In mid-July, my colleagues and I attended Orange’s annual analyst event in Paris. There were no major announcements, but we made several observations:
ORANGE is one of the few carriers with true delivery capabilities. Its global footprint is a real advantage vis-a-vis carrier competitors, in particular in Africa and Asia. At the recent event, Vale, the Brazilian metals and mining corporation, presented a customer case study in which Vale emphasized the importance of ORANGE’s global network infrastructure for its decision to go with ORANGE as UCC and network provider. ORANGE’s global reach positions it well to address the opportunity in emerging markets, both for Western MNCs going into these markets and also to address intra-regional business in Africa and Asia. Another customer case study with the Chinese online retailer 360buy, focusing on a contact center solution, demonstrated ORANGE’s ability to win against local competitors in Asia.
Henry Dewing with Dan Bieler, Katyayan Gupta, Tirthankar Sen, and Bryan Wang
Buldings on Huawei's Headquarters Campus in Shenzen, China
Huawei continues its drive for more financial openness and transparency. In an effort to shed the image of a secretive non-listed company, Huawei provided detailed information about its financial and operational performance. In 2011 Huawei grew revenues by 12% to reach US$32.4bn and EBIT by 9% to US$3bn. The main regional growth was registered in Latin America, while a 9% cash margin was the result of their investment levels – particularly in the enterprise space. These financial figures paint the picture of a company that is still enjoying strong growth and sufficient free cash-flow to fund its expansion and innovation.
Vodafone agreed to acquire Cable & Wireless Worldwide (CWW) for 1.04 billion pounds in cash, valuing CWW at three times EBITDA. The deal propels Vodafone to the second largest telco in the UK with revenues of GBP6.97 billion, behind BT with revenues of GBP15.6 billion. From a financial perspective, the deal has a limited impact, accounting for only 3% of Vodafone’s 2011 EBITDA. However, given BT’s lack of a mobile division, Vodafone, becomes the leading integrated telco in the UK, offering fixed and mobile operations. The deal is expected to complete in Q3 2012.
The main focus of the deal is on CWW’s UK fixed-line network and CWW’s business customer base, both of which Vodafone aims to add to its UK mobile network. CWW provides managed voice, data, hosting, and IP-based services and applications. The deal boosts Vodafone’s enterprise offering, both in terms of access and transport infrastructure and also in terms of customer base. CWW is a major global infrastructure player: Its international cable network spans 425,000 km in length, covering 150 countries. In the UK, CWW operates a 20,500 km fiber network. Moreover, CWW has about 6,000 business customers. The future of CWW’s non-UK assets remains uncertain. In our view they do provide true value for Vodafone, strengthening its global network infrastructure. Vodafone will provide further details regarding these non-UK assets later in the year.
Cloud, technology populism, video, and integrated solutions were in evidence throughout the show. Here is what I learned or conformed at Enterprise Connect 2012:
Cloud is happening. Buyer interest is and has been up, service providers are investing, and OEMs are enabling. At the show, SPs from 8x8 and M5 (now part of ShoreTel) to AT&T and Verizon were demoing capabilities. SIs, including well-known names from BlacBox to Presidio to HP, were talking about cloud too. Many OEM vendors did not discuss the channel implications made obvious by SI and SP discussion of cloud services — although NEC made ease of doing business for the channel one of the tenets of its cloud discussion. If I were a solution vendor, I would spend more time discussing where my solutions could be purchased and the role for my sales force, since buyers who attend Enterprise Connect in droves want to know where and how they can buy cloud solutions.
The real story here is consumerization or technology populism. Personal cloud services have enabled information workers to be a decision AND buying center for all types of communications and collaboration. Although we talk about smartphones and tablets in discussing technology populism, unified communications and fixed mobile convergence were the examples on display at this show. Buyers (including information workers and traditional technology managers) today need to know how to integrate Box, Google Docs, SalesForce, and other services into their business processes that depend on communications.