The 2020s are a shaping up to be a decade of change for telco business models. While connectivity itself is more important in all facets of our lives than ever before – as highlighted throughout the coronavirus pandemic – traditional voice and data service revenue are not growing in time with the surging demand. Combine this with the expenditure telcos face with the pricey rollout of new technologies like 5G and fibre, and the telecoms industry at large is looking for its next money-maker. 
For many operators…

The 2020s are a shaping up to be a decade of change for telco business models. While connectivity itself is more important in all facets of our lives than ever before – as highlighted throughout the coronavirus pandemic – traditional voice and data service revenue are not growing in time with the surging demand. Combine this with the expenditure telcos face with the pricey rollout of new technologies like 5G and fibre, and the telecoms industry at large is looking for its next money-maker. 

For many operators, this search has led for a shift in direction towards targeting the enterprise market, often through the deployment private networks, while for others the shift will be towards transforming into technology integrators and aggregators, offering customers suites of supporting services alongside connectivity. 

In South Korea, however, a new trend is emerging that could also prove surprisingly profitable: content creation. 

In fact, it is not content giants like Netflix or Amazon that are behind the latest smash hit South Korean TV series, but rather KT’s content creating subsidiary, KT Studio Genie. 

The show, ‘Extraordinary Attorney Woo’, which focusses on an autistic lawyer, is currently the most watched non-English TV series on Netflix in 190 countries and it is perhaps this potential to reach an enormous international audience that makes content creation so alluring to the operators.

The timing also could not be more perfect, with South Korean TV and cinema having begun to receive widespread critical acclaim in recent years, with award winning films like Parasite and TV series like Squid Game helping to make the country’s entertainment industry much more approachable for Western audiences. 

KT first set up Studio Genie back in March 2021 and Extraordinary Attorney Woo’ is only its second production, following the slightly lacklustre “Never Give Up” last year. 

Nonetheless, it represents a key part of KT’s media strategy, with the company saying it would invest around $380 million to produce over 30 new drama series and 300 entertainment programmes by 2025. In fact, the studio intends to release 22 drama series by the end of 2022.

And KT is not alone in its considerable content creation ambitions. 

SK Telecom established a South Korean video streaming service, Content Wavve Corp., back in 2019, working alongside three of the country’s national broadcasters. Since then, then Wavve has pledged to invest around $760 million in content creation by 2025.

LG Uplus, meanwhile, has recently invested an undisclosed sum in children’s animation studio SAMG Entertainment, while also bolstering its own Content Platform Business Group, which is set to focus on 5G-based virtual reality (VR) and augmented reality (AR) content. 

Of course, this is not to mention the work that all three operators are doing with regards to the metaverse, with each making strategic investments in this area in 2022. SK Telecom in particular seems to have something of a lead in this area, already making international partnerships to help offer its metaverse platform, Ifland, to customers abroad. 

The South Korean telcos appear to be unanimous in their decision to be directly involved in content creation, rejecting the conventional wisdom of operators in Western markets that have instead struck partnerships with content players like Netflix and bundled these services alongside connectivity. 

Now, with Netflix no longer looking like the unassailable behemoth it once was, betting big on content could be a big win for the South Korean telecoms operators. Their international rivals are sure to be watching the situation closely. 
 

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A 2015 United Nations report estimated that every year, an average of 60,000 people and $4 billion USD in assets are exposed to the global tsunami hazard, which can be triggered by certain types of undersea earthquakes or volcanic eruptions.  Over a number of decades, various countries have deployed dedicated tsunami warning systems, like floating buoys, to augment land-based seismic detectors. 
Seismic waves travel 20 to 30 times faster through the earth&’…

A 2015 United Nations report estimated that every year, an average of 60,000 people and $4 billion USD in assets are exposed to the global tsunami hazard, which can be triggered by certain types of undersea earthquakes or volcanic eruptions.  Over a number of decades, various countries have deployed dedicated tsunami warning systems, like floating buoys, to augment land-based seismic detectors. 

Seismic waves travel 20 to 30 times faster through the earth’s crust than a tsunami wave, so if they can be detected and localized, it should be possible to determine which coastal areas are at risk and send early warnings.  We need detectors in as many locations as possible because, for every 200-km distance between the earthquake’s epicenter and the point of detection, there is an additional one-minute delay to a potential warning. 

This is where submarine communication cables can play a part.  Initiatives are underway by the Joint Task Force, Science Monitoring And Reliable Telecommunications (JTF SMART) to promote the inclusion of dedicated seismic detection and environmental monitoring sensors in the next generation of submarine cable repeaters.  But new cables are deployed at a relatively low rate of perhaps 20 to 30 per year.  In contrast, there are hundreds of existing long-distance submarine cables deployed around the world – can something be done retroactively with these cables to turn them into seismic detectors? 

This weekend, Orange and Másmovíl have announced that they are officially moving forward with their planned merger to create a 50:50 joint venture in Spain.
The deal values Orange Spain was valued at €7.8 billion and Másmovíl at €10.9 billion, giving the combined entity a market value of €18.6 billion. 
The combined, converged operator would have roughly 7.1 million fixed line customers and 20.2 million mobile subscribers…

This weekend, Orange and Másmovíl have announced that they are officially moving forward with their planned merger to create a 50:50 joint venture in Spain.

The deal values Orange Spain was valued at €7.8 billion and Másmovíl at €10.9 billion, giving the combined entity a market value of €18.6 billion. 

The combined, converged operator would have roughly 7.1 million fixed line customers and 20.2 million mobile subscribers. Its combined fibre-to-the-home (FTTH) network would reach over 16 million homes. It would also include around 1.5 million TV customers. 

As such, the operators suggest that the merger will generate around €450 million in synergies over the following three years, with the company saying they expect “significant efficiency gains, allowing the combined company to accelerate investments in FTTH and 5G that will benefit Spanish customers”.

It is also worth noting that the deal also includes provision for a potential initial public offering (IPO) opportunity one or two years after the closing of the deal; the deal would allow both parties to trigger an IPO after a certain time and if certain conditions are met, though Orange will always have the option of taking control of the business at the IPO price.

“The joint venture […] will create a sustainable player with the financial capacity and scale to continue investing to foster the future of infrastructure competition in Spain,” said the companies in a statement. 

The deal comes after many months of speculation, with Másmovíl having been rumoured to be having merger talks with both Vodafone and Movistar, as well as Orange, at various times over the past couple of years. Official discussions with Orange were first revealed back in March and since then the operators have been chasing the requisite financing for the deal, finally securing €6.5 billion from roughly a dozen banks in recent weeks.

The move represents a major shakeup for the highly competitive Spanish telecoms market, combining the second and fourth largest players and creating a new market leader (combined market share roughly 44%), overcoming the current dominance of Telefonica’s Movistar (36%). Vodafone Spain, meanwhile, will be left in a somewhat distant third place, with a market share of only around 20%. 

Vodafone itself had explored merging its operations with Másmovíl numerous times in the past few years, with analysts suggesting that such a coupling would present less concern to regulators than the tie-up with Orange. Nonetheless, Vodafone has said that it approves of the Orange– Másmovíl merger, saying that it will improve the health of the market and attract additional investment. 

Antitrust regulators, however, may be harder to appease. Typically, these regulatory bodies have looked unfavourably at M&A that reduces the number of players in a telecoms market below four and Orange and Másmovíl will likely expect major conditions to be attached by the regulator before the deal is given the green light.

Assuming they receive regulatory approval, Orange and Másmovíl hope to have the deal closed by H2 of 2023.

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