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Research Briefing from Prospect •

@ProspectCalvin

www.prospect.org.uk

12 July 2016

European communications companies: current state of play This briefing provides an idea of current events affecting communications companies active in European telecoms markets, both from the perspective of regulatory developments, developments in company strategy and in terms of major merger proposals, both rumoured and actual. The focus is not solely on Europe, but on companies which are in play here; while the analysis also adopts a focus based on a converging industry rather than on one particular sector (i.e. (tele)communications). The intention is to take on the aims of previous Prospect endeavours in this area and, consequently, started its monitoring as of April 2015. In terms of industry consolidation, we don’t seek to report on every twitch and rumour but on those which appear to have a degree of concreteness about them; in doing so we are seeking to provide an information service to Prospect members, not to give further encouragement to speculators in the knowledge that this is a recognised way of driving share prices and causing uncertainty. Where formal merger proposals are in place, we seek to highlight particularly important developments in these. We are not only interested here in industry consolidation, although this continues currently to be the issue on which most stories appear in the specialist press, but on the range of other corporate strategy issues adopted by communications companies as they seek to develop their business models. Links are provided as a means of following up on particular developments, although do note that some of these may be behind a firewall. The stories linked here are ordered by the name of the company affected by them and, within each entry, newest first. Changes since the last published edition are tracked in green.

Latest revision of this document: https://library.prospect.org.uk/id/2013/01523 This revision: https://library.prospect.org.uk/id/2013/01523/2016-07-12

Themes a. industry consolidation – under which companies seek to merge with each other to create scale to maximise opportunities for investment; in which they have been encouraged – at cross-border level, as opposed to within-markets – by a European Commission which has sort to identify size as the route to establishing technical leadership for Europe in communications in comparison with the US and Asia An alternative model here is that recently launched by Deutsche Telekom called Ngena (Next Generation Enterprise Network Alliance). This aims at linking together operator partners into an alliance designed to facilitate business communications services, overcoming the difficulties presented by the need to broker and then manage deals with operators in different places. Cisco – the technology partner – describes it as a ‘Star Alliance’ for telcos. Ngena will be incorporated as a separate entity, 49% of which is owned by Deutsche Telekom Capital Partners, an investment fund set up by DT in 2014, and will act as a wholesaler. It will launch services in 2017 and hopes to have twenty partners on board by the end of 2016: http://www.totaltele.com/view.aspx?ID=492911 b. cloud storage – off-line storage of content and the apps to run it Cloud storage is one of the reasons why there is a data wave, on which Ericsson’s latest Mobility Report also focuses: http://www.mobileworldlive.com/featuredcontent/home-banner/internet-of-things-will-rule-connections-by-2018-claimsericsson/. Data traffic is currently growing at 10% quarter-on-quarter, and by 60% year-on-year. c. deployments of technology – in fixed lines: vectoring, G.Fast and XG-Fast (ADSL); and DOCSIS 3.1 (cable) to increase access speeds, plus voice-over wi-fi; in mobile: socalled ‘5G’ (IMT-2020) and voice over LTE (‘4G’ networks can only handle data, with calls left to 2G and 3G). The European Commission is to open a probe on the German regulatory authority’s decision to allow Deutsche Telekom to introduce vectoring as a means of increasing network access speeds. The Commission is concerned that the technology may have a ‘considerably restricting effect’ on alternative operators gaining wholesale access via VULA: http://www.totaltele.com/view.aspx?ID=493721 In fixed lines, lab tests are being conducted on XG-Fast, which promotes even higher speeds over very short lengths of copper than G.Fast. The latest operator (after BT) to be trialling XG-Fast is Deutsche Telekom: http://www.totaltele.com/view.aspx?ID=492538. There is a lot of industry interest in this, sufficient to sustain an annual conference on ‘Gigabit Copper’, run by totaltele.com: http://www.terrapinn.com/conference/gigabit-copper/index.stm BT has also successfully trialled the technology to play a role in 4G and 5G mobile architectures, demonstrating in the lab that it has the potential to connect a mobile tower’s baseband unit with its transmitters: http://www.totaltele.com/view.aspx?ID=492644

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In cable terms, DOCSIS 3.1 will facilitate download speeds of 1Gbps, an advance on the 300Mbps that DOCSIS 3.0 provides, but currently only TDC in Denmark is rolling it out: http://www.totaltele.com/view.aspx?ID=492498 Virgin Media’s Project Lightning – its £3bn network fill-in programme that will extend its network to a further 4m premises by 2020 – envisages one in four homes will be connected on a FTTP basis: http://www.totaltele.com/view.aspx?ID=493599 It is worth noting that Google is now starting to talk openly about a transition from a ‘mobile first’ world to an ‘AI [Artificial Intelligence] first’ one, in which a more intelligent search function, particularly on mobile devices, and based on machine learning and AI, comes to the fore: http://www.mobileworldlive.com/featured-content/homebanner/google-chief-we-are-moving-from-a-mobile-first-to-an-ai-first-world/. On spectrum, the European Commission has announced plans to co-ordinate the use of 700MHz spectrum across the EU for mobile services: http://www.mobileworldlive.com/featured-content/home-banner/ec-calls-forharmonised-700mhz-effort In 5G, lab speed tests conducted in Sweden by Ericsson reached download speeds of 25 Gbps: http://www.totaltele.com/view.aspx?ID=492788. A partnership between TeliaSonera and Ericsson seeks to identify use cases for 5G services from 2018, with a focus on e-health and connected cars with 5G also bringing better network performance in terms of capacity, coverage and power consumption: http://www.totaltele.com/view.aspx?ID=492451 BT, Deutsche Telekom, Telecom Italia and Vodafone are among a group of 17 companies (13 mobile operators, two satellite ones and two vendors) which have pledged to launch 5G services in at least one city in every country across Europe by 2020. However, the operators have linked their ‘manifesto’ pledge, and their investment in 5G, to net neutrality, arguing that new rules adopted as at the end of April 2017 which prevent unfair blocking and connection-speed throttling, and the paid prioritisation of web traffic, need to be dropped if they are to achieve this goal. The operators are also concerned to ensure that infrastructure-light OTT operators are subject to the same rules as they: http://www.totaltele.com/view.aspx?ID=494332. For a particularly iconoclastic review of the manoeuvre, see here: http://rethinkwireless.com/2016/07/08/the-week-in-review-europes-operators-keep-their-headsfirmly-in-the-sand/. Vodafone has launched its plans to partner with networks companies to ‘define industry standards, establish technical guidelines and prepare product roadmaps’: http://www.mobileworldlive.com/featured-content/home-banner/vodafone-partnerswith-top-tech-companies-on-5g and to foster the growth of the narrowband internet of things eco-system (NB-IoT): http://www.totaltele.com/view.aspx?ID=492823 AT&T also plans to trial 5G in the US later this year, having recently unveiled its ‘5G roadmap’: http://www.mobileworldlive.com/featured-content/home-banner/att-joinsverizon-in-race-to-5g, with further plans available here: http://www.mobileworldlive.com/featured-content/home-banner/at-warns-on-prestandard-fragmentation. 3

d. quad play consumer strategies – offering, under a single bill, fixed and mobile telecoms, broadband and TV e. fixed-mobile convergence: the logic underpinning the BT/EE merger and also the growing interest in quad play strategies. Essentially, the trick is to get a voice layer into LTE (the technology underpinning ‘4G’ mobile), or – the fixed-line equivalent – voice over wi-fi. In either case, the aim is to secure seamless communications (and easy handoffs) regardless of type of network and location (e.g. flats). Interest has been around for a long time, although practical problems still present themselves, but it is worthwhile noting that Google seems to have made this technology work in the US, albeit with a very limited choice of handsets: http://www.mobileworldlive.com/featured-content/home-banner/google-opens-upproject-fi/ f. customer service – fast becoming a strategic priority at regulatory level and as companies look to differentiate themselves. Ofcom’s latest research shows some improvements, but with Sky consistently outperforming even the industry average (and TalkTalk consistently under-performing): http://stakeholders.ofcom.org.uk/market-dataresearch/other/cross-media/quality-of-customer-service-annual-reports/2015 EE is bringing call centres back to the UK as a means of overcoming poor service: http://www.mobileworldlive.com/featured-content/home-banner/ee-to-cover-uk-inblanket-of-4g-says-new-ceo/ g. artificial intelligence: a myriad initiatives, research, company link-ups and developer conferences to establish viable applications for advanced (human-like) machine intelligence driven by companies collecting our data to develop new services (for which we are prepared to pay). Also a driver for, and something which essentially connects, a lot of aspects of the ‘internet of things’. This is a process which is being driven heavily by Google but Apple is also becoming more heavily involved with applications stemming from Siri, its voice-activated digital assistant. Personal privacy and usage of our data can be expected to pay a significant role. h. ‘internet of things’ – connected consumer devices designed to facilitate remote control of home technology; or to assist with the continued automation of driving. There are essentially two generic systems, offering low power wide area (LPWA) networks: one based on licensed spectrum and cellular technology (e.g. LoRA); and the other based on unlicensed high frequency spectrum (e.g. Sigfox). One substantial concern (and from an industry/big data perspective as well as from a consumer-rooted data privacy one) is over just how connected all these devices are going to be, or whether they will function as ‘information islands’. Ericsson, which has a history of predictions in this area, is now talking of there being more IoT connections than stand-alone mobile phone ones by 2018, with worldwide IoT connections amounting to 16bn out of a total of 28bn connected devices: http://www.mobileworldlive.com/featured-content/home-banner/internet-of-thingswill-rule-connections-by-2018-claims-ericsson/. It is worth noting that Ericsson is expecting much of the growth to take place in unlicensed spectrum as opposed to cellular-based applications, despite the assurances of reliability and quality offered by licensed spectrum. Western Europe is expected to be the prime driver of growth, not 4

least in the connected cars area that also featured significantly in the Queen’s Speech in May. The British Standards Institute has just published a specification for a standard which will allow for the automatic discovery of data from connected objects: http://shop.bsigroup.com/forms/PASs/PAS-212-2016-download/. The standard is intended to standardise software interfaces so as software engineers do not need to re-write interfaces for each new application or service they support. Vodafone has become the latest to announce plans, with the intention of rolling out a network based on LoRA cellular technology, which is not yet ratified for use as regards its technological standard: http://www.mobileworldlive.com/featured-content/homebanner/vodafone-to-deploy-nb-iot-in-multiple-markets-next-year. However, ratification is in its final stages and Vodafone is expecting a rapid roll-out subsequently: http://www.totaltele.com/view.aspx?ID=493988, while KPN is going ahead anyway: http://www.mobileworldlive.com/featured-content/home-banner/kpn-goes-nationwidewith-lora-network-wont-rule-out-nb-iot/. Nokia spends €170m on Withings, a French manufacturer of wireless-enabled activity trackers and other monitors, confirming that health will be a central piece in its approach to IoT: http://www.mobileworldlive.com/featured-content/homebanner/nokia-choses-healthy-option-with-withings-buy; while it has also launched a smart home system and network management platform: http://rethinkwireless.com/2016/06/23/nokia-launches-impact-iot-platform-targets-smart-homes-too Huawei has become the latest to trump the credentials of its IoT technology although it is behind both LoRa and SigFox in coming to market: http://www.mobileworldlive.com/featured-content/home-banner/nb-iot-reality-2016 Ofcom has allocated 10MHz of VHF spectrum specifically to drive the roll-out of particular IoT services in the UK: http://www.totaltele.com/view.aspx?ID=493249. Deutsche Telekom has announced that Dutch former incumbent KPN is the first telecom partner for its QIVICON platform, which connects compatible smart home devices to the apps needed to control them. There are 40 brands with products on the platform. Other European countries are also being targeted for the initiative: http://www.totaltele.com/view.aspx?ID=493214. SigFox is to deploy an IoT network in Germany in 2017 – its 14th – based on unlicensed spectrum: http://www.totaltele.com/view.aspx?ID=492809 and is also launching in Australia and New Zealand in partnership with a Sydney-based start-up: http://www.mobileworldlive.com/asia/asia-news/sigfox-iot-network-heads-to-australianew-zealand/. It is also extending its US coverage to 100 cities by the end of 2016: http://www.totaltele.com/view.aspx?ID=493667. Its technology is designed to provide low-power, wide area networking suitable for connecting large numbers of devices. The GSM has established a series of security guidelines with the intention of developers baking security into their products and services launched into the IoT ecosystem from the start, thus improving trustworthiness and reliability: http://www.totaltele.com/view.aspx?ID=492652 5

Bouygues Telecom has established a separate subsidiary for its IoT offer, based on LoRa technology: http://www.mobileworldlive.com/featured-content/homebanner/bouygues-telecom-unveils-iot-subsidiary while rival Altice has announced plans to go with SigFox’s rival technology: http://www.mobileworldlive.com/featuredcontent/top-three/altice-to-deploy-sigfoxs-iot-network/ Ligado Networks, the former LightSquared operation in the US, has emerged from bankruptcy emphasising its IoT credentials: http://www.totaltele.com/view.aspx?ID=492707 i. consumer products – wearable technology to assist with lifestyle choices and which also personalises the ‘internet of things’. Underpins much of the debate around ‘the fourth industrial revolution’ j. industry regulation – where the big domestic issue remains that of the potential (further) separation of Openreach from BT; Ofcom’s preferred approach is for a separate business 100% owned by BT, but to hold open the prospect of structural separation if it cannot reach agreement with BT. A group of rival operators has written to Ofcom in support of their own 10-point plan for how a 100% owned business could be made to work: http://www.totaltele.com/view.aspx?ID=493762. In the UK, CityFibre is taking legal action over Ofcom’s intention to mandate BT to offer dark fibre on a wholesale basis in the business market, arguing that this will not encourage investment in fibre networks: http://www.totaltele.com/view.aspx?ID=494318. This seems to confirm a fear that wholesale prices have reached such a level that alt.nets are unable to justify investment in fibre, which seemed to be the point that CityFibre reached as regards its residential JV in York alongside Sky and TalkTalk, although CityFibre has argued that its appeal is based (also) on the decision not to allow rivals to connect to large businesses through BT’s duct infrastructure: http://www.totaltele.com/view.aspx?ID=494337. Ofcom points out that it is in the process of taking incremental action in this regard, from residential and small companies and extending to larger ones where operators connect ‘at scale’. Meanwhile, the recent Queen’s Speech promises a digital economy bill giving every household the right to request a minimum 10-Mbps broadband service by 2020; exempt new street cabinets and overhead cables from requiring planning permission; streamline the planning process for deploying new cell towers; and automatic compensation for broadband customers experiencing a loss or reduction in service: http://www.totaltele.com/view.aspx?ID=493799. A group of senior telco executives has, alongside the employer association ETNO, met European Commission officials in connection with the EU’s telecoms framework review, re-emphasising the importance of investment: http://www.totaltele.com/view.aspx?ID=493930. The latest from the European Commission on its approach is here: https://ec.europa.eu/commission/2014-2019/ansip/blog/busy-year-ahead-buildingdigital-single-market_en. This is about the digital single market – of which reform to the telecoms framework is a part – but which of course covers a much wider sphere of things connected with our digital lives than digital communications networks alone. 6

The Commission has also launched a €450m public private partnership initiative in cyber-security, expected to trigger €1.8bn of investment by 2020: http://www.mobileworldlive.com/featured-content/home-banner/ec-steps-up-oncybersecurity-with-e450m-investment. The initiative is designed to build cybersecurity solutions in energy, health, transport and finance, among others, while overcoming fragmentation and increasing co-operation. Furthermore, the Commission has just published a consultation to identify opportunities for a co-ordinated introduction of 5G networks across Europe; and to assess what the constituent elements of a 5G Action Plan might be as regards the timely deployment of the planned infrastructure in 2020: https://ec.europa.eu/digitalsingle-market/en/news/targeted-consultation-co-ordinated-introduction-5g-networkseurope. The Action Plan is scheduled for the Autumn, and Gunther Oettinger, European Commissioner for the Digital Economy, has welcomed at length the 5G ‘Manifesto’ published by operators as giving ‘new momentum’ to the plans: https://ec.europa.eu/commission/2014-2019/oettinger/blog/vital-support-industry-eu5g-action-plan_en. The Commission has also published a proposal regarding maximum wholesale roaming charges of € 0.04/min, € 0.01/SMS and € 0.085/MB in the EU as a means of preparing for the end of roaming charges for consumers set for 15 June 2017: https://ec.europa.eu/digital-single-market/en/news/commission-prepares-ground-endroaming-charges-june-2017. The European Council has, meanwhile, confirmed plans to allocate the 700 MHz band for mobile services in all member states, meaning that all must vacate the frequencies by 2020: http://www.totaltele.com/view.aspx?ID=493888. Ofcom is already well ahead on its own plans to do so. The Commission has also unveiled a ‘digital plan’ for industry, at the heart of which is the desire to speed up the standards-making process in the area of 5G, cloud computing, IoT, data technologies and cybersecurity: http://www.mobileworldlive.com/featured-content/home-banner/ec-unveils-digitalplan-for-industry The Commission has reportedly recently published summary initial findings to its consultation on electronic communications rules: https://ec.europa.eu/digital-singlemarket/en/news/summary-report-public-consultation-evaluation-and-reviewregulatory-framework-electronic. This includes the following reference: ‘The administrations of several Member States see the need for updating the telecoms rules, for reasons varying from the need to promote investment in next-generation infrastructures to the need to respond to technological and market changes. There are also calls for more flexibility in and simplification of those rules.’ Definitely this is one to keep an eye upon with regard to structural separation. The Commission has also recently spoken of the need for better co-ordination across the EU in the 700MHz spectrum, with specific reference to IoT applications regarding connected cars: http://www.mobileworldlive.com/featured-content/homebanner/spectrum-harmonisation-vital-for-5g-iot-connected-cars-ansip/ 7

k. investment. Strong link to all the other items in this section, of course – including not least deployments of technology and regulation. But worth noting in its own right. The Italian government has had a €4bn programme for superfast broadband approved by the European Commission which has said the investment does not contravene state aid rules: http://www.totaltele.com/view.aspx?ID=494268. The scheme will provide 85% of households and all public buildings with 100 Mbps broadband service by the end of 2022. The Italian state is to provide all the necessary finance but will select a licensee to operate it. Germany has also announced plans to allocate a further €1.3bn in its current roll-out programme: http://www.totaltele.com/view.aspx?ID=494286. This is on top of the €2.7bn committed last October (i.e. €4bn in total) in a scheme to deliver networks capable of providing access speeds of 50 Mbps, with a view to covering the whole country by 2018. €1.3bn of this sum is a reinvestment of the proceeds of mobile spectrum sales, while the remainder comes from federal funds. BT is to invest £6bn in capital expenditure over the next three years in both Openreach and EE to realise its expansion plans for superfast broadband and 4G coverage: http://www.btplc.com/news/index.htm#/pressreleases/bt-to-invest-billions-more-onfibre-4g-and-customer-service-1394948. The company reminded that this is subject to regulatory support, which is a common feature in its announcements of this type, but also acts as a reminder of the investment levels with which a stand-alone Openreach would have to keep up and which may be jeopardised by Ofcom’s approach to separation. Gigaclear and CityFibre have also established a partnership allowing the former to use the latter’s metro long distance fibre infrastructure for backhaul and to extend its rural areas coverage: http://www.totaltele.com/view.aspx?ID=494291. l. net neutrality. The debate about net neutrality – the desire to have internet access unfettered by operators’ traffic management policies or ISPs offering ‘walled gardens’ continues to rumble on. In the US, the Supreme Court has upheld the reason underpinning the rules on net neutrality drawn up with effect from last June by the Federal Communications Commission: http://www.mobileworldlive.com/featured-content/home-banner/usappeals-court-backs-net-neutrality-rules. The reason is that the rules essentially classify broadband as a telecommunications service rather than an information service and this was the subject of the action. This allowed the FCC to pass rules preventing broadband providers from blocking access to legal content, applications and services, from blocking the connection of ‘non-harmful’ devices to the network; and from degrading the performance of the internet on the basis of content, application or service or on the basis of paid prioritisation for particular services. BEREC – the body of European regulators – has just published proposals for guidelines on how national regulators should interpret the EU’s rules on net neutrality: http://berec.europa.eu/eng/document_register/subject_matter/berec/press_releases/6 082-berec-seeks-views-on-guidelines-to-implement-new-net-neutrality-rules. The closing date for responses is 18 July. 8

Facebook and Airtel have just launched their Free Basics service in Nigeria – the 40th such launch over half which are in Africa. The service provides users with access to selected sites within the Basics offer which does not impact on monthly usage caps or which are extra to inclusive data allowances: http://www.totaltele.com/view.aspx?ID=493735.

Industry consolidation 3 Italia €21.8bn joint venture with Wind (an integrated fixed, mobile and internet services provider owned by Russian operator Vimpelcom, in which Telenor owns a 33% stake) given green light by Italian government: http://www.mobileworldlive.com/featured-content/topthree/italy-will-not-veto-hutchvimpelcom-deal. The European Commission has now announced that it will review the merger in-depth on the grounds of the potential impact on innovation, prices to consumers and on consumer choice: http://www.mobileworldlive.com/featured-content/home-banner/ec-opens-3wind-italyprobe/. It has recently extended its deadline to complete its review, with the permission of the parties involved, to 8 September: http://www.mobileworldlive.com/featuredcontent/home-banner/eu-postpones-ruling-on-3-italia-wind-merger/, while the agreement referred to below is now being reported as likely to secure the approval of the Commission: http://www.totaltele.com/view.aspx?ID=494364. The number of parties interested in a division of assets to meet regulatory requirements boiled down to three contenders: Swiss operator Fastweb, which already offers broadband services in Italy; Tiscali, the Italian internet service provider; and French disruptor Iliad, with the latter having entered signed a deal, subject to the merger being given the green light, just 24 hours after entering into exclusive negotiations: http://www.mobileworldlive.com/featured-content/home-banner/iliad-confirms-italian-deal. Iliad has built a 17% share of the mobile market in France, as well as having a growing presence in high-speed broadband, on the back of aggressive price-cutting. The deal allows Iliad to become a fourth operator, with nationwide coverage and a competitive position, via a €450m investment (between 2017 and 2019) in 35 MHz of paired spectrum suitable for 3G and 4G services; ‘several thousand’ cell sites in densely-populated areas; as well as several thousand more in rural areas which it could, however, replace with participation in a RANsharing deal; and a five-year (renewable for a further five years) transitional roaming deal with the merged network. Fastweb, however, is not taking defeat lying down and is seeking that the Commission consult with the market on the proposed deal: http://www.mobileworldlive.com/featured-content/top-three/fastweb-wants-ec-to-look-intoiliads-italian-plans.

Airwave In talks with Motorola Solutions about a $1bn takeover: http://www.mobileworldlive.com/featured-content/home-banner/motorola-solutions-in-1btalks-to-acquire-uks-airwave-report

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Altice (French cable operator) Assumes control of Suddenlink (US cable operator): http://www.totaltele.com/view.aspx?ID=492223 and also concludes $17.7bn purchase of Cablevision following approval by the Federal Communications Commission in May and New York state regulators this week. Conditions of the deal imposed by the latter include that Altice must pass to subscribers 25% of the $450m cost savings it expects to make over the next five years, while it will also be barred from shedding employees in customer-facing roles in New York for four years. Altice becomes the fourth largest cable operator in the US: http://www.totaltele.com/view.aspx?ID=494143. Now said to be focusing on cutting costs and integrating systems: http://www.mobileworldlive.com/featured-content/top-three/altice-to-take-breather-fromacquisitions although another cable company, Cox Communications is also said to be attracting its eye. Hives off two cable businesses – Cabovisao and ONI – required as condition of €5.79bn purchase of Portugal Telecom (http://www.mobileworldlive.com/featured-content/homebanner/altice-closes-pt-portugal-deal/) to Apax France: http://www.mobileworldlive.com/featured-content/top-three/bid-rival-apax-benefits-fromaltice-sale-of-portuguese-assets. Vodafone had held preliminary talks with Altice over Cabovisao: http://www.mobileworldlive.com/vodafone-early-talks-buying-portugalscabovisao Fails to agree €10bn merger with Bouygues Telecom, with the latter wanting to maintain an independent perspective: http://www.mobileworldlive.com/bouygues-rejects-sfrnumericable-bid, with the bid also coming in for heavy political opposition: http://www.mobileworldlive.com/sfr-numericables-bid-bouygues-telecom-faces-growingpolitical-opposition. Completes buy-out of Vivendi stake in SFR-Numéricable to take ownership to 70.4%: http://www.mobileworldlive.com/vivendi-closes-sale-numericable-sfr-stake-altice

Bouygues Telecom (French operator, originally mobile) Sells 230 towers to Cellnex, an infrastructure specialist operating in several European countries, for €80m. A planned second phase of the deal is likely to see more of Bouygues Telecom’s 15,000 towers turned over to Cellnex, with which the company has signed a twenty-year services deal: http://www.totaltele.com/view.aspx?ID=494358.

BT Following clearance of the deal by the Competition and Markets Authority without conditions (CMA case page here: https://www.gov.uk/cma-cases/bt-ee-merger-inquiry), this closed as planned on 29 January: http://www.mobileworldlive.com/featured-content/home-banner/btceo-says-ee-deal-not-just-about-selling-bundles. 10

Cable & Wireless Communications Has been bought by Liberty Global for a revised c. $7.4bn in a deal which closed on 16 May: http://www.mobileworldlive.com/featured-content/top-three/liberty-global-completescwc-acquisition.

Deutsche Telekom (former incumbent in Germany) Planning to sell off its network of mobile towers in Germany, worth €4-5bn, to raise funds to invest in its European broadband network: http://www.mobileworldlive.com/featuredcontent/home-banner/deutsche-telekom-preps-e5b-deal-for-domestic-towers-unit. Banks have been appointed to run an auction process for a process to take place after the summer. DT has 40,000 cell sites across Europe. Likely to sell T-Mobile Netherlands, raising €3bn: http://uk.reuters.com/article/us-tmobile-netherlands-m-a-idUKKCN0T11RE20151112. After deciding to explore a deal with Vodafone, Liberty Global has dropped out of the race: http://www.mobileworldlive.com/featured-content/home-banner/liberty-global-pursuesvodafone-deal-over-t-mob-in-netherlands, leaving private equity firms Appollo and Warburg Pincus in the box seat (Apax, CVC, Bain Capital and Providence have also been named as interested parties but have dropped out of the running). Final bids are expected shortly, with the unit valued at €3bn although cash offers of €2.5bn plus add-ons are thought most likely: http://www.mobileworldlive.com/featured-content/home-banner/us-private-equity-firmsready-e3b-bids-for-t-mobile-netherlands/ although Deutsche Telekom had anticipated bids of up to €5bn. In the wake of the upcoming US spectrum auction and in view of the approaching presidential elections, plans to sell its T-Mobile US subsidiary have been shelved: http://www.mobileworldlive.com/featured-content/home-banner/deutsche-telekom-puts-tmobile-us-sale-on-ice. Options for sale had been explored for some time with the most recent rumours focusing on Dish Networks: http://www.rethink-wireless.com/2015/06/16/tmobile-better-options-dish-merger/ Strikes €900m deal with Slovak Government for remaining 49% of Slovak Telecom: http://www.mobileworldlive.com/deutsche-telekom-snaps-remaining-49-slovak-telekom

Eir (former incumbent in Ireland known previously as Eircom) Sees GIC, a sovereign wealth fund from Singapore, spend €230m on taking an unspecified stake, but at €232 per share: http://www.mobileworldlive.com/featured-content/topthree/singapores-gic-to-buy-stake-in-irish-incumbent-eir. GIC had been ready to invest in a combined 3/O2. Anchorage Capital, a US hedge fund, has the largest single stake, at 35%. Subject to regulatory review on grounds of differential wholesale treatment in favour of own retail business: http://www.totaltele.com/view.aspx?ID=492130 11

Buys Setanta Sports Ireland: http://www.totaltele.com/view.aspx?ID=492082

Enel Italian energy provider plans €2.5bn investment in FTTH network rolled out alongside electricity cables in 224 Italian cities. It will wholesale the network and has signed letters of intent with Vodafone and Wind: http://www.totaltele.com/view.aspx?ID=493389. It is also open to the participation of Telecom Italia: http://www.mobileworldlive.com/featuredcontent/home-banner/ti-denies-job-cut-plans-as-new-chief but no deals have as yet been reached.

Facebook Launches Open Cellular, an open source initiative to establish shoebox-sized cellular access points encouraging the provision of a basic wireless service in remote areas without engaging operators in expensive network deployment: http://uk.pcmag.com/cell-phoneservice-providers-products/82790/news/facebook-unveils-open-source-cellular-access-point. Currently, this is in lab-testing mode. Drops plan to build own satellite to support internet.org initiative: http://www.mobileworldlive.com/facebook-drops-plan-build-satellite-report

Gigaclear (UK fibre infrastructure business) Has attracted £24m in equity funding, valuing the business at £115m: http://www.totaltele.com/view.aspx?ID=493350. It will use the finance to extend fibre rollout plans.

Jersey Telecom Reported in June 2015 to be holding talks with Airtel about a minority stake for the latter, with the States of Jersey still holding a majority share: http://www.totaltele.com/view.aspx?ID=490389, though the rumours appear to have led to nothing concrete. The talks were reported as leading to a merger of both partners operations in Jersey and Guernsey.

KCOM Completes deal to sell national network infrastructure assets (i.e. excluding in Hull and east Yorkshire) to CityFibre for £90m: http://www.totaltele.com/view.aspx?ID=492391. The assets consist of 1,100km of duct and fibre metro infrastructure in 24 cities plus a further 1,100km of national long-distance network connecting 22 towns and cities.

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KPN (Netherlands former incumbent) América Móvil is seeking to sell its KPN stake (it owns a share of 21.1% and tried to take over KPN in 2013): http://www.totaltele.com/view.aspx?ID=492002. The news was reiterated in April 2015, with the addition of a reference to the stake being worth €3.2bn, with it being clear that AM sees no strategic future in holding on to the stake: http://www.totaltele.com/view.aspx?ID=493524. Earlier in 2015, Altice had said that it was not interested in purchasing the stake, which is valued at c. €3bn: http://www.mobileworldlive.com/altice-interested-movils-kpn-stakereport, despite apparently giving it ‘serious’ consideration: http://www.mobileworldlive.com/altice-chairman-seriously-considered-kpn-takeover-bidreport

Liberty Global Rumours link the company to Polish cable company Multimedia as well as mobile operator Play: http://www.totaltele.com/view.aspx?ID=494058. A link with Multimedia would give Liberty, which already owns UPC, Poland’s largest cable operator, more than half the cable market. Play, meanwhile, is Poland’s second largest mobile operator, but for which longstanding rumours about a sale look set to come to fruition this summer. Commission has cleared proposed €1.33bn acquisition of Base, KPN’s Belgian mobile unit, by Telenet (a unit of Liberty Global), subject to conditions that ‘ensure effective competition’ (i.e. the creation of an MVNO to be owned by broadcaster Medialaan): http://www.mobileworldlive.com/featured-content/top-three/ec-clears-liberty-globalsbelgian-buy. Company has other M&A interest for 2016, focused on mobile and some fixed line interests while pointing out that it has no pipeline it was prepared to talk about. It also believes that there are cable interests to be consolidated, and that content might also provide some opportunities as regards build on advertising revenues: http://www.totaltele.com/view.aspx?ID=492472

Nokia Plans 1,300 job cuts in Finland (now trimmed to 1,032) and 1,400 in Germany as part of a global redundancy programme following €15.6bn acquisition of Alcatel-Lucent: http://www.mobileworldlive.com/featured-content/home-banner/nokia-to-cut-jobs-to-realisealcatel-lucent-savings. Signs are that company is stepping up, and bringing forward, plans for synergies arising from the merger of ‘above €900m’ in 2018: http://www.mobileworldlive.com/featured-content/home-banner/nokia-talks-up-savingsafter-tough-q1/ which could mean global cuts of 10,000-15,000 jobs (10-14% of the workforce): http://www.mobileworldlive.com/featured-content/home-banner/nokia-may-cut10000-15000-more-jobs-globally-report. Company is to return to mobile handsets business via a licensing agreement under which a newly-formed company called HMD Global (based in Finland) will be awarded exclusive rights to offer phones and tablets under the Nokia brand: 13

http://www.mobileworldlive.com/devices/news-devices/nokia-brand-to-return-to-devices-asmicrosoft-confirms-feature-phone-retreat. Assumes control of Alcatel-Lucent: http://www.totaltele.com/view.aspx?ID=492249. It initially fell short of the 95% ownership required to squeeze out the remaining owners but then launched a financial manoeuvre to take it past the 95% figure, giving it the ability now to do so: http://www.mobileworldlive.com/featured-content/top-three/nokia-ready-tosqueeze-out-remaining-alcalu-stake/. This is expected in the third quarter of 2016. Sells mapping business HERE to consortium of German car-makers (Audi, BMW and Daimler) for €2.8bn: http://www.mobileworldlive.com/featured-content/home-banner/nokia-confirmse2-8b-sale-of-here-maps-business-to-german-car-consortium. Other automotive businesses look interested in getting involved, too: http://www.totaltele.com/view.aspx?ID=493067 as indeed do Amazon and Microsoft from the perspective of supplying drone-based delivery and cloud services: http://www.mobileworldlive.com/featured-content/home-banner/daimlerconfirms-talks-with-amazon-microsoft-about-here-stake. Bosch is also seeking involvement: http://rethink-wireless.com/2016/04/18/bosch-joins-amazon-and-microsoft-in-talks-for-herestake. HERE is one of just two companies supplying maps at global scale (TomTom being the other) as an alternative to Google and Apple.

Oi (Brazilian mobile operator) Files for ‘judicial re-organisation’ (bankruptcy) under the weight of BRL65.4bn (€17bn) in debts, which have expanded as a result of making investments in fixed-line infrastructure, underpinned by regulatory obligations, and through mergers and acquisitions, while struggling with a weak domestic economy, whose impact in in reducing customer spending: http://www.mobileworldlive.com/featured-content/home-banner/oi-files-for-bankruptcyprotection-after-negotiations-fail. Neither does Oi have the international backing of its bigger competitors, all of which are owned by international telcos. Russian oligarch’s investment firm (reportedly with $16bn in its pockets: http://www.totaltele.com/view.aspx?ID=489572 and owners of a 48% stake in Vimpelcom) withdraws from investment in Oi given the decision of TIM Brasil (owned by Telecom Italia) not to proceed with merger talks: http://www.mobileworldlive.com/featured-content/homebanner/letterone-drops-offer-to-facilitate-oi-tim-merger-in-brazil.

Orange (former incumbent known previously as France Telecom) Is to buy Moldova’s Sun Communications, a digital and cable TV services provider in three large Moldovan cities, including the capital. No price was declared for the deal: http://www.totaltele.com/view.aspx?ID=494248. Orange is Moldova’s largest mobile operator. The agreement between Orange and Free Mobile under which the latter uses the former’s network for domestic roaming is to be ended starting from January 2017 and ending by 2020 following the introduction of new tougher regulatory guidelines three weeks ago: http://www.mobileworldlive.com/featured-content/home-banner/free-mobile-orange-to-endroaming-agreement/. The regulatory aim is to make such agreements transient rather than a permanent arrangement so that operators invest in their own networks. The revision is 14

subject to approval by the regulatory authority and has already been criticised as too slow by Bouygues Telecom. The French government has confirmed to the French parliament’s economic affairs committee that it has no plans to sell its 23% stake in Orange, despite recent comments that it would not hold on to the stake for ever: http://www.mobileworldlive.com/featuredcontent/top-three/french-government-reaffirms-orange-commitment/. The French government sold a two percent stake in 2015. Orange appears to have excluded itself from participating in any M&A activity in France and across the rest of Europe for the next twelve months (and possibly longer), acknowledging that this was ‘slightly different thinking’ compared to 6-12 months ago: http://www.mobileworldlive.com/featured-content/home-banner/orange-europe-boss-saysno-to-mobile-m-offers-twist-on-5g-thinking. Takes a 65% stake in Groupama Banque, to be re-launched as a mobile-specific banking service under the name of Orange Bank at the start of 2017, and extended to Spain and Belgium: http://www.totaltele.com/view.aspx?ID=493536 Calls off talks with Bouygues Telecom (another French operator) with the operators finding no common ground on all major points despite three months of discussions: http://www.mobileworldlive.com/featured-content/home-banner/orange-bouygues-abandontalks. Earlier rumoured to be in merger talks with KPN (Dutch former incumbent) and Proximus (former Belgian incumbent, having adopted group-wide the name of its mobile operation): http://www.totaltele.com/view.aspx?ID=492107 Completes 100% takeover of Jazztel (a fixed broadband operator in Spain) in a €3.4bn deal: http://www.mobileworldlive.com/featured-content/top-three/orange-completes-jazztelsqueeze-out-process General rumours have also circulated – in pursuit of European consolidation – about a linkup with Telecom Italia, among others: http://www.mobileworldlive.com/orange-interestedtelecom-italia-future-european-consolidation

Sunrise Communications (Swiss operator) Now part-owned by Freenet, a German MVNO and reseller, which has purchased a 23.8% stake for €714n from private equity firm CVC Capital Partners, which paid €2.5bn for a 90% stake in 2010 before seeing its stake reduced to 25% subsequent to an IPO in 2015. Freenet will exercise an option to take its stake to 24.6%: http://www.totaltele.com/view.aspx?ID=493197. Olaf Swantee, ex-of EE in the UK, is the new chief executive of Sunrise: http://www.totaltele.com/view.aspx?C=0&ID=493101

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TDC (former incumbent in Denmark) Has rejected as ‘financially inadequate’ a takeover offer rumoured to have been made by Apollo, a US private equity firm: http://www.totaltele.com/view.aspx?ID=494355. TDC has been owned by private equity groups since 2006.

TalkTalk Has confirmed in its annual results announcement that it will not be buying Tesco’s 50% stake in Tesco Mobile: http://www.totaltele.com/view.aspx?ID=489976, up for sale as a result of Tesco’s own woes.

Telecom Italia (former incumbent in Italy and now known as TIM, the acronym of its mobile subsidiary) Rumoured to be planning 15,000 job cuts (close to 30% of its workforce) in the wake of the investment announced recently by ENEL: http://www.totaltele.com/view.aspx?ID=493372. Rumours about the future of TIM Brasil in a consolidating market continue to dog its parent company, and TI is continually forced to deny contact with any of the other operators, most recently Oi: http://www.totaltele.com/view.aspx?ID=492301. More recent rumours surround a potential acquisition by TIM of Nextel Brasil, the fifth (and tiny) operator in the market, where Claro, a rival, is also interested: http://www.totaltele.com/view.aspx?ID=492485 Sees Vivendi (French-owned media and content group) increase influence: http://www.totaltele.com/view.aspx?ID=492174, albeit apparently without a desire to merge: http://www.totaltele.com/view.aspx?ID=492062 although certainly seeking a level of strategic influence aimed at orienting the operator towards being a southern Europeanfocused media outfit (i.e. as opposed to one with Latin American interests): http://www.totaltele.com/view.aspx?ID=493035. This has cost the chief executive his job, albeit with a €6m pay-off: http://www.mobileworldlive.com/featured-content/homebanner/ex-telecom-italia-boss-walks-away-with-e6m/. Vivendi stake now stands at 24.7%: http://www.totaltele.com/view.aspx?ID=493125, with the company being required to launch a full takeover bid at 25%, and it has just appointed a deputy chair: http://www.totaltele.com/view.aspx?ID=493601. Vivendi continues to assert that its interest lies in its content strategy and that it is not interested in becoming an operator, or managing one, including that it will ‘never’ manage TIM: http://www.totaltele.com/view.aspx?ID=493956. Xavier Niel (French business leader and owner of Iliad, the company which controls disruptive operator Free) had been apparently independently stake-building in TI but is now in the process of selling his shares as a result of Iliad’s participation in the 3 Italia/Wind merger arrangements: http://www.mobileworldlive.com/featured-content/home-banner/iliadconfirms-italian-deal. TIM is prepared to sell a further stake in Inwit, its towers business, but wants to retain some level of ownership: http://www.totaltele.com/view.aspx?ID=491977, including board representation. It has confirmed receipt of two binding offers thought to be for a 45% stake, leaving it with 15%: http://www.totaltele.com/view.aspx?ID=493211. The bids are likely to value the entire business at €3bn but no further information has yet been disclosed and it 16

has most recently been reported that the plans are currently on hold: http://rethinkwireless.com/2016/07/12/tower-sale-surge-continues-with-e80m-bouygues-telecom-deal/. On-off rumours also surround TIM (and Vodafone Italy) taking a stake in fibre provider Metroweb, in which the Italian state has a stake and which operates a 7,200km network linking northern Italian cities: http://www.mobileworldlive.com/featured-content/topthree/telecom-italia-mulls-reopening-metroweb-talks. However, the government is thought to want to keep the company neutral: http://www.mobileworldlive.com/featuredcontent/top-three/italy-to-forge-ahead-with-broadband-plans. Rumours now have TIM making a bid of for Metroweb, for either all of its shares or a two-thirds stake valuing the operator at €820m; the bid is all-cash and does not involve any complicated stake arrangements as regards Sparkle (its wholesale) arm, as had previously been reported: http://www.totaltele.com/view.aspx?ID=493555. Enel has now also submitted its own €806m part-cash part-stock bid although, as apparently the preferred bidder, it seems open to raise this to match that of whatever TIM is willing to pay: http://www.totaltele.com/view.aspx?ID=493819. Strikes five-year deal with Sky Italia to share assets and distribute Sky content over TI infrastructure: http://www.mobileworldlive.com/telecom-italia-sky-boast-quadplay-first

Telefónica Has proposed a sale of Argentine TV operator in a move to reduce debt: http://www.totaltele.com/view.aspx?ID=494028. The unit seems to be valued at around $400m. Said to be interested in acquiring AT&T’s Latin American pay TV assets, although AT&T may pursue a deal with a variety of other interested potential buyers: http://www.totaltele.com/view.aspx?ID=492389. Any deal with Telefónica likely to cost $10bn. Company has confirmed earlier rumours by creating a new infrastructure company (to be known as Telxius) to house its infrastructure assets: http://www.mobileworldlive.com/featured-content/home-banner/telefonica-to-bringtogether-certain-infrastructure-under-new-company/. Telxius will be the home of Telefónica’s domestic towers and its submarine fibre optic cables. Other assets will be integrated into Telxius in the future, and the company is expected to participate in ‘the growth opportunities that exist’. The value of the business is put at €5-6bn and may be looked at in terms of paying down the company’s debt, for which banks have now reportedly been engaged with a view to a sale in July: http://www.mobileworldlive.com/featured-content/homebanner/telefonicas-infrastructure-unit-could-stage-ipo-as-soon-as-july. Completes purchase from Vivendi of Brazilian broadband operator, GVT, giving Vivendi an 8% stake in Telecom Italia in the process: http://www.totaltele.com/view.aspx?ID=490103

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Telefónica UK (O2) Takeover bid from 3 UK was ultimately unsuccessful following the European Commission’s view of the impact of the merger on higher prices, reduced choice and quality of service and on infrastructure development: http://www.mobileworldlive.com/featured-content/homebanner/european-commission-blocks-hutcho2-tie-up. The Commission also expressed concerns about a potential impact on reducing innovation in the mobile sector as well as lesser opportunities for MVNOs to secure preferential wholesale terms. Telefónica is in no hurry to sell, but the Commission’s decision has been accompanied by speculation about possible other bidders stepping forward, including Liberty Global as well as a consortium of private equity groups, including Apax Partners, CVC Capital Partners and KKR: http://www.mobileworldlive.com/featured-content/home-banner/bidders-eyetelefonica-o2-following-hutchs-rejection. Telefónica was also thought to be interested in an IPO following a ‘period of reflection’ as a means of raising finance for its debt reduction strategy; while there has also been speculation that current chief executive Ronan Dunne is planning an £8.5bn management buy-out: http://www.mobileworldlive.com/featuredcontent/home-banner/o2-uk-chief-mulling-buy-out/. However, it is likely that the impact of the EU referendum in creating stock market uncertainty has led to such plans being put on ice for a while since the parent company is intending to consolidate again in full the results of the UK business: http://www.mobileworldlive.com/featured-content/homebanner/telefonicas-o2-uk-no-longer-up-for-sale/. This has not, however, stopped the speculation about the future of the business with further suggestions that customers could be sold shares as a means of extending its Priority loyalty scheme and further brand building: http://www.mobileworldlive.com/featured-content/home-banner/o2-uk-could-offercustomers-shares-as-part-of-10b-listing/.

Telekom Austria (former incumbent) Buys Bulgarian cable operator Blizoo through Mobiltel, its Bulgarian subsidiary: http://www.totaltele.com/view.aspx?ID=490685 Gets green light to merge Vip operator in Macedonia with Telekom Slovenije’s One, to form One.VIP: http://www.totaltele.com/view.aspx?ID=490520 Buys Amis, a fixed, broadband and IPTV operator in Slovenia and Croatia, to support existing Slovene mobile operator Si.mobil and also providing fixed line business in Croatia: http://www.totaltele.com/view.aspx?ID=490186

Telenor (Norwegian former incumbent) Calls off merger of Danish business with TeliaSonera-owned unit in Denmark in wake of scale of EU proposed remedies; the latter were defended subsequently by Margrethe Vestager: http://www.mobileworldlive.com/featured-content/home-banner/eu-chief-opensup-on-telenorteliasonera-decision-insists-no-set-rule-for-operator-numbers. Telenor has subsequently spoken of how this was a ‘disaster’ for Danish consumers since Telenor was no longer investing there: http://www.mobileworldlive.com/m360-2016-europe-article/danishdeal-collapse-disaster-for-consumers/. 18

TeliaSonera Merged operation of former Swedish and Finnish incumbent rebrands as Telia Company (thus losing the Finnish aspects of its name). The merger took place in 2002 and domestic operations in both Finland and Sweden continue to be badged under the original names: http://www.totaltele.com/view.aspx?C=0&ID=493506

Virgin Media Company has announced the ten locations which will be the first to see its FTTP offer, made as part of its Project Lightning, following a competitive voting process: http://www.totaltele.com/view.aspx?ID=493846. Voting has now started in the next round. Reported to be interested in Spain’s Yoigo, the smallest mobile operator but from a perspective of convergence towards a quadplay offer: http://www.mobileworldlive.com/virgin-group-interested-buying-spains-yoigo.

Vodafone Noting that the UK contributes 11% of group EBITDA while the non-UK rest of Europe contributes 55%, Vodafone has said that it could consider moving its HQ operations out of the UK following the vote to leave the EU: http://www.totaltele.com/view.aspx?ID=494229. Voda said that free movement of people, capital and goods was an important part of how it saw its operations in Europe and that it would be strengthening its representation in Brussels. Announces deal to merge operations in New Zealand with Sky Network Television, the largest pay TV provider. Sky will buy all of Vodafone's shares by issuing new Sky shares to give Vodafone a 51% stake in the merged company plus NZ$1.25 billion in cash: http://www.totaltele.com/view.aspx?ID=494018. This has now been submitted for regulatory approval, although the authority has not yet published a timetable, and Sky shareholders have voted overwhelmingly in favour: http://www.totaltele.com/view.aspx?ID=494329. Breakdown of negotiations on assets swap (full merger rumours being denied: http://www.rethink-wireless.com/2015/06/05/vodafone-confirms-liberty-talks-merger/) with Liberty Global: http://www.mobileworldlive.com/featured-content/homebanner/speculation-mounts-over-liberty-globals-next-move-voda-deal-not-dead-analysts. The two operators have since reached agreement on a convergence-oriented merger of their mobile/cable assets in the Netherlands into a 50:50 joint venture: http://www.mobileworldlive.com/featured-content/home-banner/vodafone-liberty-global-intalks-to-combine-dutch-assets. This will entail Vodafone paying €1bn into the JV. The merger appeared to have been referred in June to the European Commission, with the aim of completing the merger by the end of the year: http://www.totaltele.com/view.aspx?ID=494095 but the Dutch regulatory authority is now seeking permission to review the deal itself. The Commission will decide in early August 19

whether to grant the request or review the merger itself: http://www.totaltele.com/view.aspx?ID=494320. Vodafone Italy signs network deal with Metroweb (reportedly a target for Telecom Italia) and Wind: http://www.mobileworldlive.com/vodafone-italia-wind-metroweb-build-italianfibre-network-doubts-metroweb-takeover

Yoigo (Spanish mobile operator owned by Telia) A UK investment fund – Zegona – formed to purchase communications, media and technology businesses, and already with Spanish cable interests, has lost out on its bid for Yoigo, with Telia (which owns a 76.6% stake) having agreed to sell to Masmovil, predominantly an MVN, for up to €479m: http://www.totaltele.com/view.aspx?ID=494125. This indicates a value for Yoigo of up to €625m; although there is also an escalator shoud EBITDA rises to a certain level by 2019. Masmovil is now expected to seek to buy out the minority shareholders. Zegona’s bid had been reported to be higher. Masmovil itself has just paid €158m (via new debt and a share issue) to acquire Pepephone, a fellow MVNO operator with 460,000 mobile and 35,000 broadband connections: http://www.totaltele.com/view.aspx?ID=493628

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