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Webscale competition increases among carrier cloud providers

Combined Cloud as a Service revenue for telecom operators in Technology Business Research Inc.’s (TBR) 2Q18 Carrier Cloud Benchmark rose 26.3% year-to-year in 2Q18 due to strategic acquisitions and alliances, investments in new data centers, and portfolio expansion in growth segments such as SaaS and hybrid cloud. All benchmarked companies sustained year-to-year Cloud as a Service revenue growth in 2Q18 as significant opportunity remains for carriers to target businesses seeking greater cost savings, scalability and efficiency by migrating traditional infrastructure and applications to the cloud.

Certain Asia- and Europe-based operators including China Telecom, Telefonica and Orange accelerated Cloud as a Service revenue growth in 2Q18 as the companies benefit from data sovereignty laws, such as General Data Protection Regulation (GDPR), requiring cloud data to be stored in local data centers, which is slowing the growth momentum of U.S.-based webscale providers in these regions. Pressure from U.S.-based webscale providers will continue to increase over the next five years in Asia and Europe, however, as they ramp up data center investments and partner with local data center providers to gain traction in these regions.

Graph showing total Cloud as a Service revenue and year-to-year revenue growth for benchmarked carriers in 2Q18

 

TBR’s Telecom Practice provides semiannual analysis of Cloud as a Service revenue in key segment splits and regions for the top global carrier cloud operators in its Carrier Cloud Benchmark. Operators covered include Bharti Airtel, British Telecom, CenturyLink, China Telecom, Deutsche Telekom, Korea Telecom, NTT, Orange, Singtel, Telefonica and Vodafone.

T-Mobile and Sprint pursue merger to gain needed scale to disrupt 5G landscape

On April 29, 2018, T-Mobile (NasdaqGS: TMUS) and Sprint (NYSE: S) announced a definitive agreement, under an all-stock transaction, to merge operations under the brand name T-Mobile with an approximate enterprise value of $146 billion. If the merger is approved, Deutsche Telekom (DT) and Softbank would hold 42% and 27% stakes in the company, respectively, with public shareholders owning the remainder. The combined company would be led by current T-Mobile executives John Legere as CEO and Mike Sievert as president and COO, while current Softbank CEO Masayoshi Son and Sprint CEO Marcelo Claure would serve on the company’s board of directors.