Week 33 in Telecoms, Internet & Media

5G

• AT&T plans SA 5G by end 2020
• Cisco & Taiwan's Industrial Development Bureau establish 5G open networking experiment platform, with Foxconn Technology, Compal Electronics, Inventec, Pegatron, Sercomm, Accton Technology, Alpha Networks; may partner with Open Radio Access Network (O-RAN) Alliance & Telecom Infra Project (TIP)
• Rakuten Mobile plans 8652 base stations = 70% pops coverage by 210331; nationwide coverage (96%) summer 2021 (originally Jan 2028); to launch SA 5G service end Sep 2020
• Liverpool granted GBP 7m from UK gvt for Private 5G (at 60 GHz) project 5G Create: Connecting Health and Social Care
• Elisa expands to city #33: Kaarina
• Zain KSA expands 5G to 5 new cities: Duwadimi, Hawtat Bani Tamim, Hayathim, Muzahimiyah, Quwayiyah (total 35)
• Xiaomi launches 2 5G smartphones: Redmi K30 Ultra (low-end) & Mi 10 Ultra (top-end)
• Telefonica plans live broadcast TV over 5G trial, with Intel & Aviwest
• NTT Data & Mavenir to develop radio & core access solutions, plus data & device mgt platforms & analytics tools for private 5G & 4G networks in DE, CH, AT
• HMD Global plans first 5G smartphone Aug 2020: Nokia 8.3

VIDEO

• AT&T
• Rumor: to sell Crunchyroll to Sony but price ($1.5b) too high
• Rumor: CNN plans global streaming service
• Apple: Bloomberg: plans bundling Apple TV+ with CBS All Access (stand-alone 10), Showtime (stand-alone 11) for 10 $/mo (on top of 5 for Apple TV+)
• Locast: Launches in Minneapolis-St Paul, total pops coverage US 42%
• ViacomCBS
• Bloomberg: plans SVOD bundle (CBS All Access, Showtime) with Apple TV+ for 15 $/mo
• Rumor: to rebrand CBS All Access in 2021, possibly to Paramount+
• Fox Corp: Fox News Media to launch Fox News International (SVOD, based on Fox News Channel & Fox Business) 200820, 7 $/mo first in Mexico, 200917 in ES, DE, UK, total 20 countries YE 2020; apps for iOS, Android, Apple TV, Android TV, later Amazon Fire TV, Roku
• Telenet: EC approves streaming JV of Telenet & DPG Media: Streamz, to be established 200901, Peter Vindevogel (Telenet) CEO, Kris Vervaet (DPG) Chair; to focus on Flemish & int content
• Tricolor (DSB, Russia) adds TVOD to streaming service

MEDIA & SERVICES

Internet

• Amazon
• To add podcasts to Amazon Music (both free and paid tiers), Audible (combined 55m users)
• Apple
• To direct users to Apple News+ for reading articles (instead of publisher websites) from autumn 2020; also for links appearing in social media & search results
• Bloomberg: Plans Apple One subscription bundle Oct 2020, with Family Sharing (max 6): Music, TV+ (video), News+ (news), Arcade (gaming), iCloud (storage) (not Apple Care or monthly paid hardware); 3 tiers: 1. Music + TV+, 2. Music + TV+ + Gaming, 3. Music + TV+ + Gaming + iCloud; could be limited by music majors agreements not allowing Apple Music bundling with other services; plans app for virtual fitness classes (subscription-based, codename Seymour)

Media

• New York Times Plans subscription service for Wirecutter (product recommendations)

Telecoms

• Sunrise launches Back to School promos until 200831: 100 CHF/mo in 24 mo contract for BB, TV (neo max), Macbook Air (retail price CHF 1130), Apple TV (retail price CHF 200); free iPhone SE & Apple Airpods for new Freedom swiss unlimited subs (65 CHF/mo in 24 mo contract); fgree MacBook Air for new Freedom europe & US subs (100 CHF/mo in 24 mo contract)
• Ludwigsburg (DE) launches V2X tech from Cohda Wireless, with Swarco (traffic tech): all traffic lights & intersections fitted with Cohda MK5 road-side units, which correspond with MK5 on-board units in fire trucks & rescue vehicles to grant them green-light passage when on the way to emergencies

REGULATORY

Platforms

• Amazon
• Appeals Court: can be held liable for 3rd-party sellers’ defective products in California
• Competition Bureau Canada starts investigation into 3rd-party sellers (willingness to sell on other platforms or own websites; viability of 3rd-party store not using FBA & Amazon ads; influence on shopper habits using 3rd-party sellers' competing items)
• Facebook
• To ban implicit hate speech (blackface, anti-Semitic stereotypes etc)
• Removed 7m of misleading corona virus content items in 20Q2
• To show pop-up warning to users sharing corona virus info
• Instagram sued for collecting, storing & profiting from the biometric data of more than 100m users without consent; fine up to 5k $/user total $500m
• Instagram to force suspicious accounts (inauthentic behavior, such as bot accounts) to verify their identities
• Twitter Adds feature to control who can answer to a tweet to limit hate speech

Platforms general

• Indonesia extends 10% VAT on Amazon, Google, Netflix, Spotify [see 200710] to Facebook, Disney, Apple, TikTok; to be collected from 200901
• EU and US talk over replacing Privacy Shield
• Social networks (Google, Facebook, Twitter, Pinterest, LinkedIn & Microsoft, Reddit, Verizon Media, Wikimedia) cooperate on scenario planning during run-up to US Presidential Election 201103
• Epic Games sues Apple & Google for banning Fortnite from app stores as Fortnite bypassed in-app payment systems from Apple & Google, claims monopolistic behavior (violates Sherman Act & California’s Cartwright Act), claims that Google blocked OnePlus & LG from pre-installing Fortnite launchers on new smartphones - Spotify and Match Group support Epic; [Apple has monopoly on iOS access for apps through App STore; Google allows sideloading app (not through Play Store) and 3rd party app stores such as Epic's, but erected contractual & technological barriers on distributing apps not through Play Store] - Apple refused Facebook's request to waive 30% App Store fee for small businesses hosting live events (Facebook Pay instead applies zero fee)
• The Privacy Collective sues Oracle & Salesforce (CALS) over personal data collection, bundling & trading

Spectrum

• RTR (AT) plans multiband (6 blocks of 2x10 in 700, 12 blocks of 2x5 in 2100, 9 blocks of 1x5 1500) auction Aug-Sep 2020; coverage obligation: 900 towns (of 2100) with little or no mobile to be connected to 5G, bonus (price discount) for connecting any of the 1200 other
• CTU (CZ) launches multiband auction tender, applcations due 200930: 700 band (2x10 MHz reserved for newcomer), 3400-3600 band - MNOs oppose newcomer
• FCC (US) to reallocate military spectrum (100 MHz in 3.5 GHz band: 3.45-3.55) for 5G by 2021
• ACMA (Australia) plans 26 GHz auction March 2021, cap 1 GHz
• MoC Israel ends 5G auction, 3 winners with identical spectrum (2x5 in 700 band valid 15 yr; 2x10 in 2600 band valid 10 yr; 100 in 3500 band valid 10 yr): Cellcom/Golan Telecom/Marathon Telecom (owns 018 Xfone; pay ILS 115m = $34m), Pelephone (= Bezeq; pays ILS 88m), Partner Comms/HOT Mobile (ILS 62m); to be paid Sep 2022
  

Telecoms

• Ofcom (UK) starts investigation of personalised pricing in telecoms
• Ocfom (UK) launches wholesale voice market consultation until 201008, to take effect April 2021: fixed wholesale deregulation, continuation of MTA & FTA caps etc

CORPORATE

• BT: Daily Telegraph: pension deficit (GBP 11.3b) could be reduced by shifting part of Openreach (estimated value GBP 20b) to the fund
• CK Hutchison: 3 DK plans infra (1275 towers) spin-off as HI3G Networks, open for others
• Equinix: Acquires 2 datacenters (carrier neutral) from GPX India, $161m
• PPF: Rumor: considers selling MNOs acquired from Telenor (Bulgaria, Serbia, Montenegro, Hungary)
• Liberty Global: Offer for Sunrise (CH)
• Sunrise board & shareholder Freenet (24%) support
• 110 CHF/share cash (premium 28% to 200811, 32% over last 60 days average), valuation CHF 5.0b, EV CHF 6.8b
• valuation 7.5x adj EBITDA or 10.3x adj OpFCF after synergies, 10.0x adj EBITDA or 17,6x adj OpFCF before synergies
• to be financed from cash (CHF 3.5b) & new debt (CHF 3.2b o/w 1.6b for refinancing Sunrise debt)
• synergies NPV after costs CHF 3.1b (o/w CHF 2.6b from low-risk cost & capex), annual run rate from rev, costs, capex CHF 275m (46m from rev, 187m from opex, 42m from capex)
• tender to start end Aug 2020 for 40 business days, unconditional on reaching two-thirds, to squeeze out minorities & delist, expects approval end 2020
• break-up fee CHF 50m for Sunrise
• pro forma combination: >3500 employees, rev CHF 3.1b, 2.1m postpaid subs, 1.2m BB subs, 1.3m TV subs, market share in each ~30%
• target gigabit BB coverage 90% of HH by 2021 (UPC 75%, Sunrise 30%), to upgrade to 10 Gb/s over time
• "attractive opportunity to deploy existing cash to unlock substantial synergies and sustainable free cash flow growth. (...) “This transaction is another significant step on our path to create fixed-mobile champions in all of our core markets. (...)  after this deal, and assuming completion of our recently announced UK transaction, we will continue to have approximately $7 billion of liquidity8 to drive value-creation for shareholders."
• UPC/Sunrise to become part of UPC credit pool, target leverage 5.0x
• May consider IPO fo the merged business in the future
• Vivendi Proposes talks with Mediaset to settle differences - Mediaset rejects, demands compensation
• ViacomCBS Speculation on future after Sumner Redstone died 200811
• Warner Music Group Acquires IMGN Media (creates shareable social media content including memes & short videos for Instagram & TikTok)
• FuboTV: Files for IPO; Walt Disney acquired 6.6m shares = 17%
• Alphabet
• Google invests in HMD Global (device manufacturer, brand Nokia), $230m with Nokia, Qualcomm
• Distr deal for Google Search with Mozilla for Firefox to be default search engine, 3 yr, rumored value 400-450m $/yr
• Facebook: Bloomberg: establishes F2 (Facebook Financial) arouind payments (Facebook Pay, Novi (formerly Calibra), WhatsApp Pay), led by David Marcus

EARNINGS

• Deutsche Telekom: 20Q2
• T-Mobile NL: Tele2 integration & synergies on track, corona virus reduced roaming income (VR, OoB outgoing), 5G-700 reached 85% coverage (nationwide end 2020)
• TDC: 20Q2
• Swisscom: 20Q2
• Turkcell: 20Q2
• Go Malta: 20Q2
• Freenet: 20Q2
• United Internet: Raises outlook 2020: rev growth 2020 4% (formerly: flat)
• 1&1 Drillisch: Raises outlook 2020: rev growth 4%
• QSC: 20Q2
• RTL: 20Q2
• TV ad rev -40%
• streaming subs (TV Now, Videoland) 1.77m (+45%), TV Now subs +50%, viewing time +36%, Videoland subs +41%, viewing time +31%
• outlook 20Q3: tv ad rev -10%
• outlook 2020: rev & adj EBITA significantly below 2019
• 3 priorities: 1. Strengthen core (TV ads), 2. Boost growth business (streaming & content (Fremantle)), 3. Foster alliances & partnerships (Smartclip, Atresmedia)
• LT streaming targets 2025 maintained: 5-7m subs, rev >EUR 500m, content spend 350m EUR/yr, EBITA break-even
• Meredith: 20Q2
• Dentsu: 20Q2
• FuboTV: 20Q2: 286k paying subs,  rev $44m (+53%), net loss $100m