Second chances, and missed opportunities

Missed opportunities for some as well as second chances for others have dominated the headlines this week, highlighting the often fickle and sometimes surprising industry we all work in.

One brand name has re-emerged with a vengeance, thanks to the growing opportunities presented by the proliferation of smartphones and tablets and the increased appetite for all types of digital content. Napster, formerly the bad boy of the music industry because of its early incarnation as a peer-to-peer music sharing services and now a squeaky clean music subscription service, got its credentials stamped further this week when Telefónica said Napster would be its music service of choice across its footprint.

Telefónica has teamed up with Napster parent Rhapsody in a deal that will bring Napster to Latin America for the first time, and could see more Napster bundles in European smartphone plans. However, there are still many details to work out, such as how large a stake Telefónica will take in Rhapsody, if indeed any, and to what degree local Telefónica operating units will opt in favour of Napster.

Indeed, Napster is far from the only choice for mobile operators, many of which have already teamed up with Spotify, Deezer or another brand in order to be able to offer inclusive music content in smartphone plans. O2 UK provides its own music service with O2 Tracks, while O2 Germany offers simfy music plans and Movistar has Spotify packages. Whether local units will jettison existing relationships to opt for Napster remains to be seen.

While this may have been a good week for some seeking a bigger foothold in Europe, it has been a bad week for billionaires looking to do the same. Both Carlos Slim and John Malone have been forced to drop plans to boost minority stakes into majority shareholders following resistance from the Dutch companies they have been pursuing--KPN in the case of Slim and Ziggo in the case of Malone.

It seems Europe is starting to close its doors to those who want to expand by snapping up cheap deals, and these latest developments indicate that European operators are hauling themselves out of the bargain bucket.

An interesting report from Bloomberg highlights that the recent slight recovery in the European economy means that the prices that international billionaires and large corporations need to pay is going up. Investors have already started to value European telecoms companies more highly, and this has been fuelled in part by interest from the likes of Slim, Malone, AT&T and Egyptian billionaire Naguib Sawiris.

Indeed, Bloomberg notes that the Bloomberg Europe 500 Telecom Services Index is up 23 per cent since July 1, more than double the 9.6 per cent increase by providers worldwide, according to the Bloomberg World Telecommunications Index. Bloomberg also reported that telecoms deals have dominated dealmaking this year, with a value of about $236 billion (€172.5 billion), of which $70 billion was spent on 130 acquisitions in Europe.

Whether Slim or Malone will get a second chance with their targets remains to be seen, but for now they will no doubt be reviewing their options. That consolidation will happen in Europe seems to be an accepted fact, however. "The telco sector is a super-interesting place to look these days with so much activity happening," Lex Van Dam, a fund manager who oversees $500 million at Hampstead Capital in London, told Bloomberg. "Consolidation is a must so it's just a matter of time before we see the next deal."

The last word on missed opportunities has to come from Nokia's former CEO and Chairman Jorma Ollila, who published his memoires this week. Ollila said Stephen Elop was in fact the mobile phone maker's second choice as CEO when he was hired in 2010. According to Bloomberg, Ollila wrote Nokia had been hoping to find someone like Steve Jobs in order to help it replicate Apple's success.

"I asked myself several questions," wrote Ollila, who ran Nokia as CEO from 1992 to 2006. "Elop seemed to be full of words and ideas, but was he able to delegate enough? Was he enough of a product person, because we needed someone to reach similar feats as Steve Jobs."

Ollila said Nokia had operated under many assumptions and false impressions, such as the fact that there is no demand for smartphones that cost more than say $300. That assumption was blown away when Apple came along with an iPhone priced at over $600, and sold units in droves.--Anne

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