Telecom news that could impact NN at some point:
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France Telecom Lifts Market
PARIS -- French stock prices closed higher Thursday, as the rise of France Telecom's shares offset profit-taking pressure.
The CAC-40 index of most actively traded French stocks rose 15.49 to 3560.23. The trading session began one hour behind schedule because technical problems affected the exchange's computer system.
The Paris bourse was closed for trading Wednesday as France commemorated the 80th anniversary of the end of World War I.
Traders were hard-pressed to explain the surge of France Telecom's shares, which gained 19.8 francs to 399.7 francs. Book-building for the sale of a second tranche of shares in France Telecom got underway Monday. The French government will sell more than 6% of the company to the public and 2% to Deutsche Telekom. France Telecom, in turn, will increase its capital by 5%, split equally between new shares and convertible bonds.
Shares in Franco-Italian chip maker STMicroelectronics led the market gainers, surging 12%, 41 francs, to 387 francs. The stock rose on the back of the positive revenue outlook U.S. company Intel issued Wednesday, traders said.
Shares in Cie. Generale des Etablissements Michelin plunged 17.5 francs to 229.5 francs after the company published disappointing nine-month sales.
Before the market opened Thursday, Michelin reported sales for the nine months ended Sept. 30 of 60.56 billion francs, up just 3.2% from a year earlier. Analysts said the increase was disappointing after the 6.8% growth reported for the first half of 1998.
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Competitive pressure:
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November 12, 1998
Deutsche Telekom Price Plan Sparks Margin Jitters
By ANGELA CULLEN
Dow Jones Newswires
FRANKFURT -- Germany's telecommunications price war intensified Thursday when Deutsche Telekom AG (DT) detailed aggressive price cuts in an attempt to safeguard its market share in the newly liberalized telecoms market.
Telekom's move to shed more light on how it will implement its pricing strategy came amid news that sector rival MobilCom AG (G.MBC) had "almost quadrupled" group sales to DEM904.3 million in the first nine months of the year and "almost quintupled" pretax profit to DEM111.9 million.
Many telecoms investors responded to the announcements by selling shares in both companies amid concerns about the sector's future growth prospects and margin pressures in an increasingly competitive market place.
Deutsche Telekom shares ended the session down DEM0.72, or 1.6%, at DEM45.28, while MobilCom shares fell DEM8, or 1.6%, to DEM497.00.
Deutsche Telekom Chairman Ron Sommer told a telecommunications conference in Bonn the price cuts could chip billions from group sales in 1999.
"The tariff reform means we will have to take a large dip in the cash-box," he said.
Start up telecommunications carrier MobilCom has established itself as one of Telekom's biggest challengers.
Other providers including Mannesmann Arcor (G.MMW) and O.tel.o, the communications venture of RWE AG (G.RWE) and Veba AG (VEB), have also offered cheaper services since Germany's telecoms market opened to competition this year and are seen likely to join the fray over prices.
Telekom had already announced the aggressive price cuts two weeks ago after third-quarter data showed stagnant earnings.
(Corrected 1:16pm est)
On Thursday, Deutsche Telekom applied to the German telecommunications regulatory agency for approval of a reform of its tariff structure and extensive price cuts to begin in January. Long-distance prices could be lowered by up to 63%.
Analysts said Deutsche Telekom won't be alone with narrowing profit margins as the price war heats up.
"I presume all telecoms providers will show reduced margins" in 1999, said Rainer Raschdorf, analyst at DG Bank in Frankfurt.
"The scale of (Telekom's) price cuts will cause a reaction from its competitors," said Commerzbank's Philip Carse in London, adding that Telekom's action "will make the situation very, very interesting in Germany."
If approved by the regulating authority, Telekom will simplify its price structure by offering two call periods, from 0800 GMT to 1700 GMT (peak), and from 1700 GMT to 0800 GMT (off-peak) on weekdays.
While cheaper offers still exist during peak times, Telekom will strike at competitors with reductions of up to 63% on fixed line tariffs for long-distance calls within Germany. Some regional calls will be up to 33% cheaper.
Deutsche Telekom's chairman acknowledged the price cuts will curb the company's financial scope for investment.
While accepting that the cuts will chip large chunks off earnings in 1999, Telekom hopes to compensate for this by increasing its customer base through more attractive pricing.
-By Angela Cullen; 49 69 25616 500; acullen@ap.org
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November 12, 1998
Irish Govt Sees Significant Benefits In Electronic Commerce
Dow Jones Newswires
DUBLIN -- Ireland has the potential to become a "significant" player in the area of electronic commerce, which will be worth some $300 billion in the next couple of years, Ireland's Minister for Public Enterprise Mary O'Rourke said Thursday.
"The challenge for us is to seize the moment and become a significant player in the area of e-commerce," O'Rourke said at a business meeting on the telecommunications industry in Ireland
O'Rourke said a telecoms advisory committee comprising experts in information technology, which had been set up to advise the government on how best to take advantage of the growth in e-commerce, will report its findings next week.
"I am confident the report will provide a blueprint for the future and our efforts to ensure Ireland becomes that European hub for e-commerce," O'Rourke said.
On the liberalization of Ireland's telecommunications market on Dec. 1, O'Rourke said she expected "good interest" in Irish state-owned telecom company Telecom Eireann, which is due for privatization later this year in an initial public offering of shares in the company.
The Irish government plans to maintain a minority shareholding following the IPO, while a consortium of Koninklijke PTT NV (N.KPN) of the Netherlands and Telia of Sweden (S.TLA) - which currently own 20% of Telecom Eireann - has an option to buy another 15% in the company. That 15% stake will be valued at the time of the IPO.
O'Rourke also said she expected the sale of Irish-based cable operator Cablelink, which is controlled by state-owned phone company Telecom Eireann and state-owned broadcasting company RTE, to be completed by next March.
"Whoever purchases Cablelink has to dramatically upgrade it, that is the main criteria for the sale," O'Rourke said.
She said the decision to sell Cablelink was taken to promote further investments by overseas companies in Ireland's telecommunications and Internet infrastructure.
Cable & Wireless PLC (CWP), a leading provider of integrated communications and a global carrier of communications traffic, said in September it "may" make a bid for Cablelink.
Some observers say Cablelink may be valued at around 230 million Irish punts.
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