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).