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In today’s industry news roundup: Intel is to spin out its telecom and networking business into a separate company as part of its ongoing restructuring process; UK broadband service provider TalkTalk secures crucial survival funds as altnet Netomnia continues its impressive growth; private equity firm KKR reportedly wants to take full control of datacentre operator ST Telemedia Global Data Centers (STT GDC); and more!
Intel is to spin off “key elements” of its Network and Edge Group (NEX), the part of the chip giant that is most relevant to the telecom sector, into a separate business as part of the company’s ongoing restructuring process under new CEO Lip-Bu Tan, who took over in March this year. The chip giant’s CTO and head of AI, Sachin Katti, who is also the general manager of NEX, sent a note to customers stating that Intel plans to spin off the NEX business into a standalone business “focused exclusively on delivering leading silicon solutions for critical communications, enterprise networking and ethernet connectivity infrastructure”, reported CRN, which broke the news late last week. The plan is to repeat the process that Intel undertook with Altera, the FPGA (field programmable gate array) business that was spun out as a separate company last year and in which Intel has sold a 51% stake to private equity firm Silver Lake Partners for $4.46bn. That the NEX business, which generated annual revenues of around $5.8bn last year, is being offloaded will come as no surprise – Reuters reported in May that Tan was considering such a move as part of his plans to focus on the sectors where it can generate the most growth, namely PCs and datacentre infrastructure. Confirming the move to CRN, an Intel spokesperson noted that the company plans to “establish key elements of our Networking and Communications business as a stand-alone company and we have begun the process of identifying strategic investors. Like Altera, we will remain an anchor investor enabling us to benefit from future upside as we position the business for future growth,” the spokesperson added. No timeline for such a spin-off has been suggested. The memo was sent to customers, and communicated internally, as Intel reported second quarter revenues of $12.9bn, better than expected, and an operating loss of almost $3.2bn. The company is in the midst of a major restructuring process that includes a headcount reduction of 15% of the company’s workforce, a move that will reduce its workforce to about 75,000 and help the company reduce its annual operating costs for this year to $17bn. Cuts are being made elsewhere too: In his prepared remarks for the second quarter earnings conference call, Tan noted that Intel will no longer proceed with its plans to build chip fab plants in Germany and Poland. “We need to build capacity smartly and carefully, on a schedule that meets the needs of our customers and supports the economics of our business. This approach is fundamentally different than the path we have been on for the last four years,” stated the CEO. “Unfortunately, the capacity investments we made over the last several years were well ahead of demand, and were unwise and excessive. Our factory footprint has become needlessly fragmented. Going forward, we will grow our capacity based solely on volume commitments and deploy CapEx (capital expenditures) lockstep with tangible milestones and not before.” Intel’s stock is currently trading at $20.78, giving the company a market value of about $90bn.
TalkTalk, the struggling UK broadband service provider that has recently been in negotiations with financial advisors about a rescue package or even a sale, has been given something of a reprieve in the form of a commitment from “an existing shareholder” for £100m of “new funding facilities” as well as the sale of some non-core assets and amendments to interest payments that, in total, “enhance the group’s funding capacity by over £200m,” the ISP has announced. TalkTalk, which has about 3 million broadband service customers, didn’t identify the shareholder, but Sky News named it as investment firm Ares Management. James Smith, TalkTalk Group CEO, commented: “This new investment will significantly strengthen the group’s funding position and demonstrates strong conviction in our business model and value proposition. We have already made significant progress in simplifying the way we run the business and deliver our services. The new investment will enable us to accelerate with confidence the next phase of new product delivery, automation and improved customer experience across both our wholesale and consumer businesses.” In September 2024, TalkTalk managed to negotiate a refinancing deal that gave it a stay of execution by covering the company’s extended debt maturities until September 2027, but it has been reportedly struggling to pay its bills recently.
While TalkTalk grapples with its financial demons, another of the many UK broadband companies hoping for long-term survival and success, Netomnia, is brimming with confidence. The fibre-to-the-premises (FTTP) altnet has just reported the addition of 54,000 new customers during the second quarter to take its total to 341,000, while it expanded its access network reach by 243,000 premises during the April-June period to take the total number of UK premises passed by its network to 2.56 million: It expects to pass the 3 million mark by the end of this year. The company, which is at the start of its revenue-generating journey, reported second quarter sales of £23.6m, up by 256% year on year, and adjusted EBITDA of £4.9m, up by 30% year on year. Netomnia has plans to grow both organically and through strategic M&A deals – last year it announced a merger with Brsk to give it greater scale and efficiencies (the deal closed in August). It also has an experienced management team, headed up by group CEO Jeremy Chelot, a focused expansion strategy, and committed investors in the form of DigitalBridge, Soho Square Capital and Advencap (which was also an investor in Brsk). The operator, along with its retail fibre broadband sister company YouFibre, has raised £795.5m in various forms of financing during the past three-plus years, including £147.5m of debt financing in March last year. Commenting on the company’s performance during the first half of 2025, Chelot noted: “We now have the fastest network build and customer acquisition rate among [the UK’s] altnets. We’re on track to reach 3 million premises passed and achieve EBITDA positivity in 2025. With plans to scale to 5 million premises by 2027, we remain the UK’s most scaled and capital-efficient retail and wholesale platform, positioned to lead industry consolidation.”
Private equity giant KKR is seeking to acquire Singapore-based ST Telemedia Global Data Centres (STT GDC) in a deal that could value the digital infrastructure firm at more than $5bn, according to Bloomberg. KKR already owns a 14.1% stake in the company following a $1.3bn investment in STT GDC last year by a consortium led by KKR and including Singtel. STT GDC operates more than 100 datacentres in multiple markets including Singapore, India, Indonesia, South Korea, Japan, Malaysia, Thailand, Philippines and Vietnam in Asia, and the UK, Italy and Germany in Europe.
As we reported recently, Vodafone Spain has been reporting improved margins and a growing customer base under the ownership of Zegona Communications, which acquired the Spanish operator for €5bn in May 2024: Zegona heralded a “transformational year” when it published Vodafone Spain’s fiscal first-quarter results for the three months ending 30 June. We also noted that Zegona’s share price on the London Stock Exchange has risen dramatically since it acquired Vodafone Spain and started the turnaround process at the Spanish operator – in fact, it has more than trebled, rising from 254 pence on 31 May 2024 to 822 pence today. As a result, Zegona’s chairman and CEO Eamonn O’Hare landed a remuneration package more than £130m (of which £129m was a management share incentive scheme) in 2024, which The Times (subscription required) described as “a landmark in the history of executive pay on the London Stock Exchange”.
French tech startup Arago, which is developing an energy-efficient photonic AI processor, has raised €22.1m in seed funding to accelerate the development of its primary product, a chip codenamed JEF, reports the EU-startups site. “To build a product that’s not only high-performing but also truly usable, it’s critical to deeply understand the constraints of integrating a component based on a different compute principle into the broader ecosystem,” stated co-founder and CEO Nicolas Muller. “We don’t have the luxury of waiting for the ecosystem to adapt – our technology needs to be compatible with everything from manufacturing processes to the AI software stack from day one,” he added.
– The staff, TelecomTV
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