Vodafone snaps up Cable & Wireless

Vodafone looks to have succeeded in its ambition to buy up commercial network provider Cable & Wireless for a projected £1.04 billion ($1.76 billion), or about 40% of the estimated break up value of the company.


Assuming it is successful, Vodafone will gain; a national fibre-optic broadband network that is separate from BT or Virgin Media's), a massive portfolio of business customers and a global backbone infrastructure that reaches out to over 160 countries via its network of undersea cables. 


Suggestions are that the latter will probably be sold off so that Vodafone can concentrate on winning more enterprise customers at home, which is probably what they will do.  Though as a long term play, especially if they are interested in servicing large enterprise customers, I think that would be as strategically unwise as the BT forced sale of its mobile phone business...


C&W has a lot of customers but not as many as you might think, remember they have been in serious decline for over 10 years, I rather consider them to be the GEC/Marconi of the UK Telecoms Industry, the parallels are clear.


The real coup with this acquisition is not the customers or the international fibre, it is that UK national fibre infrastructure that they will take possession of as the deal completes.   Since 2010 when the use of smart phones and mobile devices saw the cellular data traffic move ahead of voice the one the largest cost-of-service-delivery items has been the amount of money that Vodafone has had to pay to BT for backhaul, and from here on in the Vodafone will benefit from the coming explosion in mobile (I don;t think mobile is even ouf the gate yet...)


Bottom line. Buying up C&W gives Vodafone its own infrastructure the reduction in backhaul costs will dramatically improve its revenue per user with all the potential advantages that this brings forth customers and investors.

Phorm Management leave sinking ship

Debate continues to rage about spyware vendor Phorm.

This week sees there management team run for the door with their hair on fire... Phorms indominatable CEO Hugo Drayton and CFO Lynne Millar both resigned this week, saying that it had all been very rewarding - I hope they meant in terms of pay, because I doubt it's done their careers any good.


Just last week Hugo Drayton recently put up this spirited defence of Phorm and it's business model. While talking to the folks at TelecomTV


It's about time for BT, Virgin, EasyNet et al, to follow Hugo and Lynne over the side of the boat; So folks, if you're listening, . Stop it now! It poisons everyone who goes near it. It's a PR disaster, even the people who work their know it

Also, stop trying to steal each others marketshares by cutting the prices it just leads to churn which is incredibly expensive let the little guys have the small price sensitive customers like my mum who uses it to shop at Tesco online and email recipes to her friends in the WI, and get back to selling people a good product that homeworkers, businesses and people who want streaming media; they will be prepared to pay a fair monthly fee.

The reality of consumer broadband; Only BT can win

Excellent week for consumer broadband again; Talktalk breaking apart, BSkyB to rescue Tiscali, and Virgin Media losing 15% of it's staff.

We don;t normally talk about Consumer Broadband; primarily because we believe that unless you own the network you will eventually go bust. But the last few days have gone so far to prove our theory, that we just had to cover the latest developments.

Back in 2006 the launch of a free Broadband service from everyone's favorite mobile phone store was hailed as the way forward. Despite losing Carphone warehouse £45m($70m) in the first 6 months, industry analysts claimed it was the future, and Ofcom said this was proof that they were taking a tough regulatory line: "Look at these 700 shiny, independent ISPs, we're doing a fine job". The elephant in the room was of course that virtually all of them relied on BTs infrastructure.

Since then a good number of these Standalone ISPs have failed; the prefered term I believe is "were acquired by Tiscali", and loads of little providers have been lost, failed to flourish, or just given up .

In the same period NTL was sold to Virgin Media for 4 pence, just before it went upside down, EasyNet was hoovered up by BSkyB. Now the same analysts who said Free Broadband was the future are urging Carphone Warehouse to split out (dump) Talktalk in the delusional hope that someone like Vodaphone might pay £1bn for its customer list, Virgin are cutting staff, and it looks like Tiscali is going to vanish.

BSkyB and NTL are only short term winners; yes they own network, but not enough to cover the country, they too rely on BT to reach their "off-network " customers and in the current economic climate there is no chance of finding the money needed to expand the networks; even these groups TV assets cannot be relied on to fund network coverage as people switch to freeview (you can get the BBC and Dave; what more do you need?!).

So it comes to this: Accelerated by the recession, the dream of a diverse, vibrant, multiplaying broadband led consumer teletopia has come down to three big players, none of which can deliver the whole convergence dream and eventually there will just be BT; just like back in the last big recession.

BT to shed 10,000 jobs

Less than 24 hrs after Virgin Media announced they would be shedding a 2000+ jobs. BT have announced further 10,000 job cuts with contractors out the door first.

I say further because anyone who follows BT will be aware that they have already reduced their global workforce by 1/3rd, down from nearly 250,000 in 2006. In October 2007 a representative of the Now Connect Union, which represents BT middle management, suggested that only the generosity of the voluntary redundancy packages avoided a strike. Unfortunately the result of that generousity is that some highly experienced engineers and network designers took the deal and left BT Global Services, the division now pulling BTs numbers down.

A BT insider recently said to me "...it's like 2001 again, lots of people in the office looking busy; waiting for the storm to hit!"