THE WRAP: Vodafone wins C&WW race, Nokia defensive after second downgrade
It was the week that saw Vodafone buy a global carrier, as Nokia suffered another credit downgrade and TRAI angered India’s mobile operators - again.
The race – such as it was – to buy out Cable & Wireless Worldwide (C&WW) effectively ended this week after C&WW bosses approved a cash offer by Vodafone Europe that values the firm at just over $1.6 billion (€1.2 billion).
The deal could still come under review if someone else makes a better offer, but Tata Communications – the only other company eyeing C&WW – dropped out of the race last week. Assuming shareholders follow C&WW management’s recommendation to sell, the firm will become a division of Vodafone Group’s enterprise business.
It was also the week where Nokia had its credit rating downgraded for the second time in as many weeks – this time from Fitch Ratings, which downgrade the handset maker’s stock to junk level.
Nokia EVP and CFO Timo Ihamuotila shot back, pointing to the firm’s strong cash balance and net cash position during 1Q12, and said management is working fast to position the company for future growth.
Unhelpfully, news emerged this week that Nokia still faces a patent-related ban in Germany even though the European Patent Office (EPO) ruled that German-headquartered patent licensing firm IPCom had no claim to a patent that it says Nokia has been violating. IPCom says it will appeal the ruling, which it claims means that previous court injunctions against Nokia will remain in force.
In other news for the week, Indian telecoms regulator TRAI freaked out cellcos with its recommended plan for reallocating the 2G spectrum vacated from the cancellation of 122 licenses.
The recommendation – that spectrum be priced at premium rates including a thirteen fold hike in the base price for 2G airwaves – was blasted by cellcos as “arbitrary, regressive and inconsistent.”
TRAI also reportedly issued an order making it mandatory to offer at least one per-second billing plan among the up to 25 plans they are allowed to provide. Operators responded that they were happy to offer per-second billing, but complained the 1 paisa per second cap was too low.
It was also the week that saw Hong Kong’s fledgling 4G wars step up a gear as China Mobile Hong Kong officially launched its LTE service – which includes an unlimited data plan that comes with a free LTE handset.
The day before the launch, 3 Hong Kong and PCCW Mobile announced that they would begin accepting pre-orders for a range of LTE devices, despite the fact that the pair haven’t officially launched their respective LTE networks yet.
In Thailand this week, the National Anti-Corruption Commission postponed its report intoTrueMove’s 3G deal with state-owned CAT Telecom to sometime next month. But NACC commissioner Methee Krongkaew, who heads the investigation, told reporters that the evidence gathered shows many irregularities.
Meanwhile, True Online launched the country’s first 200 Mbps DOCSIS 3.0 broadband service – at an eye-raising 9,999 baht (€246) a month.
Results for the week: Apple nearly doubled its fiscal 2Q (calendar 1Q) profit on stronger than expected iPhone demand; Huawei’s 2011 net profit slumped 53% as a result of heavy spending on R&D and forex losses; ZTE reported a 23.5% increase in Q1 profit, although that was substantially below the average of several analysts' estimates; and China Mobile reported a 3.5% increase in March quarter profit, but missed the expectations of analysts polled by Bloomberg as a result of increased spending on customer retention costs.
And finally, it was the week that saw debate heat up over yet another proposed US law aimed at the Internet that critics say will do more harm than good.
The Cyber Intelligence Sharing and Protection Act of 2011 (CISPA), has been making its way through the US House Of Representatives this month and is due for a vote today (Friday). Sponsors say CISPA will allow intelligence agencies to more easily share information about ongoing threats and attacks amongst themselves as well as “appropriate private-sector companies”.
But critics – which now include the Obama administration – say the bill is so vaguely worded that it could be abused to get around privacy protections for users.
This week a group of security experts – including Bruce Schneier, Christopher Soghoian,Gordon Cook, Dan Gillmor and PCCW Global VP Christopher McDonald – sent an open letter to Congress opposing CISPA and its Senate version (the SECURE IT Act), saying that passing them “would be a grave mistake for privacy and civil liberties, and will not be a step forward in making us safer.”
The house of representatives this week passed the lower-house version, but the Obama administration has threatened to veto.