Industry Trends
Thursday, September 01, 2011
Not Dead…Yet
Today’s online Wall Street Journal has a great graphic outlining the history of U.S. telecom consolidation, and how the top 5 carriers came to be who they are. In particular, it paths AT&T's complicated landscape of mergers, acquisitions and divestitures that gave birth to the whole tangled web (remarkably similar to a NYC subway map!)
Despite recent action by the US Department of Justice threatening to block the merger between AT&T and T-Mobile USA, the deal is not dead…yet. It’s just so dangerously close to changing the competitive landscape forever.
Says the DoJ, the transaction could lessen competition for wireless services, resulting in higher prices, lower quality, fewer choices and fewer innovative products for millions of consumers nationwide.
Back in March, I posted a blog here discussing how if the deal went through, the US market would dwindle to just 3 big players as (smaller) deals seemed to flow fast and furious. At the end of the day, AT&T needs this deal to happen to address a capacity crisis led by the explosion of data-hungry smartphones. Networks are virtually choking on data, and adding T-Mobile’s network would fix this…at least temporarily. But truth is every carrier is experiencing the same shortages, and with fewer and fewer networks to acquire, today’s DoJ action may be the catalyst that finally forces the industry to have another look at addressing the load.
Posted by Lisa Clark •
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Monday, March 21, 2011
When Giants Dance
Just one day before the start of CTIA in Orlando, the news of a merger between AT&T and T-Mobile U.S. comes as quite a surprise considering until this moment the headlines had the Deutsche Telekom division all but rebadged as Sprint. Either way, the wave of market consolidation continues, and if AT&T succeeds, the U.S. wireless market will be reduced to three primary players: AT&T, Verizon and Sprint.
For sure, the post-3G scenario of M&A is upon us, with the worldwide telecom industry already on pace to have another busy year. For deals that do go forward, consolidation will bring inevitable changes in personnel, technology and data management that can negatively affect the financial upside of any combination.
When telecom Giants dance, the winners in the “game” are the ones who embrace the most efficient processes. As we’ve seen with smaller scale U.S. acquisitions, the inability to assess the true value of acquired network assets puts carriers at a disadvantage to make swift and informed decisions regarding CapEx efficiencies that directly impact profit. This is as true for the new (potential) combined entity, as well as Verizon and Sprint as they compete in the new world order.
That said, if AT&T's senior management endeavors to achieve the synergies they say will exceed the deal’s $39B price tag, supply chain efficiencies and investment recovery strategies will be key. Let the dance begin.
Posted by Lisa Clark •
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Friday, October 08, 2010
Sticker Shock
Interesting report out this week from the United Nations’ program for responsible investment on the cost – in dollars and cents – of corporate environment damage. I highly recommend giving it a read if you haven’t seen it. It’s available here.
When we talk about building the business case for sustainability, we encourage people to place the conversation within the context of how sustainability can contribute in a positive way to revenue growth, cost reduction, innovation and shareholder value. Tying green initiatives to shareholder value is an incredibly important piece of the value proposition and one that I don’t think has received the level of discussion it deserves.
The eye-catching stat from the report is that the environmental damage caused by the world’s 3,000 largest public companies in 2008 cost a staggering $2.15 trillion! And that figure is projected to increase in the future. Environmental costs, the report argues, have the potential to negatively impact future cash flow and dividends, and lead to greater environmental risks. I’m guessing that most institutional investors wouldn’t be keen about having to navigate that scenario.
When it comes to the environment, companies are more exposed than ever before. We’re already seeing companies being asked to foot a significant portion of the bill for ecological mishaps and disasters. As a result, technology’s role in mitigating this type of risk – however small – shouldn’t be overlooked. The business case for sustainability is just as much about shareholder value as it is revenue and being a good corporate citizen.
If you’re in Portsmouth next Friday, come to TechWorld 2010 (www.techworld2010.com) on the Pease International Tradeport. Trade Wings’ Todd Adelman is going to be discussing how companies can build a stronger business case for sustainability.
Posted by Billy Balfour •
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Friday, August 13, 2010
Feeling My Age
Recently, we had an intern candidate in. Smart guy, graduated from one of the nation’s top liberal arts colleges. He had researched our firm thoroughly before contacting us about an opportunity to get in on the ground floor of our unique and growing business. Determined to learn more, he came by to talk telecom.
A chip off the Y generation, I suspect his context was the smartphone in his pocket, an unlimited data plan, and the coolest bandwidth-intensive apps this side of the Mississippi. He asked me pointedly, “So what do you think of the problems AT&T has had with their network and the iPhone dropping calls?” I started in on the whole data traffic explosion thing, using words like unprecedented, unabated and unprepared.
After he left my office, I had the sudden feeling that I’d lived this life before. It wasn’t until the next day listening to a new Droid radio commercial pushing high-def video, unlimited texting and hyper-fast this and that, that it struck me. New generation, same problem. Just bigger.
Remember the birth of client-server apps? The pinnacle of performance and productivity. That is until so many users tried to access them simultaneously, the volume of data requests clogged networks and brought servers to their knees. Frustrating and unproductive, there was nothing friendly about it. And how about the time when a 56K modem was considered a high-speed connection? The truth is that with each new era comes a quantum leap in technology that, frankly, makes you forget. If nothing else, it’s probably the most exciting time in the Telecom industry for a young intern – or anyone else.
Posted by Lisa Clark •
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Wednesday, July 07, 2010
The Cycle Continues
France Telecom’s new CEO, Stephane Richard, was out in front of the press earlier this week detailing the carrier’s five-year strategic growth plan. It’s a big, bold and ambitious plan that by 2015 could see Orange the service provider of choice for 300 million people. By my calculation, that amounts to roughly 22% of the world’s population. How does France Telecom plan to go from 192 million to 300 million customers in five years? Upgrade existing networks and capitalize on the explosive growth in markets such as the Middle East and Africa. Making the most of new opportunities in emerging markets will almost certainly involve a few strategic acquisitions, which are en vogue across the industry (right now, the industry’s on pace to have its busiest year of M&A since 2005 when transactions topped $408 billion).
Any time there’s an acquisition in this industry, the price tag, expected revenue and customer growth will almost certainly grab all of the headlines. What you won’t hear much about though is how these companies plan to manage all of their newly acquired network assets for maximum profit. A seemingly minor detail to a large transaction? That’s a dangerous omission for firms looking to assuage investors of a multi-billion dollar deal. When you get right down to it, the financial models created to support an acquisition are predicated on metrics such as operational efficiency, integration of network infrastructure, and service delivery levels. If a company can’t answer fundamental questions about the location, condition, or value of those millions of network assets it just acquired, discharging those models will become daunting at best.
Friday, March 19, 2010
Looking to the Future and Living in the Present
CTIA kicks off on Monday in Las Vegas. Judging by the news reports this week, looks like we’re in for a lot of announcements related to handsets – e.g. smartphones – and 4G technology. As the industry races toward 4G (and whatever lies beyond) the reality is that for the foreseeable future we’re going to see 4G, 3G and 2G all co-existing within the same ecosystem. The disparity in the sophistication of network infrastructure around the world is simply that great.
There’s no question that the prospect of having three generations of network technology operating at the same time is going to create headaches for carriers and operators alike, but perhaps the biggest impact will be felt by the equipment manufacturers. Accurately planning and provisioning network assets is difficult enough but when you add multi-vendor service contacts into the mix the pressure to maintain QoS rises exponentially.
The explosive growth we’re seeing in developing markets represents a tremendous opportunity for equipment manufacturers to drive revenue growth. But making the most of those new opportunities – and scaling for the future – requires implementing a more proactive approach to managing product data and physical network assets today.
Posted by Michael Johnson •
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Tuesday, March 09, 2010
The Mobile Data Deluge
Amidst a flurry of announcements from AT&T detailing their plans to further increase wireless network capacity, one statistic really stands out. Over the course of the last 3 years alone, wireless data traffic on AT&T’s network has increased more than 5000%. The driver behind this explosion of traffic is - of course - the smartphone and all of those handy applications we love to use so much and cannot live without.
Now combine that information with the results of a recent Cisco survey, which predicts that by 2014 the average mobile broadband connection will generate the equivalent of 3,500 MP3 music files per month, and it doesn’t take long to figure out what keeps carriers awake a night. Today, incidentally, the average mobile connection generates the equivalent of about 650 MP3 music files a month. If you think network infrastructure is churning at a high rate today, sit tight – you haven’t seen anything yet.
The mobile data explosion not only puts pressure on carriers from the perspective of service delivery requirements, but raises the stakes when it comes to recouping value from infrastructure investments. When the pace of change is this fast, it’s next to impossible for assets to fully depreciate in value. So, if a carrier doesn’t have visibility into those assets, and therefore the ability to either put them to use elsewhere, they are simply leaving money on the table. A proactive approach to ensuring consolidated visibility, picking up where OSS systems leave off, can fix that.
Posted by Michael Johnson •
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Wednesday, February 17, 2010
Greetings from Barcelona
The weather here in Spain has been on the cold and rainy side but that hasn’t dampened the energy inside the exhibition halls at Mobile World Congress. On Monday, we formally launched our new reuse optimization solution, Trade Wings Re: and the response thus far has been tremendous. It’s clear that the need within the carrier and OEM communities to put network assets to their highest and best use knows no boundaries. This is a challenge on a global basis.
From my perspective, two of the biggest business considerations I’ve heard this week driving the need for reuse strategies are (1) reducing operating expenses, and (2) preserving capital. Given the current economic climate, it’s not surprising that executives are focusing their attention on these areas. What’s the correlation between these drivers and reuse optimization? It’s all about the desire to optimize how operations and finance work collaboratively to manage inventory for the greatest return on investment.
Lacking visibility into inventory levels starts a chain reaction that can be difficult to stop. Not enough visibility forces companies to either buy and warehouse more equipment than is required, or make purchases when the need is most urgent, which means incurring significant ‘expedite’ fees. Both of these scenarios will inevitably lead to higher costs for procurement, equipment transportation and storage.
With visibility into global inventory levels – and the secondary market – a reuse strategy can be the springboard for more informed forecasting that can ensure you are buying and storing only the amount of equipment required to sufficiently support spares and repairs processes. It’s a message that has really resonated with Telecom executives this week. If you’d like to learn more about the impact of reuse strategies in the carrier market, check out our new whitepaper.
Posted by Todd Adelman •
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