Monday, May 30, 2005

Shootin' the shit on some recent stuff

One of the big telecom honchos (a very nice guy and a firstnamesake) in Latvia had a "round figure" birthday and an open house at the posh offices in Riga. So I was delegated to take a present from newspaper XX and express our warmest greetings (we have around 100+ of this company's ARPU machines, thank you :)) and all that.
That being done, after several minutes of wandering around (tieless, the half-Swedish legacy, half Latvian "lubraks"* journalist style of dress) I sidled up to some other lesser and different honchos from the IT&T sector for to shoot the shit while sipping some wine and munching various rather tasty canapes.
Some interesting matters came up. Regarding TeliaSonera, the idea was tossed around that the Swedish group has a considerable cash war chest. As I mentioned earlier on the blog, Dagens industri's commentator Michael Törnwall mentioned a few cases of how TeliaSonera has failed to spend this – notably in its abortive efforts to buy Turkcell and Megafon, but also in earlier attempts to get a stake in Denmark's TDC and the fiasco with Telenor. Nor did the Swedish "middleweight" telecom "spend it all" buying the Danish unit of Orange.
My discussion partner and I thought of a new angle– keeping all that cash for too long could make TeliaSonera an attractive acquisition object just for that reason.
I am not a financial engineer, but it is possible to do a deal (swapping shares, etc. ) where TeliaSonera shareholders, Swedish investors, Finnish widows and orphans, whatever, get a share of Humungous Telecom AG (don't take that suffix as a wild guess :)) which trades for something more like Swedish lunch today (say SEK 50 instead of the mid-30s where the TeliaSonera share is hovering). HT AG then gets TeliaSonera (now HT Nordicum -- from Norden and Balticum) with a pretty big stash of cash. In effect, as Dire Straits (?) sang - you get your money for nothing and your (not to be sexist) your gigabits for free. The cash can then be tossed into a still larger war chest or spent on various investment programs, for instance, building a regional extension of some terabit speed optical network so fast the bits in gigbit ethernet kill themselves by stepping off the fiber since they think they are standing still and wonder why the datastream has stopped.
Of course, by the time this happens, we will be several steps along toward the weirdly simply but experience-rich world where there is just "the net", "the grid" "the infosphere" that we and our devices of choice are on, always, anywhere, anytime. Talking to someone, even in Zanzibar is a trivial feature of "it". Ask Niklas Zennstrom, the Skype man. Having a little fun, say, putting on a VR helmet to hunt ultrareal dinosaurs with a bazooka-- EUR 5 an hour?
Which brings us around to the questions of what telecoms operators will do when that happens. Their purpose will be just to keep "Electricity 2.0" on 99.99 % of the time for us ordinary folks and say, 99.9999 for business customers who can afford a four figure monthly QoS fee.
Unless we are running a basement, family steel mill (or making aluminum in five kilo lots), most of us don't really freak out at the monthly electricity bill. That's not where the money is made because electricity exists. Think TV, DVD, appliances, etc – but you seldom see the local electrical utility selling you a $ 100 electric drill. The same problem faces Electricity 2.0.
In that sense, the recent purchase of IT services company MicroLink was a largely smart move by Lattelekom and its half-sisters in Estonia and Lithuania.
The problem is -- what next? The nature of IT services changes month to month, and one of the honchos I spoke to (with more than trivial connections to the whole deal) said that the best hope is if Lattelekom and its partners leave MicroLink to run itself. A big worry is that MicroLink, if Lattelekom's past experience is a guide, will be broken while being fixed because it is not broken. There were references made to Verdi, a stillborn Lattelekom IT services project. Also, Lattelekom, who has TeliaSonera as only a half-mother, is still regarded as a politicized company where the loonies (you MUST digitize by dragging fiber to the shack in the woods) can show up at any time.
I think this fears are a bit exaggerated. Nils Melngailis seems to know what he is talking about when he speaks of business process outsourcing and some things have already gotten off the ground. Maybe this time around, the Lattelekom and regional IT effort will fly. However, in terms of size, whatever does fly will be a pigeon among condors, and that may be the main problem...
So much for the buzz of the day.

* Oh yes, a lubraks is well, casually carelessly dressed to the point of slovenly. Loses a bit in the translation, but sounded nice when a friend with teenage sons admonished them not to go somewhere like lubraki.

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