T-Mobile buys U.S. Cellular for $4.4B / Deep Dive: Apple's China iPhone shipments surge 52% / U.S. Memorial Day box office hits '95 low

Plus, Shin Ramen expands with Korean noodles

Inside Business For May 28, 2024

Here’s your daily business briefing. 📱 T-Mobile buys U.S. Cellular for $4.4B 📈 Deep Dive: Apple's China iPhone shipments surge 52% 🎬 U.S. Memorial Day box office hits '95 low Thanks for reading! Shriram p/Shriram

1 T-Mobile has announced the acquisition of nearly all of U.S. Cellular's wireless operations, including customers, stores, and 30% of its spectrum assets, in a $4.4B deal. U.S. Cellular's shares ($USM) jumped over 10% after the announcement, almost ten months after the company revealed it was exploring strategic options. More: T-Mobile ($TMUS) intends to finance the acquisition through cash and up to $2B in assumed debt, which will be offered to certain U.S. Cellular debtholders. The acquisition aims to enhance coverage for T-Mobile's customers. T-Mobile expects no impact on its 2024 financial outlook or shareholder returns while projecting about $1B in cost synergies from operational and capital expenses. The deal, slated to close by mid-2025 pending regulatory clearance, needs no shareholder intervention, as Telephone and Data Systems, holding an 83% stake in U.S. Cellular, has consented.

2 What the numbers say: iPhone shipments in China surged 52% in April 2024, making up most of the 3.5 million units shipped by foreign brands. After declining in the first two months of the year, sales stabilized in March and rebounded in April. Relevance: The rebound is due to significant price cuts from Apple ($AAPL) and its resellers since early 2024, ahead of the June 18th shopping festival. Despite losing market share to Huawei, the iPhone has regained its position as the top mobile device among Chinese consumers, according to a Bloomberg Intelligence poll. More data: The surge in iPhone sales is driven by a premiumization trend in China, with over half of consumers willing to spend more than 4,000 yuan ($550) on their next phone, up from 33% currently using premium handsets. The April increase in iPhone shipments highlights strong demand from high-end users seeking better devices for longer usage cycles.

3 The U.S. box office is projected to have its worst Memorial Day weekend since 1995, with estimated ticket sales of $128.3M, down from $205M in 2022. "Furiosa: A Mad Max Saga" led the weekend with $32M in sales, as the summer box office remains slow due to last year's Hollywood strike delays. More: The summer season, constituting nearly 40% of yearly domestic revenue, is critical in determining annual totals. The blockbuster films Barbie and Oppenheimer, released last summer, collectively generated nearly $1B in domestic box office revenue. Analysts predict a 20-25% drop in summer 2024 box office revenue compared to the previous year, with "Deadpool & Wolverine" and "Inside Out 2" expected to boost earnings. "Deadpool & Wolverine" broke first-day ticket presale records and is projected to debut with earnings ranging from $170M to $210M. Box Office Pro forecasts 2024 box office earnings to reach $8.2B, approximately 10% lower than the $9B earned in 2023, remaining below pre-pandemic levels.

4 Nongshim, South Korea's leading instant noodle maker, is expanding globally due to the rising popularity of Korean culture, particularly in the U.S. The instant noodle market, valued at $50B, saw South Korea's exports reach $1B last year, with Nongshim's popular Shin Ramyun achieving record sales of $883M in 2023, with nearly 60% originating from abroad. More: Nongshim aims to triple its annual U.S. sales to $1.5B by 2030 by targeting mainstream consumers attracted to Korean culture, including K-pop and movies like Parasite. Nongshim commands a 25.4% market share in the U.S., with sales increasing by 10% to $538M last year. Despite their higher prices, Nongshim's strategy of offering premium products like Shin Ramyun Black has proven successful in the U.S. market. To meet growing demand, Nongshim is expanding production lines at its Los Angeles facility and exploring constructing a third plant in the U.S. Sales stagnation in China has prompted Nongshim to shift its focus to the European market, where first-quarter sales surged by over 30% to $80M.

5 Hotel day passes offer budget-conscious travelers access to amenities without booking a room, with ResortPass leading the market by partnering with over 1,300 luxury hotels. U.S. luxury hotel room rates averaged $400 per night from Jan. 1 to April 6, with rates expected to rise by 85% in July compared to pre-pandemic levels. More: A Booking.com survey found that over 60% of respondents consider their cost of living when planning travel, with many willing to pay for accommodation upgrades. Day passes cater to the post-Covid "revenge travel" trend, offering luxury experiences at a fraction of the cost. Virgin Hotels New York City offers day passes starting at $130, granting access to amenities like rooftop pools with views of the Empire State Building and city skyline. ResortPass has served over 3 million users, offering day-pass access in 250 cities starting at $25. The average ResortPass customer spends around $165 on all-day access, often splurging on additional amenities more than overnight guests.

6 The soda firm Olipop Inc. expects sales of about $500M this year, which will double its $200M revenue in 2023. Since its founding in 2018, the business has grown quickly; in 2019, its revenue was less than $1M. More: Olipop, a young food and beverage company, has achieved profitability, a rarity in the industry, and remains open to raising more funds given the competitive market. Olipop's sodas, with reduced sugar and fortified with prebiotics and fiber for gut health, cater to the rising demand for healthier alternatives. After gaining traction in Northern California independent stores, the company saw significant success upon entering Erewhon, a popular health food market in Los Angeles. Olipop has expanded distribution to over 30,000 locations, including major chains like Whole Foods and Sprouts, catering to a diverse customer base from Sweetgreen to Wawa.

7 Quick Hits: Thinking about growing your business? We'll work as hard as it takes to Make Ohio your competitive advantage* GameStop's stock surged 17% on Tuesday following the announcement by the struggling video game retailer that it had raised over $900M by selling its shares during the recent market rally. Blackstone Inc. purchased a $1B mortgage portfolio from Deutsche Pfandbriefbank AG, encompassing 11 loans secured by multifamily, office, and hospitality assets in the U.S. and U.K., amidst volatile commercial real estate markets. Toyota unveils a new line of combustion engines to complement batteries in hybrid vehicles, positioning itself as a challenger to Tesla's dominance in the automotive industry. Evergrande's EV unit shares surged up to 113% after a potential buyer emerged, with an unconfirmed deal possibly granting a 29% stake and offering a credit line for EV production. *This is a sponsored listing.

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Shriram Jeevakumar Freelance Writer Shriram is pursuing Master’s in Business with Marketing at Warwick Business School. He worked as a Senior Consultant in Tech and Political Consultancies before his Masters. He is passionate about Tech, Marketing, Strategy, Anthropology and Politics. He is also the Postgraduate Ambassador for Warwick Business School. This newsletter was edited by Shriram Jeevakumar

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OpenAI establishes oversight board / Hydrogen generation market to grow to $259B / Value of Spanish startups crossed the €100B mark

Plus, Cloover bags $114M seed funding round

Inside Startups For May 28, 2024

Here’s your daily Startups briefing: 🕵️‍♂️ OpenAI established an oversight board to evaluate the safety protocols 📈 Global hydrogen generation market size is expected to grow to $259B by 2033 🇪🇸 Enterprise value of Spanish startups crossed the €100B mark in 2023 Thank you.     Karan p/karan-chafekar

1 OpenAI has formed a new board committee to evaluate the safety protocols of its powerful AI models. The governance shift comes weeks after the company disbanded its internal AI safety team. On Sunday, two former board members, Helen Toner and Tasha McCauley, criticized OpenAI's governance through a column in The Economist.  More: The new board committee will conduct a 90-day review of the safeguards currently in place before giving a report.  OpenAI's rapid AI advancements have raised concerns about the technology's potential risks and the long-term threats of superhuman AI.   Recently departed employees, chief scientist Ilya Sutskever and key deputy Jan Leike, highlighted that their teams were struggling for computing resources within OpenAI.  Last fall, CEO Sam Altman was briefly ousted over disagreements with Sutskever over the pace of AI development and implementation of safeguards. The nine-person committee includes Altman, board chairman Bret Taylor, Quora CEO Adam D'Angelo, ex-Sony Entertainment executive Nicole Seligman, and the new head of alignment science John Schulman, who replaced Sutskever.  It will also consult with external advisors with government experience, including former President Donald Trump's homeland security adviser Rob Joyce and former Justice Department official John Carlin.

2 Precedence Research expects the global hydrogen generation market size to grow by 5.75% CAGR to $259B by 2033.  What the numbers say: The global hydrogen market is currently worth $155.3B in 2024, of which the U.S. accounted for $19.1B. The growth rate in the U.S. is also expected to be about 5.7% CAGR between 2024 and 2033. Europe's hydrogen generation market is forecasted to grow at 5.12% CAGR to $42.2B in 2033. Latin America is expected to report the slowest growth rate of any region, predicted to grow at 2.22% CAGR to reach $8.1B in 2033.  Relevance: The Asia Pacific region bagged a 47.32% revenue share within the hydrogen generation market. The Asia Pacific region dominated the hydrogen generation market and is expected to show the fastest growth rate amongst all regions. The market in the region is projected to grow from $74.5B in 2024 to $137B by 2033.

3 The cumulative enterprise value of Spanish startups crossed the €100B ($108.8B) mark in 2023, according to a Dealroom report cited by Techcrunch. Spanish startups raised €2.2B ($2.4B) in VC funding through 850 funding rounds. While the tally was lower than 2021 and 2022, funding still remained above pre-pandemic levels.  More: VCs invested €1.9B ($2.07B) in Spanish startups in 2019.  Spain has 18 unicorn startups valued at more than $1B.  While investment in late-stage startups remained "quiet" with only two mega-rounds, VC funding for early-stage startups, including pre-seed, seed, and Series A rounds, set a new record high in 2023.  Last year's VC investment heavily favored climate tech, biotech, and clean energy companies aligned with Europe's strategic interests.

4 Berlin-based solar software and financing startup Cloover has raised $114M in equity and debt funding. Lowercarbon Capital led the seed round, with additional backing from QED and 9900 Capital. The funding will help advance Cloover's mission to install residential solar systems across Europe. The equity tranche will be used to ramp up hiring and sales, increase the distribution network, and accelerate technology development. The debt funding will be used to finance rooftop solar, storage, and heat pump system installations.  More: Homeowners can avail of monthly subscription plans, which can help them finance their solar installer over a 20-year tenure.  The cleantech startup already operates in Germany, Switzerland, Sweden, and the Netherlands.  Cloover sees a large underserved opportunity in the European markets of Spain, France, and Britain, where it plans to expand operations soon.  Germany has made residential rooftop installations compulsory or new buildings and offers a sales tax exemption, which helps lower installation costs by 20%.

5 India's largest electric cab operator BluSmart plans to raise $300M over the next three years. BluSmart is raising fresh capital to increase its EV car fleet to 25,000 in the next three years. Part of the new funding will fuel BluSmart's expansion beyond Delhi and Bengaluru to other major Indian cities. The company is also launching services in Dubai next month, starting out initially with 100 Audi EVs, with plans to grow its fleet to 300 Audi and Tesla vehicles by year-end. More: The BP Ventures-backed startup aims to grow its Indian electric vehicle fleet from 7,500 cars currently to 13,000 by March.  BluSmart sources EVs from automakers like Tata Motors, BYD, SAIC's MG Motor, and Stellantis NV's Citroen. Unlike other ride-hailing platforms, BluSmart owns and operates all its vehicles through long-term leases, aiming to deliver a premium experience that customers will pay more for.  The company expects to nearly double its revenue to $110M by March 2025. BluSmart has raised $200M in total equity and debt funding so far.

6 Crypto hardware startup Ledger started shipping its Ledger Stax devices, a secure crypto hardware wallet with a curved e-ink display. Ledger designed the device in partnership with Tony Fadell, one of the main designers behind the iPod. Ledger will list the device on its website once it has completely fulfilled all its pre-orders.  More:  Ledger announced the device 18 months ago, featuring a larger touchscreen than other devices in its lineup, such as Nano S Plus and the Nano X.  The startup faced difficulties bringing its device to the market due to challenges associated with producing curved e-ink displays at scale.  Ledger sold the device for €279 ($300) during the pre-order phase.  Ledger roped in consumer electronics manufacturing company Foxconn to produce the new Ledger Stax device.

7 Quick Hits: Thinking about growing your business? We'll work as hard as it takes to make Ohio your competitive advantage.* AI startup Anthropic hired Krishna Rao as its chief financial officer. Anthropic expects Rao to play a crucial role in advancing Anthropic's enterprise and global growth. Co-founder and president Daniela Amodei emphasized Rao's expertise in financial strategy, capital allocation, and scaling organizations.  Israeli startup Plastic Back partnered with Thai petrochemicals firm SCG Chemicals to turn recycled polyvinyl chloride (PVC) waste into naphtha fuel for industrial use in Thailand. The startup turns discarded plastic from landfills into its original form of crude oil through a proprietary process.  Waukesha County Technical College announced the gALPHA and gBETA Applied AI Lab accelerator programs in collaboration with startup organization gener8tor.  India Accelerator launched the RUMS (Robotics, Unmanned & Space) accelerator program, to invest between $10M and $15M capital into early-stage startups working on unmanned aerial systems, counterdrone systems, ground robots, and space systems.  *This is sponsored content

Karan Chafekar Analyst Karan Chafekar is a Management Consultant, Business enthusiast, and Licensed Pilot.  This newsletter was edited by Karan Chafekar

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