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Eurobites: Colt Cuts Back on Carrier Voice Deals

Paul Rainford
4/22/2014

Also in today's EMEA regional roundup: SFR talks network-sharing with Vodafone; Liberty Global gets Carrier Ethernet 2.0 certification; the future's not Orange.

  • Pan-European operator Colt Technology Services Group Ltd unveiled a critical strategic move Tuesday as it announced a slight year-on-year increase in first-quarter revenues to €399.8 million (US$552 million). The carrier, which provides voice, data, and IT services to enterprise and wholesale customers, announced that it plans to "withdraw from approximately 85% of our Carrier voice trading contracts over the next few months" in order to free up "five billion minutes per annum of voice network capacity to pursue more profitable enterprise voice business." As a result of this move, Colt expects its Carrier voice revenues to decline by €175 million ($241 million), equivalent to about 70% of its annual total, but expects the move to improve its profit margins, so it is clearly aiming to extract itself from deals that aren't delivering decent (or any) profits. The move, which will also result in some job losses, is expected to result in restructuring charges of about €30 million ($41 million) during the second half of this year. Investors didn't much like the news, as Colt's share price lost 12% of its value and was trading at 127 pence on the London Stock Exchange at noon Tuesday. (See Colt Reports Q1, Restructuring Plans.)

  • SFR , the French mobile company that is in the process of being swallowed by cable operator Numericable-SFR , is planning a network-sharing partnership with Vodafone, reports Reuters, citing Le Figaro. SFR's CEO, Jean-Yves Charlier, told Le Figaro that SFR's "professional clients will have access to the Vodafone network everywhere in the world." (See Eurobites: Numericable Wins SFR M&A Tussle.)

  • Meanwhile, in the pain-in-the-neck department, Vodafone is being sued by its former Greek distributor, Mobile Trade Stores, for €1.37 billion (US$1.89 billion), reports Bloomberg. According to MTS, Vodafone unexpectedly and unfairly terminated a maintenance services contract in 2008, leading to lost business.

  • Liberty Global Inc. (Nasdaq: LBTY)'s wholesale unit has earned the Carrier Ethernet 2.0 certification for its European Ethernet services, courtesy of the MEF . The cable operator says it is the first to receive this certification on a pan-European level. (See Liberty Global Wholesale Gains CE 2.0 Certification .)

  • Russian operator VimpelCom Ltd. (NYSE: VIP) has sold its 51% stake in Orascom Telecom Algérie (also known as Djezzy GSM ) to the Algerian National Investment Fund for US$2.64 billion. A VimpelCom statement regarding the deal says that it will continue to exercise operational control over OTA.

  • Brits were once told, repeatedly, "the future's bright, the future's Orange." Well, apparently it's not any more. According to a report in The Guardian, Orange (NYSE: FTE) has stopped signing up new customers via its UK online channel, and this is being interpreted, by The Guardian at least, as the first phase of the dismantling of the once hip-as-hell brand by its parent, EE .

    — Paul Rainford, Assistant Editor, Europe, Light Reading

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    Ray@LR
    [email protected]
    4/22/2014 | 10:34:53 AM
    Will this be a new trend among SPs?
    We've already seen this -- the extraction from contracts that deliver little profit or generate aloss -- in the managed services sector, with NSN and ALU.

    Now Colt is getting out of carrier voice contracts so it can sell the voice capacity to enterprise customers that deliver higher margins. It's going to be painful, as the numbers show, but Colt obviously thinks it'll be worth it.

    I wonder if we'll see a spate of such deals, and not just in the wholesale sector... 
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