About this weblog

What you need to know: This weblog captures key data points about the global telecoms industry. I use it as an electronic notebook to support my work for Pringle Media.

Friday, August 13, 2021

Strong Quarter for Deutsche Telekom

Deutsche Telekom reported a 6.8% year-on-year rise in revenues (on an organic basis) for the second quarter to 26.6 billion euros. As of June 30th, T-Mobile US’ customer base was 104.8 million, an increase of almost 6.5 million year-on-year. Revenue in Germany was up 1.4%, mainly driven by broadband revenue growth and a rise in equipment sales both in the fixed network and in mobile communications. 

On June 30th, DT switched off its UMTS (3G) network across Germany and began using the freed-up spectrum for LTE/4G and 5G services. In the second quarter of 2021, it upgraded more than 800 additional sites for 5G, meaning it now offers 5G to 82.4 % of German households. DT said its LTE network covered 98.9% of German households at the end of the second quarter.

In the United States, T‑Mobile US said its "ultra capacity" 5G network in the 2.5 GHz and mmWave bands now covers 165 million people, while the 5G service in the 600 MHz band is available to 305 million people. According to Ookla®, T‑Mobile US’ 5G network covered 92 % of the interstate highway miles across America in June 2021. Source: Deutsche Telekom statements



Friday, July 30, 2021

Amazon's Recruitment Drive Pays Off

Amazon forecast net sales of between 106 billion and 112 billion US dollars for the third quarter of 2021. That would represent year-on-year growth of between 10% and 16% and is based on a favourable impact of approximately 70 basis points from foreign exchange rates.

That represents a marked slowdown from the 24% year-on-year growth  (at constant currencies) that Amazon experienced in the second quarter. Brian Olsavsky, CFO of Amazon, explained that the slowdown will be driven by the dynamics of the pandemic. "By mid-May of last year, we [had] made good progress to open up more capacity by adding hundreds of thousands of employees," he said. "This allowed our revenue growth rate to jump to the 35% to 45% range and remained at that level through Q1 of this year when we had 41% growth. In Q2 of this year, we began to comp this high sales period from last year, and the year-over-year revenue growth rate has narrowed. It has also narrowed as vaccines become more readily available in many countries and people are getting out of their homes."

"Since May 15, again, excluding Prime Day, our year-over-year growth rate has dropped into the mid-teens. Our Q3 revenue guidance range of 10% to 16% growth reflects an expected continuation of this trend. Given all this volatility, it's useful to consider the two-year compounded annual growth rate, which remains strong in the 25% to 30% range. Recall this compares to our pre-pandemic growth rate of 21%." 

Amazon now employs almost 1.34 million people, up 52% year-on-year. Source: Transcript of Amazon Q2 conference call



Comcast Rides Return of Advertising

Boosted by the return of advertising and demand for connectivity, Comcast reported a 20% year-on-year rise in revenues to 28.5 billion US dollars for the second quarter of 2021. It said that broadband revenue climbed 14% to 5.7 billion dollars, while media revenue was up almost 26% to 5.1 billion dollars. 

Sky, the European broadcast unit, reported a 15% rise in revenues at constant currencies to 5.2 billion  dollars for the quarter. Source: Comcast statements

Wednesday, July 28, 2021

Tesla Charges Ahead

Tesla reported a 98% year-on-year rise in revenue for the second quarter to almost 12 billion US dollars. Automotive revenues were up 97% thanks to a 121% rise in vehicle deliveries. Tesla said: "Public sentiment and support for electric vehicles seems to be at a never-before-seen inflection point."

The volume of solar power generation and power storage (key components of Tesla's broader electric proposition) deployed by Tesla both rose by more than 200%. 

However, Tesla appeared to acknowledge that the development of self-driving vehicles is proving difficult, even though it is able to collect data on how its customers are driving its cars. Tesla said: "We successfully launched Tesla Vision (its camera-based autopilot system) in Q2, which was mainly possible due to our ability to use data from over a million Tesla vehicles to source a large, diverse and accurate dataset. Solving full autonomy is a difficult engineering challenge in which we continue to believe can only be solved through the collection of large, real-world datasets and cutting-edge AI." Source: Tesla statement

Alphabet Reports Blow-out Quarter

Boosted by a "rising tide of online consumer and business activity", Alphabet reported a 57% year-on-year rise in revenues at constant currencies to 61.9 billion US dollars for the second quarter of 2021. Google search and other advertising revenues were up 68% (with currency movements) to 35.8 billion dollars. YouTube advertising revenues of 7 billion dollars, were up 84%.

Alphabet reported that its experimental self-driving vehicle unit Waymo continues to grow. "People love the fully autonomous ride hailing service in Phoenix," Sundar Pichai, CEO Alphabet and Google, said. "Since first launching its services to the public in October 2020, Waymo has safely served tens of thousands of rides without a human driver in the vehicle, and we look forward to many more."

In response to analyst questions, Pichai added: "We've had very good experience by scaling up rides. These are driverless rides and no one is in the car other than the passengers. And people have had a very positive experience overall. We're obviously – with a strong focus on safety, we're looking to scale it up. Through it all, we are building newer capabilities as well, investing in next generation of hardware and software. So it's an iterative process, and at each step it's very clear to us that we are ahead and we are making progress. And you'll see us continue to invest here with a focus on safety first. And I expect us to scale up more through the course of 2022." Source: Transcript of Alphabet earnings call


Saturday, July 24, 2021

Vodafone Lifted by Recovery and Africa

Vodafone reported a 5.6% organic year-on-year rise in group revenues for the quarter ending June 30 to 11.1 billion euros. Service revenues climbed 3.3%, as European economies recovered from the disruption-caused by the pandemic.

Vodafone said that Vodacom, its African subsidiary, saw service revenue rise almost 8%. "In Africa, we are the leading provider of mobile data and mobile payment services," Vodafone said. "Our M-Pesa financial services platform grew strongly. During the quarter, the platform processed almost 4.5 billion transactions, an increase of 45% year-on-year. The VodaPay ‘super-app’ will be launched in South Africa, with over 70 merchants already joining the eco-system." Source: Vodafone statement

Friday, July 23, 2021

AT&T Expects Better Bounce Back

Thanks to strong momentum in its wireless, fibre and video streaming businesses, AT&T now expects to achieve revenue growth of between 2% and 3% in 2021, up from its earlier guidance of 1%. It anticipates that wireless service revenues will now rise by 3%, rather than 2%.

The revised forecasts came after AT&T reported year-on-year revenue growth of 7.6% for the second quarter to 44 billion US dollars - its best second quarter performance for 10 years. Revenues in its Communications segment rose by 6.1%, while WarnerMedia revenues were up 31%, driven by higher content sales, subscription and advertising revenues. 

However, AT&T is in the process of spinning WarnerMedia off into a separate independent company, which will see the entertainment, sports and news assets merge with Discovery's non-fiction and international entertainment and sports businesses. Source: AT&T statements

Friday, April 30, 2021

Amazon Anticipates Slow Down

For the first quarter of 2021, Amazon reported a 41% year-on-year increase in sales to 108.5 billion US dollars at constant currencies. For the current quarter, it expects to report sales of between 110 billion and 116 billion dollars - year-on-year growth of between 24% and 30%. This guidance anticipates a favourable impact of approximately 200 basis points from foreign exchange rates. 

As it benefits from the pandemic-induced demand for digital commerce, Amazon is enhancing its delivery capabilities. It is fitting delivery vehicles with camera safety technology and artificial intelligence to capture real-time data (such as following safe distance and road conditions) to identify at-risk driving events. "When this technology was piloted in 2020 on over two million miles of delivery routes, crashes decreased 48%, stop sign violations decreased 20%, driving without a seatbelt decreased 60%, and distracted driving decreased 45%," Amazon said.

It is also expanding Amazon Scout, a fully electric autonomous delivery system. "Similar in size to a small cooler on wheels, Amazon Scout rolls down the sidewalk at walking pace and delivers items right to customers," the company said. ?Since its launch, Scout has delivered tens of thousands of packages to customers in California, Georgia, Tennessee, and Washington, and the programme is continuing to expand to new communities in the U.S." 

Amazon Web Services (AWS) increased revenues by 32% year-on-year to 13.5 billion dollars in the first quarter. It said that DISH is leveraging AWS’s infrastructure to build a cloud-based, 5G open radio access network (O-RAN) "to deliver consistent, cost-effective performance from the cloud to the edge of the network". It also reported that The Walt Disney Company is working with AWS on the expansion of Disney+ to more than 100 million subscribers around the world. Source: Amazon statement

Thursday, April 29, 2021

Alphabet Reports Big Rebound


For the first quarter of 2021, Alphabet reported revenues of 55.3 billion US dollars, up 32% at constant currencies, "reflecting elevated consumer activity online and broad-based increases in advertiser spending within Google Services, as well as ongoing strength in Google Cloud." 

Reporting on its "Other Bets" division, Alphabet said Waymo’s fully autonomous public ride-hailing service in Phoenix is providing hundreds of rides per week. In San Francisco, Waymo has begun limited employee testing. 

Asked about Alphabet's plans for office space in the wake of the pandemic, Ruth Porat, CFO said. "We've been very clear we do value bringing people together in the office. And we're looking at a hybrid work from home, work from office model. As we look forward at developing our real estate footprint for offices, what we factor into it is, first, we are growing our headcount. We are looking at less density per employee. So even with a hybrid work environment, we will continue to need space. And so we're continuing to build out our campuses and office facilities."

Source: Alphabet Investor Relations

Wednesday, April 28, 2021

Telsa Talks Up Computer Vision and Energy Storage

Tesla reported a 74% year-on-year rise in revenues for the first quarter of 2021 to 10.4 billion US dollars, as total vehicle deliveries more than doubled to almost 185,000.

CEO Elon Musk also shared some thoughts on the development of artificial intelligence to run self-driving cars:

"The neural net needs to be compressed into a fairly small computer... that's using on the order of 70 or 80 watts. So this is a much harder problem than if you were you, say, 10,000 computers in a server room.

"With the elimination of radar, we're finally getting rid of one of the last crutches. ...You actually just need vision to work. .. it's like having eight cameras, it's like having eyes in the back of your head, beside your head and has three eyes of different focal distances looking forward. ... and processing it at a speed that is superhuman. There's no question in my mind that with a pure vision solution, we can make a car that is dramatically safer than the average person.

Two million cars to collect data

"Key to solving this is also having some massive data set. Just having well over one million cars on the road that are collecting data from every sort of corner case, rare situations.....Perhaps next year, we'll have two million cars in active use, providing vast amounts of video training data that then needs to be digested by a very powerful training system. 

"So we developed a lot of training software...to do surround video labelling, which is quite tricky. This means all eight cameras simultaneously at 36 [frames] a second per camera labelling video over time. There wasn't any tool that existed for this, so we developed our own labelling tool. ... the Holy Grail is auto labelling.

"The trainers train the training system and then the system auto labels the data and then the human labellers just need to look at the labelling to confirm that it is correct and perhaps make edits. And then every time an edit is made, that further trains the system. So it's kind of like a flywheel that's just sort of spinning up. And really, the only way to do this is with vast amounts of video data.

"Dojo ...is a supercomputer optimised for neural net training. We think Dojo will be.... an order of magnitude more cost efficient in hardware and in energy usage for a frame of video compared to a GPU-based solution or compared to the next best solution that we're aware of. So then possibly that could be used by others."



Tesla also reported a 71% year-on-year rise in energy storage deployments, mainly driven by the popularity of its Powerwall product for homeowners. With demand outstripping supply, it is now only selling Powerwall to customers who also buy its solar roof products.

"Even if all lights go out in the neighbourhood, you will still have power," Musk told investors. "So that gives people energy security. And we can also, in working with the utilities, use the Powerwalls to stabilise the overall grid....with a whole bunch of Powerwalls and houses, we can actually buffer the power. And so if the grid needs more power...we can then actually release power onto the grid to take care of peak power demand.

"The Powerwalls can operate as a giant distributed utility. This is profound....and necessary because we are headed toward a world where.....people are moving toward electric vehicles. This will mean that the power needs in -- at homes and businesses will increase significantly.

Step change in electricity demand

"If you go to full renewable electricity, we need about 3x as much electricity as we currently have. So these are rough numbers, but roughly you need twice [as] much electricity if all transport goes electric, and... three times much electricity, if all heating goes electric. So basically, this is a prosperous future, I think, both for Tesla and for the utilities.

"It needs to occur both at the local level and at the utility level. If it doesn't occur at the local level, what will actually be required is a massive increase in power lines in power plants. So they have to put long distance and local power lines all over the place. They'll have to increase the size of the substations, is a nightmare."

Source: Tesla's investor relations


Tuesday, April 27, 2021

Weaker Returns for U.S. Telcos

 



Upheaval in the U.S. telecoms is hitting profitability. In 2020, the aggregate return on capital employed (ROCE) by the top three telcos in the U.S. nosedived to just 5% (before tax) from 7% in 2019. Industry ROCE was eroded by major write-downs by AT&T, primarily related to its ill-starred acquisition of DirecTV, as well as the pandemic and T-Mobile US's efforts to absorb Sprint. Tellingly, aggregate net cash flow also fell, as AT&T felt the competitive heat in the entertainment market (see chart below).

Temporarily, at least, the leading U.S. telcos are even less profitable than their European counterparts, with the notable exception of Verizon. Over the past six years, Verizon has outperformed its peers by some distance (see chart above). 

For more, please see a new report by Pringle Media on the financial performance of AT&T, Verizon, T-Mobile US and Sprint (now part of T-Mobile US). The iBooks edition is available here and the Kindle edition is available here.  



Tuesday, April 20, 2021

Top Telcos Struggle with Low ROCE

 


Over the past decade, Europe's largest telcos have struggled to cover their cost of capital. Their aggregate return on capital employed (ROCE) since 2010 is just 6% before tax, according to estimates in a new report by Pringle Media.  

Still, the aggregate ROCE of Europe's big five telcos - Deutsche Telekom, Orange, Vodafone, Telefónica and Telecom Italia - appears to have risen slightly in 2020, despite the pandemic. That is due to an improving financial performance by Vodafone, which has historically made a weak return on the vast amounts of capital it spent on acquisitions. However, Vodafone has yet to report its profitability for the final quarter of 2020, so these numbers may change.

For more, please see the iPad version of the new report here or the Kindle version here.



Friday, March 26, 2021

China Mobile Bets Big on 5G



China Mobile reported a 3% increase in revenue for 2020 to 768 billion Chinese yuan (117.4 billion US dollars).  Wireline broadband revenue increased by 17.4% year-on-year and reached 81 billion yuan, while revenue from applications and information services increased by 22.4% year-on-year and reached 101 billion yuan. 

At the end of 2020, the number of mobile customers reached 942 million of which 165 million customers used 5G. The average handset data traffic per user per month increased by 39% to 9.4GB. However, China Mobile also reported a 1.2% fall in Internet of Things connections to 873 million.

In 2020, China Mobile said it invested 102.5 billion yuan in 5G, adding: "Our cloud-based and centralised standalone (SA) core network commenced operations in September 2020. Throughout the year, we built and put in use around 340,000 new 5G base stations, bringing the total number of 5G base stations to a cumulative 390,000, providing 5G services to all prefecture-level cities, selected counties and key areas in China."  Source: China Mobile statements


Thursday, March 11, 2021

Mobile Data and Mobile Money Boost MTN

 


MTN reported a 12% increase in group service revenue to 170 billion South African rand (11.7 billion US dollars) for 2020.  Revenue in Nigeria rose almost 15% and in Ghana almost 17%, while growth in MTN's home market of South Africa was 1.6%. The group saw a 28.8 million increase in subscribers to 279.6 million. 

Fintech revenue rose by almost 24% as the number of active mobile money users increased by 11.7 million to 46.4 million, generating a monthly ARPU of 1.2 dollars. The total value of mobile money  transactions in 2020 was 152 billion dollars, as MTN processed 12,400 transactions per minute (up 35% from 2019). "While COVID-19 accelerated the adoption of mobile financial services, growth in fintech revenue was moderated by reductions in transaction fees to support our customers, lockdown restrictions on agents and a slowdown in economic activity," MTN said.  It also reported that its new aYo insurance joint venture had 11 million registered policy holders and 6 million active policies by the end of 2020. In total, aYo generated 10.5 million dollars in premium income. 

Digital revenue increased by 27% in 2020. "We expanded our instant messaging platform ayoba making good strides in the year, to record 5.5 million monthly active users, an addition of 3.5 million. It has now been integrated into 16 MTN markets and can be downloaded across many other markets on the Google Play store, Apple App Store and via the ayoba website as an OTT offering. In the year, ayoba expanded its services to include music, gaming, channels and money transfer. Streaming service MusicTime! is now live in nine MTN markets, and 15 opcos live with MusicTime in the ayoba app." 

MTN said it is aiming to have 100 million mobile money users and 100 million ayoba users by 2025.  Source: MTN report




Tuesday, March 9, 2021

China Telecom Talks Up 5G

In 2020, China Telecom increased revenues 4.7% to 394 billion yuan (60 billion US dollars), as wireline service revenues rose 5.5% to 119 billion yuan. It reported 86.5 million "5G package subscribers", representing a penetration rate of 24.6%.

Revenue from "smart family" packages (containing broadband, a home platform, applications and security services) reached 11.1 billion yuan, representing an increase of 37.5%.

The telco also said it is rolling out "5G innovative applications" such as remote control, machine vision, and automated guided vehicles. By the end of the year, China Telecom had signed contracts with nearly 1,900 customers for its 5G industry applications, with more than 1,100 use cases being launched. Source: China Telecom statements.




Friday, February 19, 2021

Financial Services Push Pays off for Orange

 


Orange's revenues fell 0.2% in the fourth quarter of 2020 to 10.9 billion euros on a comparable basis. Across the year, revenues were up 0.3% to 42.3 billion euros, driven by a 5.2% increase in Africa & Middle East, which saw strong demand for 4G and Orange Money, and a 1.6% rise in France.  However, 2020 sales elsewhere in Europe were down 3.5% and enterprise revenues down 1.4%.

Orange Money's revenues rose almost 22% in the fourth quarter, meaning the business generated more than 500 million revenues for the full-year. At the end of 2020, the Orange Money customer base comprised 21.9 million active customers, up 20% year on year.

Orange also reported a 70% rise in net banking income to 69 million euros in 2020. At December 31, 2020, Orange Bank’s customer base in France and Spain, including the mobile insurance offer, was almost 1.2 million customers. It added that Orange Bank Africa, launched at the end of July 2020 in Côte d’Ivoire, already has over 350,000 customers, more than half of whom have taken out loans.  Source: Orange statement

Tuesday, February 2, 2021

Financial Services Fuels Growth for Vodacom

Vodacom Group, which is majority owned by Vodafone, reported 6.7% year-on-year growth in group revenue (on a normalised basis) for the quarter ending December 30th to 25.1 billion South African rand (1.68 billion US dollars).  The increase was driven by 4.2% service revenue growth and sales of equipment and non-service revenue in South Africa.

The group's financial services revenue was a key growth engine. Shameel Joosub, Vodacom Group CEO, said: "Supported by a significant increase in demand for our Airtime Advance product and a healthy increase in insurance policies, our financial services business remains a very strong performer having increased revenue by 24.3%, as the business continues to scale. Our partnership with Alipay will add new dimensions to our financial services’ proposition and in particular VodaPay, which will become our single lifestyle super app."

Revenues from the mobile money payment service M-Pesa increased 10.1%, largely the result of a 7.7% increase in customers. The group reported that almost 16 million people - or just under half of its international customer base (customers outside of South Africa) - are now making use of M-Pesa. Including Safaricom, monthly M-Pesa transactions amounted to 24.2 billion US dollars, up 58% year-on-year.  Source: Vodacom statement


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