[Thabang Mokopanele Business Day] Technology and telecommunications company Blue Label said yesterday it would continue pursuing the growth of its global footprint as it rolled out its expanding range of secure electronic tokens.
The group, which yesterday posted solid results for the six months to November, said that in spite of the global economic meltdown, the products and services it provided remained appealing to its clients.
Blue Label, which distributes cellular airtime and other electronic services via point-of-sales terminals, cellphones and the internet said its transactional point of sale (POS), mobile systems and products and services were being integrated into Microsoft’s mobile and advertising service platforms.
The group said that during the course of this year these services would be rolled out into emerging and developing markets through Microsoft Unlimited Potential Group and its global partners, utilising POS and mobile channels.
“This in future will translate into the monetisation of mobile and POS advertising in these markets.”
Revenues increased 23% to R7,6bn from R5,8bn, while profit increased to R199,7m from R40,7m. Continue reading ‘Blue Label on a roll, despite downturn’
[Sure Kamhunga Business Day] UK cellphone group Vodafone has received competition tribunal approval to acquire a further 15% of Vodacom from Telkom, which forms a key plank of its African growth strategy.
The world’s largest phone company by revenue could pay more than R22bn to increase its stake in Vodacom, SA’s largest cellphone company by subscriber numbers. Vodafone and Telkom each own half of Vodacom.
The tribunal brushed aside last-minute oral submissions against the sale by the Communications Workers’ Union yesterday.
Among other reasons, the union, represented by first deputy president Karthi Pillay, said that Telkom would lose an important source of revenue, and that the domination of foreign capital would create an economic and security risk.
A few hours after the union’s submissions, the tribunal then issued a statement saying that it had decided to approve the deal unconditionally, which analysts said was now a mere formality.
Vodafone, which last year acquired 70% of Ghana Telecom for about US$900m, is keen to grow its African footprint as it diversifies revenue streams from maturing markets in Europe. Continue reading ‘Vodafone gets nod to buy Vodacom stake’
[Duncan McLeod Financial Mail] Mobile operators are better placed than their fixed-line counterparts to weather the economic storm that is engulfing the planet. This is because they have greater flexibility in their cost structures and capital expenditure programmes, and because of ongoing substitution from fixed to mobile phones.
That is one of the key findings of a new research report, Confronting the Crisis: Its Impact on the ICT Industry, published this month by the International Telecommunication Union (ITU).
Mobile operators in emerging markets are also better placed than their rivals in advanced economies. The report quotes MTN CEO Phuthuma Nhleko as saying the African telecom market may not be too adversely affected by the crisis. MTN said last week it expected headline earnings per share for the year to end-December to rise by about 40%, a remarkable achievement given market conditions. MTN reports its results on March 12.
Not everyone’s doing as well as MTN, though. The picture “varies considerably by country and company”, the ITU report says. “Any prediction as to how the crisis will affect future investment plans is fraught with uncertainty.”
Nevertheless, operators and equipment manufacturers remain bullish about growth prospects, especially in emerging markets. Last week in Barcelona, at the annual Mobile World Congress telecom confab, senior industry executives spoke bullishly about connecting the 2,7bn people worldwide who do not yet use a mobile phone. Mobile subscriptions topped 4bn for the first time in December 2008, meaning that about three in five people now have a cellphone. Continue reading ‘As economy sinks, it’s better to be mobile’
[Chris Nuttall Financial Times] Google’s e-mail service, used by more than 100m people, suffered a global crash on Tuesday, raising concerns about the world’s growing reliance on Web services.The Gmail outage lasted more than two hours from about 1.30am on the US West Coast, hitting users in Europe and Asia hardest as America slept.
Google said its monitoring systems had alerted it that consumer and business accounts worldwide could not access e-mail and apologised for the inconvenience.
It is the worst outage to date for Gmail, a browser-based e-mail service that has been growing at 40%/year and gaining on its bigger rivals, Yahoo Mail and Microsoft’s Hotmail.
Gmail has more than 113m users worldwide, according to the ComScore research firm, compared with 283m Hotmail users and 274m Yahoo account holders.
The crash is a blow to Google’s ambitions to grow business e-mail and applications that it delivers over the Internet. Users of its Google Apps Premier Edition, which charges US$50/account for services including Gmail, complained on support forums yesterday. Continue reading ‘Gmail crash fuels Web services fears’
[Duncan McLeod Financial Mail] Jeffrey Hedberg has done a great job of turning mobile operator Cell C around. But the company is drowning in a sea of debt not of his making. Hedberg thinks Telkom should buy the company. Telkom shareholders might be horrified at the prospect.
Hedberg, a former senior Deutsche Telekom executive with many years’ experience in telecommunications, has done a great job of taking the fight to Cell C’s bigger rivals, MTN and Vodacom. He has grown the company’s market share through aggressive but clever tariff plans and he has made the operator a much more formidable competitor in SA’s telecom industry.
But there are big problems, which he readily admits are beyond his control. By far the biggest of these is the company’s debt nightmare — it’s not known how deep in the hole Cell C really is because it doesn’t report details about its real profitability — but it owes its financiers many billions of rand. Interest payments, denominated in dollars and euros, run into hundreds of millions of rand every year.
As a result, the company has never reported a net profit. Operationally it is in the black, but its debt mountain means it’s unlikely to turn a real profit for many years to come.
Hedberg conceded to me over lunch last week that something has to be done — and urgently — about the situation. Unfortunately, restructuring Cell C’s debt has become a lot more difficult given the worsening global financial situation. An equity infusion from the shareholders — Saudi Telecom-controlled Oger Telecom (which holds a controlling 75% stake) and empowerment group CellSaf (25%) — seems to be the only feasible option right now. Continue reading ‘Solving Cell C’s debt nightmare’
[Paul Taylor and Richard Waters Financial Times] Microsoft CEO Steve Ballmer insists that the company is not playing catch-up as it focuses on both low and high-cost smartphones after launching a new version of its Windows Mobile phone operating system.
“I think that if you look at the market today, volumes speak volumes. In the last year we shipped over 20m phones,” he told the Financial Times, “I’d say, mostly, it’s game on – we are all out there. We are leading the pack on volume. I’d say Apple’s got some advantages on image, but we’re in the early stages.”
Explaining the strategy to expand the appeal of “Windows Phones” and extend its push into the mobile market, Ballmer told the annual Mobile World Congress industry trade show in Barcelona on Monday: “We need to take our Windows Mobile business to another level.”
While Ballmer did not mention rivals by name, the latest announcements appear designed to ensure that mobile phones powered by Windows Mobile are able to compete more effectively against competitors, including Apple’s iPhone and the new handsets powered by Google’s Android operating system.
“It is no longer just about how a phone works by itself,” he said, “it is about how it works in conjunction with a PC and the internet. The time has come for us to take the full Windows experience to mobile phones.”
Ballmer said the next version of Microsoft’s Windows Mobile operating system — Windows Mobile 6.5, which will be launched in the second half of this year — has been designed with this in mind.
Microsoft executives emphasised that these handsets will be designed to appeal to consumers as well as business users who, to date, have been the main buyers of Windows-powered smartphones. Microsoft also wants to see its operating system built into more mobile devices. Continue reading ‘Ballmer lays down the gauntlet on mobiles’
[Duncan McLeod FM Tech] Mobile operator Cell C is set to slash prepaid voice tariffs in a move designed to grab market share from bigger rivals MTN and Vodacom, and to bolster traffic on its network during the week, FM Tech can exclusively report.
Peak-time on-network prepaid rates will fall by as much as 85%, to 41,6c/minute, the company will announce in a national advertising campaign to be launched on Sunday. The move could signal the start of an aggressive price war in SA’s cellular industry. The new tariffs take effect on Monday.
The operator, SA’s smallest with 7m active customers, will introduce new tariff plans, under the Woza Wheneva brand, to supplement its popular Woza Weekend offering.
Under the new plan, consumers who purchase R10 of airtime will receive R10 of calls at regular Cell C prepaid tariffs — it’s R2,50/minute at peak-time on its standard prepaid offering — plus an additional 20 minutes. A R25 purchase will secure R25 of airtime and 50 extra minutes; R35 will get R35 airtime and 70 extra minutes; and R50 will buy R50 of airtime and 100 extra minutes. All of the additional minutes will be billed per second.
Based on Cell C’s standard R2,50/minute on-net prepaid tariff, that equates to a reduction in call costs of nearly 85%, to just 41,6c/minute, by far the cheapest cellular call rate in SA. The free minutes can be used at any time. Continue reading ‘Cell C to slash voice tariffs’
[Lesley Stones Business Day] MTN’s huge black empowerment plan to spread its shares among ordinary citizens has been shelved as most people are too cash-strapped to buy into the business.
The cellular network hopes conditions will buck up enough by year’s end for it to relaunch the scheme to sell about 6% of its stock to black buyers at a discount to market value.
The group said yesterday its implementation of a new empowerment deal in the first half of this year was postponed in the light of “severe constraints” in financial markets. The directors felt it was not in best interests of MTN, its shareholders and new investors to go ahead right now. The board remained committed to implementing the scheme “at the appropriate time”.
“It doesn’t change the transaction,” said MTN representative Xolisa Vapi. “Nothing changes except it’s being moved to a time when the conditions are better, because right now the financial markets are tight.”
MTN was making no further comments as it considered its statement to be sufficient, Vapi said. However, a source said that trying to raise money from potential investors would be difficult because interest rates were high and credit was not easily available. Continue reading ‘MTN shelves giant BEE deal’
[Lesley Stones Business Day] Technology company Faritec’s stock has continued to sink to a series of new 52-week lows, shedding 18% to trade at just 9c on Wednesday. Yesterday the stock closed at 8c.
The continued erosion of its share price means the technology group has been trading 89% down from a year ago.
Its share-price plunge was triggered by dismal results posted this week showing a net loss of R21,4m for the six months to December. That prompted Faritec to impose another 15 redundancies after shedding 25 staff.
Analysts Sibonginkosi Nyanga and Warwick Lucas of Imara SP Reid warn the stock is to be avoided, and said Faritec had “far to go”.
The real concern about its underperformance lay in the cost base, the analysts said, echoing the Faritec board’s admission that costs were out of sync with income.
Though managers are attacking running costs and have begun a bone-deep cost-cutting exercise, Imara SP Reid doubts it will be entirely successful.
Job cuts and a freeze on the head count and on all but essential capital expenditure should pare costs by R4m a month, the company hopes. Faritec’s board said those initial efforts were not yet fully visible, and would have an increasing effect in coming months to let Faritec return to profitability in the second half. Continue reading ‘More redundancies as Faritec keeps sinking’
[Duncan McLeod Financial Mail] Motlatsi Nzeku’s unceremonious axing as Telkom’s chief of operations makes him the most senior casualty so far of a far-reaching and complex plan to overhaul the way the telecommunications group is structured and run.
The planned restructuring, being done under the moniker Project Renaissance, comes just months ahead of a planned outsourcing — capability management, Telkom prefers to call it — which could result in as many as three-quarters of the group’s staff being outsourced to third-party service providers. A range of service providers are preparing tender documents in the hope of winning the outsourcing business, which will be worth many billions of rand a year.
Telkom management, led by CEO Reuben September (pictured), regards the far-reaching changes — which also include the introduction of new reporting lines — as crucial if Telkom is to avoid ceding ground to new rivals and if it is to build a successful business internationally. Some trade unions initially opposed the plan, though a source says broad support for it is starting to emerge.
In a recent letter addressed to Telkom staff, and leaked to the FM, September says he wants the new group structure in place by April 1. Implementation of the outsource plan will follow. In terms of the initial restructuring, three new, large divisions have been created. Each will have an MD who will report to September. The proposed new divisions are: Continue reading ‘Inside Telkom’s radical overhaul’