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Eurobites: BT Investors Nervous as Post-Patterson Era Kicks In

Paul Rainford
1/31/2019

Also in today's EMEA regional roundup: EU could lock Huawei out of Europe; Nokia bolsters leadership team; France lines up 5G auction for the fall; Com Hem sets broadband record.

  • As BT Group plc (NYSE: BT; London: BTA) boss Gavin Patterson hands over the reins to Philip Jansen, who steps into the CEO role tomorrow, investors will reflect on what lies in store for the ailing UK telecom incumbent. Patterson hailed a "sound quarter of operational and financial performance" today, with profits for the last nine months of 2018 up 26%, to £1.65 billion (US$2.2 billion), compared with the year-earlier period, despite a 1% fall in sales, to £17.56 billion ($23.1 billion). But investors weren't so sure. BT's shares fell early morning by nearly 4% on the London stock exchange, although they had recovered and were trading just below yesterday's closing level at the time of publication. A raft of issues worry investors, including Brexit, rising levels of fixed-line competition, punitive regulation, investment challenges, an exorbitant outlay on TV sports rights and job cuts. And that's before even considering BT's long-running pension deficit. Independent analyst Paolo Pescatore described the performance as a "modest" one but gave BT credit for good results at its consumer division in what is currently a very tough market. BT's share price has more than halved in the last three years following revelations of an accounting scandal in Italy and a weak performance in important markets. Jansen may have to be a very skilled rider to turn this horse around. (See BT Looks More Bloated Than Ever, BT's Jansen: We Need to Talk About Openreach and BT Left in 'Good State,' Says Outgoing CEO Patterson.)

  • Embattled Chinese equipment vendor Huawei Technologies Co. Ltd. could be locked out of 5G networks across the European Union following legislative moves by European officials, according to Reuters. The European Commission is said to be considering an amendment to a 2016 cybersecurity law that would classify 5G networks as "critical infrastructure" and stop companies from using vendors suspected of involvement in spying or sabotage. That could amount to a de facto ban on Huawei and ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763) because China's national intelligence law, according to EU documents obtained by Reuters, says Chinese "organizations and citizens shall, in accordance with the law, support, cooperate with, and collaborate in national intelligence work." Huawei has already been excluded from 5G markets in Australia and New Zealand and has been unable to sell equipment to major US service providers ever since 2012, when a US government report described it as a security threat. Various European countries are said to be weighing their options, while several operators have either paused deployment of Huawei products or started replacing Huawei gear because of security concerns. Huawei has continued to deny the spying charges, pointing to a lack of evidence to support them. (See Huawei Hits Out at DoJ Amid Global Backlash.)

  • Nokia Corp. (NYSE: NOK) has bolstered its "group leadership team" with the two new additions, Sandra Motley (president of fixed networks) and Tommi Uitto (president of mobile networks). In a statement on the appointments, Nokia says that, given these moves, the previously announced plan to create a single access networks division will not proceed, as "other means of collaboration" between Nokia's mobile and fixed units have been set up.

  • France's 5G spectrum auction will start in the fall, according to a Reuters report citing an interview between junior minister Agnes Pannier-Runacher and Le Figaro newspaper. Spectrum will be awarded at the start of 2020, said the minister.

  • Swedish cable operator Com Hem AB -- now part of Tele2 AB (Nasdaq: TLTO) -- has made it onto the official list of Guinness World Records for having the fastest Internet connection "ever used simultaneously by a larger group of people in the world." At its DreamHack Summer event in 2018, Com Hem supplied a connection of 1.6 terabits per second, through a direct connection to the same fiber network used to deliver Internet connections to operator's 700,000 broadband customers in Sweden. That's fast enough to download the entire Wallander canon in 0.3 seconds. (Alright, we made that last bit up.)

  • The French government and its communications regulator, Arcep , have joined forces to put out a call for the creation of open 5G trial platforms in the 26GHz band. Those players who agree to make their infrastructures available to third parties will be given authorization to use 26GHz band frequencies for a period of up to three years; a regulatory "sandbox," allowing players to test their innovation; and international exposure.

  • Packaging firm Weener Plastics (no sniggering at the back) has signed a five-year managed SD-WAN agreement with Orange Business Services . SD-WAN technology will be rolled out across 24 Weener sites in Europe, Asia and Latin America.

    — Paul Rainford, Assistant Editor, Europe, Light Reading

    Additional material and encouragement from Iain Morris.

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