Thursday, November 6, 2008

Sprint Nextel Loses 1.3 million Customers in Q3, Re-Negotiates Credit

Sprint lost a total of 1.3 million net wireless customers during Q3, including losses of 1.1 million post-paid customers and 329,000 prepaid users, which was slightly offset by a 130,000 increase in the number of wholesale and affiliate subscribers. This gives Sprint a total of 50.5 million customers at the end of the period, compared to 54.0 million at the end of the third quarter of 2007. At the end of the third quarter, the company served 37.8 million post-paid subscribers, 3.9 million prepaid subscribers and 8.8 million wholesale and affiliate subscribers. Subscribers by network platform include 35.4 million on CDMA, 13.5 million on iDEN and 1.6 million Power Source users who utilize both networks. More than 9% of post-paid customers upgraded their handsets during the third quarter, resulting in increased contract renewals.

Sprint's revenues for Q3 were $8.8 billion, 3% lower than in the second quarter, primarily due to a lower contribution from wireless. Wireless service revenues for the quarter of $6.8 billion declined 13% year-over-year and 3% sequentially. Wireline revenues of $1.6 billion for the quarter were slightly lower sequentially and year-over-year as legacy voice and data declines offset Internet revenue growth.

Wireless capital investments were $217 million in the third quarter, compared to $393 million spent in the second quarter of 2008 and $813 million spent in the third quarter of 2007. Lower spending levels reflect reduced capacity needs and the conclusion of several network investment initiatives.

Also, Sprint announced that it successfully renegotiated the terms of its revolving credit facility and increased the ratio of total indebtedness to trailing four quarters earnings before interest, taxes, depreciation and amortization and certain other non-recurring charges from no more than 3.5 to 1.0 to no more than 4.25 to 1.0. The company also paid down $1 billion of outstanding debt and decreased the current borrowing capacity of the credit facility from $6 billion to $4.5 billion, of which $1.3 billion is available.

"During tough economic times, we tightly managed our business to generate and retain cash and maintain substantial liquidity while continuing to reduce debt. At the same time, we made advancements in improving operations and delivering on the promise of the Now Network," said Dan Hesse, Sprint Nextel CEO. "Customer care metrics have improved steadily throughout the year, and external surveys are confirming we're providing a better customer experience."

NTT Europe Offers Customer Portal for Hosted Virtualization Services

NTT Europe Online, which specializes in managed hosting services, has launched a virtualization Customer Portal offering extensive levels of control to companies deploying virtualized services in any of its European data centres.

NTT Europe Online's Customer Portal gives IT Managers on-demand access to VMware's VirtualCenter control node - enabling users to configure provision and manage their virtualized IT environments online.

Users are able to activate, deactivate and reboot their hosted virtual servers in a matter of seconds. It also enables the seamless drag-and-drop migration of server resource across virtual machines without engaging SLA support services from the dedicated NTT Europe Online. The Customer Portal also provides full-featured reporting capabilities.http://www.ntteuropeonline.com

iSkoot Raises $19 Million for IP Mobile Services

iSkoot, a start-up based in San Francisco, secured $19 million in a Series C funding round for its mobile services.

iSkoot is targeting a new class of highly integrated Web/mobile communications. The company recently acquired Social.IM -- a desktop IM client that brings real-time communication and notifications to social networks. Previously, iSkoot had developed a mobile Skype client. iSkoot also worked with Skype and Hutchison 3 to launch the first carrier-deployed mobile Skype application in 2006, and to develop the 3 Skypephone, currently sold in eight countries on three continents.

The new funding round was led by Vision Opportunity Master Fund and included participation from existing investors Charles River Ventures, Khosla Ventures, Jesselson Capital Corporation and ZG Ventures. iSkoot will use this round of funding to support the introduction of a new suite of mobile communication solutions.

Sierra Wireless Demos Windows 7 Mobile Broadband Support

Sierra Wireless demonstrated support for Microsoft Windows 7 Mobile Broadband using its modems for HSPA and EV-DO networks.

Windows 7 Mobile Broadband will enable users to connect to their mobile broadband service using the View Available Networks feature within Windows, a process similar to connecting to a WiFi network.

Windows 7 Mobile Broadband was demonstrated during the opening keynote address on Wednesday, using the Sierra Wireless Compass 885 USB modem.

Brocade and Foundry Networks Amend Acquisition Agreement

Brocade and Foundry Networks have amended their original merger agreement, which was fist announced on July 21, 2008.
The amendment provides for the acquisition of the outstanding shares of Foundry Networks by Brocade. Under the revised terms, Foundry stockholders would be entitled to receive $16.50 per share in an all-cash transaction at the closing of the deal, as previously announced by the companies on Oct. 29, 2008.

In addition, Foundry stockholders may receive the proceeds of the sale of Foundry's portfolio of auction rate securities -- up to approximately $50 million in the aggregate -- calculated on a fully diluted basis based on the treasury stock method, if Foundry is successful in liquidating its portfolio of these securities prior to the close of the acquisition. It is anticipated that such amount, if any, would be distributed shortly before the closing of the acquisition through a dividend to Foundry stockholders.

Brocade expects to finance the acquisition from various financing sources, including cash on hand at both companies and the net proceeds from a $1.1 billion term loan facility which has already been deposited into a restricted Brocade custody account pending the closing of the acquisition of Foundry and other customary release conditions.http://www.foundrynet.com
  • On July 21, 2008, Brocade announced a deal to acquire Foundry Networks for approximately $3 billion. Under the agreement, Brocade agreed pay a combination of $18.50 of cash plus 0.0907 shares of Brocade common stock in exchange for each share of Foundry common stock, representing a total value of $19.25 (based on Brocade's closing stock price on Friday, July 18, 2008 of $8.27). The acquisition will position Brocade as a leading provider of enterprise and service provider networking solutions. Brocade currently offers a range of Storage Area Networks (SANs) and File Area Networks (FANs) solutions. The company is based in San Jose, California.

  • Foundry, which was founded in 1996 and held its initial public offering in September 1999, supplies a range of enterprise and service provider switching, routing, security and Web traffic management solutions, including Layer 2/3 LAN switches, Layer 3 Backbone switches, Layer 4-7 application switches, wireless LAN and access points, metro routers and core routers. The company is based in Santa Clara, California.

BT Awards non-UK Network Contract to Alcatel-Lucent

Alcatel-Lucent announced a seven-year extension of its partnership with BT, focused on the support of BT's global network operations. The agreement is aimed at further enhancing the services delivered to BT Global Services' customers and at optimizing BT's non-UK non-IP network. Financial terms were not disclosed.

Under the contract, Alcatel-Lucent will manage most of the legacy networks serving BT Global Services' customers. This will enable BT to focus on its Global 21CN Platform in order to further improve the customer experience, speed up the delivery of new services and reduce cost and complexity. The contract is built on the two companies' Multi-Vendor Managed Services contract signed in November 2006.

During the first phase of the project Alcatel-Lucent will assume operations for five legacy global and domestic networks in 27 countries outside the UK, along with the BT Global Managed Platform legacy transport network.

A few hundred BT employees will transfer to Alcatel-Lucent within the scope of the project.

"This contract will help us to better serve our customers. BT will be free to focus on its global 21st century platform, while Alcatel-Lucent can concentrate on further improving standards of service for those using our legacy networks" said Hanif Lalani, the newly appointed CEO of BT Global Services.

European Commission Proposes Reforms to EU Telecoms Rules

The European Commission published a set of proposals for the reform of the EU Telecoms rules, designed to create a Single EU Telecoms Market with improved rights for consumers and businesses, more competition and investment to boost the take-up of cross-border services and wireless high-speed broadband.

At the heart of the compromise texts is a new, small and independent office for Europe's telecoms regulators. The EC hopes this central authority will bring about more consistency to regulatory measures on Europe's telecoms markets.

A meeting of the Council of Telecoms Ministers is scheduled for 27- November-2008. The vote in second reading in the European Parliament is scheduled for April 2009. A new regulatory framework is expected to become law in all 27 EU Member States by 2010.

"The European Parliament and Council agree with the Commission on the need to strengthen the EU single telecoms market. We now need to move beyond this consensus on the objectives and reach agreement also on the concrete legislative texts. With the text proposals published by the Commission today, we intend to facilitate the work of the European lawmakers. We have focused on what is important and have left out what is not essential at this moment in time", said Viviane Reding, EU Telecoms Commissioner. "I hope this will help the French Presidency to make substantial progress on the EU Telecoms Reform in view of the next Council meeting on 27 November."

The Commission's modified proposal on the EU Telecoms Reform covers the following main points:

The European Telecoms Authority -- a new proposal envisions an authority that will be substantially smaller in size and competences than initially envisaged. Following the wishes expressed by Parliament and Council, it will be a lean and efficient office that will focus on telecoms regulation and have no competences with regard to spectrum or network security. In contrast to the initial Commission proposal, the European Network and Information Security Agency (ENISA) will not be merged with the new office, but continue to exist separately[1], as it had been requested by Parliament and Council. Taking into account the recent position adopted by the European Regulators Group (ERG), independent national regulators will form the heart of the new office, which will be called "Body of the European Telecoms Regulators", to underline this change of approach. The heads of the national telecoms regulators will be given a strong role in the management of the new office and in the appointment of its Managing Director, and the personal and financial independence of the "Body of the European Telecoms Regulators" will be fully ensured. The Commission also accepts the Parliament's proposal that 50% of the staff of the new office can be seconded by national regulators. Including such seconded staff, the new office should employ no more than 20 experts, according to the Commission's proposal: 10 experts recruited by the new office itself, and 10 seconded from national regulators.

National Telecoms Regulators -- The Commission reaffirms its proposals of 13 November 2007 to entrench the personal and financial independence of national telecoms regulators in the reformed EU Telecoms rules, a proposal that has been endorsed already by the European Parliament. More consistent remedies on the EU Telecoms Market: The existing rules under which national regulators consult the Commission and their peers in other Member States on draft regulatory measures are strengthened to ensure a direct and efficient involvement of the new "Body of the European Telecoms Regulators". In particular national regulators may be required to amend or withdraw a draft measure which both the Commission and the new office consider to create a barrier to the single market or to be otherwise incompatible with Community law.

The modified proposal reaffirms the power of national regulators to impose, where required to overcome persistent competition bottlenecks, the remedy of functional separation. This remedy would require a dominant operator to separate its network infrastructure from its service branch (without changing the ownership structure) to improve competition in the market. This remedy can only be imposed by a national regulator with the approval of the Commission which, as "guardian of the Treaty", needs to ensure that it is used in a way consistent with the principles of the EU's telecoms rules.

Radio spectrum policy -- the strategic coordination of radio spectrum policy will be strengthened at political level through a process whereby the Commission submits a multi-annual EU radio spectrum policy programme to be jointly adopted by Parliament and Council. The promotion of cultural and media policy objectives has also been strengthened in line with the European Parliament's amendments, even though the Commission has made sure in its modified proposal that this does not unduly restrict the increased flexibility in the use of spectrum and does not call into question the promotion of wireless broadband in rural and other non-metropolitan areas in line with the Commission's "broadband for all" policy. The Commission's role in coordinating conditions and procedures relating to rights to use spectrum is now clearly focused on "pan-European services" as proposed by the European Parliament. The creation of a new advisory body for radio spectrum policy, as suggested by the Parliament, has however not been retained by the Commission, in order to avoid duplication of work with the existing Radio Spectrum Policy Group.

Investment in new networks: The Parliament has confirmed and reinforced the existing EU rules applying to investment in high-speed broadband networks by rejecting all calls for "regulatory holidays" and promoting efficient investment in new fibre optic networks, and the Commission welcomes these important clarifications. In line with this, the Commission will give more detailed regulatory guidance on next generation access networks in 2009.

Consumer rights: More transparency and better information, better access for users with disabilities, consumers' right to change fixed or mobile operator within 1 working day while keeping their number, as well as a more efficient 112 European emergency number, are major consumer benefits proposed by the Commission and supported strongly by the European Parliament. The Commission therefore reaffirms these consumer rights in its modified proposal. The Commission also agrees with the European Parliament about the need to ensure effective implementation of harmonized numbers of social value that begin with "116", such as the 116000 missing children hotline number. In addition, national telecoms authorities will be able to take action in order to secure minimum quality of service for internet users in order to maintain, if necessary and appropriate, "net neutrality" in Europe. The Commission's modified proposals ensure that any national requirements are set in a consistent way that does not create barriers to the internal market.

Data security: The Commission reaffirms the need of telecoms operators to notify regulators and the public about security breaches. The Commission reaffirms that notifications must, as a matter of principle, be sent to the individuals affected by them and that the notification procedure must remain swift, simple and effective. In order to clarify, in an objective manner, the cases where such notifications will be required, the Commission will, under the new legislative text, give more detailed guidance as to the circumstances of a breach that would trigger a notification.

AT&T to acquire Centennial for Rural Wireless Coverage

AT&T announced plans to acquire Centennial, a regional provider of wireless and wired communications services, for $944 million in cash. Under terms of the agreement, Centennial stockholders will receive $8.50 per share for a total equity price of $944 million. Including net debt, the total enterprise value is approximately $2.8 billion.

Centennial has 1.1 million wireless subscribers and serves largely rural areas of the Midwest and Southeast United States and in Puerto Rico and the U.S. Virgin Islands.

AT&T said the Centennial acquisition demonstrates its commitment to continuously enhance network quality and coverage for its wireless customers. The addition of Centennial's high-quality 850 MHz spectrum will improve service quality for AT&T customers in parts of Indiana, Louisiana, Michigan, Mississippi, Ohio and Texas. Centennial also provides switched voice and high-capacity data and IP solutions for business customers in Puerto Rico.

For Centennial, the deal provides its customers with better access to the AT&T network and its product portfolio, including the iPhone 3G and the BlackBerry Bold.

"Mobility is a vital investment area for AT&T and our company's biggest growth driver," said Ralph de la Vega, president and chief executive officer of AT&T Mobility and Consumer Markets. "This transaction enhances network coverage for our consumer and business customers and is expected to create long-term value for AT&T's stockholders.http://www.att.com