NEWS BUSINESS


Corning targets data centre market with AFOP purchase


Corning has agreed to buy passive optical components maker Alliance Fiber Optic Products (AFOP) for about US$305 million (€270 million). The company’s offer of US$18.50 per share represents a 32 per cent premium to the one-month average closing price prior to the announcement. AFOP designs and manufactures


high-performance passive optical components used by datacom and telecom equipment manufacturers as well as cloud data centre operators. Corning already uses these components in several of its existing connectivity products. ‘Combining AFOP’s components


expertise with Corning’s broad portfolio of connectivity solutions further strengthens our position in the high-growth, cloud data centre market segment, and it adds products that Corning can offer our broad customer base while providing an opportunity for manufacturing synergies,’ said Clark S. Kinlin, executive vice president, Corning Optical Communications. The boards of directors of both


companies have approved the transaction, which is expected to be completed in the second quarter 2016, subject to customary closing conditions and regulatory review. On completion, Corning will integrate AFOP into its Optical Communications business segment.


@fibresystemsmag | www.fibre-systems.com


BT rivals call for Openreach separation


An industry coalition representing Britain’s telecoms providers has


challenged Ofcom to deliver on its promises to reform BT’s Openreach subsidiary and future-proof Britain’s voice and broadband capabilities. The coalition represents major consumer


brands Sky, TalkTalk and Vodafone, as well as the Independent Network Cooperative Association (INCA) on behalf of ‘alternative network’ providers of next-generation connectivity. In an open letter to the regulator, the group


presented Ofcom CEO Sharon White with a 10-point action plan to ensure Openreach is fit to equip the nation for the challenges of tomorrow. In February, Ofcom’s Digital Communications


Review concluded that reforming Openreach is critical to improving Britain’s telecoms market. Although it said that separation of Openreach from BT Group is ‘the cleanest and most clear-cut long-term solution’, Ofcom indicated that it would first explore other options. Chris Pateman, CEO of the Federation of


Communication Services, whose members specialise in serving Britain’s five million business customers, commented: ‘Frankly, FCS was disappointed Ofcom’s review of digital communications stopped short of recommending the complete structural separation of Openreach from the BT Group.’ Although Ofcom believe improvements can be


delivered without the hassle and delays of a full separation, the coalition disagrees. Step one in its


plan is ‘Establishing Openreach as a legally separate company’. The plan put forward by the coalition draws on


best practice as outlined in the UK Corporate Governance Code, the group claims. The proposals have also been informed by proven approaches in other UK sectors – including the energy, civil aviation and water markets – as well as elsewhere around the world. ‘The measures we have proposed are not


controversial or drastic, but reflect arrangements that are commonplace for large listed companies,’ Pateman added. Indeed, structural separation is not unknown in


the telecom industry. Telecom New Zealand split into an infrastructure arm, Chorus, and a retail arm, Spark, as part of the government’s plan to deploy a national fibre-to-the-home (FTTH) network. In June last year, O2 Czech Republic became the first operator in Europe to separate voluntarily. Telecom consultancy firm Diffraction Analysis


argues that telecom operators should consider structural separation because it could increase value for shareholders and release more cash for investment in infrastructure. ‘It [structural separation has] been seen to work


very well for New Zealand, and the Czech Republic’s O2


is currently undergoing the same


process. This is neither new nor rocket science,’ wrote Benoit Felten, chief research officer with Diffraction Analysis in a blog post last year. Ofcom is expected to publish its proposals for the future of Openreach in the summer.


A strategic plan to bring fibre to the homes and businesses of 32 million people across 224 Italian cities has been announced by Italian utility operator Enel. Through Enel Open Fibre (EOF),


a company established by Enel in December last year to build and operate broadband fibre infrastructure across Italy, the plan will be enacted through several phases, with an estimated 7.5 million homes reached within the first few years. The Italian government is a key


partner in the utility company, with Italy’s economy ministry owning a stake of around 24 per cent.


Enel to invest €2.5 billion to bring fibre to 224 Italian cities The plan will provide investment


of about €2.5 billion over its lifetime. EDFwill operate solely within the


wholesale market and will be commercially available to build infrastructure for other licensed operators. In keeping with that strategy,


Enel’s board of directors have discussed a letter of intent between EOF, Vodafone and Wind, with the purpose of defining a strategic and commercial partnership for the development of the Italian broadband telecommunications network. Enel is also preparing an offer to buy a majority stake in fibre


6 FIBRE SYSTEMS Issue 12 • Summer 2016


infrastructure company Metroweb, according to sources cited by Reuters. One of the pioneers in fibre-to-the-home with its network in Milan, Metroweb is currently owned by Italian infrastructure fund F2i. According to unnamed sources


cited by Bloomberg, Enel’s proposals have been met with resistance from Telecom Italia. Media reports said the company is considering cutting nearly 30 per cent of its workforce – up to 15,000 jobs – in response to the increased competition. Telecom Italia’s new controlling shareholder, French media


company Vivendi, has stressed that it does not intend to cut jobs. However, that move may be unavoidable; sources estimate that the relationship between Telecom Italia, Vodafone Italia and Wind will be heavily impacted by EOF’s broadband plans, leading to a potential loss by Telecom Italia of roughly five million wholesale customers. With the lowest coverage of all


28 EU member states, Italy has fallen behind on digital development, especially in terms of the connectivity targets expected by the European Commission in its Digital Agenda for Europe.


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