Also in today's regional roundup: Orange benefits from broadband investments; ADVA knocks its sales out of the park; Nokia's in it for the anyhaul; and Aria's AI code heads to China.

February 23, 2017

4 Min Read
Eurobites: Telefónica Trims Its Capex

In today's regional roundup: Telefónica boosts its operating income but plans capex squeeze; Orange benefits from broadband investments; ADVA knocks its sales out of the park; Nokia's in it for the anyhaul; and Aria's AI code heads to China.

  • Telefónica SA (NYSE: TEF) flagged a 5.2% dip in full year 2016 reported revenues, to just over €52 billion (US$55 billion), but boosted its operating income by 55%, to €5.47 billion ($5.78 billion), the operator said today in what must be one of the most confusing earnings reports in the industry. It now has 350 million customers across Europe and Latin America and, as it notes, is "well diversified across markets in terms of revenues: Telefónica Spain accounts for 24.4%, Telefónica Latin America 24.2%, T. Brazil 21.3%, T. Germany 14.4% and T. United Kingdom 13.2%." It has been investing heavily in fixed and mobile broadband access but plans "lower capex intensity" this year: It invested almost €8.6 billion ($9.1 billion) in 2016 (not including spectrum acquisitions), which is about 16.5% of total sales, but noted that while its revenues would remain in line with 2016's numbers this year, its capex-to-sales ratio is expected to be about 16% in 2017. The operator's stock was trading nearly 2.5% higher, at €9.58, by lunchtime Thursday on the Madrid stock exchange. Telefónica still carries a very large debt pile -- €48.6 billion ($51.4 billion) at the end of 2016 -- but it managed to reduce that number by 1.1% during the course of the year. The operator recently announced the sale of a 40% stake in its Telxius infrastructure unit for €1.27 billion (US$1.34 billion). For the full set of results and explanations/footnotes, check out this official earnings announcement.

    • Meanwhile, another European giant, Orange (NYSE: FTE), is considering an increase in its capex this year as it's reaping the rewards of its recent investments in fixed and mobile broadband. The operator reported a slight increase in revenues and earnings for 2016 and is seeking to boost those numbers further across an increasingly diversified portfolio of services. For the full story, see Orange Hints at 2017 Capex Rise as Spain Buoys 2016 Sales.

    • Optical transport and virtualization technology expert ADVA Optical Networking has reported its best ever year of sales, ramping its full year revenues by a stonking 28.2% to €566.7 billion ($599 million). That rise in revenues has had an impact on its margins, however, as the data center interconnect (DCI) gear it is selling in ever greater volumes to its "internet content provider" customers (Web services giants) carries "comparatively low" margins. In addition, ADVA also reported integration costs from its acquisition of Overture, with those costs also hitting its operating income line. The vendor's shares were trading down 0.6%, at €9.14, by late lunchtime Thursday on the Frankfurt exchange. (See ADVA Reports Record Annual Revenues and ADVA Adds NFV Smarts With $35M Overture Acquisition.)

    • The pre-MWC product push continues apace, with Nokia Corp. (NYSE: NOK) releasing its 497th press release of the month. This one focuses on new launches and product enhancements in its microwave, IP, optical, mobile and fixed access lines that are aimed at fronthaul and backhaul (or 'anyhaul') deployments. The vendor does make a good point in noting that the transport (rather than access) parts of a mobile network architecture are often the "unsung hero" in delivering a positive mobile broadband experience. The company had previously announced some specific mobile transport enhancements but this deals with the broader portfolio options. (See Nokia Enhances Its 'Anyhaul' Portfolio and Infinera, Nokia Chase 'Anyhaul' Dollars.)

    • British networking software company Aria Networks Ltd. has struck an interesting deal to have its artificial intelligence (AI) code integrated into an ONOS-based SDN controller that's due to be launched soon by Chinese IT services giant BOCO. (See BOCO Adds Aria's AI to Its SDN Controller.)

      — Ray Le Maistre, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, Editor-in-Chief, Light Reading

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