WCA March 2007

Telecom News

products, and corporate phone systems. In each, it trails larger rivals including Cisco Systems Inc and Juniper Networks Inc , both based in California. The transaction is subject to the approval of the Chinese government. Western European companies embrace voice/data convergence According to a pan-European survey of 660 medium-and-large-size enterprises conducted by a global market research firm, Western European companies are embracing the convergence of voice and data. The results, published on 30 th Novem- ber, indicate that some 44% of respon- dents are already at some stage in the convergence process, while 51% are expected to be in the convergence process within 12 months. IDC, a provider of market intelligence gathered from more than 50 countries, observed that growth of voice/ data convergence is facilitating the potential for companies to migrate from traditional PSTN (public switched telephone network) PBXs (private branch exchanges) to IP (Internet Protocol) PBXs. Organisations across Western Europe continued to replace their TDM (time division multiplexing)-based PBXs and telephones that were installed around 2000 and earlier. French companies reported the highest usage of pure IP PBXs (29%), while the Netherlands reported the lowest usage with only 3% of companies using a pure IP PBX. Most enterprises reporting to IDC use a combination of solutions to achieve convergence of their voice and data networks. The most frequent reason to outsource some or all of the convergence process was absence of in-house expertise. Large enterprises (1,000+ employees) most often develop and manage the voice/data convergence in-house. There was an increase in the number of enterprises undertaking the entire convergence process in-house from 25% in 2005 to 30% in 2006.

Vodafone said to vie for Indian mobile phone giant Hutchison Essar

Commerce Minister Kamal Nath, of India, said in New Delhi on 9 th January that the chief executive of Vodafone Group PLC planned to meet with Indian government officials to discuss the British company’s interest in buying a controlling stake in Hutchison Essar . The deal for a position in the fourth-largest mobile phone operator in India could top $14 billion, said executives involved in the negotiations. As reported in various media, Mr Nath said Vodafone had requested the meeting to talk about its potential bid for a 67% share in Hutchison Essar. The stake is currently held by Hong Kong-based Hutchison Whampoa , which is controlled by the Hong Kong billionaire Li Ka-shing. Essar owns the rest, and has the right of first refusal in any deal. As their operations in traditional markets stagnate, established telecoms are actively considering fast-growing emerging markets. According to a study by the international Gartner Group, less than 10% of the 1.1 billion people in India have a mobile phone, compared with more than 70% in the United States. But new users are growing at record rates. According to the Telecom Regulators Authority of India, in November 2006 India registered 6.79 million new mobile subscribers. In comparison, some surveys say that in certain areas of Europe and Asia, including the United Kingdom, Hong Kong, and Sweden, there is already more than one mobile phone subscription for each person. Vodafone is not alone in its interest in Hutchison Essar, which has 18 million customers. Orascom , another Indian telecom, and the private equity group Blackstone , possibly in concert with Reliance Communications of India, were mentioned among the potential suitors.

3Com seeks full control of its joint venture with Huawei 3Com Corp , an American maker of computer networking equipment, is paying $882 million for an additional 49% stake in Huawei-3Com Co , valuing the maker of routers and network switches at $1.8 billion. The Marlborough, Massachusetts- based company’s shares fell on concern that it may struggle without the help of Huawei Technologies Co , its Chinese partner, after buying the remaining stake in their venture. As reported by Bloomberg News on 29 th November 2006, the acquisition is part of a strategy by 3Com, after posting losses over the past five years, to regain profitability by tapping international markets. Huawei-3Com, a three-year venture that sells equipment made by 3Com, accounted for about 50% of 3Com’s sales in the fiscal first quarter of last year. The joint venture currently does most of its business in North America and Europe; its sales in China are

negligible. Closely held Huawei, China’s biggest maker of telecommunications equipment, last year posted a 56% gain in sales of $6 billion, more than 13 times the revenue reported by Huawei-3Com. “The sale is good for Huawei because it can now focus on its core tele- com equipment business,” one Hong Kong-based analyst told Bloomberg. “Huawei-3Com is peripheral business for Huawei.” 3Com’s bid, made first on 15 th Novem- ber, trumped an offer by private equity firms Bain Capital LLC and Silver Lake Partners. They, along with Huawei, planned to borrow about $1 billion to buy 3Com’s stake, according to bankers involved in the transaction. The bidding process was part of the original agreement in 2003 that said either company could seek control of the venture after three years. 3Com chairman Eric Benhamou had said earlier in 2006 that acquiring full control would turn 3Com into a global player. Without the venture, 3Com’s business consists primarily of networking gear for smaller companies, security

“Voice and data convergence is a reality,” said Julie Wall, IDC research

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Wire & Cable ASIA – March/April 2007