered Internet access in return for a lump sum payment to BT from the company. While the company is unwilling to divulge details of the proposal, Claire Gilbert, general counsel for AOL UK said "it’s now a question of when and not if unmetered access will happen." AOL’s efforts to put an end to per-minute charges for Internet access for its customers would pose a serious challenge to the dominance of Freeserve PLC as the dominant ISP in the UK market.
Deutsche Telekom May Launch Bid to Acquire RSL Communications
Looking to expand its size, Deutsche Telekom has turned to US soil with a possible bid for RSL Communications, and has sent a negotiating team to New York to hold talks with RSL chairman Ronald Lauder. The former German phone monopoly is looking for US acquisition candidates and RSL Communications is at the top of the list.
Vodafone Seeks Mannesmann Bid Link with France Telecom
Vodafone AirTouch has approached France Telecom to establish whether it would be interested in acquiring Orange PLC’s cellular business in the UK, should it decide to launch a bid for Mannesmann AG. The terms of the Mannesmann bid would mean that Vodafone would have to bid for the newly combined group valued at more than 70 billion stg including a bid premium. Vodafone is seriously assessing the feasibility of bidding for Mannesmann to avoid becoming a takeover target itself, with MCI WorldCom known to be keen to break into the mobile business in Europe once its takeover of Sprint Corp. is completed. However, a hostile bid for Mannesmann would prove difficult until June 2000 when a provision restricting the company’s shareholders to a maximum of 5 percent of voting rights is due to be abolished.
Ze'evi Group: Next Goal is Control of Bezeq
The Ze'evi Group announced yesterday it is aiming to win unilateral control of Bezeq after it reached a deal to acquire up to 19.5 percent in the company from Britain's Cable & Wireless Plc (C&W) for US$630 million. However, market analysts doubted the group, controlled by entrepreneur Gad Ze'evi, would seek control. It will sell the shares on the market at a profit as the real competition for Bezeq gets under way next year. Under the terms of the agreement, Ze'evi group will immediately purchase 4.9 percent of Bezeq when the deal is closed, which C&W said is expected in seven to eighth weeks' time. Ze'evi will have 18 months to exercise an option entitling to buy Cable & Wireless' remaining 14.6 percent Bezeq holding. The deal worked out to a per share price $4.13, or NIS 17.64. That was equal to a 12 percent premium over Bezeq's Tel Aviv Stock Exchange-listed share price of NIS 15.75 on Thursday. The market responded to the news by bidding up Bezeq's share price 3.2 percent to a NIS 16.27 close yesterday.
Bezeq International and Elbit to Acquire 40 Percent of Project Oxygen
Israeli companies Bezeq International and Elbit Medical Imaging will join Project Oxygen, a plan to link Israel, Europe and the United States by optic telecommunication fiber. The two companies are acquiring 40 percent of the project for an initial investment of $250 million. The project's purpose is to stretch some 170,000-km of undersea optic cables connecting 75 countries and locations. The first stage of the project will be to lay cable between Israel, Europe and the United States at a total investment of around $1.5 billion. Under an agreement finalized only at the Telecom '99 exhibition in Geneva last week, Bezeq International and Elbit will be investing a total of $500 million, in two installments. The rest of the capital may be raised from international investors. Bezeq International plans to rope the Greek telecommunications company and Discount Investments into the project too.
FIBER OPTICS
NEC America to Develop 160-Channel DWDM System
NEC America Inc. Public Networks Group is currently in development of a 160-channel version of its SpectralWave family of DWDM systems. In addition, its current product SpectaWave-32/64, supporting 32 channels of capacity upgradeable to 64, has successfully completed AT&T certification testing and is currently being deployed in the AT&T network. The SpectralWave-160, available late next year uses NEC’s L-Band optical amplifiers to achieve high channel counts and large capacity. In addition, the SpectralWave-160 achieves compact design through the use of new .18 micron semiconductor components.
INDIA
LG-Escorts venture for manufacturing CDMA units in India
In a strategic move to tap the huge potential of the Indian telecom market, Korea’s LG has formed a joint venture with Escorts Communication - LG-Escorts Ltd. However, the equity capital of the joint venture has not been finalized. The joint venture has been formed for establishing manufacturing facilities for CDMA Wireless in Local Loop systems and terminals in India. In later years, the business would also cover mobile communications systems and terminals. With an initial investment of $4 million, LG-Escorts also plans to enter the switching equipment sector next year. The joint venture company is expected to compete with Ericsson and Motorola.
Union Cabinet to Clear Information Technology Bill for Adoption of E-Commerce
The Union Cabinet is all set to clear the Information Technology Bill, paving way for a regulatory mechanism for e-commerce and other related issues like establishment of one or more Appellate Tribunals. The draft Bill hopes to "provide legal recognition for transactions carried out by means of electronic data interchange and other means of electronic communication, commonly referred to as 'electronic commerce', which involves the use of alternatives to paper-based methods of communication and storage of information, to facilitate electronic filing of documents with the government agencies and for matters connected therewith or incidental thereto."
MTNL-TCIL-World Tel Combine May Win Bangladesh Project
The Telecommunications Consultants India (TCIL)-Mahanagar Telephone Nigam (MTNL)-World Tel combine has emerged as a front runner to bag a basic telecom license in Bangladesh. The combine has been shortlisted for the $280-million telecom project. A company, in which MTNL will execute the project and TCIL, will hold an equity stake of around 30 percent. The Bangladesh government and a local partner will hold around 10 per cent each. World Tel will control the remaining equity. The license, which has tenure of 25 years, is on a build-own-operate basis and involves the roll out of a basic network of 300,000 lines over three years in Dhaka.
Pentafour Wins US$100,000 Order from ABB Alstom
Pentafour communications Ltd. has bagged an order worth $ 100,000 from ABB Alstom of the UK. The work primarily involves re-designing ABB's existing engineering models using Pentafour's CAD tools. The deal is not a one-time contract and hence may fetch more revenues for Pentafour. With this view, the company is negotiating with ABB for some of kind of joint venture on these lines.
INTERNET/E-COMMERCE
America Online Worldwide Membership Now Exceeds 19 Million Subscribers
America Online Inc. reported that worldwide membership of its AOL service has exceeded 19 million. Over the past year, AOL has added more than 5 million members. AOL member growth is benefiting from the increasing popularity of e-commerce and families back-to-school focus going online. In addition to membership growth, there has been a significant increase in AOL membership usage.
SOUTH AMERICA
Telefonica Targets 22 Percent of Guatemala Mobile Market by End of 1999
Telefonica SA is targeting a 22 percent share of Guatemala’s mobile telephony market, equivalent to 40,000 clients, by the end of this year, and 40 percent by the end of 2000. Seeing that there is strong competition in the mobile market, from other mobile operators Telgua and Comcel, Telefonica’s targets may be hard to reach. In June, Telefonica entered the Guatemalan fixed-line market.
WIRELESS
Liberty Media to Invest $425 Million in Astrolink LLC
Liberty Media Group. has signed a letter of intent to invest US$425 million in Astrolink, a wireless broadband venture scheduled to become the first global wireless broadband service provider in 2003, with the start of service in the Americas, Europe and the Middle East, immediately followed by Asia. The deal comes only three months after its three founding partners formed Astrolink: Lockheed Martin Global Telecommunications, Telespazio, a Telecom Italia Group. subsidiary. The founding partners invested a total of US4900 million, and this agreement brings Astrolink’s total equity to $1.325 billion.
"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
Headline - October 25, 1999
TOP STORIES
BRAZIL
COMPUTERS
EUROPE
INDIA
INTERNET/E-COMMERCE
MEXICO TELECOM
WIRELESS
TOP STORIES
Aglient Technologies Plans to Raise $1.1 Billion in Initial Public Offering
Aglient Technologies, the test and measurement subsidiary of Hewlett Packard, plans to raise $1.1 billion in its initial public offering. The sale will consist of 57 million common shares offered at $19 to $22 each, according to a an amended registration statement that Aglient filed with the SEC. Upon completion of the IPO, the public will own 13 percent of Aglient, with the remaining shares held by Hewlett Packard. Aglient will have 437 million shares outstanding after the offering. Assuming a price of $20.50, in the middle of the expected range, the company would have an initial market value of $9 billion.
Sycamore Networks Stock Jumps 386 Percent After Launching IPO
The optical networking space continues to prove itself as a hot commodity. In what could be one of the largest gains in stock market history, Sycamore Networks’ stock rose 386 percent following its initial public offering last Friday. On Friday, Sycamore opened at $38 on the Nasdaq stock market, traded initially at about $270 and closed at $184.75, giving the company an astonishing $14.36 billion in market capitalization. This was a rather substantial gain for a company with reported revenue of $11.3 million and a net loss $19.5 million for the year ended July 31. During intraday trading the company’s stock rose 610 percent. Sycamore’s closing price on Friday represented a gain of 386 percent, ranking the company fourth behind the IPOs of theglobe.com Inc. at 606 percent, Foundry Networks Inc. at 525 percent and MarketWatch.com Inc. at 474 percent.
Omnipoint to Acquire East/West Communications for $121 Million in Stock and Cash
Omnipoint Corp. has reached an agreement to acquire East/West Communications Inc. and its five wireless licenses for $121 million in stock and cash. With this acquisition, Omnipoint will gain access to wireless licenses covering a population of 22.2 million in Los Angeles; Washington; Sarasota, FL; Reno, and Santa Barbara, CA. The company has paid $3 million for 300,000 East/West shares and agreed to buy the remaining 4.4 million shares for newly issued preferred shares worth $118 million.
BRAZIL
Tele Centro Sul May Merge 9 Units into Single Company and Reports Lower than Expected Third Quarter Profit
Tele Centro Sul, a subsidiary of Telecom Italia, is considering regrouping its nine subsidiaries into a single company as a means to lower the risk of the company and improve the capacity to contract loans. In addition, it will eliminate inefficiency from dealing with so many individual companies and lower operating costs. The Tele Centro Sul concession currently covers nine Brazilian states including the federal district of Brasilia. Earlier this year, another of Brazil’s fixed telephony holding companies Tele Norte Leste Participacoes restructured its 16 state companies into a single company called Telemar. Separately, the company reported that net profit for the third quarter was lower than expected as a result of a change in depreciation rates. Excluding this, third quarter net profit would have been R$140. Profit was also lower because last year, some revenue from the second quarter was carried over into the third. In the nine months to September, net profit was R$190 compared with R$276.2 million in 1998. Excluding the change in depreciation rates, nine-month net profit would have been R$367 million.
COMPUTERS
Dell Surpasses Compaq in Third Quarter US Personal Computer Sales
With the current boom of lower-cost personal computers and the demand for Internet access on the rise, Dell Computer comes to the top, beating out its competitor Compaq in third quarter sales. In the US PC market Dell Computer surpassed all of its competitors with a 58 percent rise in sales, increasing its market share to 18 percent from 14 percent from 1998. On the other hand, Compaq’s unit shipments rose only 24 percent, and its market share remained roughly flat at 16 percent. Several other top PC manufacturers lumbered during the quarter. International Business Machines Corp. kept its third place position in the global ranks, but slipped to an 8.1 percent share from 9.1 percent in 1998. Hewlett Packard, which took the fourth place, made a slight improvement in its market share to 6.7 percent from 6.6 percent.
EUROPE
Cable and Wireless sell Bezeq shares
Israeli entrepreneur Gad Ze'evi has signed an agreement with the British firm Cable and Wireless to buy up to 19.5 percent of Bezeq, the Israel Telecommunication Corp, for US$630 million. Cable and Wireless officials said that company sale of its stake in the Israeli telecommunications market comes in the wake of a decision to refocus corporate development primarily on Internet Protocol and data services for business customers. Some 54 percent of Bezek's shares are still owned by the Israeli government, while the remainders of the company’s shares are traded on the Tel Aviv stock exchange.
UPC’s chello Subscriber Base Reaches 80,000
United Pan-Europe Communications NV reported that it now has 80,000 subscribers as of September 30 for its chello broadband service in five European countries. According to Roger Lynch, chello president and chief financial officer, chello’s subscriber base has grown 122 percent from 36,000 in March and the number of subscribers was up 52 percent in the third quarter alone.
Sonera and Chukurova to Transfer Shares in Turkcell into New Holding Company
Sonera Group and Turkey’s Cukurova group have agreed to transfer parts of their respective stakes in Turkish mobile operator Turkcell into a jointly owned separate company. Cukurova will own 52.91 percent of the new holding company and Sonera will hold the remaining 47.09 percent. The holding company will have a 51 percent majority control stake in Turkcell. Before the transfer, Cukurova was Turkcell’s largest shareholder with a stake of 45.9 percent, followed by Sonera with a total stake of 41 percent.
INDIA
Cabinet Clears New Telecommunications Package
The government has cleared a fresh clutch of bills and approved the migration package for telecom operators in a marathon three-hour Cabinet meeting. However, the new Information Technology Bill to enforce cyber laws was on the agenda, but was not taken up due to lack of time. In a last minute inclusion at the behest of the Prime Minister's Office, the Cabinet cleared the migration package for private telecom operators. Under the package, basic and cellular operators will migrate to revenue sharing regime and pay an interim revenue share of 15 per cent on gross revenues. The license period is extended to 20 years, from the current 10 years for cellular and 15 years for basic services. However, the final percentage of revenue sharing and entry fee will be decided by the government based on the recommendations of the Telecom Regulatory Authority of India (TRAI).
PS Saran Appointed as Secretary to Department of Telecom Services
In the first assertion of his powers, communications minister Ram Vilas has appointed PS Saran as the secretary in the newly created Department of Telecom Services. Following this, Saran will probably be more important than anyone else will because all the state-owned telecom companies will work under his supervision.
MTNL Moves Court on Tender
Mahanagar Telephone Nigam Ltd. (MTNL) has moved the Delhi High Court appealing an earlier order of the court against the finalization of a 50,000 line CDMA tender for provision of mobile services in Mumbai. The court will hear MTNL's appeal on October 26. Last month, the High Court directed MTNL to cancel the finalization of a contract with Japanese telecom major Fujitsu, which had quoted the lowest price. The petitioner, L G Information and Communications had said that certain norms had not been followed while finalizing the contract.
Hughes Ispat Eyes Payphone Segment
Hughes Ispat Ltd., which offers basic telephony in Maharashtra, has targeted pay phone segment for growth. The company, with three operational switches, will have no major roll out of its services for the next six months to nine months, and hence has decided to concentrate on the pay phone business, along with Zip Telecom, which handles this segment.
Foreign banks seek faster clearance for VSAT links
Y2K planning is on the overdrive. Many foreign banks have sought a single window clearance from the Department of telecommunications (DoT) for setting up independent VSAT systems as a second line of defense in the event of malfunctions of the existing telecom set-up. Some of the banks have already received a blanket approval from the DoT to set up VSAT systems under the supervision of Videsh Sanchar Nigam Ltd. However, with the time running out, these banks have requested for a single window clearance to speed up approvals from various departments.
HFCL Plans to Offload Entire Stake in Fascel
Himachal Futuristic Communications Ltd. (HFCL) is planning to offload its entire quantity in Fascel, the cellular operator in Gujarat circle. HFCL, which currently holds 10 per cent in Fascel, has already reduced its equity holding from the original 33 percent earlier this year. The current share holding pattern in Fascel is - Shinawatra 33 percent, Indus Ind 30 percent, Bezeq 16 percent, Kotak Mahindra Finance 10 percent and HFCL 10 percent.
INTERNET/E-COMMERCE
Digital Island and Sandpiper to Merge in $630.5 Million Stock Swap
Making a move to increase its presence in the e-commerce marketplace, Digital Island and Sandpiper Networks have reached an agreement to merge in a $630.5 million stock swap. Under the terms of the deal, Sandpiper shareholders will receive 27.4 million shares of Digital stock. On Friday, Digital’s shares closed at $23, up $1.875, in regular Nasdaq trading. Digital Island deploys a customer’s data via a combination of Web-hosting centers and networking software. Sandpiper spreads its customers’ data through computer servers situated around the world and with special software that enables customers to simultaneously execute a transaction while downloading material.
MEXICO TELECOM
Telmex to Employ Tactics to Corner Mexico’s Internet Market
Telmex is continuing to flex its dominant position in the Mexican telecommunications market as it makes a move to corner Mexico’s small, but growing Internet market. One of the key elements of its strategy is to align itself with a strong international partner. This is similar to the effort the company took when the Mexican government privatized the company in 1989. At that time, new owner Carlos Slim Helu partnered with SBC Communications and France Telecom to gain much-needed technical know-how. And Telmex continues to create international alliances. Last week, the company formed an alliance with Microsoft to develop a portal aimed at Spanish speakers throughout the Western Hemisphere. Secondly, the company has launched a marketing campaign that bundles Internet access via its Telmex-Prodigy portal with new computers. Through alliances with Acer Corp., Compaq Computer and Apple Computer, the Mexican telecom company has signed up about 70,000 subscribers, giving it an average of about 1,000 a day. This is one of the first Internet-computer initiatives to be taken in Latin America.
WIRELESS
Ericsson Canada to Invest 4196 Million cad on 3rd Generation Wireless Products
LM Ericsson unit Ericsson Canada will invest 196 million cad over the next three years on the development of third generation wireless telecommunications products. Under the new program, the company plans to open up 130 new engineering positions at Ericsson’s research and development center in Montreal.
"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 |
