MWC 2022 Day 2 – Absent is good.

5G non-entity

• 5G is missing in action at its own show but in many ways, this is a good thing.
• It means that there is no real controversy, problem or anything desperately exciting about 5G.
• It has dissolved into the background as it is being rolled out in volume and there will be around 1bn devices in circulation by the end of 2022.
• This is exactly what one wants as it is only when the technology stops getting in the way and it melts into the background does it really begin to be useful.
• The use cases for it where one has to have a 5G connection as opposed to 4G are still few and far between which means that it is in the economics where the difference needs to be found.
• At 2Ghz and up to 6Ghz frequencies, 5G offers better economics than 4G in terms of the cost per bit which is why some operators are offering incentives to get their subscribers onto 5G.
• This is particularly the case in the USA where unlimited data packages need to be aggressively cost optimised given fixed revenues and variable costs.
• Hence, 5G being absent at this show is a sign of it reaching the mainstream as everyone is focused on gossiping about other, more interesting topics.

Jolla – More hurricanes.

• Just when it looked like the hardy sailors at Jolla appeared to have found a safe harbour, the international disgust at the invasion of Ukraine has thrown the future of this company into doubt yet again.
• Jolla was born from Nokia’s attempts to create smartphones using Linux but has now found a home in the rapidly digitising automotive sector.
• The problem is that Rostelecom owns a significant stake in Jolla from the days when it did business in Russia and with the current situation, this turns Jolla into toxic waste.
• It means that its prospects of winning new customers and even the presence of its current partner, Daimler, are now in grave doubt.
• Jolla has been winding down its Russian operations during 2021 and has been seeking ways to reduce Rostelecom’s position but this strategic goal has become a critical issue requiring immediate attention.
• Consequently, Jolla needs Rostelecom to sell its stake in Jolla to a non-Russian entity as soon as possible.
• Fortunately, with Daimler as a partner and the accelerating trend of the digitisation of the vehicle, finding someone to take on the Rostelecom position is not the impossible task that it sounds.
• This is much easier than the position that British Petroleum finds itself in as it has to sell its Russian assets which will be much harder to do in this market.
• Jolla is a Finnish company that has an instinct for survival (see here) that puts an Emperor Penguin to shame which no one is going to object to having a shareholding in.
• Hence, I think Jolla will survive this latest calamity and will go on to have a good shot at the automobile where it is enabling Android apps to run on Linux or other vehicle software with no input or interference from Google (exactly what many OEMs want).