Thursday, February 26, 2009

Public Meetings Planned for Broadband Initiatives Under Obama Stimulus Bill

The National Telecommunications and Information Administration, the Rural Development arm of the U.S. Department of Agriculture and the Federal Communications Commission (FCC) will hold a public meeting on March 10, 2009 to discuss the Broadband Initiatives funded by the American Recovery and Reinvestment Act of 2009.

The meeting will be held at the U.S. Department of Commerce, National Telecommunications and Information Administration in Washington, D.C.

The Broadband Initiatives funded in the Act are intended to accelerate broadband deployment in unserved, underserved, and rural areas and to strategic institutions that are likely to create jobs or provide significant public benefits.

The public meeting agenda and information about the new program will be available at NTIA's website.

Open-Plug Announces Telephony Capabilities for Intel "Moorestown"

Open-Plug, a company that specializes in software development environments for portable devices, is working with Intel to integrate its ELIPS Linux Telephony Stack to the Moblin Linux software stack for Mobile Internet Devices (MIDs) based on Intel's next generation "Moorestown" platform. Open-Plug is now bringing its advanced cellular telephony and messaging features to this new class of MIDs.

Verizon Business Receives Security Clearance in India

Verizon Business has received approval from the government of India's Department of Telecommunications to operate the company's two international gateways in Mumbai and Chennai, under its international long-distance license. The approval allows Verizon Business to offer its suite of private line services to multinational customers and to activate the company's wholly owned submarine cable capacity to India, providing direct connections to Verizon's global network, one of the largest such networks in the world.

Verizon Business noted that is has begun an aggressive infrastructure expansion in India. Since receiving its international and national long-distance licenses in India in January 2008, the company has deployed a Private IP/MPLS network in five major cities in India: Bangalore, Chennai, Hyderabad, Mumbai and New Delhi. Its latest MPLS node will be installed in Pune during the second half of 2009.

Deutsche Telekom Narrows Loss in Q4, Sees Stable Performance

Overall, Deutsche Telekom exceeded its financial targets in the 2008 financial year. The net loss narrowed in Q4 2008 to EUR 730 million compared to EUR 750 million a year earlier as revenue rose 2% to EUR 16.11 billion.

"Our 2008 financial year is characterized by stable performance and sound financial figures," said Chairman of the Board of Management, René Obermann, at the annual press conference in Bonn. The development of earnings in the past years and the current financial figures were proof of the fact that Deutsche Telekom was in good shape, he emphasized.

Adjusted EBITDA increased 0.7 percent compared with 2007 to EUR 19.5 billion, thus exceeding the original guidance of around EUR 19.3 billion. The company said its balance sheet and debt ratios are testimony to the continued solid and sound state the company is in: net debt only increased by around EUR 1 billion year-on-year to EUR 38.2 billion, although Deutsche Telekom incurred a net expense of approximately EUR 4.4 billion for the 25 percent stake in the Greek company OTE and for the acquisition of the U.S. company SunCom in 2008.

Despite the challenging economic conditions, Deutsche Telekom currently is forecasting an adjusted EBITDA around the level achieved in 2008, that is around EUR 19.5 billion, excluding the impact of OTE. Free cash flow for 2009 is also expected to be stable at around EUR 7 billion.

Some highlights:

Mobile Communications

  • Mobile Communications in Europe and the U.S. operating segments recorded revenue growth of 2.4 percent to EUR 35.6 billion in 2008. This includes net negative exchange rate effects of EUR 1.3 billion. Revenue growth of 7.1 percent in the fourth quarter outperformed the full year. Adjusted EBITDA growth of 6.2 percent to EUR 11.4 billion was significantly stronger for the full year 2008 than the increase in revenue. Exchange rate effects had an offsetting effect of approximately EUR 0.3 billion. In the fourth quarter, EBITDA increased by as much as 12.7 percent.

  • In the past year, T-Mobile maintained its leadership in the German mobile communications market. The company gained more than 950,000 new contract customers in 2008, virtually the same high level as in the prior year. While revenue in this fiercely competitive market decreased 2.8 percent to EUR 7.8 billion in 2008, adjusted EBITDA rose 3.1 percent to EUR 3.0 billion during the same period. As a result, the EBITDA margin improved from 36.8 percent to 39.0 percent.

  • T-Mobile USA continued to post double-digit growth rates. Revenue rose by 13.5 percent year-on-year to USD 21.9 billion, while adjusted EBITDA increased by 16.0 percent to USD 6.2 billion. The weak U.S. dollar resulted in lower revenue and adjusted EBITDA growth on a euro basis of 6.3 percent and 8.5 percent, respectively. The U.S. subsidiary's customer base grew by 4.1 million over the course of the year, of which almost three million were gained organically. 1.1 million customers were also added from SunCom which was consolidated in February 2008. As a result, T-Mobile USA had 32.8 million customers on December 31, 2008. 7.7 million of these use the MyFaves community service, which corresponds to a 54-percent increase in one year.

  • Business in the United Kingdom was negatively affected by continued fierce competition. While revenue fell 2.2 percent to GBP 3.2 billion compared to 2007, adjusted EBITDA decreased by 12.7 percent to GBP 708 million. Measured in euros, the decline is significantly more apparent as a result of the continuing weak pound sterling, with revenue dropping 15.8 percent and EBITDA 24.9 percent. The negative trend in contract customer numbers was reversed over the course of the year following the introduction of new calling plans.

  • The companies in Central and Eastern Europe remain important growth drivers, with revenue increasing by 10.0 percent to over EUR 6.1 billion and adjusted EBITDA growing by as much as 14.3 percent. With more than EUR 2.5 billion EBITDA, these countries once again made an important contribution to the Group's earnings. The majority of the national companies succeeded in increasing their profitability. For example, Polish company PTC improved its EBITDA margin from 32.9 percent in 2007 to 34.7 percent and at the same time increased its contract customer base by more than 15 percent to a total of 6.3 million.

  • Data revenue excluding messaging continued to grow unabated. In Europe, this figure climbed 44.9 percent to EUR 1.4 billion in 2008. U.S. operations reported an increase of 19.3 percent to USD 1.5 billion for the full year, with growth accelerating to 24.4 percent in the fourth quarter. This positive trend is chiefly due to innovative devices such as the Apple iPhone 3G in Europe and the Android-based T-Mobile G1 that was launched in the United States and the United Kingdom in October and has been available in other countries, including Germany, since mid-February.

Broadband/Fixed Network

  • Revenue decline in this operating segment could be slowed down to 5.1 percent in 2008, compared with 8 percent in the prior year, thanks to the excellent market performance of T-Home in Germany. The initial forecast had put the decline at between 4 and 6 percent. In the fourth quarter, the decrease totaled 3.9 percent. T-Home was even more successful in terms of cost discipline. The "Save for Service" program resulted in net cost reductions of around EUR 0.8 billion in 2008, allowing decline in EBITDA in Germany to be limited to 4.9 percent, slightly better than the originally expected decrease of 5 to 8 percent.

  • The entire operating segment reported revenue in Germany and abroad of EUR 21.3 billion, 6 percent below the prior-year level. In the fourth quarter, revenue declined by 4.2 percent. Adjusted EBITDA in the Broadband/Fixed Network operating segment fell 4.4 percent to EUR 7.4 billion.

  • T-Home expanded its leading market position in the German DSL market. The DSL net add market share has exceeded 40 percent for nine quarters running and actually reached the 50 percent mark in the fourth quarter of 2008 -- the highest net add market share since the complete packages were introduced. On an annual basis, the DSL net add market share was 45 percent, putting it in line with expectations.

  • With a retail customer base of 10.6 million, T-Home further reinforced its clear lead in the German DSL market in the past financial year. Around 352,000 DSL net adds were recorded in the fourth quarter of 2008 alone. In addition, over half a million customers wanting to return to T-Home from competitors registered over the full year. This figure was, for the first time, significantly higher than the number of customers lost to competitors.

  • In 2008, line losses totaled just under 2.5 million. This was at the lower end of the guidance of 2.5 to 3.0 million. This includes losses due to fierce competition and regulatory measures, as well as lines lost for technical reasons as a result of the migration of DSL resale customers to IP-based lines.

  • As many as 480,000 customers have already ordered the Entertain triple play package, meaning that Deutsche Telekom met its expectations. Internet TV is also becoming increasingly popular in Eastern Europe.
    Deutsche Telekom's subsidiaries in Croatia, Slovakia, Hungary, Macedonia and Montenegro had added a total of more than 220,000 customers by the end of 2008.

  • Revenue and profit from international business in the Broadband/Fixed Network operating segment declined overall, chiefly due to the deconsolidation of T-Online France and T-Online Spain in the previous year. Reported revenue decreased 12.2 percent to EUR 2.3 billion for the full year, a decrease of 5.1 percent in organic terms.

Business Customers

  • On a like-for-like basis, i.e. taking into account the changes in the composition of the Group, revenue decreased only slightly by 1.2 percent considering the difficult economic environment. Adjusted EBITDA remained at the same level as 2007, while adjusted profit from operations (EBIT) increased more than fivefold year-on-year, from EUR 12 million to EUR 61 million.

  • International business reported an increase in revenue of 7.4 percent. The adjusted number of new orders increased by 5.2 percent to EUR 12.3 billion. This was partly due to major deals with Shell, Deutsche Post and Royal & Sun Alliance, for example. The agreement with Linde, announced mid-February 2009, represents another milestone in T-Systems' international growth strategy.

  • As the prior-year figures included Media & Broadcast and ActiveBilling, the reported figures show a decline in revenue of 8.2 percent to EUR 11 billion and in EBITDA of 20.0 percent to EUR 0.9 billion. By reducing costs by EUR 0.5 billion in 2008 under the "Save for Service" program, the Business Customer arm also made a valuable contribution to cost cutting.

  • In 2008, T-Systems entered into a partnership in the systems integration area with the U.S. provider Cognizant. This collaboration is now starting to bear fruit. T-Systems has so far secured 16 joint deals with total revenue of EUR 70 million and new orders worth EUR 121 million. Both partners support Continental's tire divisions in Hanover, for example, and ensure stable operation of the research and development application landscape.

India's BSNL Rolls Out 3G with Ericsson

BSNL, India's second largest telecom operator, has launched 3G services in 11 cities across the northern and eastern parts of the country.

As part of its roll-out strategy, BSNL plans to launch 3G services using WCDMA/HSPA technology across more than 700 cities in the first phase. Ericsson is BSNL's strategic partner for 3G roll-out in over 400 of these cities. This roll-out is part of the contract announced by the companies September 7, 2007.

"The widespread roll-out of 3G network will also help in propelling telecom and broadband growth in India and will help us meet India's target of 20 million broadband subscribers by 2010," stated Kuldeep Goyal, Chairman and Managing Director of BSNL.

Alcatel-Lucent Wins 100 Mbps Fiber Access Project in Munich

M-net, a Munich-based regional network operator, has awarded a multi-million Euro contract to Alcatel-Lucent to deploy the first extensive fiber access network in Munich. In the future, additional Bavarian cities will be connected to M-net's high-speed access network that consists of a mixed fiber-to-the-building (FTTB)/fiber-to-the-home (FTTH) architecture. The network will support data rates of up to 100 Mbps and possibly higher in the future.

Alcatel-Lucent will begin installing in March 2009. Alcatel-Lucent's solution includes its GPON access platform - the Alcatel-Lucent 7342 ISAM FTTU - and is complemented by the Alcatel-Lucent 5520 AMS and Alcatel-Lucent 5529 OAD management products. For in-house usage, a range of Alcatel-Lucent optical network termination (ONT) units and residential gateways will be provided. For the FTTB piece, Alcatel-Lucent will rely on existing copper wiring in buildings, using so-called multi-dwelling unit ONTs to translate the optical signal into VDSL2.

According to the current expansion schedule, the Munich-based network is set to become the largest and most modern optical access network in Germany. Alcatel-Lucent noted that its FTTH and FTTB network architectures support an "Open Access" business model, allowing M-net to open up its high-speed access network to additional service providers.

ITU TELECOM WORLD 2009 to Focus on Solutions for Economic Recovery

ITU TELECOM WORLD 2009, which will take place in Geneva, 5-9 October, will include a global leadership summit to address the role of ICTs in economic recovery from the worldwide crisis and stimulating future investment and growth.

ITU Secretary-General Hamadoun Touré said, "ITU TELECOM WORLD 2009 this October will be the right time to bring together all the key players in government and the ICT industry. We will be in a better position to assess the effects on industry and establish both how to resuscitate those sectors that need it as well as to focus on how ICTs can be a catalyst for recovery. The ICT sector has been the powerhouse of the global economy in terms of GDP. Investment in ICTs makes as much sense now as it did in building the physical infrastructure of roads and railways during the great depression of the 1930s."

Obama Budget Adds Spectrum License Fee

A single line item in the new U.S. federal government budget proposes to raises $200 million in FY 2009, $300 million in FY 2010 and $425 million in FY 2011 for unspecified spectrum licensing conducted by the FCC. The budget does not mention which bands of spectrum are contemplated for licensing fees nor for which services. This item is posted on page 126 of the budget, which is online.

The FY 2010 Budget also includes $1.3 billion in USDA loans and grants for the Department of Agriculture to increase broadband capacity and improve telecommunication service as well as education and health opportunities in rural areas.