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Technology Stocks : 3G Wireless: Coming Soon or Here Now?

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From: Eric L5/30/2008 3:54:29 PM
   of 666
The Infomer from Informa on Big Red's Sarin, MTS in Russia, and the China Shuffle ...

The Informer
A Week in Wireless #314 newsletter
30th May 2008

New Blood

It's the end of an era. The torch is being passed on. Let the trumpets sound out: The Emperor has abdicated. A great leader knows when his work is done; he understands that there comes a time when fresh hands must steer the course of his mighty ship. And so it was this week, that Lars-Johan Jarnheimer stepped down as president and CEO of Swedish carrier Tele2, to be replaced by Harri Koponen. You've got to feel for Koponen. Becoming CEO of a cellular carrier is a massive achievement. But to have your moment of glory eclipsed by the news that the CEO of the world's largest and most famous operator (by international footprint and revenue) is moving on is rotten luck. Which is why the Informer has given Koponen top billing this week, awarding second place to the news that Arun Sarin's doing the off at Vodafone.

Sarin's been in the chair at Vodafone for five years, having taken over from Chris Gent - the man who built the empire. A pin-striped British businessman of the old school, Gent bowed out with a string of impressive acquisitions to his name, leaving Sarin to make them all work nicely together.

He didn't always have the easiest time of it. Two low points stand out: the first, in 2004 shortly after his tenure began, saw his first big acquisitive manoeuvre fall flat as he failed to gain control of US carrier AT&T. The second was in 2006 when, after recording the largest loss in British corporate history - £14.85bn - there was a shareholder revolt with 14 per cent of investors withholding their vote of confidence at the AGM. This was a bit harsh, as IDC analyst John Delaney pointed out this week, given that the loss was in part an after-affect of the Mannesmann takeover that many consider Chris Gent's greatest individual accomplishment.

You could easily argue, though, that Sarin's acquisition of Indian carrier Hutchison Essar was a bigger victory - India's only the world's fastest growing mobile market after all. Certainly it won Sarin an awful lot of admiration and - with Vodafone this week reporting a profit of £6.7bn for the year to March 31st (up from a loss of £4.8bn the previous year) - it probably makes sense for him to head for the door.

He must be a bit tired. A weary-looking investor relations chap at Vodafone HQ once told the Informer that Sarin liked his daily news briefing - face to face - at 7.30am. Whether his replacement, deputy CEO Vittorio Colao, will want the same service remains to be seen, although the early signs are that continuity will be the key theme of Colao's premiership.

Sarin's last day is July 29th, and the Informer imagines that an envelope containing a big "Sorry you're leaving!" card and several kilos of jangling coins is making its way from desk to desk at Newbury as you read these words. In the card, no doubt, the standard messages will appear: "You lucky b£$%*!d. Another one escapes! Good luck on the outside! Viv x" and "Don't forget about us! Stay in touch!!! Jon B." He won't stay in touch, Jon B. They never do.

One of Sarin's most sensible decisions was to get the hell out of Japan where, this week, an initiative has been launched to limit mobile phone usage by children. The Japanese government has given its approval to the plan, which was drawn up by an education reform panel. The kids are mad for mobiles in Japan and there are concerns that it's becoming worryingly close to an addiction, with added fears about cyber crime and bullying thrown into the mix. The nation's cellcos will presumably have to bow and smile and agree with the whole thing in public, while cursing the meddling bureaucrats behind closed doors. In other news from Japan this week, a cat has been appointed to the role of station master in one town and a woman has been found living in a man's cupboard without him knowing about it in another. And they think kids on phones is a problem...

Across the water in China, where commando-going actress Sharon Stone offended over a billion people with some mind numbing comments about karma this week, there are changes afoot in the telecoms market. The government has revealed plans to reduce the number of state-owned carriers to three with some nifty consolidation. China Mobile will merge with fixed carrier China Tietong Telecommunications, China Telecom will take over the CDMA network of China Unicom, while Unicom's GSM network will be merged with China Netcom. Phew!

This fuelled more speculation this week about just what's going on with 3G licensing in China, which some people still expect to happen before the Olympics in Beijing this summer.

Netcom holds a 20 per cent stake in Hong Kong quad-play outfit PCCW, which announced this week that it wants to consolidate its offerings into a new company called HKT Group and flog off a 45 per cent stake. Richard Li, the firm's majority owner, has tried to sell the firm before - in 2006 - but was blocked by other shareholders. During the proposed sale two years ago, it emerged that Li's father and Asia's richest man, Li Ka-Shing, was involved in the consortium proposing to buy the carrier, exposing a family rift and preventing Li from voting on the sale. ... <snip>.

In other 3G news, Russian carrier MTS lit its WCDMA network in St Petersburg this week, joining MegaFon in the Russian 3G stakes. The firm has plans for ten more city networks during the course of this year and up to 40 further cities will be covered in 2009. MTS also holds 3G licences in Uzbekistan and Armenia, where it reckons launches will happen in 2009 too. All in all the firm's earmarked $1.6bn for 3G development in Russia and the CIS over the next three years.

Russia's no stranger to spy stories but it was in Germany this week that dodgy covert surveillance reared its ugly head. Well, it didn't rear its ugly head, that wouldn't be very covert would it? It sat in a van with a telephoto lens, shall we say? <snip rest>

Take care,

The Informer ###

- Eric -
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