New blood

By The Informer

It’s the end of an era. The torch is being passed on. Let the trumpets sound out: The Emperor has abdicated. A great leader knows when his work is done; he understands that there comes a time when fresh hands must steer the course of his mighty ship. And so it was this week, that Lars-Johan Jarnheimer stepped down as president and CEO of Swedish carrier Tele2, to be replaced by Harri Koponen.

You’ve got to feel for Koponen. Becoming CEO of a cellular carrier is a massive achievement. But to have your moment of glory eclipsed by the news that the CEO of the world’s largest and most famous operator (by international footprint and revenue) is moving on is rotten luck. Which is why the Informer has given Koponen top billing this week, awarding second place to the news that Arun Sarin’s doing the off at Vodafone.

Sarin’s been in the chair at Vodafone for five years, having taken over from Chris Gent – the man who built the empire. A pin-striped British businessman of the old school, Gent bowed out with a string of impressive acquisitions to his name, leaving Sarin to make them all work nicely together.

He didn’t always have the easiest time of it. Two low points stand out: the first, in 2004 shortly after his tenure began, saw his first big acquisitive manoeuvre fall flat as he failed to gain control of US carrier AT&T. The second was in 2006 when, after recording the largest loss in British corporate history – £14.85bn – there was a shareholder revolt with 14 per cent of investors withholding their vote of confidence at the AGM. This was a bit harsh, as IDC analyst John Delaney pointed out this week, given that the loss was in part an after-affect of the Mannesmann takeover that many consider Chris Gent’s greatest individual accomplishment.

You could easily argue, though, that Sarin’s acquisition of Indian carrier Hutchison Essar was a bigger victory – India’s only the world’s fastest growing mobile market after all. Certainly it won Sarin an awful lot of admiration and – with Vodafone this week reporting a profit of £6.7bn for the year to March 31st (up from a loss of £4.8bn the previous year) – it probably makes sense for him to head for the door.

He must be a bit tired. A weary-looking investor relations chap at Vodafone HQ once told the Informer that Sarin liked his daily news briefing – face to face – at 7.30am. Whether his replacement, deputy CEO Vittorio Colao, will want the same service remains to be seen, although the early signs are that continuity will be the key theme of Colao’s premiership.

Sarin’s last day is July 29th, and the Informer imagines that an envelope containing a big “Sorry you’re leaving!” card and several kilos of jangling coins is making its way from desk to desk at Newbury as you read these words. In the card, no doubt, the standard messages will appear: “You lucky b£$%*!d. Another one escapes! Good luck on the outside! Viv x” and “Don’t forget about us! Stay in touch!!! Jon B.” He won’t stay in touch, Jon B. They never do.

One of Sarin’s most sensible decisions was to get the hell out of Japan where, this week, an initiative has been launched to limit mobile phone usage by children. The Japanese government has given its approval to the plan, which was drawn up by an education reform panel. The kids are mad for mobiles in Japan and there are concerns that it’s becoming worryingly close to an addiction, with added fears about cyber crime and bullying thrown into the mix. The nation’s cellcos will presumably have to bow and smile and agree with the whole thing in public, while cursing the meddling bureaucrats behind closed doors. In other news from Japan this week, a cat has been appointed to the role of station master in one town and a woman has been found living in a man’s cupboard without him knowing about it in another. And they think kids on phones is a problem…

Across the water in China, where commando-going actress Sharon Stone offended over a billion people with some mind numbing comments about karma this week, there are changes afoot in the telecoms market. The government has revealed plans to reduce the number of state-owned carriers to three with some nifty consolidation. China Mobile will merge with fixed carrier China Tietong Telecommunications, China Telecom will take over the CDMA network of China Unicom, while Unicom’s GSM network will be merged with China Netcom. Phew!

This fuelled more speculation this week about just what’s going on with 3G licensing in China, which some people still expect to happen before the Olympics in Beijing this summer.

Netcom holds a 20 per cent stake in Hong Kong quad-play outfit PCCW, which announced this week that it wants to consolidate its offerings into a new company called HKT Group and flog off a 45 per cent stake. Richard Li, the firm’s majority owner, has tried to sell the firm before – in 2006 – but was blocked by other shareholders. During the proposed sale two years ago, it emerged that Li’s father and Asia’s richest man, Li Ka-Shing, was involved in the consortium proposing to buy the carrier, exposing a family rift and preventing Li from voting on the sale.

Meanwhile, PCCW competitor 3 Hong Kong said this week that it will be launching the iPhone in Hong Kong and Macau later this year. 3 is a 3G only operation, right? So you know what that means.

The firm’s Irish arm struck a deal with BT this week that will see the fixed player build out an expansion of 3 Ireland’s backhaul network, supporting speeds up to 14.4Mbps by next year. It’s worth EUR44m to BT.

In other 3G news, Russian carrier MTS lit its WCDMA network in St Petersburg this week, joining MegaFon in the Russian 3G stakes. The firm has plans for ten more city networks during the course of this year and up to 40 further cities will be covered in 2009. MTS also holds 3G licences in Uzbekistan and Armenia, where it reckons launches will happen in 2009 too. All in all the firm’s earmarked $1.6bn for 3G development in Russia and the CIS over the next three years.

Russia’s no stranger to spy stories but it was in Germany this week that dodgy covert surveillance reared its ugly head. Well, it didn’t rear its ugly head, that wouldn’t be very covert would it? It sat in a van with a telephoto lens, shall we say?

Over last weekend, Deutsche Telekom said it was launching a full investigation in to allegations of “misuse of call records”. Chief executive Rene Obermann said that recent findings suggest call record data was abused between 2005 and 2006. It is understood that people within the company had hired an external firm to analyse call records of conversations between board members and the press in a bid to identify the source of numerous leaks.

Obermann said the company had already investigated an individual case in the summer of 2007, following a tip-off from within the company and was able to resolve the incident. As a result, Deutsche Telekom reorganised its security department and implemented new control mechanisms. Not very good ones, it turns out.

He revealed that last month the management board had received information concerning broader and even more serious allegations from a third party commissioned by Deutsche Telekom’s security unit.

“I I I am m m sh sh shaken to the the core by these allega a a tions,” said Obermann, shaking to his core. “We take the situation most seriously. We have called in the public prosecutor’s office and will support them in their full investigation of these allegations,” said a much steadier Obermann. “By taking this approach we want to ensure the greatest possible level of transparency and allow criminal prosecutors to bring those responsible to justice.”

As everyone knows, however, there’s no justice in the world. If there were, brattish Chelsea footballer Ashley Cole wouldn’t be a millionaire. You can bet he’d be the type to go for one of the phones that a firm called Gresso has launched. You’d have to be stupid to drop $52,000 on a handset, even if it is covered in diamonds and built from ancient African Blackwood and 18 carat gold. After all, in 12 months it would be out of date and you’d be left with the ugliest brooch in the world.

In less frivolous handset news, Gartner revealed this week that, for the first time since it began tracking the handset market in 2001, sales for the first quarter of this year actually fell in Europe – by 16.4 per cent. That’s the cost of pushing contracts up to 18 months, which the vendors probably don’t like much. There was more bad news as Gartner suggested that sales in high-end handsets in particular were affected. As we get progressively more skint, it seems we are shying away from the top-notch phones. So up yours, Gresso. Gartner warned vendors to strengthen their mid-range workhorse portfolios in response to these straitened times.

Presumably we’ll all be cutting back on far-flung holidays as well. Especially now that European operators have reacted to the EU roaming cap by hiking prices for calls made from further afield. By as much as 163 per cent, according to Informa Telecoms & Media.

Informa said its analysis was based on the percentage change in aggregated roaming prices on a country by country basis between 2006 and 2008.

For example, the average price of a call home to Italy made by a subscriber roaming in Russia was Eur3.67 (excluding VAT) per minute in 2006 but had risen 25 per cent to Eur4.58 since the Eurotariff came into play.

A German mobile user outside the EU has seen a massive 163.7 per cent price increase since 2006 for a call home from Africa.

Informa analyst Angela Stainthorpe said that since the EU roaming regulation came into force, operators have reported roaming revenue declines into the hundreds of millions of Euros. “As roaming traffic growth hasn’t kept up with falling tariffs, operators are looking elsewhere to recoup their losses.

“Although only 15 per cent of EU roamers are travelling outside the EU, the high per minute rates they pay for the privilege have had a significant impact on roaming strategy. In some cases, countries that were once relatively unimportant to EU operators have now been elevated to prime position purely as a result of their contribution to roaming revenues.”

And that’s about it this week, although during one of the five ‘leisure minutes’ that the Informer is permitted each day, he found his way onto the website of comedian Emo Philips. There on the homepage was the following snippet of Emo wisdom:

“Cellphones are like dogs’ nipples. You don’t have to SHOUT INTO THEM!”

Take care

The Informer