Telecom Report

China telecom shuffle puts Nortel in catbird seat

Jim O'Neill — Thu, 28 Aug 2008 14:09:52 -0400

China's major telecom realignment has put Canada's Nortel Networks in a position to finally pull out of the doldrums that have plagued it in recent months, Paradigm Capital analyst Barry Richards told the Ottawa Citizen.

China's second-largest fixed-line operator, China Netcom Group, and its second-largest cellular carrier, China Unicom Ltd., are set to merge under China Unicom's logo Oct. 15. Between them, they have 279 million customers. Both are Nortel customers and are upgrading from second to 3G and 4G technology. Unicom plans to spend $14.6 billion over the next two years upgrading to a 3G wireless network.

"This is a glorious opportunity for Nortel, already a supplier to both China Unicom and China Telecom," Richards said. "Overall, China has the potential to pull Nortel's business and its stock out of its long-term funk, and we believe they are well positioned to exploit that market."

For more:
- See the Ottawa Citizen story

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France Telecom re-assures despite profit slide

Dan O'Shea — Thu, 31 Jul 2008 11:06:18 -0400

France Telecom reported a 19 percent decline in profit for the first half of 2008 to about $4.17 billion, along with a slight revenue increase of 1.5 percent. However, while industry observers recently have been concerned about the ongoing financial performance of Europe's largest service provider, France Telecom actually re-affirmed its prior 2008 goals and said it still plans to pay a dividend in September. The telco's attempt to acquire TeliaSonera fell apart recently and France Telecom faces some serious broadband competition in its native market, but the company seems to be holding its own for now.

For more:
- read this report at The Wall Street Journal

Related articles:
France Telecom ended its bid for TeliaSonera in June. France Telecom report
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Telecom immunity switch haunts Obama campaign

Dan O'Shea — Wed, 02 Jul 2008 08:34:49 -0400

Presidential candidate Sen. Barack Obama is under fire from some of his most liberal supporters for supporting the compromise that likely will result in new surveillance laws with immunity included for telcos who engaged in wiretapping initiated by the federal government in the past, reports the New York Times. At the heart of the complaints is that fact that Obama switched his stance on the legislation, saying in the past he would fight a new Foreign Intelligence Surveillance Act, but then switching to support the legislation after a so-called compromise was reached in the House of Representatives.

A number of other legislators switched allegiances after the compromise, but of course, they are not the ones who are running for president. Could a telecom-related issue--ok, one with telecom interests at its fringes--greatly hamper Obama? Will those inflamed by his new position on telco immunity be moved enough to jump to Nader?

The new legislation with telco immunity included is set to hit the Senate floor early next week.

For more:
- read this story at The New York Times

Related articles:
It has not been clear which presidential candidate the telecom industry most favors Telecom report
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France Telecom seeking to find TeliaSonera's sweet spot

Jim O'Neill — Fri, 20 Jun 2008 08:40:10 -0400

Like a flyfisherman changing his patterns to see what'll raise a reluctant trout, France Telecom has begun recasting its takeover bid to TeliaSonera in an effort to discover just what it's going to take to get the reticent Nordic telco to bite.

The former French monopoly says it can raise its cash offer a bit, but doesn't have much wiggle room. It's also telling the Swedish and Finnish governments, which have stakes of 37.3 percent and 13.7 percent respectively, that they'll maintain some influence on the group, although with a newly configured ownership mix giving them stakes of just 6.5 percent and 2.5 percent respectively it's hard to see how much their opinions will count in the end. Finally, FT is floating the idea that a "northern headquarters group" could be located in Stockholm.

FT on June 5 offered Telia $40.6 billion, which Telia's board immediately rejected as being too low. Critics, meanwhile, question the financial and strategic value a takeover of Telia would bring France Telecom.

For more:
- See the Thompson Financial story in Forbes
- Or the Financial Times story

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FT may dump TeliaSonera bid

Jim O'Neill — Mon, 09 Jun 2008 22:47:25 -0400

That sucking noise France Telecom execs hear is the sound of its share price going down the drain as investors let the company know what they think about the French telco’s bid for Scandinavian provider TeliaSonera. FT shares slipped 7.72 percent in the days following its announcement it was paying $42 billion for the company. It didn’t help that TeliaSonera rejected FT’s bid like the Bachelorette sends potential suitors packing.

France Telecom’s director of finance, Gervais Pellissier, said FT wasn’t wed to the idea of acquiring TeliaSonera and could withdraw its bid if share prices continued to erode.

“We need more time to explain our project and this work has only just begun,” Pellissier said. “We are convinced this project makes sense for the two groups, but it is not indispensable for France Telecom.”

For more:
- Read the Thompson Financial story

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FT bids $42 billion for TeliaSonera France Telecom report
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France Telecom confirms TeliaSonera interest France Telecom report