The TIM Diary for May

Telecoms:
KPN to introduce 'Slim' (prepaid VoIP; 1)
HanseNet (TI) to launch IPTV in Hamburg
Philips to launch VoIP321 handset for Skype in Europe

Swisscom: House of Rep's on planned state sale (62%) (10)
Australia to decide on Telstra sale (52%)

Wireless auction US for in-flight (10)
Deadline for bids for Egyptian third mobile license (4)
Telecom New Zealand to pick buyer for AAPT (5)
RfP deadline for Houston muniwifi (16)

SFR (Vivendi/Vodafone) analyst meeting, Paris (3)
Conferences: VON Europe, Stockholm (15-18), WiMAX World Europe, Vienna (22-24)
Earnings: Verizon (2), DT (11), BT (18), Vodafone (30)


Internet:
Google: hearing click fraud suit from AIT

eBay analyst Day, San Jose (4) and London (9)
Yahoo! analyst day, San Francisco (17)
Conferences: Web 2.0, Toronto (15-16), Goldman Sachs Internet (25)


Media:
Sky to launch HDTV in UK
VNU bid period ends
Liberty Media tracker spin-offs (Interactive, Capital)
WPP deadline ends for period of bid silence for Aegis (25)
Ad accounts: The Gap to award ($100-125m), Miller Brewing to award ($600m)

Brill analyst meeting, Amsterdam (4)
Earnings: Time Warner (3), Walt Disney (9), Wolters Kluwer (10), RCN (10), Vivendi (17)
Conferences: 'OnHollywood 2006', Hollywood (2-4)
Movie releases: 'Mission Impossible 3' (Paramount, 5), 'Poseidon' (Warner, 12), 'The Da Vinci Code' (Sony, 19), 'Over the hedge' (DreamWorks Animation, 19), 'X-Men 3' (Fox), 'Cars' (pre-release, New York, 26)
DVD relaeses: 'Rumor has it' (Warner, 9)
HD-DVD releases: first hybrid from Warner (9)
Blu-ray releases: 8 Sony releases and 10 from Lionsgate (23)

Wednesday Telecoms, Internet and Media Digests

Telecoms

Internet

Media

COMPANY VISIT://Wegener

Yesterday I had a meeting with Jan Wegstapel, CFO of Dutch local/regional newspaper company Wegener in Apeldoorn. Here are my notes (in Dutch).

There is some new stuff to the investment story:

• Mecom bought the Limburg newspapers of Telegraaf and is working on another acquisition. Wegener however confirms it is not in talks with Mecom, which says it is in advanced talks. That seems contrary to what investors currently speculate upon.
• For growth, Wegener has now turned attention abroad (the local Internet market is perceived to be small in revenue terms; the market for regional radio and TV is both small and controlled by state funded companies; the market for free dailies is controlled by Metro and Telegraaf; the magazine market is controlled by Sanoma). Germany and Scandinavia is where Wegener could be interested.
• A merger with NDC (#4 in the country, with newspapers in the northern part) is not ruled out. However, the foundations controlling NDC up until now have said they want NDC to remain independent.
• The Direct Marketing division (100%), housing site Funda (30%) and alternative mail company Selekt Mail (48%) could all be sold, but a deal is far off. Each first has to attain a comfortable level of profitability, in order to demand a fair price.

EC on OA: Hot summer for Reed Elsevier

Economists from two European universities have produced a report for the EC on Open Access to scientific research. The EC calls for consultation until June 1.

The report calls for OA-archiving (self-archiving) and recommends experimenting with OA publishing.

Obviously, this could be the start of a new round of hammering the Reed Elsevier stock. It hasn't performed very well, over the past few years, even if OA wasn't its largest threat. The question is: when wil it be?
So far, growth at the STM division is robust and allowing a limited form of OA-archiving could extend the current monopoly-like business model well into the future. From the shareholder point of view however, it's unfortunate that Reed Elsevier stands out as the most exposed to the OA movement.

At this point, it remains to be seen how far the EC is willing to go. Keep posted.

Wednesday Telecoms, Internet and Media Digests

This past week - click through to comprehensive overviews packed with links to source material and commentary. Here's a selection.

Telecoms: a wide range of topics

• Little company news (eircom, Vodafone/Verizon, Level 3).
• California moving ahead with BPL.
• Wifi efforts from some US cities and Yahoo!.
• More MVNOs coming in the US market.
• Vodafone plans TV launch using KPN's DVB-H infrastructure provider Digitenne.
• IPTV news from a.o. KPN (launch date) and Swisscom (tariff lowering)

Internet: the interesting news was in the search arena

• a patent from Google
• new vertical from MSN
• a click fraud report from Click Forensics

Media: focus on company news

• Time Warner may sell parts of AOL Europe.
• TiVo wins against EchoStar and extends DirecTV contract.

California to support BPL

The California PUC will propose to allow utilities to set up BPL companies and allow them free access to their networks.

Obviously, there are technology and interference issues around BPL, but the stronger the incentive from governments and the more attractive the broadband markt (low penetration in the US, falling gear prices, nifty new products from Motorola), the better BPL could compete with DSL and cable. The free access part is challenging however. Does that mean third party providers would have access? I suppose not, so this could indeed create a three player market (telco, MSO, utility).

Wednesday Telecom, Internet and Media Digests

The week in review: another exciting one. I hope I haven't missed anything big. Click through and see all the links to source material and comments.

Telecoms:

• PTTs are still not all 100% government independent: look at Colombia, Cameroon, Switzerland, Australia. In the Netherlands the job is almost done.
• In the wireless space: thye new Vodafone structure, which may lead to another round of sell-offs (like stakes in Proximus and Swisscom Mobile), to be followed by acquisitions? What about Arcor - is it still up for sale?
• In the Netherlands, Orange has 3 years to become profitable. If not, what will happen? And what about Wanadoo NL?
• The CTIA conference led to a bunch of cable press releases. Of special interest are developments around IP and IMS (PacketCable 2.0) and bandwidth (DOCSIS 2.0, 3.0), including dynamic bandwidth allocation (Camiant, Caspian).
• In muniwifi we saw Google and EarthLink team up in San Francisco. That could lead to much stronger tie. How about a takeover? (Both companies report Q1 earnings on April 2o.)
• Finally, lots around MVNOs, WiFi, WIMAX, VoIP (including the Skype acquisition of Camino for better quality), IPTV (including service for businesses), dual mode handsets and double/triple/quad plays (most notably the 'free' offer from Carphone Warehouse).

Internet:

• As usual, plenty of news around Google (including buying the algorithm for enhanced contextual ads (AdSense), using 'instant answers').
• Blogs to the mainstream!
• How about this: offline search from Webaroo and click fraud without clicks!

Media:

• ABC on demand, as well as lots of other video on the net.
• Print consolidating.
• Spectacular compression efforts from Euclid.

Weather Investments: another driver of consolidation

Today in the Financial Times, Naguib Sawiris of Weather Investments (Wind, Orascom, Hutchison Telecom) explains his acquisition strategy. It should take shape 1-3 years after his planned IPO of Weather and it focuses on France, Spain, Greece, Portugal and the Netherlands.

I'm not sure what these markets have in common, but it could be either scope for consolidation or, quite to the contrary, scope for broadband growth.

So now we have these consolidators:

• The large PTTs: DT, FT, Telefonica, and possibly TI.
• Venture capitalists and private equity groups, that have amassed a big portfolio of assets (Apax, Carlyle, Providence).
• Other pan-European groups: Liberty Global (UPC), Tele2 and maybe Vodafone (new strategy: convergence).
• And Weather?

Remains the question: what is Apax' (and the others') exit strategy? Will they IPO a large, pan-European converged telco at some point in the future?

Orange Netherlands on the block? - What about Wanadoo?

Orange in the Netherlands has 3 years to become profitable - in other words: it is put up for sale. The company hints at a possible tie-up with UPC.

Some questions and conclusions:

• Obviously, this would be much like NTL/Virgin in the UK. Also, the upcoming cooperation of Comcast et al with Sprint Nextel comes to mind. More broadly speaking: re-absorption of mobile assets into PTTs (France Telecom/Orange, TI/TIM, Telefonica/TEM, AT&T/Cingular, etc.), or even the IPOs-that-never-happened of KPN Mobile, T-Mobile, etc.
• Who else could be a buyer, should FT actually start an auction process for Orange NL? Obviously, T-Mobile and Vodafone are candidates (KPN already controls more than 50% of the market after buying Telfort). Telefonica could want to be a newcomer. Another would be Tele2/Versatel or Scarlet or Belgacom.
• Where does this leave Wanadoo, busy unbundling the KPN network? By the way, what will happen to Easynet NL and BBned?
• Should FT sell Orange NL (and Wanadoo NL), its international focus is reduced to just 4 countries: France, UK, Spain, Poland. Could it be a step toward focus on large countries? In that case, look out for deals in Germany (E-Plus, Arcor) and Italy (Wind, FastWeb).
• Would FT feel sorry for selling UPC-competitor Casema? FT bought it in 1997 for EUR 410m and sold in December 2002 to Providence/Carlyle for EUR 700m.
• Liberty Media dropped out of the Casema auction in 2002, because the regulator was opposed to a deal (Liberty controlled UPC, now through Liberty Global). How would the NMa feel about cable consolidation now? Would it follow the UK model (NTL + Telewest) or the US model (little space for Comcast to grow by acquisition).
• Will UPC/Liberty Global follow the News/Sky strategy, and possibly the new Vodafone strategy, aimed more at convergence (Sky + Easynet)? Obviously, UPC already bought an Austrian BB operator, but it hasn't ventured into the mobile/quad play arena yet (except as an MVNO). Perhaps a pan-European mobile asset would be more attractive to UPC: Vodafone, Tele2.

KPN aggressively lowers prepaid tariffs

Check out this page of new KPN Mobiel prepaid SIM-only tariffs in the Netherlands. The cheapest option now is 6 c/min, from 15!



KPN is clearly betting on its financial strength to gain subscribers and market share. Also, I suppose they will outbid just about any offer for an ISP that is put up for sale to grow in the broadband market as well.
Add to that some marketing power, and you get an incumbent buying its way back to monopoly status.