General Telecom News France Telecom defends TeliaSonera plan (April 18, 2008) PARIS (Reuters) - France Telecom on Friday defended its possible takeover of Nordic rival TeliaSonera, as its shares hit an 8-month low on concerns the deal would be risky and could destroy shareholder value. The French telecom operator, which trades now mainly as Orange, said TeliaSonera would bring economies of scale, strengthen its position in Western Europe and expand its footprint in emerging markets such as Russia and Turkey. "We believe TeliaSonera represents a strategic opportunity," France Telecom Finance Director Gervais Pellissier told reporters on a conference call. "Critical mass is an important factor." "France Telecom and TeliaSonera are complementary, share a common strategic vision and both have significantly transformed their business models," he added. France Telecom stock fell nearly 3 percent early on Friday and by 0800 GMT it stood 1.8 percent lower at 19.46 euros, after touching a more than 8-month low. "We believe that an acquisition of TeliaSonera or Telenor by France Telecom would be value destructive, but are more worried that FT's interest in this deal signals larger weakness in the domestic business," Bernstein Research wrote in a note. "To make matters worse Orange has traditionally been a weak owner of non-domestic European assets, so we worry that there will be an incremental destruction of value if they take over these assets." DIVIDEND PLEDGE France Telecom stressed negotiations had not started and it had not given itself a deadline for a deal, which would create Europe's largest phone company by sales and its third-biggest by market capitalization. It also pledged to continue increasing its dividend, which was a source of concern, but its plans were coolly received by investors. Several brokers cut their ratings for France Telecom including Societe Generale, Dexia and Oddo Securities. Since Le Figaro reported on Wednesday that the French telecoms operator could acquire TeliaSonera, France Telecom shares have fallen more than 10 percent. Analysts have criticized the deal, saying it would not create significant savings and warned France Telecom's track record with cross-border acquisitions was unimpressive. Pellissier said the company was also weighing other options including a possible tie-up with Telenor of Norway. France Telecom said if the TeliaSonera deal went ahead it would finance it with equity and cash, meaning it might not meet its target of keeping the ratio of debt to gross operating margin under 2. "In case of a tie-up with an operator of this size, we are giving ourselves the possibility of going over this ratio for a limited period," Pellissier said. TeliaSonera's debts are much smaller compared to France Telecom's: the Nordic company's net debt stood at $5.9 billion at the end of 2007 while France Telecom's was $60.61 billion. TeliaSonera on Friday declined to comment but said if a bid came along it would have to present it to its board. Apple and Orange plan French iPhone subsidy (From macworld.co.uk, April 18, 2008) - Apple and Orange parent company France Telecom are renegotiating their iPhone deal with a view to lowering prices for the device in France, according to local reports. Les Echos makes the claims, citing anonymous tipsters. It claims Orange executives met with Apple chief operating officer Tim Cook at Apple headquarters in California this week to discuss a price cut. These talks follow recent price reductions on the 8GB iPhone model in Germany and the UK. The report claims Orange is considering applying a subsidy to iPhone prices in an attempt to shore up sales, though the company has denied this. The report explains Apple is interested in subsidising sales because it is unhappy that just 100,000 iPhones have sold in France. However, in order to put the subsidy into effect the companies are reconsidering their revenue sharing arrangement. Orange told Les Echos there was "no question of changing the business model of the iPhone" and that "everything is going well". The 8GB iPhone now costs €399 in France, while costing just €99 next door in Germany. Russia Vimpelcom to roadshow Eurobonds April 21-24 (April 18, 2008) MOSCOW - Russia's No.2 mobile operator Vimpelcom will hold a roadshow on April 21-24 for Eurobonds it plans to issue to refinance a $3.5 billion bridge loan, a market source said on Friday. The roadshow will be held in Los Angeles, New York, Boston and London, the source told Reuters. Vimpelcom said on Thursday it wanted to issue Eurobonds in the second quarter of 2008 to refinance the bridge loan it had taken to acquire fixed-line operator Golden Telecom. The company said the principal amount, interest rate and maturity date of the issue were yet to be determined. Nokia's first quarter results disappoint (April 17, 2008) HELSINKI (AFP) - Nokia, the world's leading mobile phone maker, posted strong first quarter results Thursday, but its market share slipped and missed analyst forecasts, sending its share price tumbling. Nokia shares closed with a loss of 13.51 percent at 18.12 euros, their lowest level in a year, on the Helsinki stock exchange, which was down 2.10 percent on average. Net profit for the January-March period rose 25 percent to 1.22 billion euros (1.95 billion dollars) from the same quarter a year ago, the company said in a statement. It said sales during the quarter jumped 28 percent to 12.66 billion euros, which fell short of expectations of 12.74 billion euros, according to analysts. The Finnish mobile phone giant's market share in the first quarter stood at 39 percent, up from 36 percent a year ago but down from 40 percent in the fourth quarter of 2007. When the group published its annual results in January, it warned that its first quarter performance might suffer compared with the last three months of 2007. Nokia sold 115.5 million devices during the first quarter, up 26.8 percent year-on-year but down 13.5 percent compared to the 133.5 million devices sold in the fourth quarter last year. The group said however that it expected its market share to increase in the second quarter compared to the first three months of the year. "While we will not have major new products shipping in the second quarter, we expect a number of new products to be shipping and to have a positive impact on our results in the second half of 2008," Nokia chief executive Olli-Pekka Kallasvuo said in the earnings statement. The company said its handsets on average sold for 79 euros each in the first quarter, missing analyst estimates for a price of 81 euros. Its average selling price stood at 89 euros in the first quarter of 2007 and 83 euros in the previous quarter. "The average selling price seems to be falling faster than expected," Pohjola Bank analyst Hannu Rauhala told AFP. Nokia meanwhile reiterated that it expected industry mobile device volumes to grow by around 10 percent in 2008 from the approximately 1.14 billion units it estimates were sold last year. "The overall device market developed as expected (in the first quarter), with the greatest demand in emerging markets, where our position is very strong," Kallasvuo said. He added in a news conference later Thursday that Nokia had "not seen any meaningful change" in the pace by which consumers were replacing their mobile phones in Europe or elsewhere. The overall market was however expected to decline in euro terms this year compared to 2007, the company cautioned. "The change from our previous estimate of value growth for this market primarily reflects the negative impact of the recently weakened US dollar, the general economic slowdown in the US, and possibly going forward, some economic slowdown in Europe," the company explained. "It was slightly surprising that they said that in euro terms the handset market would decrease this year. That was disappointing," Rauhala said. Reports: Motorola reorganizes mobile-phone business (From CNET, April 17, 2008) - Motorola has reportedly reorganized its struggling mobile-phone business in anticipation of plans to spin it off into a separate publicly traded entity. Although Motorola, at press time, had not yet put out a statement on the changes, they appear aimed at developing products more quickly in response to consumer demands, according to reports by Chicago Tribune, The Wall Street Journal, and Reuters. Motorola has reportedly combined two categories of phones, mid/high-tier feature phones and multimedia phones, into a single segment, according to the Tribune. And among a group of executives named, Rob Shaddock, a senior vice president of mobile devices, was named head of consumer products, according to the Journal and Reuters. The Journal added that John Cipolla was promoted to senior vice president for mid- to high-tier products; Steve Lalla will oversee teams focused on mass-market phones; and Todd DeYoung "was given responsibility for ensuring the company's cell phones match its overarching strategy and are being directed at the right market." Motorola has seen its handset market share plummet, mostly due to a lack of compelling new products. In January, amid pressure from activist investor Carl Icahn, the company said it would consider separating its handset business from the rest of the company in an effort to increase shareholder value and revive the struggling business. Late last month it officially announced the plan and has since announced a round of layoffs. O2 and Carphone cut iPhone price in Britain (April 16, 2008) LONDON (Reuters) - Mobile phone groups O2 and Carphone Warehouse have cut the price for the most basic version of Apple Inc's iPhone in Britain by 100 pounds ($197) ahead of the expected launch of a new model. The two groups said the 8 gigabyte phone would be available for 169 pounds until June 1, while the 16GB phone will remain priced at 329 pounds. O2 said the offer would be available on the original iPhone tariffs which start at 35 pounds per month and the operator expects it to create additional momentum for O2's fastest selling device. Some analysts have questioned whether sales could soften at the high end of the handset market, but Carphone's Finance Director Roger Taylor told Reuters on Tuesday the company had not seen any signs of this. While sales of the iPhone may have slowed since the initial launch, the announcement on the price cut is more likely to be linked to Apple's expected launch later this quarter of a third-generation high-speed version of the iPhone. Apple declined to comment on this. T-Mobile reduced the price for the smaller iPhone in Germany earlier this month. "More and more this is starting to look like they want to clear stock of an older model, with a looming revision to the iPhone which will likely include 3G," CCS Insight analyst Ben Wood told Reuters. "But also we think the iPhone has slowed down during the first quarter and we think this (a 3G launch) should give sales a bit of a lift." Mobile operator O2, which is owned by Telefonica, and retailer Carphone Warehouse secured the deal to sell the iPhone in Britain last year. But both groups have since been reluctant to divulge any sales figures. A spokeswoman for Apple said this was an "O2-led promotion" and the price would not change in its retail stores. EU court backs fine against Deutsche Telekom (April 10, 2008) LUXEMBOURG (Reuters) - A European Union court on Thursday backed a European Commission fine of 12.6 million euros ($20 million) against Deutsche Telekom for overcharging start-up rivals to use its local networks. "By charging its competitors prices higher than the retail prices which it charged its own end users, Deutsche Telekom abused its dominant position," the Court of First Instance said in a statement, dismissing an appeal by the company. The EU executive European Commission said the "landmark" ruling for operators confirmed that the bloc's general competition rules applied even to sectors where there were specific EU rules on competition. Deutsche Telekom charged unfair prices for giving rivals access to its network, a policy known as "margin squeeze", the Commission said. "This meant that alternative operators could not compete effectively with Deutsche Telekom and German consumers were deprived of the benefits of choice and price competition for more than five years," the Commission said in a statement. The Brussels-based Commission decided in 2003 that fees set by the German regulator were too high, and Deutsche Telekom must cut them so smaller rivals could compete. The company at first charged rivals more than consumers, and even after fee cuts, competitors were squeezed. The company said it was blameless because regulators set fees, but the EU's second-highest court disagreed. "Deutsche Telekom did not use the discretion which it had during the period from 1 January 1998 to 31 December 2001 to reduce the margin squeeze or even to end it entirely," it said. The company said: "We regret the judgment. We will analyse it and decide whether to appeal." The Commission said Spanish operator Telefonica was in the middle of an appeal against a margin squeeze ruling. Orange Israel launches NewACT's Mobile Data Synchronization (April 9, 2008) YOKNEAM, Israel (PRNewswire) - NewACT announced today that Partner Communications Company Ltd, operating the orange(TM) network in Israel, has launched NewACT's mSync-based suite of services. The application suite was branded 'orange forever' by Partner Communications. 'orange forever' allows Partner's subscribers to synchronize their contacts (SIM and PIM), calendar, pictures, videos and messages between their mobile handset and the orange web site. On the orange portal subscribers are able to edit, manage and archive their data as well as share it with other users. The data is also always available for restoring in case of a handset upgrade, loss or damage. "With mobile phones becoming major content creation tools and with the increased amount and importance of mobile data stored on mobile phones, we believe 'orange forever' answers a real need for our customers," said Ofir Yaffe, Head of Product Marketing at orange Israel. "Serving as many mobile phones as possible and reducing the time and effort required to introduce new devices are key for our success. NewACT's mobile client technology practically eliminates this effort, significantly contributing to service take up and success. NewACT's synchronization technology enables simplified and intuitive user experience as well as true synchronization between multiple devices on the network." "Our mSync suite provides the most complete end-to-end synchronization, storage and collaboration solution for mobile operators and service providers. Combined with our unique client technology which makes this service available on virtually any mobile device, we believe this service is geared for immediate success." said Rafi Ton, CEO of NewACT. "The flexibility and openness of the mSync platform allows for fast implementation of additional value added services that can share the content from the mobile while enabling further differentiation and revenue for our customers." Russian Vimpelcom signs $3.5 bln loan (April 8, 2008) LONDON (Reuters) - Russian Vimpelcom has signed a $3.5 billion loan, which backs the mobile phone firm's $4.3 billion acquisition of fixed-line operator Golden Telecom GLDN.O, a banking source said on Tuesday. The loan is split between a $2 billion, three-year syndicated loan that carries a margin of 150 basis points (bps) over LIBOR and a $1.5 billion, one-year bridge loan that was provided by the mandated lead arrangers and was not syndicated. The deal was funded on Monday after the $2 billion facility closed oversubscribed. The amount was not increased. Mandated lead arrangers are ABN AMRO, Barclays, BNP Paribas, Calyon, Citigroup, HSBC, ING and UBS. In all, 17 banks joined the deal in syndication. The bridge loan, which pays a margin of 65 bps over LIBOR for the first six months, 100 bps for the following three months and 125 bps thereafter, will be refinanced with a bond. New York-listed Vimpelcom, in which private equity group Alfa and Norway's Telenor own strategic stakes, bought Golden Telecom for $4.3 billion in December. Nokia launches new digital music store in the Netherlands (April 8, 2008) AMSTERDAM (PRNewswire) - Nokia announced today that the Nokia Music Store in the Netherlands has gone live http://www.music.nokia.nl. With millions of tracks from major artists, independent labels, and up-and-coming Dutch acts, the Nokia Music Store let's people enjoy music directly on their Nokia device or personal computer. Part of the Ovi by Nokia offering, the Nokia Music Store, with its compelling combination of download and streaming services, empowers you to connect to music you want, in the way you want. "As the world's largest manufacturer of digital music players, millions of consumers from around the world can enjoy our music experiences," said Emile Baak, Managing Director of Nokia Benelux. "We're dedicated to delivering the best music experience, based on products and services that offer consumers choice, relevance, and ease of use. We also want to be more locally relevant than any other digital music store." Nokia is celebrating the launch with a special offer. Everyone who purchases five tracks on the Nokia Music Store gets five other tracks for free. This offer is valid for the first 10,000 registrants who purchase five tracks at once. With a single account, music lovers can access the Nokia Music Store via their desktop computer or directly from optimized Nokia devices such as the Nokia N81 and Nokia N95 8GB. Browse for new music, get recommendations or search for your favorite artists, songs or albums all from the palm of your hand. Once a track captures your attention, you can add it to your wishlist to buy later or purchase it immediately for download to your device without having to download the same song again on your computer. You can also transfer purchased songs via your PC to compatible Nokia devices. Individual tracks will cost EUR1.00 per track and albums from EUR10.00. Nokia Music Store will also offer a monthly subscription for PC streaming for EUR10.00. All music on the Nokia Music Store can be purchased through a variety of payment options, including credit cards and pre-paid vouchers. Other highlights include the ability to listen to a 30 second clip from any track on the store. Telefonica close to Ecuador mobile deal (April 4, 2008) QUITO (Reuters) - Spain's Telefonica SA is close to renewing its mobile concession in Ecuador after it accepted the government's economic proposal in negotiations to increase state control of the sector. But the country's largest mobile provider, America Movil unit Porta, did not meet Ecuador's expectations for its economic offer to extend the concession, Jaime Guerrero, chief of telecommunications regulator Senatel, told Reuters. Guerrero said negotiations continue, and the government could decide on the companies' deals as early as next week. An agreement with Telefonica would mark a victory for leftist President Rafael Correa, who has launched an aggressive drive to increase state participation in key sectors of the economy from oil to mobile telephony to mining. "This is a political victory for him, but at what cost? At the cost of lowering foreign direct investment," said Alberto Ramos, a senior economist at Goldman Sachs in New York. Ramos said the government's proposed tough terms in contracts could divert some of the companies' planned investment to other countries offering better terms. Telefonica agreed to the government's concession value, but the final cost will not be released yet, Senatel said in a statement. Ecuador wants both companies to pay together $700 million to renew concessions due to expire in the second half of this year. Telefonica agreed to make an initial payment for the concession and later progressive payments for 15 years based on the unit's annual income, Senatel said. Ecuador wants both mobile companies to improve services and lower rates, and has warned that if they don't comply with new regulations they could leave the country. America Movil and Telefonica control 95 percent of the country's market of more than 10 million subscribers, though Ecuador represents a small part of both their overall subscriber bases. T-Mobile slashes iPhone price to 99 euros from 399 (April 4, 2008) FRANKFURT (Reuters) - T-Mobile has slashed its price in Germany for the most basic version of Apple Inc's iPhone to 99 euros ($155) from 399 euros ahead of the expected launch of a new model. In an offer posted on Friday on its Website (http://tinyurl.com/29pokf), T-Mobile said it would sell the 8 gigabyte version for as little as 99 euros together with a two-year contract costing 89 euros a month from April 7 through June 30. The 16 gigabyte version will continue to cost 499 euros, in conjunction with a minimum 49 euros-per-month two-year contract. Apple is expected to launch later this quarter a third-generation, high-speed version of the iPhone, which propelled it into 10th place in global handset vendor rankings in the fourth quarter of 2007 after its launch at the end of June. Bank of America analysts expect Apple to produce as many as 8 million of the new iPhones in the third quarter. Apple itself has said it expects to have sold 10 million iPhones in total by the end of 2008. Deutsche Telekom said at the end of January it had sold 70,000 iPhones since they went on sale in Germany at the beginning of November, but has given no update since. Greece may sell 8pc OTE stake to German firm (From Gulf Daily News, March 22, 2008) ATHENS - Greece may sell up to eight percent of major telecom group OTE to suitor Deutsche Telekom as part of its plans to lock in the German firm as a strategic partner, Greece's finance minister said yesterday. Deutsche Telekom on Monday agreed to buy 20pc of OTE for 2.5 billion euros ($3.9bn) from buyout firm MIG and has entered talks to buy a stake from the government, which owns about 28pc, but OTE unions have called for strikes against the deal. "A 20pc holding in OTE by the state should be assumed as a basic fact, given that such a stake is strategic and grants the holder certain rights," George Alogoskoufis said on Greek Flash radio. Greece has long sought a strategic investor for OTE, even sounding out Deutsche Telekom in the past, but had no luck as it did not want to cede management control. "We have entered discussions, through our advisers, with D Telekom and believe we can reach an understanding on the levels of shareholding and the form of management," Alogoskoufis said. Greek media have reported the government is willing to share the positions of chairman and chief executive of the company. Earlier, OTE's workers union called a three-day strike next week to protest against the proposed deal. "A total strike from March 26 to 28 will be held throughout the group," OTE's workers union OME-OTE said in a statement. "OTE is a piece of Greece and is not for sale," the union added. The union will hold a meeting on March 28 to consider further strikes, it said. OTE's powerful unions have scuttled deals in the past amid concerns that further stake sales will lead to job cuts and affect job security. Pakistan set to auction 3G spectrumPublished (From Gulf Time, March 21, 2008) LAHORE - Auction for the licenses of third generation mobile phone services has been planned in June for introducing the latest telecom technology in Pakistan, official sources said yesterday. Sources in the industry and Pakistan Telecom Authority (PTA) say that the authority had planned to award three licenses through competitive bidding among existing cell services only. The third generation (3G) services would enable mobile users to access high speed Internet, video calls and other value added data services. “Currently, GSM is the main cellular technology in use in Pakistan, whereas WCDMA/UMTS is the preferred technology for 3G for which spectrum shall be auctioned,” sources remarked. “Since existing licenses of mobile operators are technology neutral, therefore no new license for 3G shall be issued instead spectrum shall be assigned for the remaining period of license term,” an official said. Conditions for rollout payment of fees and quality of service shall be added in existing licenses with assignment of spectrum. Auction methodologies ensuring fair competition would be finalised in couple of weeks. Base price for spectrum (a dollar per MHz per Year) shall be derived from auction winning price of 2004 which is $291mn for 13.6 MHz GSM spectrum for 15 years. Sources informed that the Cabinet Committee for Regulatory Authority (CCRA) had allowed issuing only three 3G licenses to existing cellular operators only because the cost of laying telecom infrastructure was very high. An open auction for new entrants may delay 3G launching. Thus it would be better to limit the auction to existing cellular services that already have the required infrastructure in place, they remarked. Telenor Pakistan executive vice-president of Corporate and Regulatory Affairs Irfan Wahab welcomes the advent of 3G and understands government’s ambition in this regard, but asks for a reasonable pricing/allocation mechanism. He says that the Telenor view is that growth and investment in the basic mobile infrastructure should not be sacrificed or slowed down - there are far too many people still without basic access to mobile telephony. “Right now operators are focused on investing in far flung areas and un-served populations, who need connectivity for basic services, to improve their productivity, and to reach out. If a huge fee is demanded for 3G, it will just divert this investment with limited benefits for those who are still waiting to be connected with basic voice services - their data needs being limited by lack of literacy, content, and affordability,” Irfan remarked. He requested the government to consider 3G not as a licensing opportunity but rather as allocation of additional spectrum linked with roll out obligations and not hefty upfront fee. PTA and Frequency Allocation Board should also make additional UMTS spectrum available in order to have equitable spectrum allocation, Irfan remarked. Shares plunge as Deutsche Telekom sees lower fixed-line profits (March 19, 2008) FRANKFURT (AFP) - Shares in Deutsche Telekom, Europe's biggest telecom operator, plunged Wednesday after it said that core earnings on its traditional fixed-line operations could fall five to eight percent this year. Sales would be down four to six percent. Fixed-line operations director Timotheus Hoettges said sales and earnings should stabilise by 2010, stressing that "the message is -- we are slowing the decrease" on the fixed-line side of the business. Investors failed to get the message however and shares in the company plunged 7.64 percent to 10.51 euros in afternoon trading to lead losers on the Frankfurt stock market, which had gained 0.26 percent overall. Earlier in the day, the share price fell as low as 9.92 euros, a level not seen since 2002. "We understand that we caused confusion, we apologize," Hoettges said after the stock had fallen. A Deutsche Telekom spokesman said it still expected overall earnings before interest, tax and depreciation (EBITDA) to remain stable compared with their 2007 level of 19.33 billion euros (30 billion dollars), brushing off concern the group might have to cut its full-year outlook. "We fully and completely affirm this forecast," he said. Fixed line sales represent around one third of the group's total. The incumbent German telecom operator has seen about 4.4 million fixed-line clients pull the plug over the past two years amid growing use of mobile phones and complaints about service. Deutsche Telekom's German fixed-line operations comprise broadband Internet access as well as fixed phone lines. Last year, sales fell by eight percent and EBITDA dropped by 14 percent on increased competition and lower prices. Hoettges