It’s time to look at some of the most important stories unfolding in the telecom sector over the past week. Some of the central stories involved Ericsson’s shareholder meeting where the CEO, Börje Ekholm, spoke about the company’s 5G strategy and urged Europe to speed up the 5G rollout as the gap with China and the U.S. keeps growing. Meanwhile, Safaricom launched the first 5G network in Kenya, and Immarsad started legal action against the Dutch government. What else was talked about in telecom? A whitepaper released a possibly serious flaw in the 5G network slicing architecture, Cellnex announced a big capital hike, T-mobile dropped some of its live TV services, Japanese government halted one of the most popular messaging apps, and a new report came out, announcing that the EU will need $355 billion to roll out 5G across the bloc by 2025. Stay with us and look at the latest telecom stories.
On Tuesday, the Spanish mobile phone mast operator, Cellnex launched a Giga 7 billion euro capital hike valued at 36.33 euros per share. The goal is funding the acquistions of Hivory, a French telecom.
The priority in capital increase will go to the existing shareholders. Cellnex announced that the existing shareholders have already expressed their interest in more than 30% of the new shares.
Cellnex was listed in 2015 and it had a quick growth and has since become the largest mobile phone towers operator in Europe. Last month, the company announced it plans to add 9 billion euros worth of assets to its portfolio by 2025.
T-Mobile announced quite some changes in their TV services on Monday.
The company informed the public that they will be discontinuing their live services with the Live, Live+, and Live Zone services shutting down by the end of the month.
As a substitution, the company plans to switch to Youtube TV and Youtube Premium, as their partnership with Alphabet will increase.
The TVision Live subscribed members will receive a free month of Youtube TV and a regular discounted price of $54.99 per month ($10 below the official price)
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On Monday, the Chief Cabinet Secretary, Karsunobu Karo, said that the government decided to temporarily halt the popular messaging app Line that is owned by no other than SoftBank Corp’s Z Holdings.
Their decision comes after the concerning reports about sensitive information about users that were allegedly accessed by the four engineers at a Line affiliate.
“The government will halt the use of Line when handling sensitive information for now, and set up a task force swiftly, so that usage guideline can be compiled soon,” Kato told a regular news conference.
At the end of last week, the long-awaited trials for the 5G high-speed internet network in the eastern part of Africa started.
The biggest telecom operator in Kenya, Safaricom, is responsible for the trials, using Nokia and Huawei technology. Safaricom is owned partly by South Africa’s Vodacom and partly by Britain’s Vodafone.
The operator started the trials on Friday in four major Kenyan cities and plans to expand to 150 sites in the next year.
Because of the 5G network, the customers will benefit from a 700 megabits per second speed which is three times faster than the current network.
After an appeal and a long fight, Deutsche Telekom and its Slovak unit lost against a EU antitrust fine on Thursday.
The two companies were given a joint fine of 38.8 million euros ($45.8 million) and Deutsche Telekom an additional 31-million-euro penalty by the European Commission back in 2014. The fine came after the EU watchdog decided that unfair wholesale prices were charged in Slovakia in order to margin squeeze.
Deutsche Telekom and Slovak Telekom subsequently challenged the decision at the General Court and subsequently, appealed to the Court of Justice of the European Union.
According to the Thursday report, Europe will need 300 billion euros to rollout 5G by 2025 across the whole bloc.
The report was published by the consulting firm BCG and commissioned by the telecoms lobbying group ETNO.
While EU has big hopes with the 5G networks, so far the EU telecoms operators have been reluctant to invest in the 5G networks, both due to large outlay and tough EU antitrust rules that can slow down the mergers.
“150 billion euros is still needed to achieve a full-5G scenario in Europe, while an additional 150 billion euros is required to finish upgrading fixed infrastructure to gigabit speeds,” the report said.
“One such step is pursuing new ownership models involving voluntary infrastructure sharing, which can allow faster roll-out, reduced overall environmental impact, and increased knowledge transfer among partners,” it said.
Some of the suggestions included easing up the telecom antitrust rules so they could co-invest and cooperate.
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The Swedish telecom equipment maker announced that Ericsson will continue with heavy R&D investment in 5G as it is seeing promising growth opportunities in 5G, especially in the enterprise sector.
“Our strategy remains in place, but we see great growth opportunities in the enterprise segment, which is why we have expanded our strategy with investments in enterprise applications. In the same way that 4G made it possible to digitalize the consumer market, 5G will digitalize the enterprise sector,” said Börje Ekholm, President, and CEO, Ericsson
Ericsson entered the enterprise market after the Cradlepoint acquisition in 2020.
Last year, the company had organic growth of 5.1%, accompanied by a gross margin of 40.3%, an operating margin of 12%, and FCF before M&A worth 22.3 billion SEK. These numbers sum up to the 2020 strongest free cash flow in the company’s history.
Ekholm announced that the future growth of the company will be focused on driving growth and enterprise sector opportunities in 5G that Ericsson can capitalize on.
In 2020, Ericsson has bumped up their R&D investment by approximately 10 billion SEK and more than 25% of total Ericsson employees work within the R&D sector. .
“However, these are not costs, but rather investments to strengthen our position. We’re taking half a step back in order to be able to accelerate,” Ekholm said.
The British satellite company, Inmarsat, began a legal action against the Dutch government. The move comes after the company was requested to move a facility that is used for global maritime safety services in order for telecoms to use it for 5G.
Inmarsat has started civil proceedings in the Netherlands to seek an injunction over what is says is a contravention of national and international law.
“Should a move be forced on Inmarsat, then the proposed timing of the changeover in frequency use . . . is unrealistic and will require a long transitional term to carry out the wholly avoidable move,” the company said.
During a shareholder meeting on Friday, Börje Ekholm, the CEO of Ericsson said that Europe must speed up the 5G developments if they want to challenge the progress that the U.S. and China are making.
The CEO of Ericsson has been warning about Europe falling behind and lacking leadership in 5G for a while. On Friday, he said that “we are falling further and further behind China and the USA”.
He said that it is the future job creation that is also on the line and that, “Today, we see very few digital champions in Europe. They are in the USA and China.”
Ekholm emphasized that it is crucial to avoid the mistakes made in 4G.
The newly published whitepaper showed a potentially dangerous security flaw in the 5G slicing architecture.
The paper was created by AdaptiveMobile Security and illustrates that there is some vulnerability that could leave customers “exposed to malicious cyberattacks” and allow data access and DDoS attacks.
According to the whitepaper, the security flaw could “cause significant security risks to enterprises using network slicing and undermine operators’ attempts to open up new 5G revenues”.
“5G is driving the mobile industry into adopting the technology and techniques of the IT world to increase efficiency and improve functionality,” Dr. Silke Holtmanns, Head of 5G Security Research at AdaptiveMobile Security said. “However, while laudable, there needs to be a wider mindset change. When it comes to securing 5G, the telecoms industry needs to embrace a holistic and collaborative approach to secure networks across standards bodies, working groups, operators and vendors.”
Network slicing is crucial as it has the potential to gain more than $20 billion annually by 2026 and become a huge part of 5G networks.
“Currently, the impact on real-world applications of this network slicing attack is only limited by the number of slices live in 5G networks globally,” Holtmann says. “The risks, if this fundamental flaw in the design of 5G standards had gone undiscovered, are significant.”
“Network slicing is a huge deal for Industry 4.0 and for 5G’s success. While mobile operators have struggled to make the case for standalone densified public 5G small cell networks, manufacturing and industry are widely seen as the ‘killer use case’ for 5G,” Singh Bedi, founder at Intelligence Consulting said. “There will be an economic hit if this problem is not rectified. Network slicing and many early Industry 4.0 use cases would simply not be possible holding back the automation of traditional manufacturing and the progress of industry.
“Early users of 5G networks will need to be assured that everything is being done to ensure this issue is resolved and does not halt 5G adoption. To this, it is reassuring to see that the GSMA, operators, and standards bodies are addressing the issue to prevent exploitation,” Bedi adds.
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