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Euro Incumbents Transform

It's been a busy day for Europe's incumbent operators, with Telefónica de España , BT Group plc (NYSE: BT; London: BTA), and KPN Telecom NV (NYSE: KPN) all taking significant strategic steps.

Telefónica got the all-clear from the European Commission for its $31.4 billion acquisition of mobile carrier Telefónica Europe plc (O2) , which has operations in the U.K., Ireland, and Germany. (See Telefónica Swoops In on O2.)

The Spanish operator says the EC's blessing comes on the condition that its mobile business, Telefónica Móviles SA , quit the mobile operators' alliance, FreeMove, which it founded with three other major mobile operators -- Orange SA (London/Paris: OGE), T-Mobile International AG , and Telecom Italia Mobile SpA (Milan: TIM) -- to cut international roaming costs and counter the growing muscle of Vodafone Group plc (NYSE: VOD). (See Telefónica Swoops In on O2.)

The reasoning behind the EC condition is that O2 is a member of a different mobile alliance aimed at reducing international roaming rates, Starmap, which comprises a number of smaller European mobile operators. The EC was concerned that Telefònica might pull O2 out of that group and into FreeMove, a move that might have spelled the end of Starmap and consequently increased international calling charges.

In the U.K., BT Group plc (NYSE: BT; London: BTA) took the wraps off its new access division, Openreach, which is already widely referred to, most unkindly, as "Openretch" by telecom industry executives because of the new lurid colors being painted on the division's fleet of 22,000 vans.

BT was forced to create the division by British regulator Ofcom as part of the watchdog's efforts to give BT's broadband competitors a better chance of getting a fair deal from the incumbent. (See BT Opens Up Access.)

And this is no small offshoot. The division is operationally independent of the rest of BT, with its own headquarters, 30,000 staff, and annual revenues of more than £4 billion (US$7 billion). It will also come under intense scrutiny from Ofcom and BT's competitors, as BT, in agreeing to create Openreach, has committed to adhere to more than 230 legally binding undertakings related to competition and fair and equal access.

Across the water in Belgium, incumbent Belgacom SA (Euronext: BELG) is expected to announce that it is paying €600 million ($725 million) for a 90 percent stake in systems integrator Telindus Group NV (Euronext: Tel.BR), a company that had also attracted the advances of Orange (NYSE: FTE). No official statement has yet been made by Belgacom or Telindus, but local newspaper De Standaard reports that the deal has been signed and that an announcement is forthcoming.

Next door in the Netherlands, KPN has snapped up Attingo , which provides public wireless LAN access services at Amsterdam's Schiphol Airport. More than 40,000 people use the service each month, making it the hottest hotspot in the Netherlands, according to KPN.

Taken over the course of a year, that means nearly 500,000 of the 40 million passengers that pass through the airport each year are using the service (though there's no data that tells us how many were satisfied users who didn't lose their connection within a few minutes).

The Dutch incumbent, which declined to provide financial details of the acquisition or the WiFi service provider's revenues, will add Attingo to the 600 public WiFi access zones that comprise its KPN HotSpots subsidiary.

— Ray Le Maistre, International News Editor, Light Reading

digits 12/5/2012 | 4:09:38 AM
re: Euro Incumbents Transform Is this the way to go for large incumbent carriers - buying into the IT services market? Maybe it makes sense, given the shrinking of traditional revenue streams...
kingcharles 12/5/2012 | 4:09:37 AM
re: Euro Incumbents Transform In this particular case it may cause Telindus to loose some contracts. Bear in mind that they are also a telecoms/transmission integrator and hold support contracts (NOC) with i.e. Mobistar, SurfNet and Orange. These companies may not want Belgacom to have access to that much detail of their networks.
ericdavison 12/5/2012 | 4:09:25 AM
re: Euro Incumbents Transform From experience of having had our SI company bought by a Telco/MSO it's a total disaster for the Enterprise business, much less so for Telco. Most European OLOs/Mobile operators are used to buying through the Wholesale divisions of incumbents aynway - where else can they find all those E1 lines?

The Enterprise customers suddenly get hit with their SI trying to sell them WAN circuits rather than Services and Support, and they've often already done deals for WAN direct anyway . The SI Sales team get targets to sell WAN circuits and take their eye off the SI business to meet the Telco-induced drive (shades of Juniper guys suddenly trying to sell 1000s of Netscreens instead of a few M-series)
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