< Previous For more stories, check out commsmea.com. Follow CommsMEA on Twitter: @COMMSMEA 10www.commsmea.com UPDATE OPERATIONS CommsMEA June-August- 2020 Softbank to reduce its stake in T-Mobile STC Group and Nokia sign strategic 5-year Master Frame Agreement The Japanese tech giant has previously announced a range of measures to try and raise a reported $41 billion to lighten its debt load and boost its share price The pair will work together on promoting cutting edge connectivity in Saudi Arabia FINANCIALS Japanese technology giant, SoftBank, is reportedly in talks with Deutsche Telekom to sell down its stake in the newly merged T-Mobile US. Softbank is the principal stakeholder of US carrier Sprint, which merged with T-Mobile in a $26.5 billion deal that created the US’ third largest telco. According to a report in The Wall Street Journal, Softbank is discussing strategies to reduce its stake in the newly merged entity. Earlier this year, Softbank revealed plans to sell off around $41 billion of what it deems non-core assets, in order to reduce its debt pile and buoy its share price. PROJECTS Saudi based telco, STC Group, has signed a five-year Master Frame Agree- ment (MFA) with Finnish tech vendor Nokia, to further strengthen their stra- tegic partnership in the region. The agreement will streamline the buying process of Nokia’s latest equip- ment, software and services, allowing STC Group to introduce innovative services faster to its subscriber base. This will allow STC Group to ramp up its deployment of cutting edge network technologies such as 5G, Internet of Things (IoT), IP & Optical network technologies, and customer experience management from Nokia’s end-to-end portfolio for mo- bile and fixed networks. “This strategic partnership with Nokia, supports Saudi Vision 2030 focused on leveraging advanced technologies for Sobank is looking to divest non-core assets. The new deal was signed during an online signing ceremony. Analysts had speculated that Softbank may opt to reduce its stake in web giant Alibaba as a way of raising some quick cash. However, reducing the size of its stake in T-Mobile also now appears to be a key consideration. The newly merged T-Mobile is the US’ third largest telco, and now has the requisite scale and scope to challenge the country’s ‘big two’ operators, namely Verizon and AT&T, for supremacy in the US’ fledgling 5G market. Sprint’s existing 5G spectrum portfolio has been crucial to launching 5G in the States and has given T-Mobile a decided edge in the race to rollout services. digital transformation and growth of the country, aligning with stc Rawafed Pro- gramme that aims to enhance local con- tent,” said Nasser Suliman Al-Nasser, STC Group CEO. “We strive to introduce advanced technologies and services faster as a true pioneer and enrich our subscribers’ lives,” he added. The agreement was remotely signed due to COVID-19 pan- demic, purely relying on soft- ware innovations and demon- strating the power of AR and AI, in a first for the Middle East region. These technologies ena- bled a virtual signing ceremony in a digital environment. “We are committed to bring- ing our technology innovations to STC in an agile manner, and support- ing STC Vision to be a world-class digital leader, empowering innovative services and platforms for digital transformation. This agreement is a major milestone in the STC-Nokia strategic ties and is a strong testimony of the solid relationship we have built with STC over the years,” said Amr K. El Leithy, SVP of the Middle East and Africa market at Nokia. For more stories, check out commsmea.com. Follow CommsMEA on Twitter: @COMMSMEA 11www.commsmea.com OPERATIONS UPDATE CommsMEA June-August 2020 India to proceed with 4G spectrum sale later this year but will delay 5G auction until at least 2021 Reliance Jio lands huge $870m investment from US wealth fund India’s telecoms operators have been reticent to invest in 5G spectrum, claiming the base price was too high to justify the expenditure Reliance Jio has attracted enormous interest from US investors in previous months REGULATION India’s Department of Telecoms will hold a spectrum auction before the end of October 2020 to provide operators with much needed 4G spectrum to add capacity to their networks, according to reports in the press. The auction will make over 8,000 MHz of spectrum available to operators as they look to ramp up capacity and expand the reach of their existing networks. The Department of Telecoms will make spectrum available in the 700 MHz, 800 MHz, 900 MHz, 1,800 MHz, 2,100 MHz, 2,300 MHz and 2,500 MHz bands. It expects to raise around $3.9 billion (3 lakh crore rupees) from the auction. However, the auction will not include 5G airwaves, with the Department of Telecoms INVESTMENT India’s biggest telco Reliance Jio is set to receive another huge cash injection as it agreed a deal with US private equity fund, General Atlantic, to purchase a 1.3 per cent stake in the business. General Atlantic will acquire the 1.3 per cent stake for $870 million, according to re- ports in the press, in a deal that values Reli- ance Jio at around $65 billion. Reliance Jio has courted interest from a swathe of US investors in recent weeks, with social media giant Facebook investing a reported $5.7 billion for a 9.99 per cent stake in the company. Equity funds Vista Equity Partners and Silver Lake invested $1.5 billion and $750 million respectively, India expects to launch 5G in late 2021. Jio has over 330 million subscribers across India. failing to secure interest from the country’s major telcos at the proposed asking price. A report in The Economic Times of India claims that the government will go ahead with the auction of additional 4G spectrum as planned, later this year but will defer the 5G spectrum sale until 2021. Bharti Airtel and Vodafone Idea, who were both hit with multi-billion dollar AGR dues by the country’s Supreme Court last October, have called for the auction to be delayed, as they battle to rein in expenses. Sources familiar with the matter told journalists at The Economic Times of India that the country’s Digital Communications Commission had met on Monday to discuss postponing the 5G auction. bringing total investments from US firms to almost $9 billion in the past month. Reliance Jio was launched in 2016 and since then has revolutionised India’s tel- ecoms market, bringing its own range of ul- tra cheap 4G data tariffs and affordable han- sets to over 300 million subscribers. The company has played a massive role in kick starting the country’s digitalisation push. The money from the US investors will be used to pay down the debt of Jio’s par- ent company Reliance Industries, whose primary business focus is in the oil and gas sector. The money will also be used to fast track the expansion and densification of Re- liance Jio’s 4G networks, particularly as the country opts to work and study from home during the current Covid 19 pandemic. Relaince Jio has won numerous indus- try awards for providing the fastest mobile download speeds in the country. “Discussions are on to hold the 5G auctions later, as some of the telcos need to buy spectrum but 5G may not be the priority now,” a source told the ET.The continent of Africa is un- dergoing a dramatic shift as the banking and ICT sectors converge to drive financial inclusion through the adoption of cloud banking, reducing operating costs, accelerating innovation and reaching customer segments previously untouched by the digital banking revolution. Our new report: ‘Cloud Banking in Africa – The Regulatory Approach’, prepared by Genesis Analytics and Orange Business Services, with the support of the Bill & Melinda Gates Foundation, highlights the impact of cloud computing on financial services and economic development. A coherent continental-wide picture is starting to emerge across Africa’s many countries and the patchwork of regulators and regulations that govern the banking sectors. Where e-commerce players, mo- bile network operators and fintech start- ups have so far led the digital disruption, traditional banks aim to follow as they Continental shift - Cloud banking fast becoming a reality, as digital drives Africa’s financial inclusion Pieter Zylstra and Dr. Emmanuel Doh Tita Sama, Orange Business Services, discuss the potential for cloud to change the face of financial services and support sustainable economic development across Africa see the potential of cloud computing as a means of overcoming the barriers of small size and high costs and ultimately to reach the vast majority of the continent’s under- served or unbanked population. THE BIGGER PICTURE Several factors are converging to make cloud banking a reality. Increasing in- vestment in undersea fibre optic cable is set to improve connectivity to and from Africa, for example with Orange Marine (which has laid almost 190,000 km of un- dersea cables) and others such as Google (Equiano) and Facebook (Simba) laying their own dedicated cables into sub- Saharan Africa; with more fibre deployed this is opening up greater bandwidth and offering faster connectivity at lower cost. Cloud service providers are respond- ing. Recently, Amazon (with AWS – Ama- zon Web Services) and Microsoft (Azure) have opened up local Cloud access and services through data centres in Africa offering lower latency to end users across Sub-Saharan Africa and enabling African organizations to leverage innovative tech- nologies such as AI, IoT, etc. THE BANKING RESPONSE The wider African banking sector is re- sponding to these developments. Fintech Jumo is attracting new and existing investors (including Goldman Sachs) to fund growth beyond its cur- rent five African countries, offering cloud-based lending, savings and insur- ance services. Branch is another fintech company which has more than 3 million people using its cloud-based application, and more than $350 million in loans dis- tributed. Paga, a Nigeria based startup focusing on payments using cloud-based technology,now has more than 12.8 mil- lion customers served by more than 20,000 agents. Large African banks are equally adopt- ing cloud solutions. Standard Bank has 12www.commsmea.com OPINION OBS CommsMEA June-August 2020 The costs theat traditional banks face across Africa, could put them at a disadvantage, compared to online banks. expressed an ambition to become “Africa’s first bank in the cloud” and Ecobank has announced the launch of its cloud-based pan-African Banking Sandbox as part of its commitment to cloud banking and which will allow partners and fintechs in 33 countries to access its APIs and devel- op innovative solutions. THE STAKES COULD NOT BE HIGHER The development of these new financial services across Africa is essential; finan- cial services play a vital role in driving financial inclusion, driving economic growth, protecting households from eco- nomic shocks (especially topical during the current global pandemic) and ena- bling household savings and investment. Currently, the average rate of finan- cial inclusion in Africa is around 41% which means that there are still over 700 million adults across the continent who remain either financially underserved or completely unserved. There is no doubt that the high cost of providing financial services with business models designed around cloud-based digital infrastruc- ture that lowers their operational costs, increases their flexibility and allow for decreasing marginal costs. The costs traditional banks face in managing their technology infrastruc- ture put them at a competitive disadvan- tage to these new entrants, who have the added advantage of operating under dif- ferent regulatory regimes. In many coun- tries across Africa, MNOs and fintechs are much more successful in providing acces- sible and affordable products and services to consumers. But banks are fighting back by adopting cloud banking solutions. CLOUD’S COMPELLING ARGUMENTS Cloud banking enables banks to signifi- cantly lower their ICT costs and increase flexibility - paying for only what is needed and with none of the costs of upgrading to the latest technology. It gives banks access to processing capacity, software, storage capacity, and to resources on demand with no investment needed in ICT skills. While the most compelling reason to move to cloud is undoubtedly cost sav- ings, there are other business benefits. The flexibility of cloud-based operating models allows banks to shorten new prod- uct development cycles with no need for infrastructure capital investments and to become more agile and responsive to the needs of banking customers. Cloud banking also improves business continu- ity for banks, where the cloud provider is responsible for ensuring that the technol- ogy remains operational. BARRIERS PERSIST A critical barrier to the adoption and effective deployment of cloud computing centres is the availability of a reliable in- ternet connection. Cloud banking requires extensive and affordable broadband ac- cess. Equally important is the cost of data. Currently, Africa has a very low share of the global data centre capacity essential to power cloud computing and address some of the slowest and most expensive internet connectivity in the world. services plays a role in this situation and leaves many traditional banks with no choice other than to continue to focus on serving the wealthier and more profit- able consumers. Regardless of this, Africa’s financial services sector is growing and changing shape, comprising a range of players from the international banks, mobile money operators, state-owned banks and co- operatives, to smaller local banks, micro- finance providers and, increasingly, new fintech players. The rise of mobile money on the African continent is a clear indicator of the demand for low-cost financial services. MNOs and their mobile money solutions have grown exponentially in markets with large rural populations and strong domestic remit- tance corridors where there is little access to banks or their branches. Today, just six MNOs serve approximately 75% of all cus- tomers with active mobile money accounts across the African continent. And increasingly fintechs in Africa play a part in the value chain of financial 13www.commsmea.com OBS OPINION CommsMEA June-August 2020Until recently, Sub-Saharan Africa had been the most underserved region in the world in terms of international fibre capac- ity, particularly in East Africa, which relied exclusively on costly and less reliable satel- lite connections. Due to increased support for telecom infrastructure projects, inter- national internet bandwidth is starting to improve in several countries. The East African Cable System (EASSy) linking Sudan to South Africa has provid- ed the opportunity for access to cheaper high-speed international bandwidth across the region. The West Africa Cable System (WACS) consists of high capacity fibre-optic submarine cables between the countries in West Africa and Europe. The underdevelopment of fixed connectivity in Africa continues to constitute a challenge and obstacle to fully benefiting from ad- vanced cloud infrastructure, especially in landlocked African countries. Another major barrier to cloud adoption by African banks is a concern over security and compliance,.as banks give control to the cloud provider for infrastructure is- sues that may affect security and the repu- tation of the bank. Cloud service providers usually store and process data in different locations and sometimes between differ- ent clouds, making it difficult for banks to monitor and assess compliance with data protection legislation. In Africa, financial service providers of all sizes however have started to explore the hybrid cloud model, where they com- bine the cost savings of public cloud in- frastructure with the enhanced security of the private cloud model. Public cloud deployments are used to host office pro- ductivity tools used by employees (such as email, CRM and ERP), as applications used by employees are subjected to less strict/ unclear cloud regulation. Core banking ap- plications are in almost all cases (at least for the time being) planned for migration to private clouds. A CASE IN POINT Stawi’s credit exchange platform is a re- cent initiative in Kenya to establish a digi- tal credit exchange as a marketplace for borrowers and lenders, supported by the Central Bank of Kenya.. The cloud-based solution is designed to share the advances made in digital financial inclusion in per- sonal finance in Kenya, and offer similar benefits to small and micro enterprises - the backbone of the real economy and the greatest opportunity for employment and wealth creation for the country. The Stawi customer value proposition includes low-cost term loans (capital investment) for Micro and SME customers; overdraft (working capital); and home ownership - an aspiration for many Kenyans. Several Kenyan banks have already adopted the cloud-based digital banking platform from Swiss vendor Additiv. REGULATORS HOLD THE KEY TO UNLOCKING THE BENEFITS OF CLOUD New competitor models from MNOs and fintechs, and new digital lending models that use digital infrastructures are of- fering customers low-cost and more effi- cient alternatives, which limit the scope for the traditional banks to sustain their high-cost pricing strategies, and therefore to compete. To remain relevant and sustainable in the face of competition, banks will need to adopt low-cost operating models that are accept- able to their regulators. Meanwhile, regula- tors will also need to encourage the use of in- novative technologies and at the same time embark on massive regulatory reforms that can level the playing and enhance access to finance by the underserved population. Our research found that many African banks are hesitating or postponing adopt- ing cloud banking because of the current lack of clearly defined regulatory frame- works on cloud banking. Before banks can invest with total confidence in cloud tech- nologies, they need the reassurance from the financial regulators that cloud banking will be permitted. Ultimately, our joint Genesis-Analytics and Orange Business Services report urges African regulators to develop policies and regulations to enable financial institu- tions – and the people of Africa - to enjoy the substantial benefits of cloud banking. Until recently, sub-Saharan Africa was the most underserved region in the world, in terms of fibre capacity. 14www.commsmea.com OPINION OBS CommsMEA June-August 2020An ITP Media Group Publication www.commsmea.com Critical analysis for telecommunications executives JUNE-AUGUST 2020 Download the free CommsMEA app and be the fi rst to read the latest issue on your mobile devices. MARKET FOCUS Ericsson lowers the cost of 5G for operators Teoco: DSS is a crucial tool for monetising 5G PG. 19 PG. 22 DYNAMIC SPECTRUM SHARING: THE KEY TO UNLOCKING NEXT GENERATION CONNECTIVITYTTHHE TRUSTED SOURCE FOR TECHHNNOOLOGY NEWWS AANNDD ANALYSIS FOR CIOOSS, IITT MANAGERSS AANND CYRBERSECURITY PROFESSIONALSSS AAAACCCCRRRROOOOSSSSSSS TTTTTHHHHEEEE MMMMIIIDDDDDDDDLLLLLEEEE EASSTT NNNEEETWORKMMMIIIDDDDDDDDLLLLEEEEEEAST.COMAs mobile network operators around the world look to rollout their initial 5G offerings, there are numerous obstacles to overcome. Firstly, demand for 5G in the near term is unlikely to justify operators being able to charge much of a premium for the ser- vice, leaving them with a serious disparity between their gargantuan 5G investments and the comparatively meagre returns. Telcos will undoubtedly have abundant opportunity to milk the 5G cash cow fur- ther down the line, once standalone 5G makes network slicing a viable proposi- tion. In the short term however, 5G is go- ing to be something of an expensive PR exercise for operators. Secondly, some operators around the world have been constrained by their gov- ernment’s reticence to allocate sufficient spectrum resources for 5G. Here in the GCC, governments and regulators have been extremely proactive about mak- ing spectrum available, and the region has reaped the benefits of this foresight by becoming one of the world leaders for 5G. Plenty of markets in Europe, Asia and even the US have not been so lucky. Dynamic Spectrum Sharing, the sub- ject of this month’s special report, pro- vides operators with a genuine opportuni- ty to launch their initial 5G services with drastically reduced capital expenditure requirements. Instead of investing in next generation network hardware, operators 5G is an eye wateringly expensive investment for telcos but what if there was a way to launch 5G with nothing more than a mere software update? We look at the opportunities and limitations of Dynamic Spectrum Sharing Dynamic Spectrum Sharing: A first step on the 5G ladder FROM THE EDITOR Chris Kelly is editor of CommsMEA. can simply update their software and use low band, LTE spectrum to provide both LTE and 5G services. Sure, it’s a stop gap solution and one that is unlikely to be a major force for the medium to long term, but it can offer telcos a cost effective way to get a first foothold on the 5G ladder. Last month Vodafone launched 5G services in The Netherlands using Eric- sson’s Dynamic Spectrum Sharing tech- nology. In doing so, it scored a major PR win, by becoming the first mobile net- work operator to launch 5G services in the country. Vodafone used its existing 1,800 MHz spectrum coupled with Erics- son’s DSS technology to offer its 5G sub- scribers download speeds of up to 1 Gbps and 30 per cent lower latency than on its LTE service. As governments around the world free up spectrum for release, particularly in the mid band and mmWave blocks, 5G net- work performance will move far beyond current performance levels. In the future, we will be able to expect, even demand, the multi gigabit per second download speeds and ultra-low latency levels that we were promised in the plethora of 5G sales pitch- es. Until then, Dynamic Spectrum Shar- ing offers operators a cost effective way to deliver very good connectivity. Par- ticularly in the current climate of work- ing, learning and entertaining from home, Dynamic Spectrum Sharing could be the best option for operators looking to boost their current network performance levels. DOWNLOAD OR UPDATE THE APP NOW ON YOUR IOS DEVICE 17www.commsmea.com SPECIAL REPORT EDITOR’S INTRO CommsMEA June-August 2020MARKET FOCUS SPECIAL REPORT We look at how Ericsson has been helping operators across the world launch their initial 5G services in a more cost effective manner, using Dynamic Spectrum Sharing PIONEERING 5G CONNECTIVITY, AT A FRACTION OF THE COST Ericsson has been one of the early pioneers of spectrum sharing technology and has enjoyed great success helping operators across the world get their 5G offering into the market more quickly and cheaper than they would otherwise have been able to do. The Swedish tech giant has helped numerous operators around the world launch 5G on a more cost effective basis. In recent months, Ericsson has helped both Vodafone in The Netherlands and Telia Group in Norway begin their 5G journeys in earnest. “With 5G networks going live and consumers getting their hands on the first 5G devices, user expectations are high. Communications service providers need to make the best use of their spectrum assets and utilise each band’s performance characteristics to support their business strategies while maintaining coexistence between all technologies deployed in the network,” explained Chafic Traboulsi, vice president and head of networks at Ericsson Middle East and Africa. The technology is ideally suited for markets where regulators have been slow to release sufficient blocks of 5G ready spectrum. There would also be huge potential for the technology to be deployed in markets such as India, where cash strapped telcos are struggling to meet sky high reserve prices for 5G spectrum. “Ericsson Spectrum Sharing, part of Ericsson Radio System, enables a quick, flexible, and cost-effective upgrade to 5G within existing 4G carriers. Based on traffic demand, the solution will dynamically share the spectrum between 4G and 5G carriers, making the switch on a one-millisecond level to minimise spectrum wastage and provide the best end-user performance,” Traboulsi added. Spectrum sharing is ideally suited for With 5G networks going live and consumers getting their hands on the first 5G devices, user expectations are high. Communications service providers need to make the best use of their spectrum assets and utilise each band’s performance characteristics to support their business strategies.” Chafic Traboulsi, VP, Ericsson MEA. markets where an operator has a firmly established LTE footprint. “Ericsson Spectrum Sharing enables a smooth and fast network migration through simultaneous and dynamic support of 4G and 5G within the same spectrum band using the Ericsson Radio System, once operators are ready to make the transition. “The new functionality can be implemented through a remote software installation on Ericsson Radio System radios shipped since 2015. This capability allows communication service providers to deliver nationwide 5G coverage with a much more flexible spectrum migration strategy – removing the need for dedicating existing 4G spectrum assets to 5G statically, which could negatively impact 4G performance. “We should also highlight that 4G/5G dynamic spectrum sharing is the key technology to efficiently deploy the most advanced 5G technology, 5G Standalone. 5G Standalone will enable the ultimate benefits of the 5G and with Ericsson Spectrum Sharing these benefits can be made available throughout the network in all the areas where the 4G signal is currently provided,” he explained. You can hear more from Chafic Traboulsi, vice president and head of networks at Ericsson Middle East and Africa, in our exclusive interview on page 38-39. 19www.commsmea.comCommsMEA June-August 2020Next >