Operators focus on return on investment in the recovery from the economic downturn

Last week’s Eurasia Com event in Istanbul was a one of the most enjoyable I’ve been to in the last months. Not only was it hosted in one of the world’s most vibrant cities - Istanbul - but the event itself had the perfect mix of learning from telecoms leaders and of networking.
After final count, over 600 people attended the event over the 2 days, sharing their time between the conference sessions and networking in the exhibition . The interesting point about this number is that different crowds attended each day, making it possible to make new contacts at each break or lunch, or indeed in the drinks reception which took place at the Conrad Hotel's Summit Bar, offering fantastic views over the Bosphorus. The audience was composed of representatives of the whole telecoms ecosystem (operators, vendors, regulators, brands etc.) from Turkey, the CIS, the Black Sea region and neighbouring markets.
The debates covered the key issues that concern all stakeholders in the telecoms market : operators’ strategies, evolution of the telecoms ecosystem, increasing competition, broadband strategies, value-added services, convergence, customer growth and retention. However, it seems that the tone of the discussions has changed in the last year.
In 2009, telecoms players were justly concerned by the global economy and the fall in revenue it caused. As a result, they were looking at cost-reduction strategies to avoid losses. Last week, they put the emphasis on ensuring return on investment instead, possibly a more positive way of approaching the market's challenges. Most of them (particularly the Turkish operators such as Turkcell, Vodafone and Avea) have kept their network investments up during the downturn, and now they are focusing on ensuring that they generate returns. As Ineke Botter, CEO of Bakcell in Azerbaijan summed up: “if an investor invests a quarter of a million dollars in a network, you have to make sure it’s followed up by revenues”. This focus on ROI means operators are looking more closely at addressing new market segments (rural areas, youth, mature customers, enterprises), improving loyalty strategies to up-sell to existing customers, service innovation such as mobile marketing, and joint ventures with other industries such as the banking sector for m-commerce.
The conference included a mix of presentations, case studies and lively discussions, with plenty of opportunities to develop next year’s programme with new topics. If you were there and would like to give some feedback, don’t hesitate to get in touch.

Is South East Asia the leading emerging market in terms of LTE opportunities?

Last month Singapore mobile operator MobileOne (M1) announced that it managed to successfully complete a 100 Mbps data call on its trial LTE (Long Term Evolution) network. According to the operator, this made it the first South Asian operator to achieve the milestone while using commercial LTE hardware and software.
LTE is rapidly becoming a hot technology even in emerging markets, and one of the most promising is that of South East Asia. HSPA networks have been deployed in Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand, and LTE is the next step for operators to deliver better, faster mobile broadband services. That is why this year's South East Asia Com congress (Kuala Lumpur, Malaysia, 20-21 July) will include a whole focus day on LTE.
The session will offer a comprehensive programme of presentations, case studies and discussions. Leading operators and industry players across the ecosystem (including Indar Atmanto, President Director of PT Indosat Mega Media, Indonesia) will share their experience and expertise on how to drive the broadband leadership towards revenue growth in the LTE space.
Key topics include:
- Status Of Next Generation Fixed & Wireless Broadband In Asia Pacific
- Exploring LTE Opportunities For Implementing Next Generation Services & Creating A Successful Business Case For LTE
- Examining LTE Standards, Spectrum Allocation Challenges & Evolution Paths For LTE Development
- Uncovering The Full Commercial Potential of LTE Through New Revenue Streams
- Evaluating Deployment Strategies, Challenges & Timescales In Planning LTE Network & System Architecture
- Paving The Way Towards 4G Vision In South East Asia
We are still looking for case studies and presentations for this session, so don't hesitate to get in touch for more information.

Turkcell financial results are down, but it is still a leader in Eurasia

The announcement of Turkish giant Turkcell’s financial results was met with varying degrees of concern. The results shown were down: the group’s net income dropped by 45% for the fourth quarter, and 25.9% for the full year. Most reports pointed out that this was explained in part by a reimbursement based on previously announced regulatory decisions. But lower operational profitability is another reason. In addition, the various components of the group show different pictures: while ISP Superonline “successfully increased its revenues by 58% to TRY252 million (TRY160 million) and recorded a positive full year EBITDA for the first time” according to Turkcell’s announcement, the contribution of the group’s subsidiaries Astelit in Ukraine and Inteltek in Turkey were the major culprit in the decrease.
The group cited “Intensifying challenges in the macroeconomic, competitive and regulatory environment” to explain its impaired operational and financial performance in 2009, but this wasn't enough to reassure investor TeliaSonera (which owns 37.1% of the group as the main shareholder), as CEO Lars Nyberg is said to have called for a board meeting “to solve this problem”.
However, the situation isn't too bad for Turkcell. It has a presence across Eurasia, and a top position in the dynamic Turkish market, not only in the telecoms market but also as one of the major Turkish brands. In addition, its innovative strategy in terms of technology and services is unrivalled by other operators - Turkcell proudly announced last week(possibly trying to distract from the attention caused by its finances) that it was among the first operators in the world to reach a speed of 42.2Mbps with its 3G technology. All in all, Turkcell isn’t likely to lose its leadership any time soon.
One of the group’s top executives, Tayfun Cataltepe (Chief Corporate Strategy & Regulations Officer), will give a keynote presentation at EurasiaCom in Istanbul later next week, which will give an insight in the group's future strategy. It is part of a new Turkey Focus Day at the event, looking at the opportunities and trends in this very dynamic market. The event will also include contributions from Turkey and Eurasia’s leading operators, from regional groups (MTS, Altimo) to national incumbents (Turk Telekom, RomTelecom, Tajiktelecom, KyrgyzTelecom), competitive mobile operators (Vodafone Turkey, Bakcell Azerbaijan, Vtel Georgia), alternative service providers and ISPs (Altel Kazakhstan, wi-tribe, koç.net, SuperOnline, Borusan Telekom, Doğan Telekom), and more.
This event will be a great occasion to gauge the state of the market in the region and the future opportunities within it, from the point of view of investment, technology and services.

Nigeria’s broadband market set to boom thanks to improved international connectivity

The last few weeks have abounded with news on Nigeria’s telecoms market, from the announcement of the departure of regulator Ernest Ndukwe to company launches and announcements relating to submarine cable projects.
Nigeria is Africa’s largest communications market, and the eighth fastest growing telecommunication market in the world. It offers ideal conditions for continued expansion: a large young population, levels of penetration that leave room for growth (54.8% mobile penetration at the end of 2009, and limited fixed market), favourable regulatory conditions (which were led by Ernest Ndukwe during his 10 year leadership at the Nigerian Communications Commission), high level of investment and a very competitive telecommunications market.
However, it has so far suffered from insufficiencies in the networks and from the lack of international connectivity. But this is changing, thanks to international projects that are coming to fruition this year and will increase available capacity for broadband services. One of them is the Glo 1 submarine cable system landed in Lagos last September, which is due to connect Nigeria to West Africa and Europe. Another is led by Main One Cable; it is in the final stage of deployment of its high capacity fibre-optic cable between Portugal, Ghana and Nigeria, and is due to go live in June this year.
These projects will enable the provision of faster, more broadly available internet services. They will create great opportunities for the major mobile operators (MTN, Zain, Glo, Etisalat), and for the many alternative operators and ISPs such as Starcomms, Zoom Mobile, Pinet Informatics, GiCell Wireless, or new entrant Geoidtel.
A number of them will be speaking at the forthcoming West & Central Africa Com congress to take place in Dakar, Senegal in June. An additional event will be held in Lagos, Nigeria in September, dedicated solely to the trends and opportunities in Nigeria’s market, with representation from the whole market’s ecosystem: fixed, mobile and wireless operators, ISPs, the NCC, government organisation, investors and more. Don’t miss this opportunity to get to know Nigeria’s telecommunications market and meet its leaders.

Mobile Money still championed by emerging markets

Three years after Safaricom launched its pioneer m-Pesa service in Kenya, African operators are still world leaders in the provision of mobile money services. The seemingly simple service, allowing unbanked people to transfer money by text, has allowed countless ordinary people to send money to their loved ones and business partners without hassle, while providing Safaricom with a unique tool to improve customer loyalty. The service was so successful that backer Vodafone launched it in Tanzania, Afghanistan, and announced last week that Vodacom was to launch it in South Africa in partnership with a local bank.
More operators have joined the trend. In January this year, Zain became “the biggest mobile commerce operator in the world in terms of geographical coverage”, by extending its Zap service to Malawi, Niger and Sierra Leone (after starting in Kenya, Tanzania and Uganda). Orange is also addressing the market, with its Orange Money service in West Africa. In North Africa, Maroc Telecom launched MobiCash last month, and Egypt-based group Orascom is partnering with Western Union for a mobile money service.
It is not only large operator groups ‘banking’ on the market: small, Africa-based companies are providing services which could shake up the offer of financial services to consumers. Two interesting examples are to be found in West Africa. Moneyboxafrica, based in Nigeria, is a new savings and payment system based on a scratch card and enabled by any mobile phone. In Sierra Leone, Splash Mobile Money allows clients using Zain, Africell and Comium networks to send money to other mobile users by registering to the Splash system. The Managing Directors of both companies (Adeniyi Elumaro of Moneyboxafrica and Michael Foley of Splash) will join the Mobile Money Panel at the forthcoming West & Central Africa Com congress (Dakar, Senegal, 16-17 June) and will discuss their visions of how to deliver on customers’ needs for better banking services.
The subject of mobile money will feature prominently in some events of this year’s Com World Series. A special session is to be dedicated to the subject at the leading pan-African event AfricaCom, with presentations and a panel discussion from operators, solutions vendors, financial institutions and regulators. In the Middle East event (Dubai, 30th November – 1st December), the topic will be covered as part of the value-added services stream, looking at the mobile money opportunity in markets where needs are different from those found in Africa: on the one hand, mobile money transfer is a valuable service for the large immigrant workforce wishing to send money home to their families, while on the other hand the high end of the customer base will be looking at more advanced m-commerce services. At Americas Com (Rio, Brazil, 30th June – 1st July), a panel discussion will address the challenges and opportunities for the mobilization of payments and remittances in Latin America.
The discussions will certainly cover how the services are adapted to different market conditions, regulatory environments, and distribution networks. It will be interesting to see if and how mobile money services will evolve from simple money transfers to more advanced mobile commerce services.

As Bharti tries another move into Africa, is the Indian operator business model transposable there?

Outsourcing, managed services, and more generally cost-reduction strategies have been major areas of interest in African telecoms markets in the past couple of years, as the decline in ARPU levels started to have a impact on revenues which was not compensated as much by the organic growth experienced until then. African operators began to work on their costs and look more closely at their margins rather. At last year’s AfricaCom congress, Zain Africa’s Chris Gabriel gave a keynote speech in which he presented the key points for a sustainable business models: scale and efficiency were at the top of his list, and most operators investing in Africa would have agreed.
Indian operators are renowned for business models that excel at optimising scale and efficiency, in order to achieve strong margins in very low-ARPU markets. The “Indian model” has been praised as the champion of emerging markets, and it is no wonder that it is often mentioned as one to emulate in Africa. Indeed, a number of Indian companies have been trying to enter the continent, with Essar in East Africa, Tata in South Africa and, as announced this month, Bharti in talks with Zain group to buy its African operations. The move would make sense, as Bharti would bring its knowledge of low revenue markets to operations which need a shake-up. In particular, it could develop interesting value-added services, for example on the content side. I met an Indian VAS vendor who was talking enthusiastically about how mobile content is driven by the same two obsessions in India and Africa: music and sport (although the sports people are so passionate about are different: cricket in India and football in Africa).
But is it as straightforwad as it sounds? Talking about the Bharti-Zain news with participants at Mobile World Congress last week, I heard some questions about how easily Bharti could work its magic in Africa. The company has limited experience of the continent - or indeed of any market outside India – and working cultures are very different. In India, Bharti can count on a relatively well-trained workforce, which will be harder to find in some African markets, unless it brings in its own staff. In addition, it would be unfair to say that Zain hasn’t attempted the so-called Indian model in its markets, outsourcing key areas to reduce costs and concentrate on selling services. But the group’s efforts haven’t been as rewarded as its backers hoped for, and some of its operations have amounted huge debt.
Changing business models, and the new ownership trends in Africa’s telecoms markets, will certainly be key topics of discussion at this year’s African events in the Com World Series. We are currently drafting the programmes for the new NigeriaCom event in Lagos in September, and for the annual AfricaCom in Cape Town in November. Now is the time to get in touch and give your input.

As the mobile world is getting ready for its annual fest in Barcelona, what are the key trends in emerging markets?

It’s been an annual date on the telecoms calendar for decades now, and it was once the place where emerging markets were championed. As most of the world’s operators, vendors and analysts will be present at Mobile World Congress in Barcelona, I am expecting it to still be a good place to discuss the major trends in the sector. However it seems that this year’s event is looking mostly at the Northern hemisphere and may not address the issues in markets of sub-Saharan Africa, Latin America. Even Asia seems a bit short-changed, as China is very well represented on the keynotes and by its vendors, but South-East Asia doesn’t appear as prominently.So, I’ll be spending my week finding out about how the issues addressed at Mobile World Congress relate to emerging markets. Here are my first thoughts/questions
LTE features heavily on the programme and on analysts’ bets on the most talked-about subject. It is indeed a big topic, particularly as TeliaSonera launched the world’s first LTE network in December. It is also big news in Asia, where operators in even the more emerging markets of Indonesia and the Philippines have committed to LTE deployments. It will be interesting to see what is said about the opportunities for these markets, particularly as we are working on a special LTE Focus Day at our next South East Asia Com event (Kuala Lumpur, Malaysia, 20-21 July). I am also interested in hearing what the LTE opportunities are for Africa. Some markets such as Ghana, Kenya, Morocco, South Africa, Tanzania, have already seen the launch of HSPA or HSPA+ services, but when will operators need to start thinking of LTE? Most of the continent already has 3G, and there is demand for internet services, but the lack of disposable income is still an issue for the take-up of data offerings. As for Latin America, a relative late starter for 3G (except in Chile, leading the region’s telecoms sector), when are we to expect operators to start looking into it?
Offering affordable and relevant value-added services is another key area, particularly for emerging markets where voice is still the major services and where ARPU levels can be extremely low. Mobile money has so far been a major success in emerging markets (particularly in sub-Saharan Africa with Safaricom’s m-pesa,, Zain’s Zap and Orange Money), and it will be covered in a day-long session at the opening of the congress. But where else can operator look at? Social networking is raising a lot of interest, but is it applicable outside Western markets? Content is expensive, and often lacking in locally-produced offerings. Mobile marketing is an interesting option, and mobile internet seems the most likely service to increase data usage.
More specifically for the African market, I will be looking at the increasing capacity demand and the evolution of the market, as I am working on the new Capacity & Wholesale event to be co-located with this year’s AfricaCom. New submarine cables will hugely increase the continent’s access to broadband, but there is still work to do to connect the land-locked areas with fibre. Satellite operators still have a strong position in the market despite costly offerings, and it will be interesting to see how they react to new competition. And with the debates on operators’ strategies, their position in the telecom ecosystem, and the rise of managed services and outsourcing, how is the role of wholesale and international carriers evolving?
Finally, I wonder if the organisers will reflect on the recent disaster in Haiti, and include sessions on telecoms in emergency situations. In such times, it is important to remember that access to communications can have a crucial impact on rescue efforts, medical provisions and the logistics of providing aid.

Saudi’s dynamic telecom market encouraged by government initiatives to increase competition and attract foreign investment

2010 starts in a positive note in the Middle East’s telecoms market. A few weeks ago, the IMF announced it was expecting economic growth of close to 4% in the region, boosted by recovery in commodity prices, and at last week’s ITU meeting for the Arab States, GCC countries (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates) fared well in a report on ICT development and growth opportunities.
More particularly, the Saudi market stands out in terms of its market conditions and of the challenges it has to face in the development of its ICT sector.
Despite a relatively high GDP per capita and a large, young population, the telecommunications market had a late start in the kingdom, partly because of its geographical conditions, as vast desert areas and a tough climate make it difficult for infrastructure projects to be viable. Market liberalisation was relatively late too, with second mobile operator Zain launching in 2005 to compete against incumbent STC, and 3rd operator Mobily in 2006.
However in the last few years, the situation has changed and growth opportunities are very encouraging:
- Mobile penetration has boomed to reach well over saturation level
- The fixed–line market is growing: market leader STC is followed by new entrant Atheeb (GO), and possible new launches from PCCW and Verizon
- Mobile broadband is picking up quickly and making up for the relative lack of fixed-line infrastructure, with Mobily leading the market and claiming 100% growth in 6 months in 2009
- WiMAX technology has been being deployed by operators Bayanat Al Oula (now part of Mobily) and ITC
- Competition is due to increase with the possible introduction of MVNOs before the end of 2010.
This dynamism is due in large part to the work of the CITC which, according to the ITU, is one of the most advanced telecoms regulators in the region. It is a crucial part in the Ministry of Communications and Information Technology (MCIT)’s plan for ICT sector development launched in 2005. The plan set targets for the creation of a knowledge-based society, comprising among other objectives: e-Government initiatives, encouraging competition in the telecoms sector, increasing PC and internet penetration and raising foreign investment in ICT projects.
One way of raising foreign investments can be found in the project of Economic Cities, new towns built on Saudi soil to attract businesses and diversify the economy away from oil, with the view of contributing $ 150B to Kingdom's GDP. Economic cities are meant to deliver state-of-the art infrastructure and processes to redefine and showcase new standards around the world. Emaar (the property developer) must offer unparalleled technology with most advanced internet and broadband services for both residential and business customers.
The fact that government targets put foreign investment as a priority is good news not only for the local market, but also for the international investors. Indeed the Kingdom has had a reputation of a difficult market to enter, as the working culture can sometimes be difficult to grasp for newcomers.
That is why Informa Telecoms & Media is launching Saudi Com, a new event in the Com World Series designed to bring together operators, investors and vendors to look at the specific opportunities in the Saudi telecoms market. Already confirmed speakers include: Dr Ahmed Sindi (CEO, Atheeb/GO), Hamoud Al-Kussayer (VP Regulatory Affairs, STC), Jameel Al Molhem (VP Personal Services, STC), Gert Reider (Chief Executive Bahrain, Batelco), Alaa Malki (Director – Mobile Radio Network Planning and Design, Mobily), Rasheed Shaksheer (Director, Key Projects, Mobily), Mohammed Al Hashili (CEO, Mazoon Mobile), Ahmad Abu Zannad (Head of Consumer Segments, Zain KSA), Abdulrahman Obaied (Marketing Director, Awalnet). The event will take place in Bahrain, an easy-to-reach desitnation and popular leisure destination for Saudi nationals.

Mobile Broadband to boost Latin America’s telecoms market

Last week Chile’s incumbent operator Entel announced its first successful LTE trial, leading the way toward mobile broadband in the region. Chile is undoubtedly Latin America’s test bed for new telecoms technologies, having been the first country in the region to launch mobile WiMAX, IPTV, EDGE, and the second to launch 3G (after Puerto Rico).
This LTE annoucement is an indicator that mobile broadband is the most exciting new service to be launched in Latin America. Indeed, after years of slower growth followed by a recession that hit the region strongly, operators are in need of new models to reinforce their positions. One way is of course to reduce costs – and as elsewhere operators are looking into cost-efficiency strategies. But they will also need to reduce to trend towards lower ARPUs by launching more revenue-generating data services. That’s where mobile broadband brings the best opportunities. The fixed market occupies a relatively small position in most Latin America’s markets compared to mobile, and mobile broadband is an ideal way of reaching new internet users.
It is therefore fitting that the upcoming Americas Com event (Rio, Brazil, 30 June – 1st July) will give prominent position on its programme to broadband strategies, with a full keynote session dedicated to it, as well as a special focus session on Chile as the most innovating market in the region. The conference programme is being written and there are speaking opportunities for operators and telecoms specialists to share their expertise on the market. Don't hesitate to get in touch for more information.

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!