Telecom
BlackBerry May Abandon Physical Handset for Cyber Security
With losses at £2.7bn, John Chen, interim chief executive must find a new way forward as Bloomberg Businessweek magazine’s cover showed a range of archaeological objects – a flint arrowhead, a skull – and a BlackBerry handset, which labels the company as still in the woods.
Meanwhile, Chen has already outlined a new strategy for the Canadian company in which he acknowledged that making smartphones was a thing of the past. As an alternative, the company will focus on intangible services such as offering cyber-security for businesses and not making physical handsets.
Making smartphones has not been a good business for anyone who isn’t Apple and Samsung recently, as they have squeezed the profits out of the rest of the industry, according to a report by Guardian of UK. BlackBerry, however, last Friday announced a loss of $4.4bn (£2.7bn) on revenues of just $1.2bn; only a tax rebate of $624m saved its net figures from being worse.
Those three months to the end of November marked a turning point: for the first time, BlackBerry now gets more money – 53% of revenues – from selling “services” such as sending data including email and web pages, than it does from selling handsets, which generated 40%. Software made up the other 7%.
But that has come as the company’s revenues have shrunk to levels smaller than at any time since May 2007, and the number of phones shipped, 1.9m, is the smallest since December 2006. BlackBerry, whose founders laughed at the iPhone’s lack of a keyboard, is out of the smartphone race.
In future Foxconn, which makes the iPhone, will co-design and manufacture BlackBerrys too, and hold the stock. BlackBerry will effectively become a reseller of its own phones.
“The smartphone business is brutal,” said Kevin Restivo, global smartphone analyst at the research company IDC. “It’s one where the big players – Samsung, Apple, and a few Chinese companies – are going to have success, and the others are scratching for crumbs.”
Andy Perkins, an analyst at Société Générale, told Bloomberg: “At some point it becomes uneconomic to make handsets in such small quantities.”
Chen is a turnaround artist. He was brought in to the software company Sybase, where he executed a successful reorganisation.
Since taking over barley two months ago, he has overseen a number of departures of existing senior executives, and hired some former colleagues. The obvious conclusion is that he is reshaping BlackBerry as a services and software company.
Unlike other struggling smartphone makers, BlackBerry can fall back on tens of millions of customers in large businesses, who rely on the security of its products. Chan said that 80% of Blackberry users were business customers.
That could be anywhere up to 50 million users worldwide, offering a substantial base for rebuilding any corporation, even the struggling BlackBerry.
But the data also confirmed that BB10, the operating system launched in January by Heins, has been a flop. Since March, BlackBerry’s customers have bought a total of around 17m phones, but only 5.6m have been BB10 devices.
The new products have fared poorly with consumers and the large businesses that rely on BlackBerry. Consumers have been turned off because the BB10 functions differently from the old BB7 model, while businesses have backed away because BB10 devices can’t be hooked up to the older BlackBerry Enterprise Server (BES) systems so many big customers use.
So while consumers have dumped them in favour of other makes, BlackBerry-using businesses have taken one of two paths: either sourcing old BB7 handsets to keep their existing users happy, or abandoning BlackBerry altogether.
Even Goldman Sachs, once a BlackBerry fortress, has begun letting some executives use iPhones for email, a move that would have been unthinkable a few years ago.
Chen has an answer to both. For consumers, BlackBerry will try to somehow make money from the millions of people who have downloaded the BBM messaging software and installed it on to iPhones and Android phones.
“Revenues might come from a per-user per-month model, or rolling out advertising,” he said on Friday. “We’re a long way from knowing how to do it.”
For businesses he will offer “mobile device management” software that will be able to control not just BlackBerrys, but also iPhones and Android phones.
But there are plenty of rivals there, and it’s not a big business – worth only about $560m (£343m) this year globally for all vendors, and growing at 12% annually, according to ABI Research. Even if a reshaped BlackBerry captures more than half of that, it would still look tiny compared to what it was.
That means, said IDC’s Restivo, that, “BlackBerry’s not out of the woods yet.” He explains: “First and foremost, Chen needs to figure out how to make money from products that have a significant customer base and are growing. The handset business isn’t growing. And how they’re going to generate significant revenue from BES and BBM, and create a company driven by those two parallel paths – right now, the path isn’t clear.”
National Association of Telecoms Subscribers (NATCOMS), a telecoms subscriber body, has warned Nigerian Communications Commission (NCC) not accede to demands by telecommunications companies in the country to hike tariff, insisting that such increase would unleash further hardships on its members.
Chief Deolu Ogunbanjo, president, NATCOMS said in statement that the group in a recent emergency meeting over the planned tariff hike of telecommunication services, unanimously voted against any tariff hike.
Ogunbanjo, said telecoms services are taxable services under the Value Added Tax Act.
The Act was amended in 2019 by the Finance Act of that year to raise the tax rate from five per cent to 7.5per cent which was 50per cent increment and the increment has been borne by the consumers of rateable telecom services.
“That increment brought about untold hardship to our members many of who have been forced to cut back on their telecom requirements.
“As if that was not bad enough, the Federal Government got the National Assembly to enact the Finance Act of 2020. Section 37 of the Act amended Section 21 of the Customs, Excise Tariff etc. (Consolidation) Act by imposing an excise duty charge on Telecommunication Services. The then president, President Muhammadu Buhari by an order prescribed five per cent as the rate of the excise duty charge, chargeable for telecommunication services. The additional tax burden was greeted with public outcry and this association, at the prompting of our members, challenged the excise duty charge in court, in the case of Registered Trustees of National Association of Telecommunications Subscribers (NATCOMS) V MTN Nigeria Communications Limited and Others – Suit No: FHC/L/ CS / 189) 2023 on the ground of double taxation which is illegal and unconstitutional.
NCC and other Federal Bodies are parties to the suit and the Federal Government as represented by the Federal Inland Revenue Service (FIRS) entered an appearance and filed processes opposing the suit. The case is now pending before Hon. Justice Aluko, sitting at the Lagos Division of the Federal High Court, and the case is slated to come up in the court on the 13th March, 2025,” Ogunbanjo said.
Mafab Communications, a Nigerian telecommunications company that acquired a 5G license in 2021, is set to begin operations by the end of the first quarter of 2025, according to Adebayo Onigbanjo, chief operating officer of the company.
Onigbanjo who shared this update with TechCabal, this launch will mark the first time Mafab’s services will be available commercially, nearly three years after the company entered the 5G market.
The company plans to roll out its 5G services with 102 operational sites located in Kano and Abuja.
Subscribers will need to purchase routers to access the network. Mafab is also working with multiple vendors to develop these sites in phases as part of its strategy for deployment.
Mafab Communications obtained its 5G license on the same day as MTN.
However, while MTN launched its 5G services within eight months, Mafab, being a newer entrant, experienced delays in deploying its network due to insufficient telecom infrastructure.
These challenges were further exacerbated by the company’s delay in receiving its Unified Access Service License (UASL) and numbering plan, which was only granted in July 2022.
This situation led Mafab to seek an extension from the Nigerian Communications Commission (NCC), postponing its initial rollout deadline to January 2023.
Following its launch event in January 2023, the company began promoting the sale of 5G routers on its website.
However, buyers quickly discovered that they could not activate the service, as uncovered by TechCabal.
Consequently, the sale of these routers has been suspended while the company focuses on completing its infrastructure buildout.
Despite the early stage of the 5G market in Nigeria, these delays have put Mafab at a disadvantage, leaving it to catch up with competitors like MTN and Airtel, particularly in Lagos, the country’s bustling commercial hub where most 5G subscribers are currently concentrated.
Although Mafab is actively working on its Lagos sites, the company has yet to announce when services will officially launch in the city.
According to Onigbanjo, foreign exchange (FX) fluctuations have posed a significant challenge, leading to higher rollout costs than initially projected—a difficulty faced by many telecom operators.
Since its commercial introduction in August 2022, Nigeria’s 5G market has experienced steady growth, spearheaded by MTN Nigeria.
By October 2024, 5G services accounted for 2.33% of the nation’s internet subscribers, with MTN Nigeria commanding a 79% market share and Airtel Africa holding roughly 20%.
Mafab’s anticipated rollout in Q1 is expected to further drive 5G adoption, particularly in cities beyond Lagos and Abuja.
The company has prioritized building robust infrastructure and extending its coverage in Kano and Abuja to support broader access to 5G services.
According to Onigbanjo, this includes developing a Radio Access Network (RAN), transport systems, and intelligent networks designed to connect various user devices—ranging from smartphones to IoT gadgets—to the company’s core telecom network.
Telecommunication companies in Nigeria are lobbying their regulator for permission to double price tariffs to weather harsh economic conditions and inflation running near a three-decade high.
“We’ve put forward requests of approximately a 100% increase” to the regulator, Karl Toriola, chief executive officer of MTN Nigeria Communications Plc, told Lagos-based Arise TV.
“There’s no way that the industry could continue to sustain itself and provide the required quality of service under the present structure,” he said.
The industry has been stepping up efforts for permission to relax pricing rules that have been in place for 11 years, amid surging annual inflation that touched 34.6% in November, and the steep depreciation of the naira against the dollar.
If the pricing issue is resolved, Toriola is optimistic 2025 will be a good year for operators.
The unit of MTN Group Ltd. plans to grow voice and data revenue this year by increasing coverage of rural areas as well as 5G broadband penetration, he said.
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