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Archive for the ‘International’ Category

China Mobile is reportedly in talks with Norway’s Telenor concerning an acquisition of their Pakistani mobile network. Both companies are denying such development, yet sources told the local Dawn newspaper that negotiations were being held secretly at the group level.

According to some statistics, the combined customer base of China Mobile (NYSE: CHL)’s and Telenor’s Pakistani operations is around 26 million, representing a 28% of the market.

For the record, China Mobile entered the Pakistani market in 2007, when it paid $460 million to buy Paktel from Millicom International. Previously, they had tried to acquire Warid Telecom, another smaller operator in the country, but failed to reach an agreement on the price.

China Mobile’s Pakistan subsidiary is called Zong and with just under 6 million customers, it is the smallest of the 5 main operators in the country.

Source: Into Mobile

The implementation of a direct operator top-up strategy can bring double digit revenue gains and reduced costs, claims a study commissioned by electronic payments vendor, Vesta Corp. Given the size of the prepaid market in Western Europe, this can equate to hundreds of millions of Euros annually, adds the report. Direct operator top-up channels include all operator-managed top-up channels that rely on electronic transactions outside a retail environment, such as the operator’s website, IVR and handset applications.

The research indicates the significant advantages that direct operator prepaid top-up has over other existing top-up methods, including improved performance metrics, lower costs and improved CRM capabilities. In addition, direct handset top-up has the ability to remove the fragmentation and complexity impacting the take up of m-payment services and drive new revenue streams for operators.

The research has been conducted by independent telecom consultancy Northstream and is based on the feedback of wireless operators across Western Europe.

Chris Parsons, CMO of Vesta commented, “When prepaid direct top-up is executed properly it not only offers an opportunity to increase the ARPU of prepaid but also provides the foundation for operators to seamlessly offer a wide range of profitable mobile payment services from the same platform. Aside from prepaid debit reload, other services such as peer-to-peer transfer, international remittance and mobile commerce become far more readily accessible.”

According to the whitepaper, with overall growth in the prepaid market slowing, operators are looking at ways to reduce costs while increasing prepaid customer loyalty and revenues. Non-cash (credit/ debit card/ bank) payment penetration has grown significantly in Europe, and a staggering 91% of operators interviewed intend to drive top-up transactions from costly commission-based retail infrastructures to “virtual” non-cash top-up (NCTU) channels.

Aligned with this view, not only are operators exploring alternatives to retail top-up but 100% of those interviewed want to shift their non-cash payment mechanisms from a bank centric model to a direct operator model. Given this finding, it is somewhat surprising that less than 20% of the NCTU offerings analyzed in the research included handset-based top-up applications, even though top-up frequency using handset applications can be up to 80% higher than other channels. This increased frequency also results in an ARPU increase of 23%.

The main imperatives stated for adopting a direct top-up approach were avoiding zero credit service interruptions, increasing top-up frequency and improving customer experience with anytime, anywhere top-up availability via handsets, the web and IVR. However, the research also indicated the ability of direct top-up to enhance CRM capabilities, enabling operators to identify high value customers and cross-sell while customizing and optimizing user experience. Indeed, over 90% of operators interviewed highlighted the need to strengthen the way that top-up integrates with their online services and other operator-controlled channels.

Chris Parsons continued, “By adopting a direct top-up approach, operators will improve their prepaid performance indicators by reducing costs, improving prepaid customer loyalty and increasing revenues. Operators are struggling to build-out direct top-up channels given the reduction in their IT budgets but those that address these challenges early will reap significant benefits in the prepaid market and create a strong platform from which to launch further mobile financial services.”

Source: cellular news

Adobe Flash may still be excluded from the iPhone, but the software company is determined to provide a unifying standard for the rest of the smartphone world, and will launch its key handset product by year-end.

The company currently offers Flash Lite for phones, but Apple and others have complained that this is insufficiently powerful for the high-end mobile web experience.

Adobe has since formed the Open Screen Project to support its Flash and AIR technologies as key systems that could bridge PCs and handsets, and is now set to release actual products.

CTO Kevin Lynch, in an interview with The Wall Street Journal, said that Adobe has made deals with chip designers and phonemakers and is offering incentives to developers to write programs the new version of the software.

Adobe will launch a trial version of Flash that works with most of the key smartphone OSs – including Palm WebOS, Google Android, Symbian and Windows Mobile – this year, though iPhone and BlackBerry remain off the roadmap for now.

“We need to have Apple’s agreement before we can do it,” Lynch said.

As promised for the past year, the new release will bring fully featured PC Flash to smartphones and Flash Lite will be phased out. Nokia is a key ally, and joined with Adobe in February to create a $10 million fund for developers who build mobile apps for Flash.

Source: telecomasia.net

The two epic cellular battles that have dominated headlines for months continue.

In the first instance, France Telecom says it won’t make a bigger offer to buy Osracom’s stake in ECMS, Egypt’s largest mobile operator, the Financial Times reports.

France Telecom and Orascom have been squabbling over the French operator’s attempts own ECMS (and its 21 million subscribers) outright since 2007 – they assumed joint ownership in 2001 – amid many claims and counter-claims of failure meet agreed or arbitrated conditions.

The two companies control ECMS via Mobinil, a company that owns 51% of the Egyptian mobile operator. France Telecom owns 71.25% of Mobinil and Orascom the rest. Orascom also owns 20% of ECMS directly.

In March, an arbitration court, sponsored by the International Chamber of Commerce, ruled that Orascom should sell its stake to France Telecom for €517 million ($725 million).

But, as the FT explains, the Egyptian securities regulator has in effect blocked the transaction by saying it take place in tandem with a tender offer to minority shareholders at ECMS, which is listed on the Cairo stock exchange.

Egypt’s Capital Market Authority has rejected two offers by France Telecom to the minority shareholders on the grounds they were too low. The most recent offer was worth €1.5 billion ($2.1 billion).

France Telecom has repeated its previous stance that it is ready for as long a legal battle as necessary to secure its rights (and control of ECMS) and continues to accuse the Egyptian authorities of overriding international law and consequently damaging future investments into Egypt.

In the second epic struggle, Russian bailiffs have agreed to hold off on the sale of Telenor’s shares in VimpleCom until the court in the West Siberian city of Tyumen has reached a decision, according to Dow Jones Newswires.

Reuters reports that the court has adjourned the case until 30 September.

Telenor yesterday said any deal with Alfa Group to resolve the dispute over jointly-owned mobile ventures in Russia and Ukraine must wait until the Russian court case brought by Farimex is solved.

Telenor maintains that Farimex is an off-the-shelf, British Virgin Islands company with less than a 1% stake in Alpha, that is being used by Alfa Group for unfounded gain. Alfa Group is owned by an oligarchy of Russian billionaires.

Telenor and Alfa have joint ownership of VimpelCom and also Kyivstar in Ukraine. Farimex is suing Telenor for delaying the progress of Kyivstar in Ukraine.

In this complex, protracted case, the bailiffs had frozen the shares as collateral against the $1.7 billion damages the court awarded against Telenor by the Siberian court in favor of Farimex.

Under the country’s law, the bailiffs could have sold the shares before Telenor had the chance to appeal.

Telenor has prevailed on the Russian Prime Minister, Dmitry Medvedev, to see that justice is done and the principles of international law upheld in the interests of encouraging investors into Russia.

Source: telecomasia.net

This year could well be make or break for small-cap telecommunications companies, many of which are vulnerable as larger rivals step into their traditional areas of trade in an attempt to increase market share in uncertain economic times, analysts say.

Amid the gloom, however, some companies have shown a resilience to the downturn by growing market share through regional business and providing a series of niche services.

These companies have managed to create partnership arrangements with “tier one” blue-chip peers – big companies which typically own a physical infrastructure or network – carving out areas of resistance where other smaller companies may be struggling.

Tier one companies are now starting to move back into servicing the small and medium enterprise (SME) market through a process called “aggregated outsourcing.” This involves going to smaller telco companies and asking them to badge themselves as either BT Group PLC or Cable & Wireless, for example, to undertake SME work, with the tier one company taking a cut of the profits while outsourcing the work.

“BT won’t be the only blue chip eyeing the SME market, Cable & Wireless is also another contender after it cut its customer base from 30,000 to about 3,000 SMEs back in 2006,” said Andrew Darley, a telecommunications analyst at institutional broker and corporate adviser FinnCap.

One company which has shown resilience in the current market is AT Communications Group PLC. The company specializes in maintenance, and designing and installing Internet protocol technology which allows for communication of data across a packet-switched internetworks alongside standard telco operations.

“We’re seeing a reverse in the current trend, with more business from tier one companies,” said Chief Operating Officer Scott Kean.”If you look at Cable & Wireless, for instance, they’re clearly moving out of that [SME] space, and passing it on to suppliers like us.”

“C&W handed SME contracts over to us on condition that we don’t shift them onto another carrier. They still keep the revenue, albeit they reduce their margin,” he said.

“By doing this, tier one companies can shave off staff costs through structured redundancy,” Kean said.

“AT Comms has done well in a credit crunch, as people defer spending on hardware,” said Philip Carse, a telecommunications analyst at Teleq Consulting.

“By being lower down on the scale in terms of the sort of customer they are catering for, much of their business comes from the maintenance type, support contracts, areas which will show resilience as customers defer spending on new technology,” Carse said.

Kean said, however, smaller telco dealers and resellers will start to lose more ground to the tier one companies if they don’t secure partnership deals.

“Dealers and resellers are, and will continue to suffer for the moment. We’ll probably see more small companies looking to sell their business on or consolidate, getting out before their revenues are further reduced.”

Analysts also cautioned that, while AT Comms will benefit from aggregated outsourcing, it is still likely to suffer from recent cuts by blue chips in contractors and staff.”BT cut its contractor costs by 30% this year and you’d expect AT Comms to have a rather hard time because BT is their major client,” Darley said.

Analysts also said mid-size telecommunications firms could stand to benefit in the current market after a series of profit warnings in recent months from the likes of Alternative Networks PLC, Maintel Holdings PLC, and KCOM Group PLC, a Hull based telecommunications and internet provider, pushed such companies into significant restructuring.

“With these companies cutting so many costs, plotting how their positioning will look when the market recovers becomes difficult. But, if you look at KCOM, it’s a highly cash-generative business with a flexibility you may not get from a tier one,” said FinnCap’s Darley.

KCOM’s Chief Financial Officer Paul Simpson said that a company like KCOM will always have the advantage of bespoke products and services, something that larger peers can’t always offer “The larger you are, the more difficult it is to bespoke a product every time somebody rings you, but our size gives us a flexibility that you may not find with the larger players,” Simpson said.

It would be futile for a company like KCOM to buy up smaller networks to try and compete with tier one companies, he said.”We are a long way behind BT and C&W in terms of the size of our network; in this respect we’re much better off utilizing other people’s networks in combination with our own to drive our offering.”

The restructuring of the company’s operations has revolved around getting its Integration and Managed Services unit back to profitability. The company always had a very cash-generative business on one side of the fence and that “there would be no point in buying a smaller network unless it gave extra reach, and was underpinned by cost savings,” Simpson said.

Redstone PLC, a smaller communications services provider, is a unique investment case. The company operates very closely within the limit of its banking covenants and could stand to benefit from consolidation more than other smaller players.

The company migrated up the value chain to focus on much larger contracts to facilitate growth. While it has a strong sales pipeline, it faces cash flow problems as clients delay on contracts, according to FinnCap’s Darley.

Of the smaller telcos, Redstone is trapped in a financial straightjacket where it can’t generate sufficient cash to consider making significant acquisitions, Carse said.

This, therefore, pushes it toward one of two possible outcomes: either forge further partnerships with tier one players or look at the benefits of consolidation.

Carse said a merger or acquisition was still conceivable with Redstone, the shares of which have lost 85% of their value in the past 12 months, although it was more likely to be initiated by a tier one player who possessed “greater financial fire power.”

“The risks in the interim are significant, as are the rewards in the long run. However, there is no incentive to own the stock until those rewards are closer,” Darley said.

When asked Redstone didn’t wish to provide comment.

Analysts also cautioned about the dangers of “catching a falling knife.””If we’ve hit the bottom of the macro trend, then consolidation holds fewer perception risks,” said Darley, referring to the benefits of consolidation in an environment which would typically limit organic growth.

While the current market is still very uncertain, analysts are confident that there are benefits awaiting some smaller companies.”Apocalypse phase one, is passing,” said Darley.

“Direct company action on the balance sheets through initial and far-reaching cost-saving measures has resulted in more partnership deals and bespoke services, which has allowed them to reinforce their areas of business,” he said.

“There’s a proliferation of smaller telco companies which serve the SME market better than a tier one company can offer…investors should still be braced for volatility but understand that there are some highly cash-generative businesses on in this market trading at very much knocked-down prices,” Carse said.

Source: Total Telecom

Quality of Service on IPTV networks, for both operators and their customers worldwide, can now be greatly improved thanks to the efforts of a dedicated team of experts at the Broadband Forum.

The approval and release of “Splitter Testing” Technical Report 127 (TR-127) creates – for the first time – the opportunity for network operators and independent test labs to carry out a system level test across four key IPTV network elements; the DSLAM, the CPE modem, the Central Office Splitter and the CPE Splitter. Testing splitters as part of a complete system assures the new TR-127 compliant splitters will prevent disturbance of the video signal by a telephone signal on the same line.

“Video signal interruption by on-hook, off-hook telephone usage has plagued Triple Play delivery since the concept first became reality,” explained Broadband Forum Chief Operating Officer Robin Mersh. “I’m absolutely delighted that after such a thorough effort by our Testing and Interoperability Working Group we are able to help the industry and its customers deal with this issue.”

The new TR-127 enables high quality delivery of triple play services by maximizing the interoperability of splitters and in-line filters with xDSL transceivers in an active, dynamic telephony environment, including the previously troublesome on-hook, off-hook, ringing, and ring trip events. TR-127 addresses VDSL2 technology as well as ADSL2/2plus, and relates to the previously issued Technical Report 100 (TR-100), which covered ADSL2/ADSL2plus Performance Test Plans.

The Broadband Forum sees TR-127 being used as a new reference criterion for the specifications of splitter equipment and testing worldwide. Among the drivers for this series of dynamic splitter tests were:
• Telephone ringing and answering (Ring trip) events had been proven to have an adverse effect on the quality of IPTV services.
• VDSL2 and ADSL2plus needed separate dynamic test procedures
• There was a need to analyze how splitters might affect the xDSL performance, in terms of achievable bitrate and margin

TR-127 addresses these issues with dynamic splitter test procedures. Splitters compliant with these requirements will offer significant reduction of IPTV pixelization on the TV screen image and will eliminate the “re-starting” of the DSL Modem. The result is that service providers and customers will soon be able to request TR-127 tested splitters, which deliver better picture quality and a more robust service.

TR-127 was announced by Robin Mersh, COO of the Broadband Forum, at this week’s FTTx Summit where the Broadband Forum was host organization.

Source: Total Telecom

Indonesian market leader Telkomsel saw another excellent quarter for customer growth in Q1 09. In fact, its figure of 6.83m net additions was the second highest ever recorded behind its own Q3 08 boost of 8.06m. At the end of the quarter, it had 72.13m customers. Despite the strong quarterly performance, Telkomsel fell from 6th to 7th in the world rankings of individual operators, having been overtaken by Reliance of India.

On an annual basis, Telkomsel added just under 20.8m customers, compared to 12.43m for the prior twelve month period. Proportionate annual growth improved from 32.0% to 40.5%. It is the prepaid base which has driven growth, taking 99.6% of the year.s net additions. It finished the quarter with 70.18m customers, compared to 1.95m contract. Annual contract growth fell from 9.7% to just 3.9%, with net additions slumping from 166k to 74k.

The bullish growth in customers has been at the cost of ARPU figures. There were double-digit annual declines across the board, with the two prepaid brands seeing particularly marked drops: budget brand .KARTU As. saw a 35.0% yearly drop to IDR26,000 while .simPATI. was down 35.5% to IDR49,000. In fact, both saw declines of more than 20% in Q1 09 alone. Meanwhile, contract ARPU was down 16.7% to IDR200,000 and blended ARPU fell 29.9% to IDR47,000. All of these figures were all-time lows by some margin.

Although the customer growth rate exceeded the rate of ARPU decline, operating revenues fell by 3.6% to IDR9,248bn. Prepaid revenues actually rose slightly, a 0.5% gain taking the Q1 figure to IDR8,026bn, but postpaid revenues were down 17.4% to IDR994bn. Even more damaging was a 26.4% decline in interconnect revenues to IDR594bn. The drop in revenues, combined with a 21.8% increase in operating expenses, left EBITDA down by 13.2% to IDR5,895bn. However, at 63.7% the EBITDA margin remains robust.

Source: cellular news



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