Summary Bullets:

• Vodafone is developing an intent-based infrastructure, which is an automated platform to deliver desired business outcomes.

• Enterprise customers should consider the trends related to the evolution of network solutions and include the evaluation of digital platforms and roadmap when sourcing a new WAN supplier.

Vodafone has articulated and shown how the right digital platforms and software-defined capabilities can enable the network of the future. As enterprises pursue digital transformation, they often think cloud first before worrying about whether the network can support the major shift in workloads. To support a hybrid, multi-cloud environment, the network needs to be flexible to deliver the right performance for different applications, in a dynamic fashion. And yet, customers often do not have full visibility into how their network and applications are performing. It can also be problematic to determine network issues without the tools that provide end-to-end visibility. This will likely get more complex when enterprises begin to adopt 5G, edge computing, and IoT. Continue reading “Vodafone Business Provides a Glimpse of the Future of Networking” →

Summary Bullets:

• Telecom operators need cash. FTTP, 5G and multi-play is expensive. Voice/data is not able to pay the bills. Operators are offloading assets that are no longer seen as core to their business.

• REITs and private equity firms are buying infrastructure for sale, like data centers and now complete companies managing them as another utility for better returns.

Increasingly, telecommunications operators are facing pricing pressure resulting in limited revenue growth from fixed and mobile services. Meanwhile, they need to invest in faster access such as fiber and 5G (equipment and spectrum), which will require more capital. Some telecom operators are also looking at growth outside of the traditional voice and data services and they are building capabilities to offer IoT, enterprise services and entertainment services for consumers. These new areas require different types of investments including platforms, applications, and content. While shareholders want to see new revenue streams and growth, they also expect stable returns (e.g., dividends and share buyback) from these businesses and a healthy balance sheet. This makes it more challenging for telecom companies to raise capital to fund their growth ambitions without carrying too much debt. Continue reading “Telecom Assets for Sale, Telecom Assets for Sale” →

Summary Bullets:

• NBN Co is developing capabilities to support business users, including providing higher QoS and enhanced customer support.
• With better connectivity, service providers have opportunities to offer more products and services (e.g., cloud, collaboration and networking) to businesses of all sizes.

NBN Co has been looking to the business segment to grow its revenue and has publicly discussed the aim to make $1 billion in revenue from this segment. While many small businesses are already using residential-grade NBN services, there is a demand for connections with higher service levels, lower contention ratios and better performance. In December 2018, NBN Co indicated that its network had reached half a million businesses. NBN Co is doubling down on developing products for business customers, and this will accelerate as it reaches more businesses across the country. Continue reading “NBN Co Stepping Up the Development of Services for Business Customers” →

Summary Bullets:

• TPG is facing headwinds in growing its revenue and there is limited room to expand its margins. It needs to find new ways to grow its business.

• The merger with VHA will give TPG mobile capabilities and greater scale to compete with Telstra and Optus; but it also needs to pursue growth from the business segment.

TPG released its H1 FY2019 results in late March 2019. Total revenue for H1 FY2019 (ended 31 December 2019) declined 1.5% YoY to A$1.24 billion, but underlying EBITDA and NPAT improved 2.8% and 3.5% respectively. Revenue and EBITDA growth was mainly due to improvement in its Corporate division, but the growth was offset by the decline of Consumer division due to the DSL to NBN migration and iiNet home phone decline. Within Corporate, growth was mainly driven by the Vodafone Hutchison Australia (VHA) fibre contract (contributed A$22 million of growth), which will not deliver long-term growth. While TPG has not been able to grow its revenue in H1 FY2019 compared to the same period in the previous financial year, it has been successful in reducing costs to improve its margins including a reduction in employment and overhead costs. With the consumer market challenged by competition and NBN migration, there is limited upside. There is also limited room for further cost reduction, so business-as-usual is not an option for TPG. Continue reading “TPG Needs the Merger with VHA, and to Grow Business Customers” →

Summary Bullets:

• Vocus’ results for the first half of the financial year do not look great. Revenue is stagnating and EBITDA is declining.
• There is, however, some optimism as the company embarks on its three-year turnaround journey. The company has a new leadership team and its network assets remain a key differentiator.

Vocus has reported its results for the first half of the financial year (H1 FY 2019) and updated investors on the outlook for the company. Revenue for H1 FY 2019 was flat (growth of barely 1% YoY) and underlying EBITDA dropped 10% compared to H1 FY 2018. Consequently, underlying NPAT declined 29% and net leverage ratio increased to 3.1x. Net debt increased $88 million to $1,089 million. The company grew revenue from its New Zealand operations, its enterprise, government and wholesale (the bulk of the growth is from the project revenue associated with the construction of the Coral Sea cable system). However, the growth was offset by the decline in its retail business in Australia; consumer declined 12% and SMB declined 27%. Overall, the financial results are not looking too good for the first half of the financial year. Continue reading “Vocus Looks Like a New Company Starting Out on a Three-Year Turnaround Journey” →