Eurobites: UK Bets Big on AI

Paul Rainford
4/26/2018

Also in today's EMEA regional roundup: Telefónica, Orange and KPN reveal Q1 earnings; Ericsson lands Italian virtualization job.

  • The UK government has announced a "sector deal" which will see it team up with businesses and academic institutions to pump £950 million (US$1.32 billion) into the development of artificial intelligence. The Aritificial Intelligence Sector Deal embraces new AI-related investments such as Japanese venture capital firm Global Brain opening its first European HQ in the UK and the University of Cambridge booting up a new £10 million ($13.9 million) AI supercomputer. However, of the £950 million, just £603 million ($842 million) is newly allocated funding, while £342 million ($477.2 million) is from existing budgets, including £250 million ($348 million) already earmarked for the development of connected and autonomous vehicle technology.

    Included in the plan is what the UK government claims is the world's first "Centre for Data Ethics," which will cost £9 million ($12.5 million) and set out to address the ethical challenges posed by the adoption of AI.

  • Telefónica's adoption of new accounting standards seems to have muddied the waters somewhat in the reporting of the operator's first-quarter results. In reported terms, revenues were down 7.2% year-on-year at €12.19 billion ($14.82 billion) but, in "organic" terms, excluding the effect of the accounting changes, this becomes a 1.9% rise. Similarly, its core profit, or OIBDA, is down 3.9% to €3.86 billion ($4.69 billion) in reported terms but up 3.3% organically. Out of this morass of numbers, Telefónica extracts a net profit of €837 million ($1.02 billion), a 7.4% increase on the previous year's equivalent figure. Customer numbers were down 1% year-on-year to 356.9 million "accesses."

    Telefónica's UK division, O2, has announced that by the end of 2018 it hopes to have connected more than 1,000 sites to the new 4G spectrum it acquired in the most recent auction. O2 bought an additional 40MHz of 2.3GHz spectrum in Ofcom's spectrum auction, which concluded earlier this month.

  • Things are a little more straightforward at Orange (NYSE: FTE), where first-quarter EBITDA climbed 3.8% to €2.60 billion ($3.16 billion) on revenues that were up 2% to €9.88 billion ($12.02 billion). A highlight was the Africa & Middle East sector, which was up 6.2% during the period. In terms of product lines, Orange's "convergent offers" or bundles seem to be hitting the spot, with 10.4% year-on-year growth in customers opting for these offers being recorded.

  • In the Netherlands, KPN Telecom NV (NYSE: KPN) is feeling the effects of competitive pressures on its "single-play" offerings, with first-quarter revenues down 3.4% year to €1.4 billion ($1.7 billion), though EBITDA climbed 4.9% to €555 million ($675 million). Last week Maximo Ibarra succeeded Eelco Blok as CEO: In a statement he says there is "significant scope for further improvement" through the increased digitalization of KPN's business.

  • Italian operator Wind Tre has chosen Ericsson AB (Nasdaq: ERIC) to virtualize its core network as part of its preparation for the arrival of 5G. The five-year contract swings into action in the second quarter of 2018. OpenStack will be involved.

  • Another Italian outfit, Fastweb SpA (Milan: FWB), is teaming up with Belgium-based BICS to offer connectivity services from mainland Europe to the Middle East, Asia and Africa via international subsea cable systems in Sicily.

  • Germany's ADVA Optical Networking (Frankfurt: ADV) suffered a first-quarter net loss of €2.4 million ($2.9 million) compared with a profit of €6.2 million ($7.5 million) a year earlier. Revenues were down 15%, to €120.5 million ($146.6 million). CFO Ulrich Dopfer remains upbeat, however, insisting the vendor was "back on track for growth and profitability."

    — Paul Rainford, Assistant Editor, Europe, Light Reading

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