Q1 results are in which means that every few days we get to see how the telecom companies have done in the first 3 months of 2021. This week, we will show you two Q1 results summaries: Google Cloud and the long-awaited Nokia. The first one remains in red despite a record-high growth while the latter is doing amazing in network infrastructure and slightly worse in its other sectors. We will also talk about China proclaiming a 6G world dominance, Huawei potentially losing one of its biggest European deals, Frontier with a strategy to emerge from bankruptcy days ahead of Nasdaq debut, South Korea trying to accelerate the 5G user growth as we pass two years of the network’s launch, and Verizon getting rid of its legendary businesses such as Yahoo, AOL, and TechCrunch, in a $5 billion deal with a private equity firm.
Emerging from bankruptcy, Frontier Communications will start trading on Nasdaq today under “FYBR”, has released an investor update highlighting their new strategy aiming at becoming a leading player in its sector.
The main point of Frontier’s strategy is deploying more fiber, with the ultimate goal of passing more than 6 million homes and businesses (more than double Frontier’s current network)
In 2021, the company’s goal is to pass 495,000 additional locations. Frontier’s network that consists of fiber and copper connections both currently covers 25 states, with over 180 000 fiber route miles. To add, the company now has 41.5% fiber penetration in its footprint, with a future target of 50%.
“Companies that are able to achieve higher penetration are clearly more valued by the market. When we acquired much of our fiber from Verizon, penetration was in the high 40s, which then dropped in subsequent years due to significant operational challenges,” incoming Executive Chairman John Stratton said.
“Strategically, we’re most focused on the expansion of our fiber network with our initial emphasis on building over 3 million new fiber passings in the very near term. We believe that Frontier has the foundation to become the largest U.S. pure-play fiber provider,” he added.
Frontier has identified more than 10 million additional locations that could be their potential fiber locations, focusing on a high RoI (Return on Investment). As the CFO of the company, Sheldon Bruha said, the company is looking at high-priority states such as California, Texas, Florida, and Connecticut.
Nokia’s net sales have gone up by 3%, from $5.94 billion in 2020 to $6.18 billion in Q1 of 2021. The growth is accelerated by the network infrastructure group that is an unquestionable winner of Nokia’s Q1 results.
“The standout was our network infrastructure business, which had a fantastic quarter,”
Nokia’s CEO Pekka Lundmark said on the company’s Q1 earnings call. “This business group builds on strong technology leadership, and we see robust demand for its products.”
Nokia’s network infrastructure business that showed the strongest Q1 results included fixed, IP, optical, and submarine networks.
“Next-generation access is a big opportunity for us,” Lundmark said. “Consumers, businesses, and governments are all pushing for ultra-fast connections to homes and workplaces, as work-from-home looks like it is here to stay. We expect demand in the addressable network infrastructure to have solid growth of 4% in 2021.”
While a home office is definitely bringing the company big opportunities, it is also the 5G that the fixed segment will be able to benefit from.
“We should not forget that 5G will start to drive the demand for fixed connections as well,” Lundmark said. “It is already doing that for base station connections, for backhaul connections. We had some of that already in Q1. But in the little bit longer term, where we get to the phase where operators will start to build high-capacity small cells in mmWave frequencies, that will actually increase the demand for fiber when these small cells will have to be connected back to the network.”
Unfortunately, the other units were not as successful. The mobile unit which remains roughly half of Nokia’s overall business displayed a 4% sale decrease. The Cloud and Network business has recorded an even larger decrease of 9%.
However, Lundmark remains optimistic and claims that the decrease is an illustration of extremely strong Q1 results in 2020 rather than weak Q1 results of 2021.
“There are early indications of our ability to lead in our chosen focus areas,” Lundmark said, referring to more than 80 new service provider deals just in the first quarter.
Related to Nokia’s Q1 results:
In an earnings call, the CEO of Alphabet, Sundar Pichai, released the Q1 results for the Google Cloud unit. Despite a huge 45% year-on-year growth, the uni remains in the red.
Reporting the $4 billion Q1 revenue, Google Cloud has jumped from the $2.8 billion revenue in Q1 2020 results. Although it remains in the red, its loss has been narrowed from approximately $1.7 billion to $974 million.
Pichai has highlighted three specific market trends that are driving and accelerating Google Cloud’s dynamic growth. He cited Data Cloud for analytics and artificial intelligence (AI) workloads, cloud infrastructure for enterprise IT overhauls, and its Workspace product for hybrid work environments.
“We are winning large IT transformation deals with the companies that are migrating their data centers to Google Cloud,” Pichai said. “Multi-cloud remains a differentiator as it provides the easiest and most open development environment for customers like Telus, allowing them to access and move their data between various plants.”
“I think there’s a lot more progress coming down the pipe, and so I’m pretty excited, and it’s why I feel Google – GCP – will be differentiated over time as our competitive advantage plays out here,” he added.
Two years after the 5G network went live in South Korea, the country has passed 14 million users. Standing at 14.48 million now, it accounts for roughly 20% of the mobile subscriptions in the country.
SK Telecom has the most 5G subscribers at 6.74 million, followed by KT Corp and LG Uplus with 4.4 million and 3.33 million respectively. Trying to attract more consumers and encourage the 5G migration, the mobile companies are launching more affordable 5G data plans.
While the number of 5G customers increases, the number of 4G subscribers is understandably decreasing. While the number of 4G customers is decreasing as quickly as 250 000 fewer subscriptions monthly, 4G remains strong.
South Korea was the first country to commercialize 5G technology, back in April 2019. Now, the country is trying to accelerate the adoption. Currently, users on 4G account for 72% of the total mobile subscriptions market.
One of the issues standing in the way of faster adoption is network quality issues, with several 5G users preparing a lawsuit against South Korea’s telecom operators, seeking compensation for disappointing speed and poor connection.
The China National Intellectual Property Administration (CNIPA) has self-proclaimed China to be the world leader in 6G development, through the state media.
CNIPA made the announcement on April 26th, which also marks World Intellectual Property Day. According to CNIPA, out of 38 000 patents that relate to the 6GG technology, almost 13 500 are from China, accounting for roughly 35% and making China a 6G lead.
The report urges China to “utilize its technological advantage in 5G to continue staying ahead.”
The second-place follower to China is the US, with a significantly smaller percentage of patents (18%).
In some of the 6G areas where China is slightly lagging behind other countries, CNIPA has adviced to cooperate with the leading Japanese and South Korean companies such as NEC, Samsung, and Mitsubishi, urging to “reduce reliance on American and European technologies.”
An important part of the 6G network is AI and currently, 75% of all the patent applications in this area are from China. This highlights the pressing needs for the US and EU to step up their research game, as the top three applications are all Chinese universities—Southeast University, China University of Electronic Science and Technology, and Nanjing University of Posts and Telecommunications.
We cannot expect 6G until the end of this decade, however, the technology is expected to exceed the 5G capacity by far, bringing a terabit speed, 3D coverage from underwater to space, and services such as immersive extended reality (XR) and high-fidelity mobile holograms
6G research projects have been launched both in the US and the EU, aiming at preventing a situation where one country holds the dominance in establishing the next-generation mobile network.
Verizon decided to sell its media businesses including Yahoo and AOL, ending more than a decade of unsuccessful media and advertising adventure.
In a $5 billion deal, Apollo Global, a private equity firm, will take over the businesses. Verizon will get $4.25 in cash, with an additional $750 million interest and a 10% stake. The deal sums up to roughly half of what Verizon initially paid for the businesses.
However, it does not come as a surprise. During the last decade, telecom was constantly struggling to keep up with the advertising space of Facebook and Google. Moreover, as Hans Vestbarg took over the Chief Executive role from Lowell McAdam, he has changed the main focus and priority to building out the telecom network and focusing on 5G.
Apart from Yahoo and AOL, Verizon Media’s portfolio includes brands such as TechCrunch, Makers, Ryot, and Flurry.
Over the past week, we have been reporting on several news related to Huawei losing its contracts and struggling not only in the United States but several European countries as well. As the United States has been pressuring the European countries to block Huawei’s equipment citing security risks, the Chinese tech giant had to face several huge losses in the past months.
Now, Telecom Italia is eyeing canceling their contract with Huawei for supplying the 5G equipment. If Telecom Italia which is one of the biggest European clients of Huawei decides to drop the Chinese tech company, it will be a gigantic loss to Huawei.
The Italian telecom gave the 5G network equipment contract to Huawei and the two biggest European 5G equipment suppliers – Ericsson and Nokia. If Huawei is dropped, Nokia and Ericsson will benefit from gaining a larger share of the contract.
Telecom Italia and Huawei declined to comment so far.