at&t, Telefonica Eyeing Targets?

Apparently, at&t wants to buy a stake in the mobile arm of state-controlled phone firm Telekom Malaysia , a Malaysian newspaper has reported.

Telekom Malaysia is spinning off its mobile business into a separately listed firm, TM International, which will include its domestic Celcom unit and operations in nine other countries, including India, Indonesia, Bangladesh and Sri Lanka.

Separately, there is talk of Vodafone or Best Buy buying Carphone Warehouse. There also are rumors that KPN is being eyed by Telefonica (KPN denies talks are underway).

Given the success Western European mobile providers are having in Eastern Europe and elsewhere, we might make one observation: though wireless has underpinned carrier revenue growth over the past several years, internal growth now is slowing sharply, meaning growth will have to be sought "out of territory."

Typically, when that sort of situation develops, it is a clear sign that internal growth prospects are limited.

Wireline Substitution, Mobile Plans, Broadband

KPN seems to have found a way to take market share in the German wireless market: give customers unlimited calling for a flat fee, avoid phone subsidies or selling phones, and keep things simple. The growing number of wireless-only customers apparently is helping, as one obviously needs more minutes in the plan to cover the additional volume when all calls in and out are taken on the mobile.

For $108 a month, Base subscribers can make unlimited free calls anywhere in Germany. A comparable offer by Vodafone costs $144. The sister E-Plus brand KPN supports also has shifted to this "no frills" approach.

In the third quarter 2007 subscriptions wereup 16 percent year-over-year, to some 14.1 million. E-Plus operating profit also rose 79 percent over that period, with profit margins of 38 percent.

Of course, KPN will have to figure out how to translate that success into similar good fortune in the mobile broadband segment, where it might not be quite so easy to maintain robust margins of this sort. Still, KPN's approach to the market is an example of what a carrier can do in an environment where phones are unlocked.

As Verizon moves to "unlock" its CDMA network, and as the C block 700-MHz spectrum goes into operation, also with an "unlocked" approach to device use, one wonders how soon somebody will try this in the U.S. market as well. Cricket Communications, one might argue, already has been chasing the wireline replacement market, but without the unlocked phone component.

Carrier Fiber Plans Accelerating?

Ofcom, the U.K. communications regulator, hasn't come to terms with BT about ways to speed up fiber to customer investments in the U.K. market. Up to this point BT has objected to earlier proposals that would have applied relatively robust wholesale requirements to new optical access plant. Perhaps there is new hope for some compromise that reassures investors, speeds up fiber deployment and yet offers some hope of a return.

Around the world, fiber to customer deployments seem poised to accelerate, but both competitive providers such as Illiad in France and Verizon in the United States have been punished by the financial community for daring to proceed with such deployments, which are costly, no doubt. U.S. cable companies have the same problem. Every time there is a hint that capital spending plans might intensify, equity values get hit. Comcast appears to be under that cloud as well at the moment.

Irrespective of the competitive elements of such decisions--obviously the providers making the investments want to keep the rewards, if they can be had--these networks can only be built by private capital. And private capital keeps making clear concern about the payback, whether those investments are made by cable companies, incumbent telcos or competitive providers.

At this point it is a simple fact that the investment framework has to reassure the capital markets. Yes, competition is desirable. But that has to be balanced against capital markets that actually loathe competition. Let's hope Ofcom and BT can thread this needle.

Global Voice Traffic Keeps Growing

Despite all the new ways people can talk to each other, and all the other ways people can communicate using text, global voice traffic keeps growing at a steady rate, according to TeleGeography.