Egyptian communications giant Orascom is planning to take advantage of Canada’s telecom ownership laws by converting its non-voting shares in Globalive Investment Holding Corp, to common shares. If approved, Orascom’s rights will increase times two, from 32% to 65.1%.
The Canadian government has eased its laws on foreign-ownership of telecom operators. Foreign investors can now own up to 100 percent of local operators as long as they have less than 10% of the market share according to the revenue. Just last year, Orascom had a successful merger with a Russian operator, VimpelCom Ltd. (VIP).
Last Sunday, Orascom said it plans to rename itself as Global Telecom Holding by the end of 2012 after a successful meeting among the board of directors. The plans will be presented to shareholders in an assembly on November.
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The Chinese government slammed the US Congress after an intelligence committee concluded after a yearlong investigation that telecom giants Huawei and ZTE posed a security threat to US security. The congressional report, which looked into the equipment and networking gears being sold by the telecom companies, warned private companies from making business deals with the Chinese operators.
Authorities in China dismissed the accusations that the Huawei and ZTE were being used by the state government to supply hardware that could be utilized as tools for overseas spying operations. The new heightened tensions between Beijing and Washington comes at an already politically sensitive period between the two nations.
Analysts have noted that the congressional report came at a time when Huawei has been mulling over a probable IPO in the US. Other experts say the report - which included recommendations to block mergers or acquisitions with the two companies - was a business move designed to protect national operators like Cisco.
China’s spokesman for the Commerce Department dismissed the report in a written statement as, “based on subjective speculation and false foundations.” State-run media outlets in China also reported the country’s foreign ministry reacting to the US development. The spokesman for foreign affairs, Hong Lei, commented that the investigation was undoing US-China trade relations.
Security analysts and intelligence officials in the US have been worrying over Huwaei and ZTE’s close relations with the Communist Party in China, as well as its military. The congressional report said that the two telecom companies we’re still under state-influence. The year-long investigation looked into the possibility the hardware being sold had been tampered by the installation of “back doors” which can be used to access information from computers.
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As the European telecom market tried to hurdle the effects on the global economic crunch, the telecom operators from the continent, along with many other foreign companies, are eyeing China to expand sources of revenue.
The Asian giant’s economy has been robust despite the financial crisis and foreign telecom companies are seeing the country’s potential.
Although Chinese law does not allow foreign telecom companies to operate wireless networks or provide phone call services, new business opportunities have emerged, especially those focused on network IT services.
BT Group Plc, headquartered in London, has been tapping the Chinese market and benefiting from the country’s economic progress over the years. The British multinational telecommunications company has been targeting multinational companies with a presence in China, or Chinese companies operating inside and outside the country.
AT&T, a US telecom company, has also been enjoying business success by delivering IP-VPN services in China, and has been servicing the increasing presence of Chinese companies abroad.
The outlook against the economic downturns across the globe is brighter in China, as the state government has set out strategic plans in the IT sector, like cloud-computing, and healthcare reforms, which will provide new opportunities for foreign telecom companies.
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The bulk SMSes and even MMSes that has sent thousands of people into exodus from Indian cities like Hyderabad and Bangalore is also expected to impact the telecom operators in the subcontinent, especially after the government has ordered a restriction in the number of text messages sent among prepaid users.
Rumors spreading about increased Assam violence in Northeastern India, coupled by edited videos, have sent many communities in the region into a panic, and the Indian government has looked into minimizing the effects of misleading reports by being more stringent in the communications means.
More than 90% of 930 millions subscribers in India are pre-paid users. Post-paid users on the other hand, are not experiencing any trouble.
The ban on bulk messages may cost telecom operators loss in revenue accounting up to 8%, since operators earn 15 to 18 percent of their revenue through data services like SMS.
Citizens are already feeling the more stringent measures as Indians, especially those part of the Muslim minority, were limited in sending out greetings during the Eid ul-Fitr.
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Out of the $2 Trillion generated by telecom services across the globe, 2% is billed on fraud. Two percent may not seem big of a number, but the cost in dollars is a staggering 40 billion, roughly the same as the revenue of the Walt Disney Company.
The report from the Heavy Reading Service Provider IT Insider Report reveals the staggering loses of many telecom operators despite efforts and policy implementations to curb thefts in the market. The growing losses has unsettled many operators, especially with the growth of mobile services, and mobile payment: technologies which may serve as a catalyst to even more attempts of stealing.
The report also comes at a time when many telecom companies, especially those in the US and Europe, are taking austerity measures to cut down on losses, weather the tumultuous financial environment, and respond to more competitive domestic pricing wars.
Decreasing vigilance among telecom operators has contributed to the rising number of fraud in the industry, alongside networks becoming less and less secure in the digital age. The report recommend redoubling efforts to curb stealing, as well as undertaking a broad research on fraud to understand how it works, and how it persists despite previous actions taken.
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