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.
8 Sept 2009
28 Aug 2009
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!
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!
22 Jul 2009
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.
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.
16 Jul 2009
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.
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.
8 Jul 2009
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…
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…
15 Jun 2009
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.
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.
8 Jun 2009
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.
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.
28 May 2009
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.
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.
19 May 2009
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!
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!
1 May 2009
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!
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!
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