Telecom, energy sectors see sharpest earnings cut after Q1

 

 

 

 

 

 

The April-June quarter of 2022-23’s (FY23’s) earnings season has wrapped up. Subsequently, the benchmark Nifty has seen only a marginal cut in its FY23 and 2023-24 (FY24) earnings estimate, but telecommunications (telecom) and oil and gas sectors have seen sharp cuts.

The Nifty earnings per share (EPS) is estimated to grow 9 per cent year-on-year to Rs 785 in FY23, against an earlier expectation of 13 per cent growth to Rs 820.

Meanwhile, FY24 earnings estimates are revised downwards, marginally from Rs 935 to Rs 925.

The FY23 EPS for telecom stocks has been revised downwards by 27 per cent, while that of oil and gas has been cut by 18.2 per cent. With the exception of these two sectors, most other sectors have seen single-digit cuts in earnings.

The FY23 EPS for the automotive sector has been revised upwards by 28 per cent, underpinned by pick-up in two-wheeler demand and an improved outlook for passenger vehicles.

 

“A major disappointment came in from the oil and gas sector wherein marketing margins came in lower than estimated. However, capital goods, metal and mining, and the pharmaceutical space surprised on the positive side,” says a note by ICICI Direct.

The brokerage believes that the cut in earnings can be offset by a slight rerating of the Nifty Index by virtue of a thaw in commodity prices, consequent positive impact on inflation, and resultant modest rate hike.

 

Spectrum auction and outlook for telecom stocks

 

 

 

 

 

The telecom stocks are back in the limelight amid the spectrum auction by the government. But are they worth your hard-earned money? Let's find out 

 

Spectrum auction has brought focus back on stocks of telecom service providers.

According to reports, Sunil Mittal-controlled Bharti Airtel, Mukesh Ambani-owned Reliance Jio and Gautam Adani have collectively bid around 1.45 trillion rupees to buy 5G airwaves on the first day of India’s largest-ever spectrum auction that began on Tuesday.

The bidding and demand seen on the first day itself was 80 per cent higher than the government’s internal estimates of 80,000 crore rupees.

According to a Jefferies' note, telcos may look at the 700 megahertz band more closely as it is the primary band for 5G globally.

It is available pan-India with its price is similar to the 800/900 megahertz bands; and got provisional bids worth 39,270 crore rupees on day-one of the auction.

The note also pointed out that the spectrum supply is nearly 20 times higher in 2022 as compared to 2021 - mainly on account of the 5G band auction availability.

Analysts say the spectrum spend by market leaders Reliance Jio and Bharti Airtel is significantly higher than expected, requiring the industry to grow faster in order to justify such large investments.

According to ICICI Securities, “Higher spectrum investment has been seen to depress the return on invested capital for the industry globally. We remain cautious on the higher investments by Indian telcos.”

However, Edelweiss Securities says that given the improving cash flows amid rising revenues from data, the telecom companies will be able to manage the annual payouts for spectrum. In a note to Business Standard, it says, “These bids translate into Rs 12,600 crore annual pay-out versus our expectation of Rs 8,430 crore. Considering strong and improving profitability, we do not see this as much of an issue.”

At the bourses, Bharti Airtel and Vodafone Idea have underperformed and are currently trading below their respective 200-day moving averages, which indicates underlying weakness.

[Byte of Avdhut Bagkar, Business Standard]

On Thursday, the markets will react to the outcome of the US Federal Reserve’s decision on interest rates. Futures & options expiry of July series later in the day, too, will keep traders busy.

Standalone 5G networks will enable true 5G game changers such as slicing & ultra-low latency

 

 

 

 

 

 

We had the pleasure of interviewing Vodafone's Kerstin Larsson-Knetsch ahead of next week's Connected Germany, taking place in Mainz on April 5-6

Can you introduce yourself and your role?

 

My name is Kerstin Larsson-Knetsch, I am responsible for consulting and solution design at Vodafone Business Germany. Staying true to our motto "Co-Create. Digital. Future" my team and I co-create digital and innovative solutions with our enterprise customers. Part of our portfolio are 5G solutions, which we implement in all kinds of industries (e.g. automotive, media, smart factory and health). 

 

What have been the biggest developments in Germany’s rollout of next-gen mobile communication networks over the last year?

 

The 5G rollout in Germany started in 2019 with the first 5G call by Vodafone Germany's CEO Hannes Ametsreiter. Since then, we have seen the fastest rollout of a new mobile network generation so far. Today, over 45 Mio people in Germany already benefit from 5G Giga-speed which means that the original rollout targets have been exceeded. Germany now holds a leading position in Europe and the network is growing fast. 

 

However, 5G coverage and speed is just one dimension. We also need to fully exploit the technological possibilities of 5G as fast as we can. What do I mean by that? So far, most of the 5G network in Germany is based on "non standalone" (NSA) 5G technology. This means that while the radio antennas are already 5G, the underlying core network is still based on 4G technology. However, true 5G game changers like slicing or ultra-low latency can only be achieved with a full standalone 5G network. Therefore, Vodafone Germany just launched 5G standalone as the first operator in Europe in hundreds of locations and cities and we will constantly grow our footprint. 

 

Another important aspect of 5G are mobile private networks (MPNs) for our enterprise customers. This is a step change for many industries as MPNs help to simplify the network environment and connect production systems in a much more flexible way. Just look at our 'Vodafone Redbox', which is a complete network-in-a-box that can be deployed easily and keeps data save at the customer’s premise. 

 

Overall, the pandemic has underlined the importance of a strong fixed and mobile network infrastructure as the backbone for society, digitalisation, innovation and future success. It is key that all responsible parties - politics and regulation, MNOs, hardware vendors and other players - work together even more effectively to bring us to the top. 

 

How should connectivity for enterprises continue to evolve within Germany?

 

Over the last two years, we have seen a high interest in 5G from our business customers. We have conducted a range of "proofs-of concept" with customers from different industries, such as testing autonomous driving with customers like Porsche at our 5G mobility lab in Aldenhoven near Aachen. We see amazingly innovative ideas and concepts. The university hospital in Düsseldorf is building a 5G hospital campus. One of the many impressive use cases utilizes augmented reality to provide 3D animations of organs for doctors to improve surgery and diagnostics. We also see a lot of activity in the agricultural sector where 5G combined with IoT and AI can help to increase harvest yield while at the same time contribute to environmental protection. These are great examples of how 5G can contribute to overcome some of the most pressing challenges of our time like climate crisis, health, nutrition or mobility. 

 

The 5G ecosystem matures and therefore we will see much more innovation for instance more devices will become available. Slicing will be a major driver: Companies will be able to apply different parts of the network to different use cases in their factory - for example one slice could be used for AGVs, another for video surveillance. Our vision is to allow customers to simply rent a network service for a certain time on a website, for example when they need specific coverage for a construction site. We are building the prerequisites for network-as-a-service to orchestrate network capability and on-top-services so that customers can manage their connectivity demand much more flexibly. 

 

Many of these ideas are being developed together with customers and partners in our 5G labs and in the future also in our new R & D centre in Dresden. I strongly believe that innovation comes from collaboration and co-creation. 

 

What are you most looking forward to at Connected Germany?

 

After two years of mainly remote meetings, I look forward to networking and meeting people from the industry in person, being inspired and coming home with new ideas and contacts.

 

 

 

Telecoms chiefs urge EU lawmakers to press tech groups on internet investment

 

 

 

 

 Europe’s largest telecoms providers have called on EU lawmakers to compel Big Tech groups to contribute more to the cost of expanding internet infrastructure, as streaming and other entertainment services take up an ever-increasing share of bandwidth. The chief executives of Deutsche Telekom, Orange, Telefónica and Vodafone accused video streaming, gaming and social media groups of piggybacking on billions of euros of investment in internet infrastructure, saying that the “burden must be shared in a more proportionate way”, in an open letter published in the Financial Times. “We now urgently call upon legislators to introduce rules at EU level to make this principle a reality,” said the letter, which was signed by José María Álvarez-Pallete, chair and chief executive of Telefónica; Tim Höttges, chief executive of Deutsche Telekom; Nick Read, Vodafone chief executive; and Stéphane Richard, outgoing chair and chief executive of Orange. Most telecoms groups are investing heavily to expand or upgrade services from copper to fibre and on 5G deployment, but have for years struggled with weak margins and falling valuations. Although carriers have made similar requests to European lawmakers in the past, the companies said they were encouraged by a European Commission proposal that “all market actors benefiting from the digital transformation . . . make a fair and proportionate contribution to the costs of public goods, services and infrastructures”, made in a declaration on digital rights last month. “I suspect we’ll see more positioning like this, particularly during the French presidency of the Council of the EU given they have been fairly critical of Big Tech in the past,” said Matthew Howett, an analyst at Assembly Research. In their letter, the chiefs note that video streaming, gaming and social media from just a handful of digital platforms accounts for more than 70 per cent of all traffic on networks. Their plea echoes a recent spat in South Korea over who should contribute to maintenance costs incurred by broadband providers — a move that was sparked by the surge in online traffic from the successful Netflix series Squid Game. Such was the popularity of the dystopian show that South Korea’s SK Broadband, owned by the country’s largest mobile carrier SK Telecom, last year sued Netflix to cover the cost of the surge in traffic, saying that it had been forced to upgrade its network. The quartet warned that their sector’s retail markets “are in perpetual decline in terms of profitability”, and cautioned that “network operators are in no position to negotiate fair terms with these giant platforms due to their strong market positions, asymmetric bargaining power and the lack of a level regulatory playing field”. “Consequently, we cannot make a viable return on our very significant investments, putting further infrastructure development at risk,” they said. “If we don’t fix this unbalanced situation Europe will fall behind other world regions, ultimately degrading the quality of experience for all consumers.” Video streaming companies have countered that they should not be singled out to pay more for a network, citing the concept of ‘net neutrality’ — the idea that network providers should not be allowed to discriminate or charge companies differently based on use or content. They also argue that they invest heavily in their own servers to ensure they can get content to consumers without clogging up the network. Although Deutsche Telekom’s share price has risen 12 per cent over the past five years, Orange’s has slipped 25 per cent, Telefónica’s is down more than 50 per cent and Vodafone’s is down nearly 30 per cent.

US: Telecom operators agree to 5G delay in U-turn decision

 

 

 

 

 

Two major US telecom operators, AT&T and Verizon, agreed on Monday evening to a further two-week delay to a planned rollout of 5G networks across the country.

The decision followed a request by Transportation Secretary Pete Buttigieg on behalf of aviation companies that were worried about the interference of 5G signals on aircraft safety devices.

The two companies had previously rejected the request after having already delayed their launch by a month.

"We've agreed to a two-week delay which promises the certainty of bringing this nation our game-changing 5G network in January," Verizon said in a statement after talks with government officials and the Federal Aviation Authority (FAA).

Problems of frequency

Buttigieg and FAA chief Stephen Dickson wrote to Verizon and AT&T on Friday asking them to hold off on their nationwide launch for a maximum of two weeks.

The move was triggered by concerns of "unacceptable disruption" to flights due to possible interference from 5G signals.

The C-band frequency used by 5G is close to that used by altimeter devices on planes that measure the aircraft's altitude.

Airlines are worried about serious impacts on their flights. At the same time, the two telecom companies are eager to launch their new service after having spent billions on licenses to use the frequency.

 

Limits on 5G around airports

"We know aviation safety and 5G can co-exist and we are confident further collaboration and technical assessment will allay any issues," an AT&T spokeswoman said in a statement.

Although they had initially rejected the request, both companies agreed to limit the new 5G services around major airports for six months so as to limit any possible problems for aircraft.

They had been hoping to launch in many US cities on Wednesday.

Total Telecom: Maximizing the Value of Connectivity

 

 

The British company said the investment would enable it to build products and se ..

Read more at:
https://telecom.economictimes.indiatimes.com/news/vodafone-adds-7000-software-engineers-to-target-digital-services/87196863

 

LONDON--(BUSINESS WIRE)--Total Telecom reported that industry leaders gathered recently at Ultra-Broadband Forum 2021, organized by UN Broadband Commission and Huawei, held in Dubai to discuss building future-proof networks sustainably.

Total Telecom thinks that the expectations from digital connectivity have been redefined in the last one year. From conducting financial transactions online to remote factory management, the digital way of life is becoming pervasive.

"Connectivity reshaped how we live and work when the pandemic hit in 2020. Connectivity is more than an expansion of functions, it is an emotional bond. As long as there is connectivity, there is a bond. Where there is connectivity, there is innovation. It presents us with unlimited possibilities. I believe in our shared mission to create a connected world," says Ryan Ding, Executive Director of the Board, President of the Carrier BG, Huawei, in his inaugural address.

The C.A.F (Coverage, Architecture and Fusion) model is emerging as a way for the telcos to maximize the value of connectivity and achieve new growth. "The broader coverage the network has, the more number of connections it will grow. Further, fusion between connectivity and cloud is important to speed up digitalization. The sooner we achieve network and cloud convergence, the better competitive advantage telco operators will have. Lastly, network architecture is the cornerstone for current and future business opportunities. A future-oriented network should be more elastic, more efficient and greener," says Peng Song, President of Global Carrier Marketing and Solution Sales, Huawei.

According to Total Telecom, with the growing dependency on digital tools, there is a strong need to rethink our network strategy to expand coverage, benefit from cloud and connectivity and build a future-oriented network. The communications service providers (CSPs) need to adopt innovative network strategies to provide reliable and ubiquitous broadband coverage to power the next wave of growth and innovation.

About Total Telecom

Total Telecom offers daily online news with the option to sign up for headlines by email and monthly analysis. Total Telecom organises the annual World Communication Awards, Asia Communication Awards and a range of conferences and networking opportunities, including Submarine Networks EMEA, 5GLIVE, Connected Italy, Connected Britain, Connected Germany and the Total Telecom Congress. Find out more at www.totaltele.com

 

LONDON: Vodafone said it would add nearly 7,000 software engineers to its workfo ..

Read more at:
https://telecom.economictimes.indiatimes.com/news/vodafone-adds-7000-software-engineers-to-target-digital-services/87196863

 

LONDON: Vodafone said it would add nearly 7,000 software engineers to its workfo ..

Read more at:
https://telecom.economictimes.indiatimes.com/news/vodafone-adds-7000-software-engineers-to-target-digital-services/87196863

 

LONDON: Vodafone said it would add nearly 7,000 software engineers to its workfo ..

Read more at:
https://telecom.economictimes.indiatimes.com/news/vodafone-adds-7000-software-engineers-to-target-digital-services/87196863

 

The British company said the investment would enable it to build products and se ..

Read more at:
https://telecom.economictimes.indiatimes.com/news/vodafone-adds-7000-software-engineers-to-target-digital-services/87196863

K Rajaraman appointed as new telecom secretary

 

 

 

 Rajaraman, a Tamil Nadu cadre 1989-batch Indian Administrative Services (IAS), is currently working as an additional secretary in the Department of Economic Affairs (DEA). He would take over new role of telecom secretary after incumbent Anshu Prakash's retires on September 30, 2021.

 The Centre has appointed K. Rajaraman as the new telecom secretary as part of a major top-level bureaucratic reshuffle.

Rajaraman, a Tamil Nadu cadre 1989-batch Indian Administrative Services (IAS), is currently working as an additional secretary in the Department of Economic Affairs (DEA). He would take over new role of telecom secretary after incumbent Anshu Prakash's retires on September 30, 2021.

His appointment comes just a week after the government announced wide ranging reforms in the telecom sector, including announcing steps to convert government’s dues to telcos as equity over time in a bid to ensure a three-private player telecom market.