Gadgets & technology

Rivian Lost $1.7 Billion in the Second Quarter

Rivian, a fledgling electric vehicle manufacturer, said Thursday that it lost $1.7 billion in the second quarter and estimated that it would make just over 26,000 vehicles this year, about a thousand more than it previously forecast.

The company said it was continuing to struggle to get enough components to ramp up production to higher levels.

“Supply chain continues to be the limiting factor of our production,” the company said in a statement. “However, through close partnership with our suppliers we are making progress.” Rivian also said it expected to add a second shift of production toward the end of the third quarter.

Rivian said it generated $364 million in revenue in the three months from April to June, up from $95 million in the first three months of the year. It also said it had customer reservations for 98,000 vehicles at the end of June.

Rivian said last month that it produced 4,401 vehicles in the second quarter, and delivered 4,467 to customers.

Rivian was once viewed as “the next Tesla,” an electric-vehicle maker poised to grow rapidly and unsettle century-old giants of the auto industry like Ford Motor, General Motors and Volkswagen. It planned to make an electric pickup and sport-utility vehicle — models that would set it apart from the minimalist electric cars Tesla produces.

The company gained billions of dollars in backing from investors including Ford and Amazon, which announced it intended to buy 100,000 electric delivery vans from Rivian.

Rivian’s initial public offering was the largest of 2021, and within a few days its stock price soared. For a time, the company’s market value was greater than that of Ford and General Motors combined.

But difficulty in sourcing critical computer chips and manufacturing troubles at its plant in Normal, lll., kept production far below what the company had hoped for. It has also struggled to build delivery vans for Amazon. Rivian’s stock price plummeted and investors remain concerned about the company’s prospects.

Now, as production is climbing, it faces a tougher competitive landscape. Ford has started making an electric pickup, the F-150 Lightning, which is likely to pass Rivian in sales by the end of the year. Ford, Volkswagen, Hyundai and several others have ramped up sales of electric S.U.V.s, and G.M. has said it will start selling an electric version of its Chevrolet Silverado pickup and a pair of electric S.U.V.s next year.

Buyers of some of Rivian’s vehicles are also expected to soon lose access to a federal tax credit under the climate bill that the House is expected to approve on Friday; the Senate passed it on Sunday. Under the bill, purchases of vans, S.U.V.s and pickups that sell for more than $80,000 will not qualify for tax credits. The credits will also not be available to individuals or couples who earn more than $150,000 or $300,000 a year.

Rivian said last month that it was laying off about 6 percent of its 11,500 employees. “To fully realize our potential, our strategy must support our sustainable growth as we ramp towards profitability,” the company’s chief executive, R.J. Scaringe, said in a letter to employees. “We need to be able to continue to grow and scale without additional financing in this macro environment.”

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Marqeta shares fall on departure of Jason Gardner as CEO

Marqeta celebrates IPO at the Nasdaq on June 9th, 2021.

Source: The Nasdaq

Shares of payment processor Marqeta tumbled 24% on Thursday after founder Jason Gardner announced plans to step down as CEO, and the company said it’s being cautious given the challenges in the economy and fintech sector.

Gardner started Marqeta in 2010 and grew it into a company that was worth over $16 billion after its stock market debut last year. However, the stock is more than 75% off its high, and the broader tech market swoon has pushed the company’s valuation below $5 billion.

“To maximize the next stage of growth, as we diversify the business and the capabilities we offer and the geographies we serve, we want to be very proactive and begin our succession planning process by looking for the next CEO to lead Marqeta,” Gardner told analysts on the earnings call. He said he’s staying on as executive chairman and will remain CEO as the company looks for a successor.

Marqeta sells payment technology that’s designed to detect potential fraud and ensure that money is properly routed. The company issues customized physical cards that look like credit and debit cards, which contractors from DoorDash or Instacart use to make point-of-sale purchases from restaurants or supermarkets.

For the second quarter, Marqeta beat estimates as revenue jumped 53% from a year ago to $187 million. But CFO Mike Milotich warned of economic challenges on the horizon. He said it’s “prudent to be cautious about the next several months.”

In particular, Milotich said many of the customers that signed up in the last year, including crypto companies, will ramp their business more slowly than previously expected. He also called out the “fintech-specific challenges with significant declines in valuation and increasing difficulties in raising capital.”

Still, analysts at KeyBanc Capital Markets lifted their price target to $12 from $11 and increased their revenue estimate for the year.

“Based on our research, we believe Marqeta has established a strong market presence with customers based on platform modularity, innovation velocity and roadmap, deep domain knowledge, fair and aligned contract terms, and robust commercialization capabilities with a general desire to expand international presence,” the KeyBanc analysts wrote in a note after results were released late Wednesday.

WATCH: Marqeta CEO on the need to diversify

New York Times stock jumps on ValueAct 6.7% stake

The New York Times building

Jonathan Torgovnik | Getty Images

Activist investor ValueAct has built a 6.7% stake in the New York Times, according to an SEC filing out Thursday, sending shares of the media company up around 10% in afternoon trading.

“We are aware that ValueAct has made an investment in the Company,” a spokesperson for the New York Times said in a statement. “As we do with other shareholders, members of our management team have had conversations with ValueAct to hear their views and share ours.”

ValueAct purchased more than 11 million shares and reportedly wants the news organization to push further into subscriber-only bundles, according to Bloomberg, who first reported the stake.

The New York Times added roughly 180,000 digital-only subscribers and 230,000 digital-only subscriptions during the second quarter of 2022, reflecting users with more than one subscription to the company’s productions, according to its earnings release out last week. The adds brings the organization’s total to 9.17 million subscribers and 10.56 million total subscriptions across print and digital, including 1 million subscribers to The Athletic, which the company recently acquired.

Digital subscription revenue was $238.7 million in the second quarter of this year, up from 2021. These subscriptions include digital access to the company’s news, its popular cooking offering, and games.

ValueAct did not immediately respond to request for comment from CNBC. The firm’s 2018 investment in Citigroup reportedly sped up the retirement of CEO Michael Corbat.

This story is developing. Please check back for updates.

Disney is raising prices, but this time, don’t blame inflation

Another major American company is raising prices again, but this time, don’t blame inflation.

Disney is increasing the price on its streaming products and signaled that a price hike could be in the works at its theme parks as well. On Wednesday, the company said the price of Disney+ without ads is jumping $3 per month to $10.99 starting Dec. 8. Hulu with ads will increase by $1 per month to $7.99, and Hulu without ads will jump $2 per month to $14.99.

Then on Thursday, Disney Chief Executive Officer Bob Chapek indicated to CNBC’s Julia Boorstin that a price increase will likely happen at theme parks as long as people keep coming in droves.

“We read demand. We have no plans right now in terms of what we’re going to do, but we operate with a surgical knife here,” Chapek said. “It’s all up to the consumer. If consumer demand keeps up, we’ll act accordingly. If we see a softening, which we don’t think we’re going to see, then we can act accordingly as well.”

Instead of blaming the rising cost of materials, labor and gas, Disney is rationalizing the increases based on the consistency of the popularity of its products. Disney said Wednesday that Disney+ added 15 million new subscribers last quarter, blowing out expectations. It also said it expects further growth for core Disney+ (excluding India’s Disney+ Hotstar) next quarter beyond the 6 million it added in its fiscal third quarter.

Raising prices on the back of strong demand isn’t new for Disney. The price of theme park tickets has climbed for decades. During its most recent quarter, the company posted a 70% revenue increase in its parks, experiences and products division, rising to close to $7.4 billion. Per capita spending at domestic parks rose 10% and is up more than 40% compared with fiscal 2019.

Handout | Getty Images Entertainment | Getty Images

Disney strategically caps attendance at its parks, an effort that was borne out of the attempts to avoid crowding during the Covid pandemic. The move is a way to improve the customer experience. Additionally, the company has added Genie+ and Lightning Lane products, which curate guest experience and allow parkgoers to bypass lines for major attractions.

Beyond the parks, Disney annually asks cable TV providers to pay aggressive price hikes for ESPN because it knows there’s strong demand for its stable of live sports rights.

Disney+ first launched in November 2019 at $6.99 per month. About three years later, that price will have risen 57%. The service now has more than 152 million customers.

Chapek has experienced his share of bumps in the road since taking over for Bob Iger as Disney CEO. But one thing hasn’t changed: consumers still seem to enjoy what Disney has to offer.

WATCH: CNBC’s full interview with Disney CEO Bob Chapek

‘Forget the past three years’

Eugene Zhang, founding partner of Silicon Valley VC firm TSVC Spencer Greene, general partner of TSVC

Courtesy: TSVC

Eugene Zhang, a veteran Silicon Valley investor, recalls the exact moment the market for young startups peaked this year.

The firehose of money from venture capital firms, hedge funds and wealthy families pouring into seed-stage companies was reaching absurd levels, he said. A company that helps startups raise money had an oversubscribed round at a preposterous $80 million valuation. In another case, a tiny software firm with barely $50,000 in revenue got a $35 million valuation.

But that was before the turmoil that hammered publicly-traded tech giants in late 2021 began to reach the smallest and most speculative of startups. The red hot market suddenly cooled, with investors dropping out in the middle of funding rounds, leaving founders high and dry, Zhang said.

As the balance of power in the startup world shifts back to those holding the purse strings, the industry has settled on a new math that founders need to accept, according to Zhang and others.

“The first thing you need to do is forget about your classmates at Stanford who raised money at [2021] valuations,” Zhang says to founders, he told CNBC in a recent Zoom interview.

“We tell them to just forget the past three years happened, go back to 2019 or 2018 before the pandemic,” he said.

That amounts to valuations roughly 40% to 50% off the recent peak, according to Zhang.

‘Out of control’

The painful adjustment rippling though Silicon Valley is a lesson in how much luck and timing can affect the life of a startup – and the wealth of founders. For more than a decade, larger and larger sums of money have been thrown at companies across the startup spectrum, inflating the value of everything from tiny pre-revenue outfits to still private behemoths like SpaceX.

The low interest rate era following the 2008 financial crisis spawned a global search for yield, blurring the lines between various kinds of investors as they all increasingly sought returns in private companies. Growth was rewarded, even if it was unsustainable or came with poor economics, in the hopes that the next Amazon or Tesla would emerge.

The situation reached a fever pitch during the pandemic, when “tourist” investors from hedge funds, and other newcomers, piled into funding rounds backed by name-brand VCs, leaving little time for due diligence before signing a check. Companies doubled and tripled valuations in months, and unicorns became so common that the phrase became meaningless. More private U.S. companies hit at least $1 billion in valuation last year than in the previous half decade combined.

“It was kind of out of control in the last three years,” Zhang said.

The beginning of the end of the party came last September, when shares of pandemic winners including PayPal and Block began to plunge as investors anticipated the start of Federal Reserve interest rate increases. Next hit were the valuations of pre-IPO companies, including Instacart and Klarna, which plunged by 38% and 85% respectively, before the doldrums eventually reached down to the early-stage startups.

Deep cuts

Hard as they are for founders to accept, valuation haircuts have become standard across the industry, according to Nichole Wischoff, a startup executive turned VC investor.

“Everyone’s saying the same thing: `What’s normal now is not what you saw the last two or three years,'” Wischoff said. “The market is kind of marching together saying, `Expect a 35% to 50% valuation decrease from the last couple of years. That’s the new normal, take it or leave it.'”

Beyond the headline-grabbing valuation cuts, founders are also being forced to accept more onerous terms in funding rounds, giving new investors more protections or more aggressively diluting existing shareholders.

Not everyone has accepted the new reality, according to Zhang, a former engineer who founded venture firm TSVC in 2010. The outfit made early investments in eight unicorns, including Zoom and Carta. It typically holds onto its stakes until a company IPOs, although it sold some positions in December ahead of the expected downturn.

“Some people don’t listen, some people do,” Zhang said. “We work with the people who listen, because it doesn’t matter if you raised $200 million and later on your company dies; nobody will remember you.”

Along with his partner Spencer Greene, Zhang has seen boom and bust cycles since before 2000, a perspective that today’s entrepreneurs lack, he said.

Founders who have to raise money in coming months need to test existing investors’ appetite, stay close to customers and in some cases make deep job cuts, he said.

“You have to take painful measures and be proactive instead of just passively assuming that money will show up some day,” Zhang said.

A good vintage?

Much depends on how long the downturn lasts. If the Fed’s inflation-fighting campaign ends sooner than expected, the money spigot could open again. But if the downturn stretches into next year and a recession strikes, more companies will be forced to raise money in a tough environment, or even sell themselves or close shop.

Zhang believes the downcycle will likely be a protracted one, so he advises that companies accept valuation cuts, or down rounds, as they “could be the lucky ones” if the market turns harsher still.

The flipside of this period is that bets made today have a better chance at becoming winners down the road, according to Greene.

“Investing in the seed stage in 2022 is actually fantastic, because valuations corrected and there’s less competition,” Green said. “Look at Airbnb and Slack and Uber and Groupon; all these companies were formed around 2008. Downturns are the best time for new companies to start.”

Tommy Lee’s nude photo sparks Instagram censorship debate

Rocker Tommy Lee posted a full-frontal nude photo on Instagram and Facebook early Thursday that he cheekily captioned with “Ooooopppsss.”

But clearly, the graphic photo’s appearance was no mistake. And while the penis pic has since been removed from the platforms, the Mötley Crüe rocker sparked a debate about the social media sites’ community guidelines, citing a double standard in that Instagram censored his image differently from others.

Newsweek reported that the image, which showed the heavily tatted musician naked while sitting on the edge of a tub, was up for about four hours — “an insane amount of time,” according to one Twitter user.

It’s unclear whether Lee removed the image or if Instagram and Facebook took action on the account. Representatives for Meta, the platforms’ parent company, did not immediately respond Thursday to The Times’ requests for comment.

Before the photo was removed, Lee’s wife, Brittany Furlan, commented on the picture with “OH MY GOD,” and the dating app Grindr responded with, “Wrong app, babe,” according to TMZ.

The 59-year-old drummer also posted a pair of irreverent, phallic-themed photos before and after the nude one as he became a trending topic across the internet.

Lee is no stranger to nude scandals. The rocker made headlines in the 1990s for his infamous sex tape scandal with ex-wife Pamela Anderson, which inspired this year’s Hulu series “Pam & Tommy.” Although he hasn’t yet publicly responded to the latest controversy, commenters were quick to get the conversation going. Many questioned why he posted the photo, while others wondered why the platforms ignored it for so long.

“We know that there are times when people might want to share nude images that are artistic or creative in nature, but for a variety of reasons, we don’t allow nudity on Instagram,” Instagram’s lengthy community guidelines state, citing the posting of content appropriate for diverse audiences (a topic that came up repeatedly during 2019’s boisterous “Free the Nipple” debate).

“This includes photos, videos, and some digitally-created content that show sexual intercourse, genitals, and close-ups of fully-nude buttocks,” the guidelines say. “It also includes some photos of female nipples, but photos in the context of breastfeeding, birth giving and after-birth moments, health-related situations (for example, post-mastectomy, breast cancer awareness or gender confirmation surgery) or an act of protest are allowed. Nudity in photos of paintings and sculptures is OK too.”

That being said, users still let their feelings be known about Lee’s most recent photos and on Twitter.

“Instagram guidelines said idgaf today,” one user wrote.

“So we just gon pretend nothing happened huh,” added another.

“following tommy lee on instagram is interesting enough but i- sigh. that was traumatizing. how is it still up,” wrote a Twitter user who posted a meme of a person washing their eyes out with bleach.

“So Tommy Lee can post a picture of his penis on @instagram that’s still up three hours later but a picture of my curvy booty in a thong bikini gets taken down? Cool, cool,” tweeted journalist Lola Méndez.

Driverless Cars Shouldn’t Be a Race

I grind my teeth when the metaphor of “a race” is used in discussions about self-driving vehicle technology.

Companies developing computer-piloted car technology, including Tesla, the Chinese company Baidu, and Waymo, a sibling company of Google, are regularly described as being in a horse race to make self-driving vehicles ready for widespread use. Some U.S. policy organizations and elected officials talk about America’s need to demonstrate “leadership” by beating China at autonomous technology.

There are risks to moving too slowly with a technology that could make people’s lives better, but we shouldn’t uncritically buy the narrative that a technology that will take many years to develop — and could have both profound benefits and fatal pitfalls — should be treated as a race.

The danger is that an artificial sense of urgency or a zeal to “win” could create unnecessary safety risks, give companies permission to hog more of our personal information and prioritize corporations’ self-interest at the expense of the public good.

When you read that a company or country is speeding, rushing, racing or winning in an emerging area of technology, it’s useful to stop and ask: Why is it a race at all? What are the potential consequences of this sense of urgency? Whom is this message for?

Most self-driving vehicle technologists now think it may take decades until computer-piloted cars are commonplace. Another month, year or two years might not make much difference, and it’s not clear that all races are worth winning.

So why does this narrative about self-driving cars exist? First, companies find it useful to be perceived by their employees, investors, business partners, regulators and the public as having the best shot at making safe, useful and lucrative computer-piloted transportation technology. Everyone wants to back a winner.

Pioneers have a shot at dictating the direction of a new technology and building a network of business allies and users.

But winning a “race” in technology isn’t always meaningful. Apple wasn’t the first company to make a smartphone. Google didn’t develop the first online search engine. Taiwan Semiconductor Manufacturing Company didn’t produce the first advanced computer chip. They are technology superstars because they did it (arguably) best, not first.

Second, the “race” narrative feels like a cudgel to persuade the public or elected officials to move faster with rules and regulations, justify loose ones or expose people to unnecessary risks to “win.”

The Wall Street Journal reported last week about concerns that the autonomous trucking company TuSimple was taking safety risks with people’s lives “in a rush to deliver driverless trucks to market.” The Journal reported that a truck fitted with TuSimple technology veered suddenly on an Arizona interstate last spring and careered into a concrete barricade. TuSimple told The Journal that no one was hurt and that safety was its top priority.

Apple’s autonomous test cars have smacked into curbs near the company’s Bay Area headquarters, and earlier this year one nearly crashed into a jogger who had the right of way crossing the street, The Information reported last month.

Cars without drivers could eventually make our roads safer, but each of those incidents was a reminder of the threats that these companies pose as they work out the kinks in self-driving vehicles. Developing a streaming video app doesn’t kill people.

“We are letting these companies set the rules,” Cade Metz, a New York Times reporter who writes about autonomous vehicle technology, told me.

Cade suggested a redefinition of the race narrative. Instead of trying to win at making driverless cars widespread, there could be a race to steer this technology in the public interest, he said.

Characterizing emerging technology as a “race” with China isn’t great, either. There are advantages if an American company is the first to commercialize a new technology, but it’s also dangerous to treat everything as a superpower competition.

In an interview last year with Kara Swisher, who at the time hosted a Times Opinion podcast, the 23andMe chief executive Anne Wojcicki lamented that the U.S. was “behind” China in an “information war that’s going on with respect to understanding the human genome.” Then Swisher asked: “Is this a war we want to win?”

Good question. If China is collecting mass amounts of people’s DNA, does that mean the U.S. should do it, too?

Plus, putting this much focus on driverless cars also may crowd out alternative ideas for improving transportation.

Perhaps the race metaphor we need is from Aesop’s fable of the hare and the tortoise. Slowly, steadily, sensibly, with a keen awareness of the benefits and drawbacks — that is the way to win the self-driving car race. (But it’s not a race.)

Tip of the Week

Samsung this week unveiled a new set of foldable phones that combine elements of smartphones and tablets. Brian X. Chen, the consumer technology columnist for The Times, brings us his likes and (mostly) dislikes of foldable phones:

Foldable cellphones are basically smartphones with a hinge to open and close like a book to expand the screen size. Samsung has been refining this technology for years, but I remain generally skeptical about it.

These were my impressions of the pros and cons of earlier models after testing them years ago (starting with the cons):

Cons

  • When folded up, foldable phones are thicker than a typical smartphone, which adds bulk in your pocket or hand.

Pros

For a similar take: David Pierce, a writer for The Verge, wrote that folding phones seem like a great idea but are annoyingly compromised.

  • It’s the twilight of Silicon Valley boy bosses: My colleague Erin Griffith reported on why some founders of young technology companies are quitting. Surprise: It’s not so fun to run a company when investor money is harder to come by, the economy is rocky, and cost-cutting is cooler than “vision.” (Bonus points for the sparkling unicorn illustration.)

  • Bad government technology is a symptom, not a cause, of dysfunction: The Washington Post has a delightful and infuriating photo essay showing the I.R.S.’s antiquated technology and clunky bureaucracy for processing tax returns. The cafeteria is just a sea of paper. (A subscription may be required.)

  • Hobby drones go to war: Drones used in combat zones are no longer only large, expensive weapons. Ukraine’s military is also using hobbyist drones adapted in makeshift workshops to drop bombs and spot artillery targets, my colleague Andrew E. Kramer reported.

NO ONE can resist doggy Martha with the pleading eyes.


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BlackRock launches a private trust to give clients exposure to spot bitcoin

Larry Fink, chief executive officer of BlackRock Inc., gestures while speaking at the Handelsblatt Banking Summit in Frankfurt, Germany, on Wednesday, Sept. 4, 2019.

Alex Kraus | Bloomberg | Getty Images

BlackRock has launched a private trust offering institutional clients in the U.S. direct exposure to bitcoin.

The largest asset manager in the world revealed the new product in a blog post Thursday, though it was light on detail.

“Despite the steep downturn in the digital asset market, we are still seeing substantial interest from some institutional clients in how to efficiently and cost-effectively access these assets using our technology and product capabilities,” the company said in the post.

Bitcoin is still more than 60% below its all-time high of almost $69,000. However, many investors believe it has found a bottom with stocks, with the two asset classes being more correlated to each other this year than ever before, amid 2022’s slide in risk assets. On Thursday, the digital currency rose above $24,700 to its highest level since just before it fell to its June low.

“Bitcoin is the oldest, largest, and most liquid cryptoasset, and is currently the primary subject of interest from our clients within the cryptoasset space,” the post continued.

The announcement follows CEO Larry Fink saying earlier this year that BlackRock clients had been showing “increasing interest” in digital currencies, including stablecoins and “the underlying technologies” — also known as blockchain.

BlackRock on Thursday also highlighted the work of energy nonprofits RMI and EnergyWeb for their work “to bring greater transparency to sustainable energy usage in bitcoin mining,” adding that the firm “will follow progress around those initiatives.”

Institutional investors once hostile toward the crypto industry have changed their tune in the last few years, but environmental concerns around the process of bitcoin mining have continued to be an obstacle for many.

The post said BlackRock has been researching areas with “potential to benefit our clients and capital markets more broadly,” including permissioned blockchains, stablecoins, cryptoassets and tokenization.

Thursday’s news is the latest in BlackRock’s foray into crypto. The company, which has about $8.5 trillion in assets under management, announced recently a partnership with Coinbase that allows its institutional clients to buy crypto, beginning with bitcoin.

This also comes amid frustration by new institutional investors in the market keen to see the Securities and Exchange Commission approve a spot bitcoin exchange-traded fund. So far, only bitcoin futures ETFs have been approved.

South African network operators launch the Association of Communications and Technology

Nomvuyiso Batyi, in partnership with various executives from South Africa’s telecommunications industry, launched the Association of Communications and Technology (ACT) on Thursday, 11 August 2022.

Initially formed in 2021, the non-profit organisation aims to look after the interests of South Africa’s major telecommunications operators through collaboration with regulators and the government.

Batyi, who previously headed the Department of Communications and Digital Technologies’ Presidential Commission on the Fourth Industrial Revolution (PC4IR), has been appointed ACT CEO.

She also previously served as the special advisor to former communications minister Stella Ndabeni-Abrahams.

“The formation of this association will assist the network operators in reducing fragmentation in the industry and ensure that they provide a common message on industry-related matters,” Batyi said during the launch.

“The ICT sector creates job opportunities and economic participation in industries such as health, banking, financial institutions as well as education, making the role of a unified industry voice critical to aid the government in managing these sectors.”

The Association of Communications and Technologies’ logo was unveiled during the launch

Batyi also highlighted the fact that there were significant disparities relating to regulation in South Africa’s ICT policy.

“We need to find solutions that are appropriate for South Africa and its citizens,” she said.

Batyi added that the industry must be proactive in ensuring that its policies and regulatory processes are responsive.

Vodacom Group CEO Shameel Joosub chairs the association, and its founding members include Vodacom, Rain, Cell C, Liquid Intelligent Technologies, MTN, and Telkom.

The Minister for Communications and Digital Technologies, Khumbudzo Ntshavheni, attended the launch as a keynote speaker.

The minister likened the formation of the association to the old African proverb, “If you want to go fast, go alone. If you want to go far, go together.”


Now read: Rain proposes merger with Telkom