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.
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!