Friday, May 11, 2012

Telefónica Adds in Latin America But Europe Drags

The total number of accesses served by Telefónica reached 309 million as of the end of March, up 7% over the year earlier thanks to growth in Latin America.

Revenues totalled 15,511 million euros in the first quarter of 2012, a 0.5% year-on-year increase (-1.8% in the previous quarter), driven by higher sales at Telefónica Latinoamérica (+8.3% year-on-year), which more than offset lower revenues at the European businesses (-6.6% year-on-year). Excluding the negative impact of mobile termination rates cuts, revenues rose by 1.6% from the first quarter of 2011.

OIBDA totalled 5,081 million euros, down 8.8% compared to last year, while operating income was 2,511 million euros. Meanwhile, consolidated net profit for the quarter stood at 748 million euros and was impacted primarily by Telco’s writedown.

“Our earnings for the first three months of 2012 reflect the strategic priorities set for the full year and the success of the company's shift in commercial strategy, which began in the second half of 2011," said Telefónica Chairman César Alierta. “These results are in line with internal estimates and thus allow us to reiterate our financial and operational guidance announced for 2012."

Some highlights from the quarterly report:
  • The company is seeking to implement a new approach to handsets subsidies, reducing its upfront costs
  • The company is moving from voice to data-centric tariffs
  • Smartphones represent 81% of new commercial activity in Europe in Q1
  • There were 2x mobile net adds in Latin America vs. Q1 11.
  • The company describes Latin America as its "engine for growth".
  • There was a similar revenue contribution from Brazil (23%) and Spain (25%).
  • CapEx(ex-spectrum)/sales was 11% in Q1, up 1% over the same period last year. CapEx totalled 1,712 million euros in the quarter, up 10.3% year-on-year. The Company continued to devote the bulk of its investments to growth and transformation projects (81% of total CapEx),fostering the expansion of broadband services, both fixed and mobile.
  • The company blamed commercial and regulatory costs for its drop in OIBDA.
  • Telefónica’s mobile accesses growth in Latin America accelerated to 13% year-on-year in the first quarter boosting the accesses base to 170.8 million users.
  • Telefónica’s fixed accesses in Latin America rose by 2% year-on-year to 34.6 million accesses. The Company’s retail broadband accesses climbed by 12% year-on-year to reach 8.0 million and net additions of pay TV customers totalled 2.3 million, up 23% year-on-year. 75% of fixed accesses now include some bundled offer package (+7 percentage points year-onyear), while 89% of broadband accesses are subscribed to a double or triple-play offer. 

ITU: Broadband Remain Unaffordable in Many Markets

While there are some 600 million broadband lines in service worldwide, affordability remains a major obstacle, particularly in Africa, where fixed broadband access costs on average three times monthly per capita income, according to the ITU's newly published "Trends in Telecommunication Reform" annual report.

In contrast, mobile cellular and mobile broadband services remains very competitive in 92 percent of all markets. By the end of 2011, ITU estimated that the number of mobile-cellular subscriptions reached close to 6 billion, representing a global penetration of 86.7 percent and a penetration level of 78.8 percent in developing countries.

Subtitled ‘Smart Regulation for a Broadband World', this year's report sheds light on the often complex legal and regulatory issues now emerging as broadband becomes pervasive and increasingly serves as a driving force for the development of other economic sectors. Case studies and decision trees are provided for national regulators who are working through the process of developing a broadband plan for their country. Ultimately, there is not a single "right" universal service funding model, according to the report, but there are common principles such as economic efficiency, equity, competitive neutrality, technological neutrality, certainty, transparency, and cost effectiveness. 

Verizon Advances Control Plane Strategy, 100G Metro Deployments

Verizon is making progress on two key initiatives that are transforming its global optical network: advanced control plane technology and the extension of 100G into its metro networks.

The integration of additional control plane technology allows electronic devices on its optical network to more easily communicate with each other, simplifying operations and allowing for near real-time provisioning of specified new circuits. Verizon has deployed the Ciena 5430 Reconfigurable Switching System, which features advanced Optical Transport Network aggregation and switching software. The control plane initiative enables end-to-end optical transport network functionality and global mesh architecture capabilities.

Verizon noted that it has been a pioneer in mesh network architecture, beginning deployments in 2006, which gives the company significant flexibility and precision in routing choices. This architecture creates additional paths to quickly and seamlessly reroute traffic in the event of multiple breaks or network disruptions.

The extension of 100G technology into its metro network worldwide, which follows earlier deployment of 100G in its long haul network, provide greater scalability while supporting higher access speeds. Verizon expects to implement this technology into major metro markets around the world during the first half of 2013.

"By combining our expanded control plane capabilities with extended 100G technology, Verizon is building the network of the future," said Ihab Tarazi, vice president of global IP and transport planning and technology for Verizon. "It’s no longer about miles and scope. It’s about leveraging strategies that further enable us to deliver