THE WRAP: Microsoft's $8.5b Skype deal

John Tanner
13 May 2011

It was the week that saw Microsoft buy Skype, as well as NBN satellite deals in Australia and another new subsea cable for Asia.

This week’s Big Deal was Microsoft’s purchase of VoIP player Skype, which raised plenty of eyebrows, not least for its $8.5 billion price tag.

On the plus side, it’s a good fit for Microsoft’s product portfolio, and Microsoft needs something to compete with FaceTime and Google Voice. On the negative side, Skype is a loss-maker, and its multiplatform mobile strategy has potentially just become a lot more complicated.

It was also the week that saw Australia’s NBN Co hand out over $279 million in contracts for the satellite portion of the country’s national broadband project.

Optus will manage the satellite project, while Thaicom's IPSTAR Australia will provide the capacity via its Thaicom-4 bird. Israel-based satellite gear vendor Gilat will supply Optus with equipment for hubs and VSATs. The project, which will launch service in July with 6-Mbps downlink speeds, is intended as an interim service until NBN Co launches its own satellites in 2015.

Australia also saw the commission of a new subsea cable providing terabit capacity to Singapore this week. ASC (Australia Singapore Cable) International, a subsidiary of Australian project development and contracting company Leighton, has commissioned Alcatel-Lucent to build the multi-terabit cable.

ASC said it will have an option to upgrade the cable to 100Gbps waves, which would make it the first 100Gbps connection between Western Australia and South East Asia. That will also give it an ultimate capacity of 16Tbps once the 100Gbps option is taken.

This week’s financial results: SingTel said its Q4 net profit fell 2%, and that it would have actually grown 1% if not for Bharti Airtel's losses in Africa; PLDT posted a 6% decrease in Q1 profitdue to declining revenue and forex losses; and Alcatel-Lucent slashed its losses by $726 million in Q1, which it says should help it meet its full year targets.

In terms of mobile subscribers, it was a good Q3 for Australian operators Telstra and Optus at the expense of struggling Vodafone Australia. SingTel reported that Optus grew its postpaid customer base by 151,000 during the quarter, and Telstra said it had added 197,000 post-paid customers, while VHA lost 244,000 postpaid customers.

In India, it wasn’t a great week for Reliance Communications and Tata Teleservices, who reportedly face having several licenses revoked for missing network rollout requirements.

Meanwhile, India’s telecom ministry – displeased over missing its broadband subscriber targets for last year – said it will ask for bids from fixed and wireless operators to roll out of wireless broadband services in June. Only one of two slots will be auctioned in each of the 22 circles, with the second to be reserved for state-owned BSNL.

Other wireless broadband highlights this week: Cellcos in Sri Lanka escalated their own wireless broadband race, as Etisalat Sri Lanka went live with HSPA+ and Sri Lanka Telecom's Mobitel and Dialog Axiata announced the conclusion of successful LTE trials; and South Korea’s three operators agreed to collaborate to build carrier-agnostic Wi-Fi networks in various areas in the country to help with data offload and cut costs.

And finally, it was a week packed with legal action.

Thailand’s TOT threatened to countersue Ericsson for filing a “frivolous and unreasonable” lawsuit over its 3G tender.

Huawei won a preliminary injunction prohibiting ZTE from selling certain USB modems, as part of the patent battle between the two companies.

And Google is being sued for $13 million by three French publishers claiming that thousands of their works were scanned for Google Books without their permission.

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