Crowded house

By The Informer

As the Informer was routinely deleting his morning email today he overheard one of his colleagues exclaim that they had just downloaded “a really great album of Crowded House covers.” Now the Informer is not normally one to judge but that’s a sentence he never expected to hear. The only real exposure the Informer has had to the Aussie chart toppers is those two songs that everybody knows and that was only because an ex-housemate, who had the worst music taste in the world, had a big crush on them.

“Always take the weather with you,” that’s what the band famously sang. And a cursory glimpse out of the window this week will have identified the only UK weather up for grabs as drizzly, grey and occasionally foggy. Maybe that’s why everyone’s crowding into the house?

It was certainly busy in the plummeting profits house this week, which the Informer imagines to be similar to a damp basement flat in Hackney. In the financial doldrums were EE, KPN, Samba Mobile, T-Mobile and Twitter.

UK operator EE posted a 3.6 per cent year on year drop in revenue for the first quarter of 2014 to reach £1.55bn. But the firm claimed the highest number of 4G subscribers joining during the period, with the operator’s 4G customer base reaching 2.9 million, an increase of 889,000 subscribers during the quarter.

Also in the UK, MVNO Samba Mobile closed down its business due to unsustainable mobile data costs. The service launched in July 2012 offering subscribers free mobile data usage in return for viewing adverts and ran on 3UK’s mobile network. It’s a business model several have tried – going all the way back to the original launch of Blyk – but none have yet succeeded.

Samba Mobile was founded in 2010 and said at launch that it has financial backing from an international mobile operator and a number of very experienced and “well-connected independent investors”. Yet the MVNO said that it closed down its operations primarily due to the high cost of wholesale data, which makes its current model unsustainable.

European operator group KPN reported a whopping 98 per cent year on year drop in net income for the same quarter, blaming intense competition leading to decline in ARPU. Net income for the quarter stood at just €3m, compared with the €152m recorded in the year-ago quarter.

Over in the US of A, T-Mobile recorded a $154m loss in the quarter, compared to a $106m profit recorded in the same period last year. Yet total revenues for 1Q14 increased by 47 per cent year on year, principally due to the inclusion of MetroPCS results in the period, following T-Mobile’s acquisition of the operator in May last year.

T-Mo claimed to have taken “virtually all of the industry phone growth” in 1Q14, winning market share from its competitors and reporting total net subscriber additions of 2.4 million. But even so, rumours that rival Sprint is eyeing a takeover of the firm, following its own takeover by Japanese operator Softbank last year, have resurfaced. A June/July timeline is being mooted.

In internet land social media darling Twitter reported a net loss of $132m for the first quarter, up considerably from the $27m loss for the same period last year. Revenues for the same period jumped over 119 per cent however, to $250m, versus $114m a year ago.

The company chalked up $126m of its loss to stock-based compensation expense, which is where stock options are used to reward employees, based on the idea that employees will work harder because they want the stock to rise. Unfortunately, the stock took a battering on the back of the poor financials.

Average Monthly Active Users (MAUs) were 255 million as of March 31, an increase of 25 per cent year-over-year. Of this, mobile MAUs reached 198 million, an increase of 31 per cent year-over-year, Twitter said.

There was also a fair bit of moving and shaking going on. Danish incumbent operator TDC struck a deal with Finnish player DNA that will see the latter acquire the former’s Finnish operations for €154m. The deal covers both TDC Finland and TDC Hosting—which provide communications and IT solutions to public and private enterprises and wholesale services—and their associated customers. TDC and DNA will co-operate on enterprise and international wholesale services in Finland after the deal’s conclusion.

Japanese operator NTT Docomo has put its stake in Indian operator Tata Teleservices up for sale. The Japanese firm has a 26.5 per cent stake in the Indian operator, which it acquired in 2009. But Docomo intends to sell its stake back to its JV partner Tata Group.

Under the original agreement, in the event that Tata Teleservices fails to meet certain specified performance targets, Docomo is entitled to sell Tata Group its shares for 50 per cent of what the Japanese firm paid at the time, which amounts to 72.5bn rupees, or a fair market price, depending on which is higher. Docomo said that it plans to exercise this right by June 2014.

French conglomerate Vivendi looks set to continue its offloading of telecom interests after Emirates-based Etisalat announced that it has secured funding to buy the French firm out of Maroc Telecom. Etisalat signed a share purchase agreement for the acquisition of Vivendi’s 53 per cent stake in the Moroccan operator back in November. Etisalat said the funds totalling €3.15bn were raised with a group of 17 international, regional and local banks in the United Arab Emirates.

The move will give Etisalat control over Maroc Telecom and will put an end to a long winded battle for the operator that has seen several operators vying for control of the company including Ooredoo, France Telecom, Qatari operator Qtel and South Korea’s KT Corp.

Over in Ireland, incumbent operator Eircom is hoping for some interest, having appointed Goldman Sachs International and Morgan Stanley & Co. International to explore strategic options including a potential international offering and listing (IPO).

Back to the US and silicon vendor Qualcomm’s Retail Solutions subsidiary, which focuses on location services, is to be spun off as an independent company, following an agreement signed between the firm and a group of third party investors. The investors will gain a controlling interest in Qualcomm Retail Solutions, which will be renamed Gimbal, taking the name of the unit’s context aware proximity platform.

The third-party investors include of a mix of venture capital, strategic and individual investors. The i-Hatch LBS Fund has been identified as one investor, and Qualcomm Technologies will also keep a stake in the firm after it also invested in Gimbal.

Indeed, there seems to be no shortage of investors ready to take a ‘gimble’ on a disruptive venture. US API developer Apigee this week secured a further $60m in funding, bringing its total raised to date to $171m for big data analytics development.

Pine River Capital Management and Wellington Management Company participated as new investors in this round, along with current Apigee investors Norwest Venture Partners, Bay Partners, Third Point, SAP Ventures, and funds managed by BlackRock, Focus Ventures, and Accenture.

Earlier this month the company upgraded its big data analytics platform, claiming to enable enterprises to increase customer satisfaction and revenue by predicting and immediately adapting to the needs of individual customers at scale.

As part of this trend, Cisco Investments, the corporate venture capital arm of Cisco, has allocated $150m over the next two to three years to fund early-stage companies in big data and analytics; the Internet of Things (IoT); connected mobility; storage; silicon; content technology; and Indian innovation.

Under the program, Cisco announced three minority investments in IoT accelerators and startups AlchemistAccelerator, Ayla Networks and EVRYTHNG.

Yet as new projects get underway, older ones die. It’s understood that Canonical, the company behind the popular Linux distribution Ubuntu, has pulled the plug on its Ubuntu for Android project, which back in 2012 promised to merge Ubuntu and Android to create a new breed of OS. But it looks like sanity prevailed and another OS fragmentation was put to bed. Well almost. Canonical instead is going to focus on Ubuntu as a standalone OS for Phones, and reckons that we may see the mobilised version of the Ubuntu OS on tablets even later this year.

Something else you’re likely to see on tablets is more Facebook ads. The company has unveiled a mobile advertising network that will allow it to serve adverts in third party smartphone apps, supporting IAB banners, interstitials and native advertising.

Facebook, which announced the network at its F8 developer conference this week, said that the Audience Network will offer the same level of personalisation and targeting as adverts sold within its own inventory.

Ovum analyst Eden Zoller said Facebook’s move into third party inventory was “highly significant” but suggested that the social network will face stiff competition from the likes of Google’s AdMob, MillennialMedia and Twitter’s MoPub. Mobile advertising accounts for 59 per cent of Facebook revenue, Zoller said, adding that Audience will play a “key role in driving further growth” and “keep at least some of [the other] players awake at night.

There were two new appointments at some of the industry’s biggest names, which may now be sleeping more, or less, soundly depending on their disposition. Ericsson has appointed Rima Qureshi, a 20-year veteran of the company, as its chief strategy officer, following the resignation of Doug Gilstrap earlier in April.

Qureshi—now Ericsson’s most senior female employee on the engineering side—will be the force behind the firm’s M&A activity, which in recent years have been vigorous. She featured in Telecoms.com’s 2010 profile of the industry’s most influential women, joined Ericsson in 1993 and was previously responsible for the firm’s CDMA business.

Over at one-time arch rival Nokia, Rajeev Suri has been appointed as group CEO. Flush from the Microsoft deal, which sees the handset unit offloaded, Nokia will have three strings to its bow. The networks business, which Rajeev Suri will continue to run directly, its location services business, recently rebranded as Here, and a unit responsible for R&D and intellectual property strategy, known as Technologies.

It was a sad day over at Microsoft as new owner of the Nokia handsets division though. Newly-appointed executive vice president for the Microsoft Devices Group division Stephen Elop, formerly CEO at Nokia and engineer of the company’s sale, said that the software giant plans to drop the Nokia brand from its marketing in the not too distant future.

“Nokia as a brand will not be used for long going forward for smartphones,” Elop said on the company blog. “Work is underway to select the go forward smartphone brand,” he added.

The Informer thinks it will be sad to see another industry giant fade into the annals of history but we must move with the times he supposes. Microsoft also took ownership of trademark brands like the Lumia and Asha, so it’s likely these names will continue. The move also puts into focus Nokia’s decision to use Android on its emerging markets devices and skin them up like Windows phones, so that when the next wave of smartphone upgrades come from the developing world, the users choose to go with the visual familiarity of a Windows phone.

Hey now, hey now, don’t dream it’s over.

Well, for “Nokia” phones, and for this week, it is.

Take care

The Informer