As 2009 comes to a close, let's take a look at the most talked-about topics of the year in emerging telecoms markets

We're coming to the end of the year and it's time to take a look at all that happened in the last 12 months. Attending events in emerging markets throughout the year has allowed me to hear some of the industry's leading minds share their visions of the market, with some very inspirational views. Here are my thoughts on some of the most talked-about topics in emerging telecoms markets this year:
* The economic downturn
2008 ended with the predictions of global economic meltdown. As it turned out, the telecoms sector in emerging markets remained strong. A number of companies, particularly greenfield investors, experienced difficulties in securing funding for their projects, but overall operator spending was relatively high(MTN for instance spent record amounts on improving its networks across Africa), and organic growth continued in regions where penetration levels are still relatively low
* The shift in relations between operator and vendors
There have been lots of talks this year about how the telecoms value chain is changing with regards to the relations between operators and their suppliers. All parties have been calling for more partnership-based relations rather than the client-supplier approach; the new model is expected to improve efficiency and offer a more win-win situation. The growth of managed services has been a step towards it, but when listening to vendors showcase their solutions at events such as AfricaCom last month, the language they used indicated that a lot of them are still betting on the more traditional approach.
* M&A activity
This was supposed to be the year when MTN and Bharti merged to create a giant emerging markets specialist, but regulatory issues and shareholder concerns stopped the deal. Zain group was rumoured to sell off its African operations to Vivendi but it turned out that the French group was more interested in opportunities in Latin America; since then Chris Gabriel (CEO of Zain Africa) has insisted that Africa is still very much a key part of Zain group's strategy. Meanwhile, an Indian consortium was due to buy a stake in the group but the deal seems to have stalled.
* Technology evolution
WiMAX seemed to be on the way out at the beginning of the year but it has found a niche in a number of region (Eurasia, sub-saharan Africa and South East Asia) with a number of successful launches by alternative operators; on the mobile broadband front, LTE is gaining momentum with South East Asia leading the way in terms of planned deployments, and interest growing in the Middle East.
* Broadband in Africa
All eyes are on the many international connectivity projects (including submarine cables EASSy , Seacom and TEAMS in East Africa, ACE, SAT3-WASC and Glo-1 in West Africa) that are due to dramatically improve the links between Africa and the rest of the world, and enable the provision of affordable and reliable internet services on the continent. This is expected to create growth opportunities not only for the telecommunications sector but also for whole economies.
* Value-added services
ARPU levels are declining and operators worldwide are looking for the next value-added services which will reverse the trend and improve their revenues. In 2008 all eyes were on mobile money and some major launches took place this year, but now mobile internet access looks like the next best bet.
* Cost-efficiency
To counter the effect of declining ARPU, operators are looking at solutions to reduce their capex and opex and improve efficiency: outsourcing, managed services, infrastructure sharing are all avenues explored across emerging markets to improve their margins. Tower sharing companies are gaining mometum in markets such as Nigeria, a great case of business opportunities for local entrepreneurs.
* Increased competition
A high number of markets have seen or are expecting new entrants, whether they are new mobile licences, MVNOs or alternative operators; in other markets (particularly in Latin America), mobile number portability is intensifying existing competition; to respond to it, operators need to differentiate (the role of the brand has been much debated) and to be innovative with their customer retention strategies.
These are just a few thoughts on the year's themes. I'm expecting that next year will see more of the same, but don't hesitate to share your views on what will be the most talked-about topics in 2010.
In the meantime, I wish you all a happy festive season, and see you next year!

Finishing the year on a high note in Dubai and preparing for next year's event calendar

The last event of the year, the Middle East Telco World Summit in Dubai, closed earlier this week and us in the UK can all concentrate on the next big event on the calendar: the winter holiday!
I have to say that a trip to Dubai in one of our team’s most exciting events was a great way of finishing the year. 2,000 attendees from over 80 countries attended the 2 days, and discussed the key strategies for the region’s operators who are expanding their businesses, either by deploying new technologies and services in their home markets, or by expanding to new regions. Indeed, the major theme of the two days was how to balance domestic and international expansion strategies. The second day saw the introduction of a focus on the Saudi Arabian telecoms market, opened by the COOs of Mobily and Zain KSA. The operators highlighted the need for a focus on customer experience and enhanced customer relationship management, and the great opportunities available for increasing ARPUs based on the high proportion of young people in KSA and the very low broadband penetration rates.
We are now focusing on our events for the first half of 2010: EurasiaCom in Istanbul in March, East Africa Com in Nairobi in April, Saudi Com in Bahrain in May and West & Central Africa Com in Dakar in June. The brochures for the first two events will be available soon, and we are currently inviting speakers for the last two, so don’t hesitate to get in touch!

HR strategies are crucial to a changing telecoms environment, say participants to Telecom HR Summit

In the last couple of years, human resources strategies have been mentioned on a regular basis as a key focus of many groups operating in the Middle East and Africa. It started as a concern for groups expanding into new territories, with issues of including local staff to that of home markets. However more recently the global economic downturn has added a new dimension to the issue, as groups are cutting down costs, including staffing and training ones.
This week I am attending the Telecoms HR Summit, co-located with the Middle East Telco World Summit in Dubai. As the first event focusing specifically on HR strategies for the telecoms sector, the main impression I got out of the presentations and debates was how hugely important a topic it is for telcos' overall strategies.
HR in the telecoms sector faces three types of specific challenges. First, convergence: as the telecoms ecosystem is evolving, new skills are required from staff and leaders, and different types of companies are competing for the same talent pool. Second, a generational change: within a company’s staff, the baby-boom generation is joined or being replaced by members of generations X (now in their 30s and 40s) and Y (the Millennium generation), who have different ways of working and different expectations from the careers and employers. Third, the economic downturn is bringing new challenges to operators, and particularly their HR representatives, as budgets are being cut, motivation levels are down and pressure is increasing.
In light of this context, the main points of discussion at the event this week were:
- an effective HR strategy remains crucial at times of economic challenge, to retain talent, improve motivation (and therefore productivity) and manage employee rewards
- managing talent within an organisation should be an HR priority, to spot talent, develop leadership and fast-track promising employees to positions where they can add most value
- finding the right ways of rewarding performance is important when cost reduction is affecting salaries: a high basic pay is not enough for long-term performance; instead, companies should focus on KPI-based financial rewards and psychological ones (job satisfaction, good career path, availability of training and personal development, staff awards etc.)
- recruitment strategies should be adapted to new market conditions: organisations need to set in place effective processes to attract talent to the right position; these processes involve in-house recruitment, partnership with agencies, as well as new recruitment methods such as online advertising and social networking sites.
These points were illustrated by case studies of effective HR strategies from leading telcos such as Batelco, Vodafone Egypt, du, Zain, Ericsson, as well as recruitment agencies and training companies. It brought a new, highly relevant angle to the Midldle East Telco World Summit.

2,500 telecoms executives expected in Dubai next week for Telco World Summit

Part of the Com World Series, the Middle East Telco World Summit is due to open its doors on Monday, with an expected 2,500 participants from 80 countries, and 70 different oeprator companies represented.
The event has been going on for over 15 years, and has seen the emergence of the Middle East as a powerhouse of telecommunications for emerging markets. This year's conference is focusing on Middle Eastern operator groups' strategies to move beyond the region and become global players. It is no surprise then that Etisalat is a strategic operator partner of the event. The company's global presence may not yet be as broad as that of for instance Zain (also present at the event), but it is definitely making a strong mark on high growth emerging markets such as West Africa.
The conference programme covers all the key strategic issues in the market (from network developments to regulation, value-added services and marketing strategies), and also incorporates two brand new elements this year: The Saudi Arabia Focus Day dedicated to the Middle East’s fastest growing market and the two day Telecoms HR Summit set to analyse the changing role of HR managers during the current economic downturn.
I will be at the event for the first time this year and I am looking forward to witnessing the debates in this exciting market. I am curious about the general mood in the region following the city's economic difficulties. Judging from the response to next week's event, I would guess that the city's busy events industry won't be severely affected by this.

Cost-efficiency and outsourcing major focus for operators in 2009-2010

Zain’s announcement this week that it is to outsource its East African networks (in Kenya, Tanzania and Uganda) to Nokia-Siemens Networks is not surprising considering the focus of the company on cost-efficiency. Chris Gabriel, CEO of Zain Africa, said in a statement that the outsourcing agreement was part of Zain’s Drive11 strategy of improving efficiency and network quality and that it will enable the operator to focus on its customers.
Mr Gabriel gave the opening keynote speech at the AfricaCom congress held earlier this month in Cape Town, and dedicated a large part of the presentation to the subject of outsourcing, a change from last year’s speech which focused heavily on the power of the brand. This year’s message resonated heavily with the audience and other speakers, as African operators are facing declining ARPU levels and looking at cost-efficiency strategies. The AfricaCom event was a great place to discuss them, with sessions on managed services, infrastructure sharing, call centre outsourcing, network deployment and sustainable solutions, as well as a number of companies promoting their products in the adjacent exhibition. Among them were the aforementioned NSN and its close rivals Ericsson, Huawei , ZTE, but also companies specialising on aspects of outsourcing such as call centre company PCCI, tower sharing solutions vendor Turkkule and more.
Gabriel and other speakers advocated new partnership models between operators and their vendors, and he is certainly making this a priority for the group as other deals have been announced in the last few months in its African operations (a five-year managed services deal with Ericsson in Nigeria announced in June for instance).
This will certainly be a major topic of discussion in the coming year: Informa Telecoms & Media predicted in their end-of-year Industry Outlook event in London today that network sharing and outsourcing was going to be one of the Top Ten major issues for operators in 2010. Informa’s top analysts announced that the telecoms industry should “expect further infrastructure sharing announcements during 2010 as operators attempt to extend coverage and reduce costs. Both network sharing and outsourcing will continue to gain momentum as mobile operators seek to reduce their capex and opex burden. Each of these individually is already an established trend but we can also expect to see more variations on a theme where the two approaches are combined.”
Cost efficiency will be one of the key topics discussed at events in the Com World Series in 2010, as well as broadband developments (with LTE gaining interest in emerging markets), value-added services (with mobile banking still a major issue, but also more on data), marketing and customer relations and more. I am currently working on the programme for our next West & Central Africa Com event, which will be held in Dakar, Senegal. If you want to be involved in the programme or send suggestions of topics and speakers to include, don’t hesitate to get in touch!

In times of changing market conditions, operators turn to Darwin for inspiration

Telecoms markets worldwide, and even more so emerging ones, are going through profound changes. Whether you look at business models, supplier relations or services, all operators need to embrace change in order to compete in a market that is affected not only by tough economic conditions but also going through changes in its ecosystem. It’s no wonder then that Charles Darwin is so often quoted by telecoms executives these days, with his famous words: “It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change.”
It was mentioned a few times at the ‘Convergence in Istanbul’ event organised by the SAMENA Council this week, where people were also talking about “new rules of the game” and “a new paradigm” in the way operators must approach the market. The main change all telecoms players are facing is of course the economic situation. Once again, speakers were keen to point out that the telecoms sectors isn’t as affected as others by the downturn. But operators are experiencing a renewed interest from governments to be involved in the sector, as it is widely seen as an engine for recovery. In a rare show of unity, the CEOs of some of the region’s leading operators, incumbents and challengers alike (Turk Telekom, Etisalat, STC, Mobinil, Alpha, du, and more) voiced their concerns today.
One of the major topics at the event, and a direct link to the economic situation, was how operators improve their efficiency (this was the focus of a pre-event day hosted by Nokia Siemens Networks, and came back in most of the talks at the main conference). Running leaner operations is a key aspect of operators’ efficiency strategies, in particular thanks to outsourcing. But most interestingly the relations between operators and their vendors are being redefined, changing the shape of the telecommunications ecosystem. Indeed, new needs in the market, new technologies and new business models mean that forward thinking operators are building relationships with vendors that are based on partnership rather than a client/supplier basis. One positive consequence is that such partnerships help foster innovation in operations, technologies and services. Another partnership model touches on the financing itself: the ’pay as you grow’ model, where the vendor takes an interest in the operator’s success.
Has this change been brought upon or accelerated by the tough economic climate, or is it a natural evolution of the market? The new, more efficient models are being pioneered in markets such as India and Africa, so it may be that fast-growing emerging markets are breeding grounds for innovation.
The shift in the telecoms ecosystem and business models will be one of the key topics addressed at next week’s AfricaCom congress, the 12th annual pan-African event to be held in Cape Town. Judging by the record registration numbers and interest from companies from around the world, this event should be a great place to share thoughts and encourage innovation in telecoms markets.

Telecoms and media industry survey - share your views and win a report or iPod touch

My market analyst colleagues at Informa Telecoms & Media are conducting a survey to capture the mood of the telecoms market and I would encourage all of you to take part. Here's how it works:

As 2009 draws to an end we want to understand what you feel are going to be the hot topics in the telecoms and media industry in 2010 and how your business is performing in the current climate.

By taking part in our short survey, which will take just 5 minutes, you will help us to define our industry research and conference agenda for next year. In return, you'll receive an overview of the results and you will be entered into a prize draw where 10 people will each win a research report of their choice, and one winner will receive an iPod touch.

To take the survey visit: http://www.informatm.com/itmlogos/survey/io/io_2010.htm

North Africa Com 2009: North Africa still showing strong growth in changing market conditions

North Africa's telecoms market is set to remain on of the most dynamic of the emerging regions, judging by the successful opening of this year's North Africa Com congress. The event opened today in Cairo with a stellar line up of speakers and record breaking attendance, allowing busy networking among the participants.
According to my colleagues attending the event, the discussions focused on how to move the region's telecommunications market forward, as telecommunications companies in the region are adapting their strategies to face new market conditions. Following several years of high growth and increasing competition, the telecommunications sector isn't as affected as others by the global economic downturn, but operators are facing new challenges related to investment, consumer spending and high operating costs.
The programme included strong representation from host country Egypt, Algeria (one of Africa's fastest growing markets), as well as leading operators in Tunisia and Morocco.
Emerging markets specialist Orascom Telecom was represented by Mr Tamer El Mahdi, the CEO of the Algerian branch – Djezzy – OT’s most profitable branch. Mr El Mahdi described how Djezzy is “fighting in the trenches” as the changing economy begins to affect telecommunications in North Africa, but he also painted a positive picture of the operator overall, describing how revenue is rising steadily, as well as a similar trend in cutting costs – very promising for this leading operator. There were also positive messages from Dr Olfat Abdel Monsef, Vice President, National Telecommunications Regulatory Authority (NTRA), Egypt, as she described the regulators aim of a more simplified regulatory process, eventually focusing more on competition regulation – rather than licences, etc.
Other leading speakers from Day 1 included Mr Abderrahmane Mounir, Director of B2B for Meditel, Morocco, Jean-Carl Mazigi, Chief Strategy Officer for Wataniya Telecom Algeria (Nedjma), Sami Ayoub, Deputy-CEO, Tunisie Telecom, Khaled Hegazay, Corporate Affairs Director, Vodafone Egypt, Ricardo Tavares, Senior VP, Public Policy, GSMA, Wael Fakhanary, Egypt & NA Manager, Google. This broad spectrum of industry thought leaders brought a wealth of experience and perspectives to this opening day, and it has been a valuable “well organised event” for delegates, according to Mr Sami Ayoub, Deputy-CEO of Tunisie Telecom.
The main messages taken from today included the benefits and challenges for 3G services in North Africa – with some countries facing the prospect of no 3G at all in the case of Algeria. Furthermore, the need to accommodate for increasing numbers of subscribers and to understand user behaviour. Finally, a key message has been that operators need to keep adapting in this dynamic region, leading service providers like Djezzy may have a huge market share for now, but operators need to ensure that they do not focus solely on voice services. As Mr Fakharany from Google said “operators with big market share in voice – but if there are no 3G services – this is dangerous for the future.”
The high level of the talks in the conference encouraged lively debate among the congress participants, who were networking enthusiastically in between sessions. Despite budget restrictions among the region's companies, executives from over 20 countries travelled to the event, representing a broad picture of the telecommunications sector: leading operators, alternative service providers, regulators and government bodies, industry associations, and providers of a range of solutions for telecommunications operators (from infrastructure to co-location solutions, power, CRM and more).
The second day of the event will include even more presentations and debate from leading regional figures, including; Hatem Dowidar, CEO, Vodafone Egypt, Hassan Kabbani, CEO, Mobinil Egypt, Charles-Henri Levaillant, Corporate VP, Strategy & Development, Vivendi Group (share holders of Maroc Telecom), Mr Cherif Yaici, Director of Business Strategy, Algerie Telecom Group, Mohammed Bouhelal, Chief Corporate Affairs Officer, Canar Telecom Sudan, Marwan Hayek, VP Technologies, Mobinil Egypt, and more!
The second day of the event opens at 9 at the JW Marriott. Don't miss it if you're in Cairo.

Five questions to Bob Fonow, international telecoms consultant and emerging telecoms market specialist

I am currently spending most of my time on the next Eurasia Com congress (Istanbul, 23-24 March 2010), researching the market and building the conference programme. As part of my research I have turned to some of the region’s experts for insights and ideas. One of them is Bob Fonow, Managing Director of RGI Ltd, an operations turnaround specialist, general manager and cross-cultural management consultant to corporations and governments worldwide. I first met Bob at the launch South East Asia Com event in Malaysia last year. As the region’s market was relatively new to me, he gave me a great insight into its telecoms opportunities and business practices. Since then, he has attended several events in the Com World Series, bringing his expertise and leading very interesting debates with the speakers and other participants. He will chair the opening keynote at the next Eurasia Com congress. I took this opportunity to ask him 5 questions about the region’s market.

What are the key trends in Eurasia’s telecommunications market today?
“Central Eurasia is at the beginning of a great change in telecommunications geopolitics. Up to now international telecommunications has been primarily an issue of several putative global carriers such as ATT in the United States, BT and Deutsche Telekom in Europe, NTT/KDD in Japan and to a lesser extent Singapore Telecom. Overlaying these massive fiber installations are several mobile conglomerates such as Vodafone, Zain and in future perhaps China Mobile.
The new world of telecommunications may look much different than it does today. The existing international carriers are run by smart people, who will be able to keep significant market shares in an expanding global market. However Russia and Turkey are well placed to take leading positions in international networking and Internet development.
There can be little doubt that the 21st Century is the Eurasian century and Russia and Turkey at the geographic fulcrum of this trend, perfectly positioned in the Eurasian land mass. Russia is the northern bridge between China, Asia and Europe. Turkey is the land bridge between both Europe and the upper Middle East and CIS, and the most important land route from Africa into both Russia and northern Asia.
Currently almost all of the large international fiber routes follow the circumference of the middle oceans from the Atlantic, through the Mediterranean to the Indian ocean and Malaccan Straights, and back across the Pacific. There is still very little connectivity across the northern or middle Eurasian land mass. As Turkey and Russia add capacity or leading capacity consortia, the relative power and influence of several carrier networks will change. Turkish, Russian, Iranian and CIS carriers may be the biggest beneficiaries.”

What are the key markets to watch and why?
“Turkey seems the most vibrant and exciting to me. Young people in Turkey seem to be excited by the Internet and mobile applications in a way reminiscent of China and Japan, rather than the US and Europe.
Russia is always interesting. But the country has an extremely complex regulatory regime that makes it difficult for competitors to build networks quickly for the revenues needed to sustain start up and growing businesses. Cronyism remains a problem.
Cyprus and Azerbaijan are smaller markets, but there is intense interest in telecoms development in the countries.”

How is the global economic situation affecting Eurasia’s telecoms sector, and how are companies responding to it?
“The large carriers have the revenues and regulatory advantages to sustain themselves during the recession. Smaller carriers and start ups, for example wireless broadband and WiMAX start ups, are experiencing difficulties raising capital from private equity markets and banks.
The companies with financial strength were in a good position earlier this year to acquire assets cheaply. But values are increasing again.
How are companies responding in the recession? Almost every company today uses the same technology service platforms. The key to success is clever marketing and sales, customer support and cost controls, and making sure you have the right people in the right positions. Of course, that’s the key to success anytime! Good management usually survives and eventually wins.”

Which services or technologies are likely to have the biggest impact on the market in the years to come?
“In the medium term, HSPA and LTE will expand broadband mobility in urban areas with dense populations. WiMAX is likely to find a niche in smaller towns and villages, and in specific applications in urban environments. Wealthier neighbourhoods in cities will see more fiber to the home.
The big question is what is going to come out of China? Huge numbers of developers are at work on mobile applications and social networking. Today it’s still aimed at the China domestic market, but it is naive to believe that only the United States in social networking or Scandinavia and Korea in mobile will lead global innovation in the future.”

How important is the Eurasia Com congress for the region’s telecoms industry and what do you expect to take out of the event?
“Last year I was impressed by the energy of the conference, especially the breakout sessions on new applications by start up companies, and the presentations from medium sized countries like Tajikistan. The morning on Turk Telecom and Turkcell had comprehensive presentations that illuminated the importance of Turkey in telecommunications geopolitics. Overall it was an excellent blend of technology and business.
This year I am limiting myself to two conferences. This is the one I wouldn’t miss.”

If you are i terested in joining Bob at Eurasia Com by becoming a speaker, I am currently confirming the programme, so don’t hesitate to contact me for more information.

Africa still very much the centrepoint of M&A activity

The failure of the MTN-Bharti was only annouced a couple of weeks ago, but the South African group is not wasting time to move on: rumours say that it is looking towards its rival Zain. Zain group caught the eye of a number of potential investors recently (including Vivendi, which is now turning to Latin America for expansion), and is now the object of interest from an India-based consortium which includes no other than Bharti. So, will the previous friends become rivals in a bid for a stake in Zain? If MTN does get a interest in the group, will it not create competition issues in the many African countries where both groups have strong operations?
On another front, Indian operator MTNL is trying to build its position in Africa too. According to my colleagues at Global Mobile Daily, MTNL'schairman, R.S.P. Sinha, "told local press that his company had expressed interest in buying state-owned Zambian operator Zamtel and had already signed a nondisclosure agreement with the operator". The interest of several Indian operators in Africa makes sense. They are renowned for running low-cost operations for low revenue markets, which would suit the continent.
With these never-ending M&A talks, it looks like the face of Africa's telecoms is shifting. New players are about to make a strong impression, not just from the investment side, but also from the vendor side. As relations between operators and their suppliers are changing to become more partnership-based, large vendors may take a more important position on the market. And although Ericsson is still the major player in Africa, it seems that the Chinese vendors are keen to grow their presence (they certainly made their mark at last week's ITU summit, benefiting from the absence of the major European and American companies).

Big ideas for world telecoms but not much excitment at ITU in Geneva

It’s day three at the ITU summit in Geneva and this year’s event has its ups and downs. While the exhibition is rather small and quiet (with some big industry names shining by their absence), the Forum is well attended and generating the expected mix of self-congratulation, wishful thinking, big ideas and complaints about the missing/misdirected regulation, investment, technology developments etc.
The big talk of today was climate change, and its impact on the telecoms industry. On the one hand, operators and vendors need to work on more eco-friendly ways of running networks, while on the other hand telecoms technologies can help reduce carbon emissions. Emerging markets have a different position on the issue from developed economies. Poorer parts of the globe are the main victims of climate change, without enjoying the benefits of what caused it, as was reminded by the Vice-President of Sierra Leone. But on the other hand, emerging markets are where some of the most innovative ecological solutions are tried, not for their green credentials but because they are cheaper to build and run (solar power for base stations has been pioneered in Africa and India for instance).
Talking of emerging markets, the infamous digital divide is still a big discussion point, particularly in what concerns broadband access. The ITU’s Telecommunications Development Bureau released new statistics that showed that while mobile access is growing hugely in emerging countries (now overtaking subscription numbers of developed countries), broadband access is severely hindered by costs. The average monthly cost for broadband access in the developing world is ten times higher than in developed countries, and represents 300% of monthly gross national income compared to just 2% in the developed world. With such shocking statistics, it’s no wonder the ‘Broadband for All’ session was so well attended today, with people standing at the back of an overheated room. The debate went over the usual challenges unfortunately without providing any new solution: lack of backbone in emerging countries, inadequacies of universal service provisions, lack of funding, insufficient initiatives from the major players, and of course the state of the global economy putting projects on hold.
Other topics of discussions included the evolution of the telecoms ecosystem and business models within it. In particular, the relations between vendors and operators, and between vendors themselves, are changing. From a position of client/supplier or competitor, many major players are developing partnerships, or calling for more to be developed. For example, Paul Excell (Chief Operating Officer – Innovation at BT) called today for a global open ecosystem for innovation for instance.
I haven’t heard a lot of mentions of the economy, but I'm hearing some reassuring 'feelgood' phrases such as "let's be proud to be in this industry" (courtesy of Stephan Scholtz, CTO of Nokia Siemens Networks), the kind of phrases we heard at Mobile World Congress earlier this year and I remember hearing when I first started in telecoms in 2001.
Thankfully, the mood about our forthcoming AfricaCom event is rather upbeat, and I’m expecting a livelier mood among the audience.

Hope for broadband access in Central Africa

I wasn’t able to make it to the opening day of the ITU summit in Geneva, but I am keeping an eye on the various press releases sent so far before visiting the event tomorrow.
The main one attracting my attention is the announcement by the World Bank of its endorsement of the $215 million, ten-year Central African Backbone Program (CAB Program). According to the release, “this program will support the countries of the Central African region in developing their high-speed telecommunications backbone infrastructure to increase the availability of high-speed Internet and reduce end-user prices. The CAB Program will also help countries harmonize the laws and regulations that govern the ICT sector to increase private sector investment and improve competition.” The programme is supported in its initial phase by 3 Central African countries (Cameroon, Chad and Central African Republic - CAR) and will be followed by another eight countries - the Republic of Congo, Equatorial Guinea, the Democratic Republic of Congo, Gabon, Niger, Nigeria, São Tomé and Principe, and Sudan.
Central Africa includes some of Africa’s least developed telecoms markets. The landlocked countries in particular are experiencing difficulties in benefiting from the various submarine cable projects being launched, connecting West and East Africa to the rest of the world. Hopefully the CAB programme will support Central African telecoms markets and help them develop broadband services, a key factor in the region’s economic development.
This will continue to be a major topic of discussion at the African events in the Com World Series, with AfricaCom coming up in Cape Town next month, and the sub-regional events in 2010: East Africa Com in Kenya in April, West & Central Africa Com in Senegal in June, and the new Nigeria Com in Lagos in September.

Turkey's telecoms market looking towards Western Europe

I am Istanbul to meet key operators and vendors ahead of our Eurasia Com event in the city in March, and it is interesting to have a first-hand view of the Turkish market.
One thing that I found particularly striking over the last couple of days is the prominence of Turkcell as the major telecom brand in Turkey. This position is usually held by the fixed-line incumbent and its mobile arm, particularly in recently liberalised markets (Turkey only liberalised in 2005). Here, Türk Telekom does own close to 100% of the fixed voice market, but its mobile subsidiary Avea is largely distanced by Turkcell, who leads the market in many ways: number one mobile operator in terms of subscriptions, mobile broadband leader (the operator launched HSPA at the same time as its 3G network earlier this year), and an omnipresent brand. Its strategy of targeting high-end segments has certainly paid off, as it is now seen as the high quality operator in the market.
Another thing I realised through the conversations I’ve had is how far Turkey has come as a telecoms market in the last few years. In just a few years of competition, the regulator and operators have wasted no time to catch up with developed markets, to the extent that Turkish companies now benchmark themselves against Western European markets rather than closer ones such as Eastern Europe. Here are a just a few areas to watch in Turkey’s maturing market:
- MVNOs: regulation should be effective in 2010 but in the meantime “pre-MVNOs” (most successfully football club brands) are already in place on a simpler reseller model, where the host operator still owns the SIM and the customers ; from next year, a fuller MVNO model should attract other types of brands such as retailers; mobile operators are gearing up for this new market, and SIM card vendors and MVNEs should also benefit from new opportunities;
- Convergence, with triple play and potentially quadplay offerings: Turkcell with the acquisition of ISP Superonline among other moves, Türk Telekom with fixed and wireless offerings and the potential launch of IPTV next year;
- New strategies to deal with increased competition: operators are expressing a strong interest in new ways of serving their customers with segmentation strategies and lifestyle offerings;
- Managed services in the ICT sector: as already done by alternative operators Koç.net and Superonline, Türk Telekom is looking into moving its wholesale strategy towards managed services to better serve its corporate clients.
Next year’s Eurasia Com event will include a special focus day on Turkey. The draft agenda will be published this week, to be followed by a call for speakers.

Vivendi's high growth markets strategy and the changes of investors in emerging markets

A couple of weeks ago, French group Vivendi announced a deal with Brazilian broadband operator GVT. The agreement, which is still being finalised, will give Vivendi a 51% stake in the Brazilian company, allowing it to bring the growing operator its expertise of new markets such as IPTV services. According to Jean-Bernard Lévy - Vivendi's chairman - it fits the group's strategy of development in high growth markets.
It's interesting to see Brazil come back to the spotlight as a highly investable market, after a few years when Latin America was not among the top markets with major potential. But I wonder about Vivendi's position regarding Africa. A few weeks ago, the group was the main contender for Zain's African operations, but moved away from the opportunity. Vivendi still owns a majority stake in Maroc Telecom, a major investor in North and West Africa, but will it now focus more on other regions as the next growth opportunity?
In a recent article, my colleague Matt Reed asked whether Africa was losing its appeal for some investors: "Falling ARPUs, rising competition and the recession have certainly forced investors to reappraise African markets, and some have decided that it is time to head for the exit", he says. But despite those challenges it remains an attractive market: "there is still potential in Africa for the realistic investor. Mobile penetration in Africa was just 40.62% at end-June. The arrival of new undersea cables on the coasts of sub-Saharan Africa could foster the emergence of a new generation of data services. And operators in India, for example, manage to run profitable businesses despite very low ARPUs" he adds.
Instead of a sudden lack of interest in Africa's telecommunications market, we may witness a change of the main stakeholders involved in the market: as Zain, but also Telefonica and Portugal Telecom are moving away from the continent (the Spanish and Portugese groups recently sold their stakes in Morocco's Meditel), other groups are moving in or growing their investment portfolios: Indian operators Bharti, Essar and Reliance, French group France Telecom, and Egypt-based Orascom are all making moves in the region.
2009 has been so far a busy year in M&A news in emerging markets, and it looks like it's set to continue.

Looking at Turkey's telecoms market in times of increased competition and economic challenges

This week I’m working on the programme of our next Eurasia Com event, covering the markets of Eastern Europe, the Caspian and Central Asia regions. The region's major market being Turkey, I've been spending a bit of time looking into its ins and outs, and it is definitely an interesting market to watch.

Although often described as an emerging market, it shows many of the characteristics of a fully developed one, as it is close to saturation with 65 million mobile subscriptions, has a healthy dose of competition and an effective regulatory regime - partly driven by Turkey’s application to enter the European Union, as it needs to integrate EU regulation to its own system.

The telecom market is largely dominated by mobile, led by regional group Turkcell (55% market share), followed by Vodafone (23.5% share, showing great improvement after 3 poor quarters up to 1Q09),and Avea (incumbent Türk Telekom’s mobile arm, with 19% share). Competition was increased by the launch of mobile number portability in 2008 and will be affected again by the imminent entry of MVNOs. All operators are looking at customer retention strategies, as well as new services to increase loyalty and reduce the impact of lower ARPUs. Mobile broadband, made possible by the recently awarded 3G licenses, is a strong strategy for operators to generate new revenues from advanced data services.

Turkey’s economy has been badly affected by the global downturn. Its GDP dropped, and unemployment is rife, particularly among the young. How is this affecting telecoms ? Subscription additions have gone down since the beginning of the year, which is largely blamed on the economic crisis. But these tough conditions haven’t deterred the operators from investing heavily in their networks to take full advantage of the opportunities created by mobile broadband.

At the height of the economic panic, Turkcell’s CEO Suereyya Ciliv was keen to reassure the market on their investment plans, saying: "We will continue our 3G investments in order to maintain our leadership in 3G coverage and quality just like today. […] We are continuing to invest in Turkey and Turkey's future.” Avea CEO Cüneyt Türktan went further, saying "We might even increase our investments and create further job opportunities in the Turkish market". Meanwhile, Vodafone confirmed that they were to invest $750m in 2009. To top this positive trend, Türk Telekom was named Turkey's most valuable trademark by independent brand-valuation consultancy Brand Finance and Capital magazine, in a research conducted to gauge how brands are holding up in the economic downturn.

As the world slowly gets its finances together, Turkey will continue to be a market to watch. Its unique position (between Europe and Asia, and between emerging and developed) gives it an opportunity to pioneer innovative strategies and business models, and be a trendsetter in the region.

And to finish on another note… When I tuned into the BBC breakfast news programme this morning, they were announcing a big merger between two telecoms operators that would change the face of the market. My first reaction was one of surprise: I immediately thought of the MTN-Bharti deal, but in my experience, European media aren’t very interested in emerging markets (unless it is to announce a natural disaster or political turmoil). I soon realised my mistake, as they were talking about the T-Mobile/Orange talks in the UK. Interesting news I concede (particularly as a customer), but not quite as exciting as the other one.

MTN and Bharti all over the news

The summer break is nearly over for most of us, and judging from the news over the last few days it looks like September’s biggest story is the last sprint in the discussions between South Africa-based MTN Group and Indian Bharti.
After allowing themselves a bit more time by postponing the decision to the end of September, things seem to be moving with Bharti announcing that they have secured $5 billion in funding from a consortium of banks. This looks like an encouraging development in the long story, but the deal is still far from being agreed, as MTN’s shareholders need to be convinced that they are not giving away their company at too low a price, particularly as MTN’s half-year results are very positive (the group announced 30.6% year-on-year growth to $1.16 billion in its H1′09 net profits 29.2 million new subscribers added in last twelve months to reach a total of 103.2 million mobile subscribers). It may take MTN’s management team a lot of persuasion to ensure that all is confirmed by the deadline, as they’ll have to convince not only shareholders but also Public Investment Corp. Ltd (PIC), a body controlled by the South African government that holds nearly a 20% stake in the company, to accept the deal.
If/when the deal goes through, this will make the new group the 3rd largest in the world. It will bring together groups that have pioneered emerging markets business models with great success, and put them in a great position to reach the next wave of consumers. As their territories reach levels of penetration of around 30-40%, they need to adjust their strategies to continue growing. An apparently obvious answer is reaching the rural areas, but providing coverage there is difficult, and balancing the necessary costs with the market’s low spending power is no easy task. That is where the Bharti-MTN alliance could prove particularly successful. Indian operator groups are champions of the low cost model, based on outsourcing and delivering cheap services. As MTN is giving priority this year to improving its networks across Africa (spending $2 billion in the first half of 2009 on capex), both groups could learn from sharing each other’s expertise and buying power.
Overall, it has been refreshing to see telecom news that were not centred on declining revenues or other stories related to the global economic downturn. To see international companies based in Africa seriously competing with global giants is very encouraging for the continent’s future. It makes the telecoms industry all the more exciting to work in.
Finally, I’ll end with a little plug: the programmes of our biggest events of the year – AfricaCom in Cape Town in November and Telco World Summit in Dubai in December - are now ready to see. We have a great speaker line-up so don’t hesitate to have a look, and join us there!

All eyes on North Africa for the next big emerging market opportunities

North Africa is a difficult region to study: while the Maghreb area in the West is a relatively clearly defined sub-region comprising Morocco, Algeria and Tunisia, it is more difficult for a country like Egypt to be positioned as typically North African, considering its ties with the Middle East.
In the telecoms markets though, the links are clearer: similar degrees of liberalisation (except Libya, but change is coming), maturing markets with growing data/broadband opportunities (including three in Africa’s top 5 largest mobile markets: Egypt, Algeria and Morocco), and the same group of investors (France Telecom, Orascom, Vivendi, Wataniya, Q-Tel, Etisalat). In the last few months, all North African markets have been in the news, mostly reporting growth trends and new opportunities.
Egypt is still leader in the region, and one of Africa’s top ten mobile markets, thanks to a strong fixed offering (from incumbent Telecom Egypt and several established ISPs) and 3 dynamic mobile operators: Mobinil, Vodafone Egypt and latest entrant Etisalat Misr. Mobinil has been the subject of a dispute between its two owners France Telecom and Orascom Telecom as the former has been trying to secure full ownership of the company. Orascom ended the legal action it had started against the French operator, but the dispute has still not been sorted and now the regulator is involved. The country’s broadband market is very healthy (one of Africa’s leaders) thanks to good fibre infrastructure, a strong fixed market and mobile broadband services offered by all three operators.
Libya was the first country in the region to exceed 100% mobile penetration at the end of 2008, with 7.5 million subscriptions shared between market leader Libyana and far behind Almadar Aljadeed, both owned by Libya's General Post and Telecommunications Company (GPTC). Subscription growth is slowing down, but two factors are keeping the market going: the launch of 3G services by Libyana is proving popular, and the liberalisation of the market announced at the beginning of the year is attracting interest from investors. Among them are Turkcell, which in its bid to expand to emerging markets is targeting North Africa and Central Asia, and Zain, which is trying to move away from Sub-Saharan Africa and could see North Africa as a good place to invest.
Tunisia’s mobile market continues to grow steadily (albeit with lower net additions as penetration is over 80%) thanks to the competition between its two operators: state-owned incumbent Tunisie Telecom and Orascom's subsidiary Tunisiana. However the picture will change dramatically next year with the entry of a new fixed and mobile operator. The winner of the bid was announced in June as France Telecom, in partnership with local company Divona. With a growing middle class and a large youth market, the demand for broadband services – be they fixed or mobile – should drive the market in the years to come.
Morocco is a healthy competitive market with a leading incumbent operator Maroc Telecom (with mobile subsidiary IAM) and two strong competitors: Meditel and Wana, a CDMA player which entered the mobile market in 2008. As in Egypt, and unlike most of Africa, the fixed and wireless sector is dynamic; in addition to 3G, broadband services are the main engine for growth in the country’s telecoms market.
Last but not least, Algeria is the 2nd largest market in the region, with healthy competition between incumbent Algerie Telecom, Orascom-owned Djezzy, and Wataniya-owned Nedjma. There are talks of a 4th licence, so the market should draw a lot of attention from investors and commentators alike in the near future. Algeria is the only country in the region not to have launched 3G services yet, so the mobile data opportunities remain to be tapped into. The market’s main players are already pumping their muscles to be on top of the competition, and they will all be represented at the upcoming North Africa Com congress in Cairo in October: Algerie Telecom Group’s President Director General Dr Benhamadi Moussa, Djezzy’s CEO Tamer El Mahdy (also group CTO of Orascom Telecom Holdings), and Wataniya Algeria’s CEO Joseph Ged will all give keynote contributions at the event to discuss their strategies and focus for the year to come. They will join representatives of all the main players in the market, including mobile operators (Mobinil, Vodafone Egypt, Tunisiana, Meditel Morocco), investors (Vivendi), ISPs (Mediatel Tunisia, TE Data Egypt), regulators (Egypt, Tunisia) and more.
The exceptional programme and the industry support for this year’s event show that North Africa is a region to watch in the coming months. I’ll give you an update after the event.

Are South East Asia’s telecoms regaining strength after a tough year?

The global crisis has affected the South East Asia region perhaps more than other emerging economies. 2008 was a tough year due to the relatively suddent slowdown of exports to economies themselves enduring the full strength of the downturn (the USA, Europe and Japan). How has 2009 fared so far for the region's telecoms markets?
According to recent data from Informa, for the first part of 2009 the picture is mixed. In terms of subscriber growth, Cambodia and the Philippines added more net subscriptions in 1Q09 than in 4Q08, but several countries (including Indonesia, Laos, Malaysia, Singapore, Sri Lanka, Thailand and Vietnam) added fewer subs in 1Q09 than in 4Q08. According to my colleague Nicole McCormick, “Thailand's net-adds figure was hit hardest, sinking from 2.1 million in 4Q08 to less than 1 million in 1Q09, thanks in part to the country's political turbulence and resulting weakness in the tourism sector. In Indonesia, the number of net adds dropped off slightly, from 7.79 million in 4Q08 to 7.48 million in 1Q09, probably in part because the country is no longer in the midst of a full-blown price war. The country's tariff battle ended in 4Q08.”
The health of the telecoms market can’t be gauged just by subscription figures. The region’s markets are maturing, meaning that their operators must find new ways of generating revenues as they slowly approach saturation. Value-added services are key to generate new revenues, which is made possible by the increasing availability of broadband networks in the region. Most markets have now launched 3G networks and/or are working on HSPA, and WiMAX has seen some succesful launches too.
The impact of the global economy on South East Asian telecom markets, and operators’ strategies to thrive in these challenging conditions, will be major subjects of discussion at next week’s South East Asia Com event in Kuala Lumpur, where the region’s major operators will meet to share their experiences: PT Indosat (Indonesia), Starhub (Singapore), DiGi Telecommunications (Malaysia), Maxis Communications Bhd (Malaysia), VNPT (Vietnam), Emtek Group (Indonesia), Celcom (Malaysia), Planet Online (Laos), Bayan Telecommunications (Philippines), EVN Telecom (Vietnam), Globe Telecom (Philippines), Packet One Networks (Malaysia), and more.
Considering the many travel restrictions placed by companies across the region, this great line-up shows that operators are seeing the benefits of networking and sharing best practices. This should give me interesting stories to report on after the event, if not some gossip about what operators are up to in the region.

Outsourcing and investment strategies of MEA operators

It’s been a while since I last wrote, longer than I intended to, but forgive me as I’ve been out of the office for some time – partly holiday, partly attending the West & Central Africa Com event in Abuja, Nigeria.
What a conference that was! The CEOs from the major players in the region’s market (MTN, Zain, Etisalat, Moov and more) were more candid than usual in their talks on their strategies in a turbulent economy. Christian de Faria, VP for the West & Central region at MTN group, summed up the economic situation: “we have seen a slowdown in the minutes of use; access to finance has become more difficult, particularly where currency movements are adverse, but the banking system has resisted better than in other parts of the world”. The consensus among operators was that they need to be cleverer about their costs, and outsourcing was a major point of discussion. The message was: let’s focus on what we do best (i.e. selling services to customers), and leave the logistics to specialists. This sounds like great news for the equipment vendors who are pushing managed services or outsourcing of CRM activities. Operators are increasingly moving towards infrastructure sharing too, not only to reduce network deployment costs but also to respond to growing environmental and health concerns. Another key point of discussion was regulation, with Bayo Ligali of Zain Nigeria calling for an adjustment of regulatory requirements by decreasing or deferring regulatory fees and relaxing licence obligations. As access technologies are developing and capacity is increasing (thanks to new satellite and submarine cable link projects), the region’s burgeoning broadband market is creating great opportunities. Most operators are now focusing on data services as a major source of revenues to counter the decline of their ARPU.
Although the debates touched upon some difficult issues, there was a major elephant in the room: Nigeria’s suspended licensing process for spectrum in the 2.3GHz frequency band, to be used for mobile WiMAX services. The licensing process has caused a huge rift between the Nigerian Communications Commission (NCC) and the Ministry of Information & Communications (see my previous blog entry for more details). Representatives of both bodies (Ernest Ndukwe, Chief Executive of the NCC, and Onuoha Nnachi, Technical Adviser representing the Hon. Minister Prof Dora Nkem Akunyili) were present at the event and declined to comment, only saying it should be sorted by August. There seems to be renewed interest in WiMAX on the continent, so this issue will be one to follow.
In other news, I can’t really finish this piece without mentioning (again) Zain Group’s much talked-about plan for its African operations. Zain, whose strategy is to be a top 10 global group by 2011, has almost confirmed that it is considering selling some of its African assets to concentrate on its more profitable Middle East operations, and possibly divert its new investments to Asia. Last week the firm appointed Swiss bank UBS to help assess its operations.
So who would benefit from the sale? Vivendi, the French group which had been linked to Zain when the first rumours of a sale were brought out, declined to comment on the issue at an economic summit in Southern French town Aix-en-Provence last week. The group has confirmed its participation to the next AfricaCom congress in Cape Town, where it will be represented by Régis Turrini (Senior Vice President for Strategy and Development). This makes me think that they may have interesting comments to make on their African strategy later in the year. Rival group France Telecom, also present at last week’s meeting, denied they were interested in Zain’s operations.
That’s it for today about this summer’s soap opera but as they say, to be continued…

French groups France Telecom and Vivendi rumoured to be expanding further into emerging markets

French telecoms companies are in the news today following expansion rumours in emerging markets.
France Telecom/Orange Group has been present in Africa for a long time, and expanding recently across West Africa and further, with the acquisition of a controlling stake in Kenya's Telkom, launching the country's first triple-play operation. Until now, it seems that its emerging market strategy was strictly focused on Africa, but there are now reports that it is looking at Asia too. According to my colleagues at telecoms.com, France Telecom is reportedly in talks to take a 25% stake in Indian operator Aircel for up to US$2 billion. France Telecom should buy the stake from Malaysian investor Maxis which holds a 74% shareholding in the operator. Aircel is currently a regional operator in India (operating in 13 circles), but it is planning a nationwide launch in the coming years. India's mobile market has been suffering from a slow regulatory process, but the sheer size of its population, combined with a fast-growing middle class, makes it a prime market for operators looking at high growth opportunities.
Back to Africa, the rumour that Zain group was to sell its African operations to "a French company" raised eyebrows last week, and I wasn't the only one thinking of France Telecom as the potential buyer. However, another operator has also been looking at opportunities in Africa: Vivendi. The group was one the stars of the 1999-2000 telecoms boom, and suffered one of the most spectacular descents when the bubble burst. Since then, it's been slowly rebuilding its position, and has already invested successfully in Africa, with a 53% share in Moroccan operator Maroc Telecom, which has investments in Mauritania (Mauritel), Burkina Faso (Onatel) and Gabon (Gabon Telecom). Now Nigerian paper Business Day claims that Vivendi is the group in talks with Zain to acquire its African operations.
The move would bring a new major player to the African market, but it also raised the question of the direction of Zain's strategy in Africa. Zain's objective has been for the past two years to become a global player by 2011. Africa was one of the cornerstones of this strategy, and all operations across the continent were re-branded as Zain in a expensive campaign in 2008. Zain representatives are not commenting on the rumours, other than mentioning that the group is looking at strategic partnerships for its expansion.
The rumours should be a big discussion point at this week's West & Central Africa Com event in Nigeria, were Zain Nigeria's CEO Bayo Ligali is scheduled to give a keynote presentation. If his company is taken over by another group, he would probably not relish the thought of going through yet another rebranding exercise - it would be the 3rd in almost as many years.

Are cost effectiveness and customer-centric business models enough for Russian operators to get out of the economic downturn?

The economic downturn was on everybody's minds at the Russia & CIS Com congress in Moscow last week. Russia was already a highly competitive market, with three major operators sharing the majority of the subscriptions, while a number of regional operators battle for a space in the market. Mobile penetration passed 100% as early as 2006, ARPU levels have been declining, and the imminent entry of MVNOs should make the market even tougher. It's no wonder that operators are getting worried about the impact of the economy on the market - but some players are faring better than other in a difficult context.
As in other sectors, companies specialising on discount have a better chance of survival when consumers are tightening their belts - or "being clever with their spending", as Donna Cordner, CEO of Tele 2 Russia, put it in her presentation at the congress. Ms Cordner, speaking in the opening keynote of the event, gave a master class on the discounter model as applied by the Scandinavian-owned operator in Russia. Tele 2 operates in 17 regions, with a further 18 to be launched. Its business model is based on that of discounters across various sectors (retailers such as Ikea and Aldi and airlines such as Ryanair to name but a few). The model's main strategic points are: a low-cost operation, a small portfolio of products, efficient management of vendor relationships, and good communication with the customers. It is proving particularly popular with customers who look at managing their budgets more efficiently, not just the lower income segment.
When faced with such competition, Russia's major operators have to be more creative to keep their leadership of the market. Among them, MTS has put in place a detailed sales and marketing strategy based on customer-centricity, as was presented by Garrett Johnston (Group Director of Strategic Marketing) in a lively talk. His main message was that operators need to understand their customers in order to deliver services they need, rather than products that suit the operator. He didn't just go over classic business manual theory, but gave concrete examples of how to get to know customer behaviour, and how to apply the learnings within an operator's sales strategy.
Among the other operators present at the congress, the main focus was how to keep costs under control in order to retain heatlhy margins. Cost-effectiveness is a priority for most operators across the world, but it seemed event more of an issue in Russia. The light at the end of the tunnel for operators investing in the region should be seen in CIS countries rather than Russia: emerging Central Asian markets, with their low penetration levels and improving economies and network, offer more potential than the already developed Russia.

WiMAX spectrum licensing causing trouble in Nigeria

In the past couple of weeks, I’ve been debating with my colleagues about the opportunities for WiMAX in Africa. It has always been hailed as a great technology to provide wireless broadband services on the continent. Its relatively cheap deployment and flexibility made it a good business case for under-served areas. But it hasn’t taken off quite as fast as some of its most fervent supporters were hoping for, and the debate is still ongoing over what the best use is for the technology on the continent.
Over 100 WiMAX deployments are either planned or in service across Africa. Mobile WiMAX is not really an option in the foreseeable future, but fixed wireless services have good potential. Existing operators use WiMAX as a complementary technology to mobile for the provision of wireless broadband services (Orange in Mali and Botswana for instance), or as a cost-effective backhaul solution, ideal for rural coverage. Mostly, it has been seen as a good choice for Greenfield operators due to its easy deployment and favourable licence conditions. In the last few months, the global economic downturn has made it difficult for new entrants to raise the necessary funds, but this trend may change for 2010. The other potential obstacle to WiMAX’s success on the continent is the popularity of CDMA WLL for wireless broadband, supported by an active industry association, the African CDMA Forum (Bill Hearmon, the association’s chairman, is a regular at our conference and a very dynamic advocate of the technology).
As Africa’s largest telecoms market and one of the most competitive, it’s no wonder Nigeria is embracing the opportunities of WiMAX in addition to the other available technologies that are already successful in the market. But, as I’ve experience in last couple of years, things often take longer than expected to get done in Nigeria, and this particular process is being delayed in quite a spectacular fashion.
Licences have been issued for spectrum in the 2.3GHz frequency band for WiMAX services, and were allocated this month by the regulator (the Nigerian Communications Commission - NCC) to Mobitel, Spectranet and Multilinks. But almost as soon as the news was out, doubts were raised about the licensing process, and Nigeria’s Economic and Financial Crimes Commission arrested Ernest Ndukwe, head of the NCC, over the matter. According to my colleagues at Middle East & Africa Wireless Analyst, the main controversy was caused by the award of a licence to Multilinks rather than rival bidder Galaxy; Nigerian paper the Daily Trust reports an issue with winner Mobitel as well, and with contracts for the construction of community information centres across Nigeria.
Ernest Ndukwe is a major figure in Nigeria’s telecommunications as well as across Africa, and a regular speaker at international congresses. He led the NCC’s move to unified licensing in Nigeria, one of the first regulators to do it in Africa. I was surprised to hear of his arrest, but not of the fact that licensing processes are subject to controversy, particularly when matters go back and forth between different government bodies. Indeed, his arrest followed a petition filed by the Hon. Minister of Information and Communications, Professor Dora Akunyili, who has since ordered the cancellation of the whole licensing process. Professor Akunyili took office at the end of 2008, coming from a medical background - she was previously Director General of National Agency for Food and Drug Administration and Control. As new Minister for one of Nigeria’s foremost industries, it is understandable that she takes a keen interest in what is happening with new licences. She also has a strong reputation to defend as a popular public figure in the country, and probably doesn’t want to be associated with any controversy.
The NCC is currently fighting the cancellation and arguing its case with the government, so we should hear more of the story in the coming days or weeks.
Both Professor Akunyili and Ernest Ndukwe are due to give keynote presentations at the forthcoming West & Central Africa Com congress taking place in Abuja in 3 weeks. Their presence should attract a lot of attention from the local industry observers and stakeholders. Hopefully by then we’ll see more clarity in the case.

Operators working on their network performance in South Africa

Competition is increasing in African markets, and added to the threat of lower consumer spend due to the global economic downturn, operators need to look at how they can best differentiate. In some cases, particularly for incumbents and market leaders, network capacity and high quality of service is a strong asset for both customer acquisition and retention.
That may be the reason why MTN is so strongly supporting the move of South African regulator ICASA 's decision to make operators publish quarterly reports on their performance. South Africa’s mobile operators MTN, Cell C and Vodacom met with ICASA last week to discuss the terms of the agreement. As a result, they will have to publicly report on: network performance and availability, network parameters (including reports about dropped calls and delayed text messages) and Active Subscriber Information. ICASA’s move is “part of the broader investigation about the source of dropped calls and the delayed SMSs that cell phone subscribers have been experiencing recently”. Apparently, SMS delays became a major issue during a reality TV programme involving text voting (a sign that the reality TV format is still alive and well across the globe!).
MTN was quick to turn the decision to their advantage, with representative Tim Lowry commenting publicly on it (Lowry is MD for the South Africa operation, regional VP for Southern and Eastern Africa at group level, and a regular speaker at the AfricaCom congress). According to MTN, ICASA’s decision was based on their proposal, described as similar to the way listed companies have to report on their financial performance. A great PR move for an operator which is investing heavily on its networks across Africa this year, as mentioned in a previous post. They will undoubtedly want to avoid the situation they experienced in Nigeria last year, when the local regulator threatened to block all new subscription additions until the QOS issues were sorted.
Tim Lowry’s comments also included a snap at Telkom, saying that the most consistent area of failure occurred when its network was relying on link faults by the fixed operator. His comment was quickly picked up by Telkom’s people, who released a statement saying “Telkom rejects the claims made by Lowry where he reportedly blamed the company for their own network and capacity shortcomings as an attempt to deflect attention from MTN’s own failure to adequately service its customers”.
We’ll just have to wait and see if Telkom is asked to share its network performance too to settle the debate. In the meantime, let’s hope South African viewers get to vote safely for their favourite TV show!

Picture of contrast in India’s telecoms market

India is a land of contrast, and it seems that its telecommunications industry reflects this. In the past week or so, news coming from India have given very different pictures of the industry: on the one hand, strong 2008 results from the market’s operators, while on the other hand, regulatory uncertainty still prevails.
The results for the last quarter of 2008 published this week show a healthy situation. Mobile subscription growth is still strong, boosted by operators expanding into new territories as well as the launch of new ones. Operators’ financial performances are healthy, with Bharti Airtel and Reliance Communications showing EBITDA growth. The market is still attracting foreign investment, as Etisalat joined in with a stake in new operator Swan Telecom. Above all, operators are still investing in their networks and services, in order to be ready for the increased competition on the market (only today, Bharti and Alcatel-Lucent announced a network management over the operator’s fixed-line and broadband business). In a context of global economic uncertainty, India seems to be a great example of the fact that emerging markets are the best places to do business at the moment.
However, the market is still experiencing drawbacks, a major one being its relative uncertain regulatory situation. New decisions take a very long time to be made, due to the constant bouncing back and forth between regulator TRAI and the government’s Department of Telecommunications. 3G licences took years to be awarded, with yet further delays earlier this year. Particularly telling was a debate among emerging market operators in February at Mobile World Congress: while all operators where discussing their great plans for mobile broadband, the Indian operator on the panel explained he had to make do with 2.5G networks while awaiting the regulator’s decision. Similarly, the situation with MVNOs took years to be sorted, with Virgin Mobile launching while arguing that it was only a branded offer, in order to bypass the regulatory uncertainty.
As reported in the last week, one of the interesting ‘up-and-coming’ new operators, Loop Telecom, may be another victim of regulatory challenges: its license may be under threat following an enquiry by the Ministry of Corporate Affairs over its indirect ownership by Essar Group. As Essar already owns a stake in mobile operator Vodafone-Essar, its link with Loop means that the new company may be in breach of its Universal Access Service License (UASL) conditions, and risk losing it altogether.
An interesting market then, that I’ll be happy to explore further at the India & South Asia Com event in Mumbai next week. A number of senior representatives of the abovementioned companies will be there, and I’ll be particularly attentive to the contributions of the Department of Telecommunications representatives. More news to come!

Developing Telecoms Watch: Rural VAS tipped to grow in India

Developing Telecoms Watch: Rural VAS tipped to grow in India

Looking at new data on how the economic downturn affects emerging market operators’ spending

The question of how the global economy is affecting the telecoms sector has been in every discussion for a while, but there seems to be a consensus on the fact that emerging markets are not to be as affected by it as developed economies.
A new report released last week by global ratings agency Fitch Ratings is looking exactly at that: telecom operators’ capital expenditure plans in emerging markets. And the picture is a mixed one. Spending is expected to be stable to decreasing in most emerging markets (far from a doom-and-gloom vision of all money taps turned off), while Africa is to see a rise in operator spending in 2009.
According to the report, infrastructure investment is expected to increase by about 10% in Africa, and markets such as Nigeria will be the main beneficiaries of it. Indeed, pan-African operator MTN has announced it would follow up its record US$3 billion CapEx programme of 2008, with an even larger US$4 billion expenditure plan for its 2009 financial year. US$2.1 billion will go to MTN’s operations in West and Central Africa, and MTN Nigeria is expecting to invest at least US$1.5 billion on its network during this year to improve on the quality of service on its network. Zain group is also planning its 2009-and-beyond spending plans: having already acquired a stake in Morocco’s Wana on its shopping spree (as mentioned in a previous post), the group is now sorting out its finances by arranging a new deal to refinance a $2.5 billion Islamic loan it signed in 2007, according to Gulf Daily News.
In other parts of the world, the picture is not as positive, but still not bleak either. In India, one of Asia’s leading growth markets, operator expansion and new regulatory decisions (such as 3G and WiMAX licences and the introduction of mobile number portability) should boost operator spending. As an example, latest entrant operators Swan Telecom, Unitech Wireless, Loop Telecom, ByCell Communications and Datacom are looking at outsourcing contracts and are already in talks with various IT vendors like Tech Mahindra, IBM, Wipro and Infosys. The rest of Asia seems slightly more affected by the economic downturn, but operators are still deploying or expanding their networks, subscriptions are still growing, and broadband access is still a priority for the industry.
The report predicts a worse situation in Russia, with “sharp cuts, with many regional fixed-line incumbents expected to slash their capex by over 50% from the previous year, and mobile operators to reduce budgets by up to 25%," according to Nikolay Lukashevich, Senior Director and Fitch's Head of Russian/CIS Corporates. However, looking at Informa Telecoms & Media 's forecasts for this year and until 2012, the market still looks strong, particularly thanks to a growing broadband market, the launch if IPTV services and the emergence of MVNOs. Russia’s subscription base growth is set to continue in the coming years, despite a forecast penetration rate of 150.8% by 2012. Operators’ investment in data networks, including GPRS, EDGE and latterly WCDMA and HSPA, will help to achieve a growth in data revenues to reach 54% by 2012. This is likely to contribute to the quite unique trend observed in Russia of increasing ARPU levels: while between 2003 and 2006 ARPU levels fell rapidly from $16 per month to just over $7 per month (a trend observed in all markets as they develop), they have since rebounded, reaching $12 per month at the end of 2007. This leaves operators with great opportunities to invest in new services in order to retain customers: at the lower-end, messaging applications are a strog focus, and on the fixed-line side IPTV services are taking off and operators are investing in developing quality networks to support the demand.
In all the events I’ve attended in the past few months in emerging markets, the economy is a matter of concern, but operators are adamant that they cannot halt their expansion plans, nor stop investing in innovative services in order to differentiate from their competitors. What they are doing is looking at new ways to make their spending more cost-effective. That is why managed services are creating such a big interest in emerging markets. And for some of the groups whose strategy relies on international expansion, now is probably the best time to clinch cheaper deals. That is certainly the view of my colleague Nick Jotischky, who says: “ask Etisalat about global macroeconomic conditions, and it says the current climate is an M&A opportunity. A void has appeared, since many traditionally strong - and expansionist - mobile operating groups, such as France Telecom and Telenor, are becoming reluctant to get involved in acquisitive activity. Their reluctance has encouraged some wealthy Gulf-based incumbents, which themselves face intense competition in their domestic markets, to look for growth overseas. And they are using the low-cost business models that have been a success in their home markets to gain large numbers of customers in Asia and Africa.”
How operators adapt to new market conditions are one of the main topics discussed at events in the Com World Series this year. It will be interesting to see how the answers evolve as the year goes by. 2009 will close with our Middle East event, with a special focus on Middle Eastern operators’ international strategies, which will be a great way to update Nick’s point.

When football and telecoms meet in South Africa

It seems not so long ago that Zinedine Zidane headbutted his way out of the football world cup final in Germany, but the next World Cup is now only a year or so away. This is even bigger news as usual, as it is taking place for the first time in Africa, one of the most football-crazy continents. Having visited African countries during or just after the last African Football Cup of Nations, I can testify that is a big deal there – and it was definitely useful to make friends with a taxi driver in Egypt who was more than pleased to comment on his country’s recent win.
Now, what is the link with telecoms? Well, for a start, large sporting events have always been a great way of boosting uptake of mobile content services. Due to the high price of such services, and to the limited available bandwidth, the market for such services remains small in emerging markets (with the exception of India). Operators and industry commentators also blame the limited success of such services on the lack of original local content. Next year’s world cup could be a great way for operators on the continent to make the most of their recent 3G upgrades and get customers to use their data services.
Closer to my colleagues and me, the preparations for the 2010 event in South Africa are having a considerable impact on our schedule of congresses. Next November, FIFA is holding the final draw of the teams playing in the competition. Judging from the show they put on for the preliminary draw, it’s going to be a big event. It will take place in beautiful Cape Town, at the International Convention Centre. I know this is a great venue, as we use it every year for our flagship event AfricaCom. We were planning to use it the week before FIFA is organising the draw, but it turns out that they will need it in order to prepare for their show.
That is why, after consulting with FIFA and with the Mayor of Cape Town, we are moving our event to 11th and 12th November (instead of 18th and 19th as originally planned). Nomfanelo Magwentshu, Chief Operations Officer for the FIFA World Cup Organizing Committee, says: “it is of the utmost importance to ensure that the preparations for [the FIFA World Cup Final draw] are flawless [...] to ensure an excellent television broadcast allowing us to showcase South Africa to the world, and present the country and the continent hosting the 2010 FIFA World Cup in the best possible way”. For those of you who will join us for AfricaCom, he adds: “allow me to pass on our sincere thanks not only to Informa but also to the exhibitors, speakers and delegates of AfricaCom 2009 who have been affected by our request but without whose co-operation this would not have been possible”.
For my part, I am happy that AfricaCom can be associated, if only in a small way, to such a big event. In particular, I’ll be looking forward to the possibility of meeting football stars in Cape Town – watch this space as we are planning special guests for our AfricaCom Awards evening!

Bakcell: a company to watch in Azerbaijan

Azerbaijan was one of the most talked-about markets at last week’s 6th annual Eurasia Com event in Istanbul. Although Turkey is by far the region’s leader (with great talks of broadband opportunities and MVNO launches), and Uzbekistan is hailed as the next big thing, one of the markets that was most talked about was Azerbaijan. Within it, the company that drew my attention most was Bakcell, its 2nd mobile operator.
Bakcell was represented by Ineke Botter, its new CEO of two months, and seemingly the only female senior executive in the region’s telecom (although I’d welcome anyone to contradict me on this!). With a background in Greenfield operations, she was brought to the company to rethink its position and fulfil its stakeholders’ renewed ambitions.
After 15 years in the market and 1.5 million subscribers (according to my number-crunching colleagues at WCIS), Bakcell is still somewhat lagging behind Azercell, the mobile arm of incumbent fixed-line operator Azertel (3.6 million subscribers), and threatened with being caught up by relative newcomer Azerfon/NAR Mobile, already claiming 1.01 million subscribers after a launch in 2007. Furthermore, smaller alternative operators are trying to make a mark in the market, particularly with broadband services: CDMA player Catel, and new WiMAX ISP Delta Telecom (whose CTO Rahid Alekberli also spoke at the event). In these conditions, Bakcell has been suffering, according to Ms Botter, from an image of an old-fashioned company at a standstill in the market.
But under the impulse of new shareholders with “great ambitions and great expectations”, and a new management team at the helm of the company, Bakcell is gearing up to face the competition and make a strong impact in Azerbaijan’s telecom. The company is being reorganised along some key drivers to move towards a new image and stronger market position:
- A strong team to lead the change, with new executives coming from diverse backgrounds; one of them, CMO Steinn Naevdal, was at the event and is bringing experience from other emerging markets
- Building an efficient network with new ideas to facilitate the rollout (and “not just cut and paste from other operators’ models”), and money to spend; Ms Botter said the company has “good CapEx to spend”, and indeed a GSM network expansion contract was announced with Nokia Siemens Networks last month
- Focusing on the company’s Azeri roots, to differentiate from foreign-owned competitors
- Building healthy relations with the government, with the objective of participating in the process of creating an independent regulator, which doesn’t yet exist in the country
These clear points, presented with conviction by Ineke Botter, made me think that we would probably hear more from this company. I am looking forward to hearing about the innovative solutions that are to be tried out, and maybe even more to seeing its competitors’ response.

Zain on its way to global domination

When Chris Gabriel (CEO of Africa at Zain Group) announced at AfricaCom last November that the group was ‘shopping’ and expected to confirm 3 or 4 deals in 2009, it sounded quite bullish, if in line with his presentation’s very enthusiastic tone. After all, one of the main topics discussed at the event was the likely impact of the global economic downturn on Africa’s markets, not to mention that on that same stage the year before, another group CEO (Nizar Dalloul of Comium) had said he expected to announce 2 deals in the following month – which didn’t happen.
But Zain is an unstoppable group, and they already had an announcement to make in the first quarter of this year, with a stake in Morocco’s Wana. I first heard this company’s story at North Africa Com in 2007, when their CEO gave a presentation in which he described their move from being an ISP to providing mobile CDMA services. Since then, they have acquired a GSM licence and are set to really shake Morocco’s market, one of the region’s most promising thanks to good economic and competitive conditions. Wana has been noticed for its ability to stay at the forefront of technology innovation, enabling them to provide attractive and affordable services to consumers that are increasingly technology-savvy. This model, combined with Zain’s buying power, is probably a great recipe for success. It also gives Zain its first presence in North Africa, a more developed market than the rest of Africa, where other Middle-Eastern investors (Etisalat and Qtel) have already established a strong presence.
Following this interesting first move of the year, Zain is now announcing a renewed interest in India’s booming market. Opportunities to invest are becoming rarer, and competition is already fierce, but the size of the potential market still means it is on the right side of the growth curve. Zain is said to be looking at two privately-owned operators who have yet to make their mark. India is one of the world’s most attractive markets, but also a difficult one for operators, considering the slowness of the regulatory decision process. We’ll see at our forthcoming event India & South Asia Com if Zain’s announcement is creating interest in the market.
If a deal was to be confirmed, this would be the group’s first step outside its original Middle East and Africa presence, towards its strategy of becoming a global operator. It is said to be looking at other parts of Asia as well. Going further East, there are some interesting markets with great potential in South East Asia: Vietnam, Laos and Cambodia for instance are experiencing great growth; regulatory changes are helping the sector’s development, and other international groups are showing interest. A possible future move then?
But Zain is not the only Middle-Eastern operator group looking at entering other markets. It is a noticeable trend, which has come up a lot in some of my colleagues’ conversations with local observers. The general feeling is that Zain is cleverly selective over its investments, going for strong growth markets where competition is still within reasonable levels. On the other hand, other groups are said to be spending over-the-odds for ‘trophy’ acquisitions, their main strategy being seemingly to place their logos in as many markets as they can regardless of the foreseeable returns. This will be a main focus at the Dubai event in the Com World Series to take place at the end of the year. Hopefully by then we’ll have a better idea of how investment is evolving in the region and more generally in emerging markets.