Not Every Acquisition Works Out

Not every acquisition works. Not every asset disposition is driven mostly by profit taking. Sometimes loss limitation is at work. And though many institutional investors or private equity firms have one business model for telecom infrastructure assets, service providers often have a different model. 

That difference in models explains why many institutional and private equity firms now are buyers of assets while many service providers are asset sellers. WindTre might be next. Lumen and Telefonica are among recent sellers. So was Cincinnati Bell.

Telecom Italia could move as well. 

Because we can” or “because we should” might explain a good deal of asset disposition behavior in the connectivity business these days. 

Optus owner Singtel, for example, is said to be mulling the sale of a stake in its Australian access facilities, a move that would allow Singtel to raise cash. 

Such opportunistic moves--as always--are driven by a combination of seller need, buyer interest and a broader rise in the value of optical fiber access and transport assets for investors in search of alternative assetshttps. 

Low interest rates mean lots of capital is available, while high valuations for other traditional assets also are driving investor interest in lower-valuation, higher-return financial vehicles and something more akin to a private equity approach to investing by institutional investors such as pension funds. 

Buyer interest has grown the value of optical fiber assets or the ability to create them,  while sellers are enticed by such higher valuations to monetize access network assets as they earlier monetized cell tower assets. Singtel itself sold a majority stake in its Australia cell towers in 2021. 

No doubt owner's economics still are important. But the issue is whether full ownership is required to reap that value. In a growing number of cases, partial ownership seems to be viewed favorably.  

In other areas, co-investment deals are changing the economics of optical fiber investment. 

For a number of reasons, the business model for telco and cable TV fiber to home is changing. A higher degree of government subsidy support; a desire for investment in FTTH facilities as alternative investment and competitive dynamics in the home broadband industry all mean the business case for FTTH improves. 

As one example,Cable One is part of a joint venture with GTCR LLC,  Stephens Capital Partners, The Pritzker Organization and certain members of the management team to build optical fiber to premises networks by Clearwave Fiber.

Clearwave Fiber holds the assets of Cable One’s subsidiary Clearwave Communications and certain fiber assets of Cable One’s subsidiary Hargray Communications. 

At the same time as capital investment requirements are changing, there is a shift in the assumptions about business model. 

In the late 1990s FTTH was seen as the only viable way for telcos to take market share in the linear video subscription business from cable TV operators. So the revenue upside was subscription video and internet access speeds. To be sure, video arguably was seen as the bigger revenue driver, as late 1990s telco FTTH speeds were in the 10 Mbps range. 

Bundling (triple play or dual-play) also was seen at that time as the way to compensate for competition-induced account losses. While telcos or cable each competing across the voice, business customer, internet access and video entertainment markets might have fewer total accounts, revenue per account from triple-play services would compensate. 

But something else now seems to have changed. A decade ago, independent internet service providers began to attack the market increasingly based on one service: home broadband. To be sure, many independent ISPs tried a dual-play or triple-play approach for a time. 

But nearly all eventually settled on a home broadband-only approach. Since virtually all independent ISPs face both telco and cable TV competitors, the single-product business model makes some concessions on potential revenue that necessarily must be balanced by lower capital investment and operating costs. 

The latest developments are that such tradeoffs are seen as feasible even for incumbent telcos: in other words, the business model increasingly relies on broadband as the foundation, with some contributions from voice. Video (linear or streaming) plays a lesser or no role in revenue assumptions. 

There are other changes. Subsidies have been rising for broadband deployment, and that also changes the capex requirements. Some of the investment in optical fiber also is helped by the denser optical fiber networks necessary to support 5G networks. Essentially, the payback model is bolstered by the ability to defray some optical media costs from mobile service revenue opportunities. 

Also, 5G supports home broadband using the same transmission facilities as does mobile service, often offering a chance for mobile operators to compete in the home broadband business at relatively low incremental cost. That also helps lower the cost of fixed network FTTH as more revenue is wrung from the installed assets. To the extent that higher revenue produces incrementally higher free cash flow, more capital is available to invest in additional FTTH facilities.

The incremental cost of consumer home broadband is lower once a dense trunking network must be put into place to support small cell mobile networks. 

Also, the value of FTTH facilities has changed as rival investors (institutional investors, private equity) view consumer broadband as a legitimate alternative investment. That boosts the equity value of an FTTH network and supplies new sources of investment. 

Also, the cost of FTTH construction has improved steadily over the past few decades. Also, the expected reduction of operating costs from fiber networks, as opposed to copper networks, now is well attested. So there are opex savings. 

FTTH remains a challenging investment, nonetheless. But it is noteworthy that assumptions about the business model now have changed for incumbent and new providers as well. Where it once was thought an FTTH upgrade virtually required revenue from three services, in an increasing number of cases the investment can be justified based on home broadband alone. 

In greater numbers of cases, the primary value of home broadband is supplemented by some revenues from other sources. But where a triple-play might have produced $130 per month to $200 per month revenues, home broadband might produce $50 to $80 a month. 

That projects increasingly are feasible with a $50 monthly revenue target and adoption around 40 percent to 50 percent shows how much the capex and opex assumptions have changed.

Why more Public Network Assets are Going Private

Institutional and private equity investor interest in communications infrastructure waxes and wanes. Right now it is waxing, after a precipitous drop in interest in the wake of massive facilities overbuilding around the turn of the century. 

In large part, the interest is driven by returns on other assets, leading investors to desire some exposure to alternative assets, including infrastructure with some market moats, scarcity and dependable demand, plus free cash flow. 

That appetite is matched by connectivity provider capital investment issues, namely low returns on invested capital that have bedeviled connectivity providers in recent years. 

source: Arthur D. Little

 

Simply put, it has gotten harder for connectivity providers to generate satisfactory returns on their network investments over time. And telecom is hugely capital intensive. 

source: Bain 

In many cases, service providers have trouble earning back their cost of capital, according to analysts. 

source: Arthur D. Little

All of that creates a heightened private equity and institutional investor demand for investments in “digital infrastructure” that is similar to demand for the more-traditional interest in real estate and utility investments. 

But the strategies can vary. The easiest and arguably safest choices are core infrastructure operations where most of the return comes in the form of cash dividends. This is most often found in regulated segments of the industry, with low growth but consistent demand. Ownership of electrical utilities provides a good example of this type of asset. 

Most digital infrastructure assets do not offer predictability or moats as high as might be the case for electrical utilities or airports, but arguably is most true for mobile towers. 

In other cases, there are some specific drivers that shift a bit of the story to more growth, if some tweak to the business model is made. That seems to be the case for mass market telecom networks where the upside is the upgrade from copper internet access to fiber to home. 

In other markets, the same thinking underpins buying a regional airport with expectations of creating a higher-value super-regional hub. In the communications assets business, perhaps an example is the “roll up” strategy of amalgamating many diverse and smaller connectivity or data center assets to create scale. 

The point is that a confluence of connectivity provider need and investor want is fueling a resurgence of private equity and institutional investor interest in a growing range of digital infrastructure assets.

Are Access Networks Still a Source of Competitive Advantage?

Just how far might tier-one telcos be willing to go with dispositions of their home market access network assets? Lumen Technologies in the United States sold off about half of its access network assets, to deepen its focus on enterprise, wholesale and global connectivity services. 

That move is a classic asset disposition driven by a repositioning of capital from a declining business to others with higher expected growth. What is not so clear is the appetite for selling assets in a business still considered “core.” 

In some other markets, tier-one service providers including SingTel, BT, Telstra and Telecom New Zealand have voluntarily surrendered ownership or control of their access networks, often in exchange for rights to pursue perceived higher-growth lines of business. 

Telefonica might now be considering how to monetize at least part of its Spain home network, at least in part because there is high private equity interest in acquisitions of such infrastructure assets, and in part because Telefonica has been monetizing other assets to reduce debt. 

It might be worth noting that the private equity model is based on acquiring what are perceived as underperforming assets, repositioning those assets for higher returns, and then selling the assets, often with target holding times of six to seven years. 

All those moves do raise a question. 

Where does sustainable business advantage lie in the connectivity business? In other words, where are the potential sources of long-term advantage that competitors find hard to copy?

Widespread sales of tower assets suggests many mobile operators no longer consider tower ownership a source of competitive advantage. Fixed line operators have a possibly wider range of views. 

In out of home markets, the ability to lease capacity on a wholesale basis from a third party is routinely viewed as a reasonable alternative  to building and owning assets. 

In their home markets, ownership of access networks has typically been viewed as a key source of advantage, absolutely in the monopoly and relatively in the competitive era. 

But in markets where optical fiber access is supplied on a wholesale basis by one provider, with retailers able to rent access, ownership is not necessarily seen as vital. 

The point is that ownership of scarce access network assets traditionally has been viewed as a source of competitive advantage in the fixed networks business. In at least some cases, that view has changed.

KKR Bids for Telecom Italia

It is official: private equity firm KKR is making a bid to take Telecom Italia private. Said to be the biggest-ever private equity bid for a public telecom service operator in Europe, the $12 billion deal seems to be opposed by Vivendi, which owns 24 percent of Telecom Italia. 

The KKR playbook would normally involve an effort to streamline, rationalize and reposition the assets. KKR is believed to be interested in separating Telecom Italia’s network assets from the retail operations, turning part of TI into a wholesaler of capacity, likely with a heightened optical fiber position, while retail operations are conducted separately, using the wholesale network. 

At first glance, the proposed deal looks like a standard private equity deal: buy an underperforming asset, make changes and then sell. But the deal might also reflect another private equity focus: buying infrastructure assets to hold longer term, as an alternative asset. 

Perhaps a likely scenario is that KKR hopes to dramatically improve financial performance before selling the asset to an investor that wants the long-term cash flow. 

Telecom Italia, for its part, also fits the “go private” scenario: it has high debt and shrinking recurring revenues and profits, arguably impairing its ability to invest in digital infrastructure including fiber to home facilities. 

Among the key drivers for telecom privatizations is the perception by asset owners that public markets will not positively reward the firms, in terms of equity valuations, commensurate with their revenues, cash flow or potential growth prospects.

Another key driver is private equity firms with lots of private capital to invest, and assets that offer long-term and predictable cash flows to institutional investors such as pension funds and other entities with long time horizons that view infrastructure assets as equivalents to other long-duration fixed-income assets such as bonds.

 

Also, asset diversification is another motivation for investors.

  

There is a good reason why any number of public telecom firms have been taken private, and why others are considering similar moves: high debt, low growth and poor operational performance. And connectivity providers are not the only type of firms facing investment issues.  

That is a fairly-common prescription for any public company to be taken out of the public markets by private equity, and many public telco assets  fit the bill. 

source: Focus Finance

One defining characteristic of infrastructure assets is their monopolistic position. We tend to forget that for most of the history of the industrialized world, much of the funding for large scale public infrastructure such as roads, canals and railroads has come from private sources of capital. And that includes telecommunications in the United States. 

source: Maria Sward 

The function of private equity also has included the rehabilitation of firms that are not performing financially. Private equity buys a public asset, restructures and then sells the asset, often within about a five-year period. 

source: Bain

Dish Buys Blockbuster

Dish Network Corp. has won a bankruptcy auction for Blockbuster, offering about $320.6 million for the movie-rental chain. Dish, unlike some of the other bidders, has said it would keep some of the stores open as retail locations to support sales of Dish services.

Some may question the wisdom of that move, but Apple also was highly criticized for opening its own retail stores. There now is recognition that the retail outlets now play a huge role in Apple's sales and support process, though. Likewise, mobile service providers have found retail locations to be crucial for selling mobile services.

Dish Network Corp. has won a bankruptcy auction for Blockbuster, offering about $320.6 million for the movie-rental chain. Dish, unlike some of the other bidders, has said it would keep some of the stores open as retail locations to support sales of Dish services.

Some may question the wisdom of that move, but Apple also was highly criticized for opening its own retail stores. There now is recognition that the retail outlets now play a huge role in Apple's sales and support process, though. Likewise, mobile service providers have found retail locations to be crucial for selling mobile services.

But Blockbuster also brings other assets that do mesh with the current Dish strategy, including the Blockbuster online and kiosk vending services. Dish also has been making other moves in the mobile and on-demand video business, though some analysts might claim they do not yet fully understand what the grand strategy is. Neither would Dish CEO Charlie Ergen, either, at this point. Rather, Ergen seems to understand that the TV business is changing, and that mobile and online services are part of that future.

The Blockbuster acquisition therefore would seem to complement a growing interest by Dish in alternative distribution channels and business models.

Dish also earlier acquired DBSD North America, Inc., a hybrid satellite and terrestrial communications company, for approximately $1 billion. DBSD has a license to operate in 8 MHz worth of spectrum.

Frontier Wireless, the wholly owned subsidiary of Dish, also owns 168 licenses in the 700 MHz range, covering about 76 percent of the U.S. population. The licenses represent 5 MHz worth of spectrum. There has been speculation about what Dish might plan to do with such spectrum, but the purchases of other assets supporting terrestrial mobile service with satellite backhaul suggest a possible move into a video service usable by mobile devices.

It is possible to use the same approach to deliver signals to fixed locations such as homes, but bandwidth constraints would make an on-demand service difficult. A more logical approach would be linear video or multicast services based on use of mobile devices.

Sister company Echostar, for its part, owns Slingbox and now Hughes Network Systems, which gives Echostar a new international business revenue stream, enterprise networks and an owned satellite network offering significant new wide-area distribution capability. Whether those assets might play a role in Dish strategy is not immediately clear.

What does seem logical is that a couple of the Dish assets could be used to create a mobile-focused video service. A technology known as TDtv supports mobile multicast content, delivering as many as 14 high-quality, 300 kbps video streams channels using only 5 MHz of unpaired spectrum. It contains a built-in uplink capability that will allow for some digital video recorder features as well.

For its part, Clearwire also has been talking to satellite concerns about creating some sort of mobile TV service as well, though nothing concrete seems to have emerged from those talks.

CEO Charlie Ergen has not been shy about suggesting that if an entrepreneur wanted to get into the TV distribution business today, that person might well take a "Netflix" style, over the top approach, rather than launch satellites or even build cable networks. Another analogy Ergen has used in the past is fixed and mobile voice service. Essentially, he has likened satellite-delivered TV to fixed-line voice, while online video is more like mobile voice. In other words, the original business was TV by satellite, but the future business will be online.

There might not yet be a clear grand strategy for how Dish uses all the new assets, but it is clear enough that Ergen wants to fashion a business model that is built more on mobile and online video, and less on satellite video delivered to fixed locations.


But Blockbuster also brings other assets that do mesh with the current Dish strategy, including the Blockbuster online and kiosk vending services. Dish also has been making other moves in the mobile and on-demand video business, though some analysts might claim they do not yet fully understand what the grand strategy is. Neither would Dish CEO Charlie Ergen, either, at this point. Rather, Ergen seems to understand that the TV business is changing, and that mobile and online services are part of that future.

The Blockbuster acquisition therefore would seem to complement a growing interest by Dish in alternative distribution channels and business models.

Dish also earlier acquired DBSD North America, Inc., a hybrid satellite and terrestrial communications company, for approximately $1 billion. DBSD has a license to operate in 8 MHz worth of spectrum.

Frontier Wireless, the wholly owned subsidiary of Dish, also owns 168 licenses in the 700 MHz range, covering about 76 percent of the U.S. population. The licenses represent 5 MHz worth of spectrum. There has been speculation about what Dish might plan to do with such spectrum, but the purchases of other assets supporting terrestrial mobile service with satellite backhaul suggest a possible move into a video service usable by mobile devices.

It is possible to use the same approach to deliver signals to fixed locations such as homes, but bandwidth constraints would make an on-demand service difficult. A more logical approach would be linear video or multicast services based on use of mobile devices.

Sister company Echostar, for its part, owns Slingbox and now Hughes Network Systems, which gives Echostar a new international business revenue stream, enterprise networks and an owned satellite network offering significant new wide-area distribution capability. Whether those assets might play a role in Dish strategy is not immediately clear.

What does seem logical is that a couple of the Dish assets could be used to create a mobile-focused video service. A technology known as TDtv supports mobile multicast content, delivering as many as 14 high-quality, 300 kbps video streams channels using only 5 MHz of unpaired spectrum. It contains a built-in uplink capability that will allow for some digital video recorder features as well.

For its part, Clearwire also has been talking to satellite concerns about creating some sort of mobile TV service as well, though nothing concrete seems to have emerged from those talks.

CEO Charlie Ergen has not been shy about suggesting that if an entrepreneur wanted to get into the TV distribution business today, that person might well take a "Netflix" style, over the top approach, rather than launch satellites or even build cable networks. Another analogy Ergen has used in the past is fixed and mobile voice service. Essentially, he has likened satellite-delivered TV to fixed-line voice, while online video is more like mobile voice. In other words, the original business was TV by satellite, but the future business will be online.

There might not yet be a clear grand strategy for how Dish uses all the new assets, but it is clear enough that Ergen wants to fashion a business model that is built more on mobile and online video, and less on satellite video delivered to fixed locations.

"Digital Infrastructure" Can Mean "Everything" But Then Means "Nothing"

Digital infrastructure is a term increasingly used by suppliers of connectivity services. But digital infrastructure arguably includes the rest of the information and communications ecosystem as well. To the extent that digital infrastructure includes connectivity, computing, applications and services as well as devices, it is synonymous with “internet ecosystem.”

source: AIIB

When used in the more-narrow sense of “connectivity infrastructure,”however, some connectivity assets are of growing interest to private equity, institutional investors and others, as a form of alternative investment providing diversification. 

As investment organizations sometimes desire to hold assets such as land or real estate, they now sometimes wish to own infrastructure assets that throw off predictable cash flows, have business moats and stable and recurring demand. 

That interest on the part of buyers also  accounts for service provider interest in monetizing some parts of their access infrastructure, steps that might not have been deemed wise decades ago, when ownership of scarce facilities was viewed as a primary source of business advantage. 

  

source: AIIB

But digital infrastructure now sees a confluence of supply and demand interest as much private equity views investments in digital infrastructure the same way other long-lived infrastructure (transportation, utilities, real estate) is seen: reliable providers of long-term cash flows. 

So in addition to investments in infrastructure related to  clean energy, water, and wastewater, some investors see digital infrastructure as part of the mix. 

The capital-intensive nature of these assets also creates barriers for competition, while demand growth is robust. Still, infrastructure investing--digital or not--is an asset class expected to  deliver low returns, but also with low volatility. 

At the same time, interest in alternative asset classes and low dividend yields on bonds contribute to the interest in digital infrastructure asset investment, and the trend to monetize such assets on the part of service providers. 

In substantial part, there also is corresponding interest on the part of infrastructure owners to monetize assets, driven in large part by increasing capital requirements and declining return on investment. 

In Asia, for example, communications infrastructure faces higher capital intensity and yet lower returns on invested capital. In that sense, communications infrastructure faces potential  investment gaps similar to those of other infrastructure categories. 

source: AIIB

That accounts for the prevalence of interest in “capital light” business models, public-private partnerships, wholesale access service models and privatization of assets. 

Is Verizon Strategy Built on 5G Connectivity Revenues?

With the exception of its buying Vodafone’s interest in Verizon Wireless for $130 billion, most of Verizon’s acquisitions have been far smaller. The overall pattern might indicate that Verizon spends most of its acquisition funds on network assets.

So it probably is not surprising that the choice of Hans Vestberg as the next Verizon CEO suggests to most observers an investment priority on 5G assets, not content or other “up the stack” assets, or even operating efficiencies.

Some of us would not necessarily agree with that view. It is true that Verizon sees itself as the leader in network quality and a first mover where it comes to each next generation network. Iin its acquisition strategies, Verizon has emphasized connectivity assets.

The issue is whether the choice of Vestberg suggests Verizon will focus its revenue growth plans on connectivity services, or has something else in mind. Some of us would argue that Verizon has something else in mind.

Verizon has for some time been acquiring “up the stack” assets. Verizon sees its solution and platform assets as being built on top of the network platform, so the Vestberg pick likely indicates Verizon retains that view. But Vestberg also is considered a merger and acquisitions expert, so it is possible to suggest that Verizon believes it has to pair its 5G leadership with clever picks of firms and assets that can supply value “up the stack.”

There is another way to look at what might otherwise be called a ”5G first” strategy, and that is to look at the revenue lift that strategy might provide, compared to alternative investments of capital.

And the essential reality is that incremental 5G revenue is unlikely to provide all that much revenue lift.

If Verizon is successful using its 5G network to attack a fixed wireless opportunity worth about $7.5 billion, and  internet of things connectivity revenues of about $5.4 billion, that implies something like $13 billion annually in incremental revenues, in perhaps five years time.

Here are the assumptions: Verizon believes it can address about 30 percent of  U.S. homes, mostly out of territory, using 5G fixed wireless.

If there are some 130 million U.S. homes, that implies access to about 39 million potential new accounts, a significant new opportunity if one assumes each new account could generate $80 a month in recurring revenue.

Were Verizon to get 20 percent of potential customers as new accounts, 5G-based fixed wireless could generate $960 per account, per year, on a base of 7.8 million locations, it could realize $7.5 billion a year in additional annual revenue.

That is about 5.5 percent incremental revenue lift for Verizon. That is interesting, but not transformational in any way.

GSMA has predicted that connectivity revenue will be about five percent of the total IoT revenue opportunity.

That might work out to as much as $50 billion in annual global revenue. Verizon’s opportunity is a fraction of that. If U.S. revenues are a third of total, that implies $16.5 billion in connectivity revenue. If Verizon gets a third of that, it might realize $5.4 billion in annual incremental revenues.

Again, that is nice, but hardly transformational. Verizon might believe it will do much better than that, longer term.

So some might argue that something else must be at work. And that likely is a move into other parts of the value chain built on 5G, including internet of things apps, as the amount of new connectivity revenue from IoT likewise will be interesting, but not transformational.

The point is that incremental new revenue Verizon can drive directly on 5G connectivity services is not so large as to constitute a growth strategy.

Consider that, if approved, the AT&T acquisition of Time Warner might generate $31 billion in incremental revenue for AT&T, immediately.

There are “size of debt” issues, but Time Warner is a “book revenue now” gambit, in addition to changing AT&T’s business sources profile.

For Verizon, additional acquisitions arguably are necessary, eventually. The reason is simply that both Verizon and AT&T have gotten most of their revenue growth from acquisitions, not internal and organic growth.

source: Deloitte

Since 2013, AT&T has dramatically changed its revenue profile by acquiring DirecTV, immediately becoming the largest U.S provider of linear video.  International acquisitions, though smallish, also indicate where AT&T could go next, beyond content.

Verizon’s biggest deal since 2013 was acquiring Vodafone's stake in Verizon's mobile business for about $130 billion in 2014. But debt load from that deal also limit Verizon’s ability to make other big asset purchases.

source: AT&T

Although the appointment of Hans Vestberg as the new CEO of Verizon has been interpreted as a focus by Verizon on “5G,” as opposed to some other strategy, such as getting into content ownership in a bigger way, beyond the Oath brands.

That might not necessarily mean Verizon has in mind a strategy something like “doubling down” on connectivity services as a driver of growth, which is one way the strategy might be interpreted.

Instead, 5G investments are “only” the way Verizon keeps its claim to be the quality network leader, where it comes to connectivity services, while actively making acquisitions to build its “up the stack” assets in internet of things areas, for example.

More FTTH Co-Investment

Investment firm Meridiam is co-investing in fiber-to-home infrastructure with T-Mobile in Austria, each firm investing about a billion euros to construct facilities reaching 650,000 homes in rural areas and small towns. 

The firm began investing in digital infrastructure in 2000, and has made prior FTTH  investments in Germany and Canada. 

The deal essentially solves a problem for Magenta Telekom, namely the high cost of wiring rural and lower-density homes. 

Liberty Global, Telefonica and InfraVia Capital Partners have created a joint venture on a larger scale, aiming to build FTTH past seven million U.K. homes. 

Such moves represent a change in thinking on the part of fixed network internet service providers, who historically have favored fully-owned access infrastructure. But high capital requirements and heightened risk seem to be encouraging fresh thinking. 

Better to share financial returns and risk, the new thinking suggests. But such thinking also should raise the issue of the value of fixed network access assets. Access networks traditionally have been viewed as assets with high moats, in large part because of the high capital investment required to create them. 

But competitive local access markets also raise the issue of stranded assets as well. In markets with two facilities-based contestants, equally skilled, stranded assets (facilities generating no revenue) might represent up to 60 percent of deployed assets. 

Co-investment and wholesale business models represent a way to both lower capital investment, reduce risk and the danger of stranded assets. 

At the same time, institutional investors now view digital infrastructure as an alternative investment quite similar to the real estate and other infrastructure investments they have traditionally made: long-lived assets producing steady income and offering business moats (protection from additional competition). 

But there also are other strategic drivers. Profit margins on internet access services are harder to sustain and capital intensity seems to be increasing as well. 

All of that increases incentives to trade some revenue upside for reduced risk.