Sunday, October 25, 2020

Week 43 in Telecoms, Internet, Media


  • Telefonica: Establishes Telefónica Tech Ventures, with ElevenPaths & Telefónica Innovation Ventures (TIV) to invest in cybersecurity
  • Rostelecom: Acquires Synterra Media
  • Play (to be acquired by Iliad): Sells towers to Cellnex: 7k sites, EUR 800m for 60% stake, to close 21Q2; to add 5k sites in 10 yr, EUR 1.3b
  • TalkTalk: Rumor: interested in Post Office telecoms unit, 500k BB/voice subs, GBP 100m; also: Sky, Shell Energy (130k BB subs)
  • Eurofiber: Transfers services business of Unet Groningen to Hallo (= merger of Fieber, Tritel)
  • BMG: Acquires majority of Undercover (live concerts; Germany)
  • Walt Disney: California sets guidelines for reopening Disneyland & other large theme parks
  • ITV: Plans restructuring by March 2021, to focus on VOD, reduce office space London; to establish Media & Entertainment division with 2 BUs (broadcast, VOD), VOD unit around Hub (catch-up), Hub Plus (ad-free), BritBox
  • ProSieben: Sells Windstar Medical (92% owned via NuCom) to Oakley Capital, EUR 280m
  • ViacomCBS: Restructures streaming division to cover SVOD & AVOD globally
  • NENT Group: Moves license registrations from UK to Sweden
  • Google: Google study released on interest-based advertising: collective ad targeting of audience cohorts (people with similar browsing histories & interests) performs better than random user groupings
  • Amazon: To hire 1500 employees for 4 Amazon Fresh stores in Chicago


  • Orange: Considers IPO for Orange Cyberdefense
  • Vivendi: UMG plans IPO 2022
  • Canal+ Polski (Vivendi, Discovery, Liberty Global): Plans IPO from TVN Media (Discovery) & Liberty Global selling stakes (32% resp. 17%)
  • Round Hill Music: Plans IPO to raise $375m
  • Nextdoor: Considers IPO, valuation $4-5b; raised $470m
  • Databricks: Bloomberg: plans IPO 21H1 




  • Telecom Italia: Bloomberg: to expand FTTH coverage to 10m HH, EUR 4.0-4.5b, incl. maintenance & upgrade of 13m lines (2021-25)
  • Croatia plans NP-BBI: national FTTI network (public institutions: national, regional & local government offices & branches for educational, health, cultural, tourist, judicial institutions) 
  • NetCologne orders (212 MHz) from Nokia for in-building add-on to FTTB network (30k), max 1 Gb/s (replacxes VDSL2)
  • Total Play Telecomunicaciones (Mexico) raises $500m, Fitch rates BB-/stable
  • Inmarsat and Hughes Network Systems plan free in-flight WiFi (GX+ North America), plans trial 20Q4, commercial launch 2021, first in N-America
  • 6G Symposium (2 days); FCC: 6G to be fully virtualised, blockchain for spectrum allocation; AT&T: to focus on AI, edge, latency; Ericsson: use cases: internet of the senses, connected intelligent machines, digitalised & programmable physical world, connected sustainable world; Samsung: immersive XR, high fidelity mobile holograms & digital replicas (enable remote monitoring of robots using VR or holographic displays)
  • NGMN Alliance launches 6G project: 6G Vision and Drivers



  • UPC CH fined CHF 30m by Comco for not sharing ice hockey TV rights 2017-22 (abuse); plans appeal
  • Rumor: T-Mobile US to expand TVision nationwide (announcement 201027) [see 200724, 200720, 190410]
  • Google Fi (MVNO) launches separate (without mobile subscription) smartphone subscription program: 9 $/mo (24 mo contract) for Pixel 4A or 15 $/mo including device protection plan & upgrade after 24 mo (note: discount on the phone is lost if remaining balance is paid off ahead of time)
  • Virgin Media UK adds smart home portfolio from Google (Nest Hub, cameras, doorbell), from 10 GBP/mo


  • Universal Pictures (Comcast) to shorten theatrical window, earlier option for onlines rental
  • Walt Disney: Hotstar to expand SVOD to Singapore 201101, 70 SGD/yr; distr deal with StarHub
  • Discovery: Rebrands Dplay (free AVOD) as Discovery+ in UK/IE, integrates with linear TV offering (Discovery Channel, TLC, Animal Planet, ID, Discovery Science, Discovery Turbo, Discovery History); 5 GBP/mo or 50 GBP/yr, 6 EUR/mo or 60 EUR/yr
  • Salto (France TV, M6, TF1): Launches: 19 live channels, catch-up from TF1, France Télévisions, M6; 3 tiers: 7 EUR/mo (1 screen), 10 (2), 13 (4); to add exclusive content - Tech from Bedrock (= M6, RTL)
  • Quibi: shuts down to save equity, to sell assets - Spent $63m on ads - To close around 201201
  • Apple: Launches Apple Music TV: 24/7 music videos in Apple Music and in Apple TV (free, no ads), with exclusive content (premieres, special curated music video blocks, live shows & events, chart countdowns, guests)
  • XITE Partners with Vevo to launch TV app Vevo powered by XITE
  • France Channel: Plans launch in US early 2021 via Netgem, 7 $/mo



  • Overall deal with Ithaca Holdings (Scooter Braun) for podcasts, first series Country Shine
  • Launches first daily morning show The Get Up as playlist (led by hosts; combines news, pop culture, entertainment, music; music is personalized)
Apps, other
  • Google Launches Camera Go app for basic Nokia & Wiko devices, developed by Next Billion Users team (300 employees); other apps: Gallery Go (search & edit photos), Assistant Go
  • Facebook
    • Expands Facebook Dating to Europe (32 countries) (so far in 20 countries)
    • Trials Neighborhoods feature (local groups) in Calgary
    • WhatsApp launches In-chat Shopping (link to Facebook, add buy button); launches Facebook Hosting Services to host online assets & activity for SME (free); to start charging for WhatsApp for Business (50m business users, total 175m pops)
  • Huawei launches Petal Maps (navigation) & Huawei Docs (office)


  • EETT (GR) reserves spectrum (5 MHz in 700 band, 10 MHz in 3.4 band, 200 MHz in 26k band) + 25% of auction proceeds for universities and start-ups
  • PTS (SE) approves Telia, 3 Sweden, Teracom, Net4Mobility (= Telenor, Tele2) for 5G auction (2.3 & 3.5 GHz bands) 201110; excludes Huawei & ZTE as suppliers (to be removed from core networks by 250101)
  • MoC (Israel) awards 5G license to Cellcom
  • Facebook
    • Oversight Board launches
    • Prepares for US POTUS election 201103: slow the spread of viral content, lower the bar for suppressing potentially inflammatory posts 
  • Google: Removed 3 Android apps for kids over data collection violations
  • Patreon: Rermoves accounts promoting Qanon
  • Google: DoJ & 11 State AGs sue in DC over abuse of monopoly, to respond by 201219
    • in Search (general search services, search advertising, general search text advertising) in US through anticompetitive and exclusionary practices (exclusive distr deal with Apple for iOS, estimated value 15-20% of Apple's annual profit, $8-12b; also pays LG, Motorola, Samsung, AT&T, T-Mobile US, Verizon, Mozilla, Opera, UCWeb; default in Android; 'Some of these agreements also require distributors to take a bundle of Google apps, including its search apps, and feature them on devices in prime positions')
    • Google opposes (market share based on consumer preference for Google; 'we pay to promote our services, just like a cereal brand might pay a supermarket to stock its products at the end of a row or on a shelf at eye level'; 'Today, you can easily download your choice of apps or change your default settings in a matter of seconds')
  • Facebook: DCP (Ireland) starts investigation of Instagram over leaking data (email addresses, phone numbers) of 5m kids
  • Platforms
    • FTC Japan proposes alliance with US & EU regulators in regulating internet platforms
    • Associated Press (AP) election results to power voice, video & search products around US elections 201103 for Amazon (Alexa), Microsoft (Bing, News, MSN, Edge), AT&T (DirecTV), Google (Search, Home, Nest Home Hub)
    • No competing cloud gaming apps in Apple App Store
    • Ofcom publishes guide to regulatory requirements for video-sharing platforms (VSPs): protect children from potentially harmful content, protect all users from criminal content & incitement to hatred & violence, ensure that standards around advertising are met
    • PBO (ZA) proposes digital tax on consumption and income generated by digital economic activities & cross-border activities
    • EFF: leaked proposals for EU antimonopoly enforcement for gatekeeprs (part of DSA)
      • Prohibitions (customer transaction data to be shared with competitors, opt-in for combining platform data with other data, ban on preferential ranking of platforms' own offerings, ban on pre-laoding own apps only, ban on prevention measures for removing apps, ban on contracts that force businesses to offer their wares everywhere on the same terms as the platform demands, ban on prevention of side-loading, ban on prohibiting complaints about the platform, ban on requiring use of specific email provider, ban on requirement to sign in)
      • Compliance system
      • Greylist of activities

Friday, October 23, 2020

Netflix: all the originals and licensing announcements of Week 43

  • Movie Ma Rainey's Black Bottom (Chadwick Boseman) premieres 201218 (also in theaters Nov 2020)
  • Movie What We Wanted premieres 201111
  • Orders movie Day Shift (Jamie Foxx)
  • Movie Mank (David Fincher, Gary Oldman, Amanda Seyfried) premieres 201204 (in theaters Nov 2020)
  • Musical film The Prom (Ryan Murphy, Meryl Streep, Nicole Kidman) premieres 201211
  • Movie The Life Ahead (Italy, Sophia Loren) premieres 201113
  • Rumor: interested in acquiring James Bond movie No Time to Die (rumored production cost $250m) from MGM, $600m; MGM denies

Wednesday, October 21, 2020

Netflix 20Q3: record cash flow from ops, some targets raised, cash spent per net add down

Main items 20Q3
  • Net adds (2.2m) below forecast (2.5m) due to sub-growth slowdown due to record H1 & pull-forward
  • Retention remains healthy & engagement per member HH was up solidly yoy
  • Sub growth highest in APAC
  • Streamings subs 195.151m (net adds 2.204m)
    • UCAN 73.081m, net adds 177k
    • EMEA 62.242m, net adds 759k
    • LATAM 36.324m, net adds 256k
    • APAC 23.504m, net adds1.102m
  • Total revenues $6.436b (+22.7%)
    • Streaming $6.377b (+23%, lowest rate since 19Q1)
      • UCAN $2.933b (+12%, slow-down)
      • EMEA $2.019b (+41%, remains in ~40% area)
      • LATAM $789m (+6.5%, slow-down)
      • APAC $635m (+66%, accelerated, highest since 18Q2)
    • DVD-by-mail $58.8m (-18%, same as since 18Q1)
  • Streaming ARPU $10.95 (-1.6% but +1% excl. F/X)
    • UCAN $13.40 (rising)
    • EMEA $10.88 (rising)
    • LATAM $7.27 (falling)
    • APAC $9.20 (roughly flat)
  • Operating income $1.314b, margin 20.4%
  • Cash spent on streaming content $3.033b (-19%)
    • TTM $13.205b (-3.0% yoy, first ever decline)
  • Cash & equivalents $8.422b
  • Cash spent (in previous quarter) per net add (in current quarter) on TTM basis: $378 (-19%)
Outlook 20Q4
  • Total subs 201.15m, net adds 6.00m
  • Revenues $6.572b (+20.2%)
  • Operating income $885m, margin 13.5%
  • As the world hopefully recovers in 2021, growth to revert back to levels similar to pre-COVID; expects net adds 21H1 down yoy
  • Raises target 2020 operating margin to 18% (from 16), average margin improvement 300 bp per yr but lumpiness increases (due to increased F/X exposure from international expansion & COVID impact); margin target 2021 remains 19%
  • FCF 20Q4 to be slightly negative due to production restart, 2020 FCF target $2b (raised from flat to up) due to higher margin & timing of spending; FCF to improve over coming years due to higher profitability & transition to originals production matures; target FCF 2021 between -1b and zero
  • No fund raising during 20Q4
  • Completed principal photography on 50+ productions since lockdown March 2020, to be shooting 150 productions by end 2020l
  • Target original additions 2021 up yoy in each quarter
Viewing stats (first 28 days)
  • The Umbrella Academy (new season) 43m
  • Lucifer (new season) 38m
  • Ratched 48m, American Murder: The Family Next Door 52m
  • The Social Dilemma 38m
  • The Old Guard 78m
  • The Kissing Booth 2 66m
  • Project Power 75m
  • Enola Holmes 76m
  • Cobra Kai (new season) 50m
Promotion & distribution
  • Plans StreamFest in India, 201204-5: 48 hr free access
  • Distribution deal with Reliance Jio (India): STB integration

Friday, October 16, 2020

Week 42 in Telecoms, Internet, Media






  • ATIS establishes Next G Alliance to advance North American leadership in 6G; with AT&T, T-Mobile, Verizon, US Cellular, Facebook, Microsoft, Qualcomm, Bell Canada, Telus, Ciena, InterDigital, JMA Wireless, Telnyx



  • Telefonica: Merges 3 global units (wholesale, roaming, MNE) into Telefónica Global Solutions
  • China Broadcasting Network Co (CBN) to launch as #4 MNO (has 700 MHz & 4.9 GHz spectrum) in China via 51/49 JV with others (State Grid Information & Telecomm, Alibaba Venture Capital Mgt, Guangdong RTV Network, Beijing All Media & Culture) [see 200521]
  • Walt Disney: Plans reorganisation to focus on streaming/D2C: content creation units Studios, General Entertainment, Sports; distr unit Media & Entertainment Distribution; other unit (Disney Parks, Experiences & Products) remains; plan Virtual Investtor Day 201210
  • AMC Entertainment: May face liquidity problem from end 2020 due to corona virus





  • Google
  • Amazon: Amazon Prime Day (201013-201014) in 19 countrie: US, UK UAE Spain, Singapore, Netherlands, Mexico, Luxembourg, Japan, Italy, Germany, France, China, Canada, Belgium, Austria, Australia, Turkey, Brazil; to spend >$100m on promotional activities to help SMEs; early deals on Amazon products & services start 200928 - 3rd-party sellers sold $3.5b (+60% yoy), savings for Prime subs $1.4b - Strikes in DE
  • Apple: Hi, Speed event: launches
    • iPhone 12 (5G, iOS 14, A14 Bionic chip; USB-C adapter, 4 models; Mini : 5.4 inch from $700; 6.1 inch from $800; 6.1 Pro from $1000; Pro Max 6.7 inch from $1100)
    • HomePod mini smart speaker ($100; with Siri; S5 & U1 chips, central hub for HomeKit devices, supports Pandora, Amazon Music, iHeartRadio, with Siri-controlled Intercom feature for all iOS devices)
    • MagSafe to iPhone 12 & Apple Watch: magnetically attached chargers ($40), wallet ($60), cover ($50)



  • Min EZK (NL) to submit Telecom Code (EECC) implementation law to Raad van State end 2020, then to Parliament, EU deadline for implementation 201221


Platform regulation

  • Amazon: Reuters: EU antitrust case (started July 2019) to focus on dual role (selling platform & private label product seller); separate investigation into data used in selection of Buy Box winners
  • Internet Platforms advise EU to leave regulating harmful content out of DSA
  • FT: EU to focus on 20 largest platforms; to share data, increase transparency
  • NL & FR propose separate EU regulator for gatekeeper platforms; platform subject to intervention should at least have considerable market power in at least one market; propose principle-based obligations (right to data portability for business users, fair contracts) & prohibited practices (disruptive self-preferencing, halting access for 3rd-party providers of services or goods, incl APIs & data without objective justification), case-by-case remedies (access obliigations: obligation to proactively offer alternatives to users, safeguarding interoperability, data sharing obligations)
  • FCC proposes Section 230 interpretation to deny special immunity to social media, plans rulemaking - FCC jurisdiction disputed
  • Facebook and Twitter limit sharing NY Post article over containing hacked material and private information - US Senate to subpoena Twitter CEO Dorsey to testify 201023

5G: main developments since previous wrap-up 200527 (developing)


  • Services
    • Smart factory, smart city
    • Unmanned aircraft, tractor, minibus
    • Gaming (Verizon/Twitch, StarHub/AntStream, Facebook Gaming)
    • AR/VR: Telekom DE with 1. FC Köln
    • Broadcast
  • Networks
    • FWA: Rain, Optus, Fastweb, Oordeoo Oman, SmarTone, Telstra, TPG Telecom, T-Mobile US, Telia NO, Swisscom
    • Private 5G, solution from Samsung with Microsoft; Verizon Business with Microsoft & Nokia, many new networks
    • Slicing
  • Business model
    • Wholesale: Optus, Orange ES, Verizon
  • SA 5G: T-Mobile US, Vodafone UK, KPN
  • MEC (AWS/Verizon, GCP)
  • Slicing (KDDI/Samsung)
  • DSS
  • CA
  • Release 16 (= 5G v2), Release 17 delayed into 2022
  • Virtualisation
  • Open RAN: Rakuten (with Telefonica, STC), VodafoneZiggo (with NEC)
  • Network automation (Rakuten)
  • Airborne cell towers
  • Small cells (TIM)
  • mmWave
    • Trial at Optus, Verizon with small cells (Samsung)
    • Long range: 3.8 km
    • Extended range bij US Cellular
    • Polish MNOs expect little demand until 2022/23 fpor lack of CPE
  • Laptop
  • Smartphones: OnePlus, Samsung, Xiaomi, HMD/Nokia, LG, Sony, HTC, Motorola, Apple, Smartisan (ByteDance), Huawei
  • Outdoor FWA modem: Casa Systems
  • Hotspot: Inseego, Netgear
  • Football helmet with camera
  • TV (Xiaomi)
  • Newcomers: Ligado (US, IoT), Drillisch (#4 MNO DE), Dish (#4 national MNO US), DirecTV Colombia (FA), Mobilitie (US: DAS)
  • Launches
    • Zweden (Tele2, Telia, 3, Telenor?)
    • HK (SmarTone)
    • Poland (T-Mobile)
    • Canada (Bell, Telus)
    • ZA (MTN)
    • Iran (MCI)?
    • Bahrain (Zain)
    • Taiwan (Chunghwa, Taiwan Mobile, Far EasTone, Taiwan Star, Asia Pacific Telecom)
    • Madagascar (Telma)
    • Brazil (Claro, TIM?, Vivo?)
    • Seychelles (C&W)?
    • Philippines (Globe Telecom, Smart)
    • Slovenia (Telekom Slovenije)
    • NL (T-Mobile, KPN)
    • Thailand (AIS)
    • Denmark (TDC, Telia?, Telenor?)
    • Spain (Telefonica, Orange, MasMovil)
    • Colombia (DirecTV)
    • Laos (LTC)
    • Bulgaria (Vivacom)
    • Singapore (M1)
    • Ireland (3)
    • US (C Spire)
    • Israel (Pelephone, HOT, Partner, Cellcom)
    • Japan (Rakuten)
    • Germany (Telefonica)
    • CZ (Vodafone)
    • Luxembourg (Post)
    • Estonia (Telia)
  • To come soon: Wind Tre, Bouygues, Orange FR, Tango (LU), T-Mobile CZ
  • 5G Blueprint
  • 5G-PPP (EU)
  • FUDGE-5G (EU, private networks)
  • WPI for Vodafone
  • EBU: broadcast
  • Huawei 5G’s ‘five opportunities’
  • Dublin: for municipalities
  • US Postal Service: post offices for antennae & MEC
  • InterDigital: 5G power requirement rising fast
  • The Huawei problem
    • Samsung's advance, also Reliance Jio, Rakuten; and Mavenir, VMware
    • EU 5G Toolbox (cybersecurity)
    • ECTA warns for higher costs, delays (EU Toolbox 5G takes care of cybersecurity, other considerations are merely geopolitical)
  • Health myths: report Poland; Gezondheidsraad NL
  • Pricing: no surcharge at Verizon
  • Rural coverage: South Korea
  • Data consumption at Rakuten: average 350 GB/mo
  • Network sharing
    • Finland
    • Portugal
    • CZ
    • Consultation NL
      • Coordinate antenna locations
      • Lease spectrum
        • May distort competition when caps are superseded
        • To others (such as Private networks): no problem
      • Roaming deals for 2G/3G to make it easier to switch off 2G/3G
      • RAN sharing: to be studied
      • Small cells: to be studied
  • New entrants
    • Rakuten
    • Fastweb
    • Drillisch

Netflix: all the originals and licensing announcements of Week 42

  • Movie Operation Christmas Drop premieres 201105
  • Docu In Wonder (about Shawn Mendes) premieres 201123
  • Content deal for movie Mosul (Iraq War drama), premieres Nov 2020
  • Plans live-action & animated content based on Elf on the Shelf; existing short animated films Elf Pets: Santa’s Reindeer Rescue & Elf Pets: A Fox Cub’s Christmas Tale premiere before Christmas 2020
  • Movie Hillbilly Elegy (Ron Howard, Amy Adams, Glenn Close) premieres 201124
  • Orders movie Starngers (Jennifer Kaytin Robinson)
  • Orders movie Caste (Ava DuVernay)
  • Movie Rebecca premieres 201021
  • License deal for movie Funny Boy (Deepa Mehta), to premiere in US, UK, Australia, NZ 201210, in theaters in Canada
  • Docu film Secrets of the Saqqara Tomb premieres 201028
  • Orders comedy film Don't Look Up (Jennifer Lawrence, Leonardo DiCaprio, Meryl Streep, Ariana Grande, Jonah Hill)
  • Pauses production on movie The Harder They Fall (Idris Elba, Regina King) after positive COVID-10 test
Overall deal
  • With Jorge Gutierrez (Mexopoli prodco) for new animated films, series & interactive projects

Monday, October 12, 2020

Week 41 in Telecoms, Internet, Media


  • KPN: Bloomberg: EQT considers offer
  • IPKO (Telekom Slovenije): Attracts >10 potential buyers, to diclose Nov 2020
  • TalkTalk: Toscafund Asset Management (TAM, hedge fund, owns 28.5%) plans to offer 97 p/share, to deceid by 201105; Board supports
  • Telia: Sells Telia Carrier (019: rev SEK 5.39b, EBITDA excl IFRS-16 SEK 500m, capex SEK 396m; 530 employees) to Polhem Infra (= First AP Fund, Third AP Fund, Fourth AP Fund), SEK 9.45b (EV/EBITDA 18.9), capital gain SEK 7.00b, extra div 0.65 SEK/share; to close 21H1
  • 3 Group Europe (CK Hutchison): Rumor: 3 UK plans sale of rooftop locations (acquired from UK Broadband, 2017), to exit MBNL (macro sites JV with EE/BT) in order to sell
  • Virgin Media
  • Destiny: Acquires Voips (NL)
  • Vivendi: Canal+ increases Multichoice stake to 6.5%
  • Quibi: Rumor: 400-500k subs, offered company to Apple, WarnerMedia etc.




  • Kazakh operators (Beeline (KaR-Tel), Kcell, Mobile Telecom Service (Tele2-Altel) ) sign joint rural coverage pledge to cover 600k pops

  • BT: Launches edge-based, open caching as a service, tech from Cisco, Qwilt, Digital Alpha
  • Cellnex plans IoT networks in IT, UK, IE, with Everynet, based on LoRaWAN tech (for Industry 4.0, Smart Cities, Smart Parking, Social & Facility Management, Environmental Management, Smart Utility)
  • Telefonica DE


  • Nvidia launches Maxine: managed cloud AI (gaze correction, super-resolution, noise cancellation, face relighting etc; dramatically reduces how much bandwidth is required to 10% of H.264) videoconferencing service for developers


  • Amazon: To launch eero for Service Providers (ISPs) in US/Canada Nov 2020: WiFi hardware & software: eero 6 Series Mesh Wifi System (WiFi 6), eero Insight (issue monitoring), eero Secure (security, privacy, parental controls; blocks blocks malware, spyware, phishing; ad blocking)



  • CTU (CZ) plans multiband (700 & 3.4-3.6) 5G auction, 7 bidders, encourages newcomers
  • EKIP (Montenegro) plans 5G multiband auction 21Q4: 700 (694-790), 3.4-3.8 GHz, 1 GHz in 26 GHz (24.25-27.5 & 26.5-27.5)

Platforms individually
Platforms general
  • Paris Court of Appeal to rule 201008 on whether competition authority has the power to require Google to negotiate with French press on neighbouring rights which allow online newspaper publishers to be remunerated for publishing extracts of their articles on Google News - Google and Alliance de la Presse d’Information Générale (APIG, " Google accepts the principle of remuneration for our press titles") working on remuneration of neighboring rights - Paris Court supports competition authority for fairer negotiations between Google and publishers; APIG, FNPS, SEPM target Apple App Store, highlighting 30% commission & in-app payments, ringfencing of consumer data in media subscription packages purchased through the AppStore
  • Facebook and Twitter remove posts from POTUS Trump with false corona virus claim
  • US Congress (House Judiciary's Antitrust subcommittee) to report Oct 2020 on antitrust hearings 200729, delayed due to new info about Facebook's Instagram acquisition (from whistleblower) - Reports 201006: Amazon (most third-party sellers and many suppliers), Apple (distribution of software apps on iOS devices), Facebook (online advertising and social networking), Google (online search) all have monopoly powers (built on acquiitions), proposes break-ups - Republicans oppose: "Unfortunately, the Democrats’ partisan report ignores this fundamental problem and potential solutions and instead advances radical proposals that would refashion antitrust law in the vision of the far left." - Amazon disagrees - Apple disagrees
  • ECJ: mass personal data collection (mobile, internet) breaks EU law (unless in a situation of serious threat)
  • Ukraine considers tax on digital services (Facebook. Netflix, Amazon): 20% VAT
  • Global Privacy Control (NYT, EFF, DuckDuckGo) proposes setting preferences once for global opt-out

Saturday, October 10, 2020

EQT could offer a hefty premium for KPN (DEVELOPING)

Bloomberg reports that EQT is exploring an offer for KPN, talking to advisors for input. This is clearly not a takeover based on expected synergies, but on valuation. KPN is slowly morphing into an all-fiber company, which has not translated into its stockmarket valuation. In addition, some value may be created from further separating its networks division froms its retail units.

Assuming EQT takes on KPN's debt, it could pay a sizeable premium for the equity. The FTTH business alone is almost worth the same as KPN's current market cap.

KPN is spending roughly 800 EUR/home upgrading to FTTH, which could be worth (as per KCOM) four times as much. Spending EUR 4.5b on the remaining 5.6m lines would create EUR 13b in value.

Looking at it this way, EQT could pay as much as a 100% premium. This has two main reasons:

  • KCOM (200k lines, almost full FTTH) was taken over by Macquarie for GBP 627m or EUR 3,300 per line. KPN's FTTH business alone would be worth EUR 8.6b.
  • Iliad's offer for Play (15m mobile subs) of EUR 3.48b implies a value per mobile line of EUR 230. Based on this, KPN's mobile business would be worth roughly EUR 4b.
  • The remaining businesses (VDSL, ADSL, DTT, other) have an unspecified value.
The upside has two main reasons:
  • KPN builds FTTH at 800 EUR/home, whereas these lines are valued at 4x that amount (as per KCOM).
  • KPN suffers a discount as a result of its own (prefs) and the government's (Wozt) protective measures.


  • Bloomberg reported a planned offer for KPN from Brookfield and local pension funds 190131. Never materialised but similar to the latest TDC takeover (Macquarie and 3 Danish pension funds). TDC first rejected a DKK 47 offer, then accepted DKK 50.25 on 180212.
  • EQT has a large number of telecoms holdings: Adamo, Zayo, Delta Fiber, Melita, Deutche Glasfaser/inexio, GlobalConnect/IP-Only. EQT Infrastructure V just raised EUR 15b.
  • Management is loaded with options, so all it takes is a nice premium for them to agree with an offer.
  • KPN safeguarded itself against takeovers (based on preference shares), so it would need to be a 'friendly' deal.
  • Also, the Wozt law gives the government a right to scrutiny, to prevent 'essential' infrastructure from falling into the wrong hands.
  • EQT's Delta Fiber owns FTTP in rural areas, FTTO in business parks, a service provider on several different networks, and mainly: the regional cable company in the Zeeland province. From this perspective, a takeover is a no-go, unless the Zeeland cableco is sold. Ziggo is the obvious candidate, but T-Mobile NL could be interested as well.
  • KPN closed up 3% at EUR 2.235 for an equity value of EUR 9.4b. Net debt stands at EUR 6.1b, for an enterprise value of EUR 15.5b.
  • EBITDA AL TTM is EUR 2.3b and is forecast to be flat to slightly up over 2020.
  • KPN revenues (20Q2): total EUR 1.292b
    • Consumer: EUR 706m
    • Business: EUR 450m
    • Wholesale: EUR 149m
  • KPN lines (20Q2)
    • By technology
      • FTTH: 32% = 2.599m lines (of which 1.319m activated)
      • FTTC (VDSL): 55% = 4.5m lines
      • Other (ADSL, other): 13% = 1.1m lines
    • Consumer
      • 3.153m households, ARPU EUR 48.5
      • 4.580m mobile lines, ARPU EUR 13.4
    • Business
      • 0.807m voice lines, ARPU EUR 24.3
      • 0.334m broadband lines, ARPU EUR 71
      • 1.872m mobile lines, ARPU 17.7
      • Non line-based revenues from IT and Professional & Consultancy services
    • Wholesale
      • 0.074m voice lines
      • 0.138m unbundled broadband lines
      • 0.759m wholesale broadband lines
      • 0.758m mobile lines
  • Peers
    • Fiber-only: KCOM (delisted)
      • Taken over by Macquarie for GBP 627m (190715, closed 190819).
      • It had 195k FTTH lines and 8k VDSL lines, or say 200k equivalent FTTH lines.
    • Mobile-only: Play (being acquired by Iliad)
      • Offer from Iliad: enterprise value EUR 3.48b
      • It has 15.0m mobile lines with an ARPU of almost EUR 7.