It has been impossible of late not to set telecoms news and commentary in the context of these troubled times for the global economy. I find myself looking for signs of our sector's resilience. In that spirit, I am keen to flag up examples of telcos committing to significant items of CAPEX. One such, reported last week in the Global Mobile Daily is Vodafone's selection of network vendor Huawei to upgrade the 2G network of the national incumbent carrier, Ghana Telecom, in which the giant cellco acquired a 70% stake back in July 2008.
At the same time as entering Ghana's mobile market, Vodafone also took over Ghana Telecom's fixed-line and broadband operation, which has around 99% of the total number of lines and around 90% share of the retail ADSL market. Ghana Telecom's mobile arm, One Touch, has been something of an underperformer. The MNO claimed 15.49% of mobile subscriptions by December 2008, according to Informa Telecoms & Media's World Cellular Information Service. This represents a slow, but steady decline in market share, which had stood at 18.29% at the end of 2006. Over this period, market-leading Scancom, a unit of the South Africa's MTN has held onto a solid lead over its four rivals. According to an article in Ghana's Chronicle newspaper last week, Vodafone will be aiming to compete more effectively in this context through a "commitment to deliver on its promise of providing a world class service to Ghanaians and to transform Ghana Telecom to an enviable position in the telecom industry."
Ghana will be among the countries to be represented at our West & Central Africa Com event, which this year will take place in Abuja, Nigeria in mid-June. The event will be a good opportunity to network and do business with all those involved in developing the region's telecoms sector.
26 Jan 2009
How (hard) will the global slowdown hit telecoms M&A activity?
Last Thursday's telecoms.com blog newsletter came with yet another article discussing how telcos will need to respond to the current mood of economic gloom. A Frost & Sullivan analyst, Saverio Romeo is quoted as believing that the key to surviving the credit crunch is being able to design lower cost and disruptive business models as an effective way to attract consumers. Romeo highlights the combination of existing technologies with new business models to create low cost products and services, such as the combination of mobile content with forms of marketing and advertising.
This is important, according to Saverio Romeo, because "due to the lack of credit in the global economy, investments will fall in the beginning of 2009. Particularly, investments related to incredibly costly projects such as acquisitions, will feel this drop intensely."
However, I have heard the view articulated widely of late that acquisitions will continue to be a feature of the telecoms landscape in the near future, with some people even expecting this kind of activity to intensify. In this scenario, it is telcos headquartered in the Middle East that would be expected to be shopping for extensions to their various empires.
There are a good number of very recent examples. In addition to ones I've already discussed here, consider the case of QTel acquiring a "significant stake" in Philippines-based Liberty Telecom Holdings, a provider of wireless voice and data telecommunications services, according to a report from Qatari daily, The Peninsula earlier this month. In another recent move, according to Informa Telecoms & Media's Telecom Markets service, the Bahraini incumbent carrier Batelco is set to acquire a 49% stake in India's S-Tel in partnership with Millennium Private Equity for US$225 million. S-Tel, says the report, is preparing to launch GSM services in six Category C spectrum circles in the northern part of India and is funded by private-equity companies Sky City Foundations and Telecom Investments Mauritius. Writing about this move, Fredrick Richter of Reuters quotes Jithesh Gopi, a telecom analyst at Bahrain-based investment bank SICO: "Middle Eastern operators and their major shareholders are less risk-averse than some of their counterparts in other regions as most of them have relative low levels of debt."
Also this month, as reported by Global Mobile Daily, another MENA region heavyweight, Orascom Telecom, via its Telecel Globe unit, has paid US$59 million in cash for Namibian GSM player Cell One, after closing the deals it agreed to in July to reacquire Telecel Centrafrique in the Central African Republic and U-Com Burundi (formerly Telecel Burundi).
It will be interesting to track further activity of this type on the part of MENA's leading telecoms groups in the coming months. I wonder how much more shopping they will feel like doing as this challenging year unfolds.
This is important, according to Saverio Romeo, because "due to the lack of credit in the global economy, investments will fall in the beginning of 2009. Particularly, investments related to incredibly costly projects such as acquisitions, will feel this drop intensely."
However, I have heard the view articulated widely of late that acquisitions will continue to be a feature of the telecoms landscape in the near future, with some people even expecting this kind of activity to intensify. In this scenario, it is telcos headquartered in the Middle East that would be expected to be shopping for extensions to their various empires.
There are a good number of very recent examples. In addition to ones I've already discussed here, consider the case of QTel acquiring a "significant stake" in Philippines-based Liberty Telecom Holdings, a provider of wireless voice and data telecommunications services, according to a report from Qatari daily, The Peninsula earlier this month. In another recent move, according to Informa Telecoms & Media's Telecom Markets service, the Bahraini incumbent carrier Batelco is set to acquire a 49% stake in India's S-Tel in partnership with Millennium Private Equity for US$225 million. S-Tel, says the report, is preparing to launch GSM services in six Category C spectrum circles in the northern part of India and is funded by private-equity companies Sky City Foundations and Telecom Investments Mauritius. Writing about this move, Fredrick Richter of Reuters quotes Jithesh Gopi, a telecom analyst at Bahrain-based investment bank SICO: "Middle Eastern operators and their major shareholders are less risk-averse than some of their counterparts in other regions as most of them have relative low levels of debt."
Also this month, as reported by Global Mobile Daily, another MENA region heavyweight, Orascom Telecom, via its Telecel Globe unit, has paid US$59 million in cash for Namibian GSM player Cell One, after closing the deals it agreed to in July to reacquire Telecel Centrafrique in the Central African Republic and U-Com Burundi (formerly Telecel Burundi).
It will be interesting to track further activity of this type on the part of MENA's leading telecoms groups in the coming months. I wonder how much more shopping they will feel like doing as this challenging year unfolds.
23 Jan 2009
Middle East markets: regional players prevail in mobile licence auctions
At last month's GSM>3G Middle East conference in Dubai, at which I had the pleasure of moderating a number of the sessions, the panel of speakers included Farid Lekhal, Chief Commercial Officer at Vodafone's Partner Markets business unit. I hope his comments on mobile broadband added a useful perspective for an audience largely representing telcos headquartered in the MENA region. MENA operations in which the Newbury, UK-based giant cellco has equity currently only number two. Vodafone Egypt is an established outpost of the company's global empire. Much newer is the operation in oil and gas-rich Qatar, where I believe services are expected to be launched in March this year.
Notwithstanding Vodafone's recent foray into Qatar, My guess is that across the Middle East the entry of a group with European roots to any market selling further licenses will be comparatively rare going forward. It looks far more likely that MENA-based groups will continue to grow their footprints in the region. One recent example: Saudi Telecom acquiring Bahrain's third mobile licence for USD 230 million, according to yesterday's report from Gulf News. The story indicates that three other firms had registered interest in the auction, something which Global Mobile Daily told me only eleven days ago in a piece which led me to infer that the Bahraini regulator was planning to launch a lengthier tender process. However, yesterday's Gulf News piece suggested that STC's bid was the only one received. The story also reveals the previously unknown prospective bidders, indicating that Mohammed al-Amer, Chairman of the Telecommunications Regulatory Authority of Bahrain, had said these named Bahrain's TwoConnect and Mena Telecom as well as a consortium including France Telecom subsidiaries Orange and Jordan Telecom.
Another major intra-regional move was the recent win in Iran by the Etisalat, where the UAE-based telco has snapped up the country's third national mobile licence. My colleague Matthew Reed, Editor of our Middle East and Africa Wireless Analyst publication, feels the deal was a bargain, noting that the license fee was only US$399 million, of which Etisalat is paying 49%, in line with its 49% stake in the consortium that won the license. Etisalat’s local partner is Tameen Telecom, an Iranian public-sector investment fund. Matt notes that the new operator will reportedly pay 23.6% of revenues to the Iranian government, though MCCI and MTN Irancell pay 28%.
Matt feels that Etisalat's new operation will enjoy - and exploit - the significant competitive advantage conferred by its licence, which confers the right to be the only 3G operator in Iran for two years. Matt notes that "perhaps more than any of its peers, Etisalat has put new technology at the heart of its strategy, saying that in this way it can future-proof itself because it will be able to offer the most up-to-date services and because the latest systems are cheaper in the long run."
Matt points to the example of Egypt, where Etisalat launched a 3.5G network on its debut in the country in May 2006, becoming the country’s first 3G operator. In Egypt, Etisalat had the 3G market to itself only briefly, since Vodafone launched its own 3G network within a couple of weeks, and Egyptian market leader Mobinil launched a 3G network in September. In Iran, Etisalat will look to make the most of a much longer period of 3G exclusivity.
Matt notes that "when Etisalat launches services - in six to nine months, according to company executives - it will most likely offer HSDPA services from the outset, as it did in Egypt." Matt feels this will enable Etisalat to offer data services such as mobile broadband and target Iran’s largely untapped broadband market, without any meaningful competition.
Notwithstanding Vodafone's recent foray into Qatar, My guess is that across the Middle East the entry of a group with European roots to any market selling further licenses will be comparatively rare going forward. It looks far more likely that MENA-based groups will continue to grow their footprints in the region. One recent example: Saudi Telecom acquiring Bahrain's third mobile licence for USD 230 million, according to yesterday's report from Gulf News. The story indicates that three other firms had registered interest in the auction, something which Global Mobile Daily told me only eleven days ago in a piece which led me to infer that the Bahraini regulator was planning to launch a lengthier tender process. However, yesterday's Gulf News piece suggested that STC's bid was the only one received. The story also reveals the previously unknown prospective bidders, indicating that Mohammed al-Amer, Chairman of the Telecommunications Regulatory Authority of Bahrain, had said these named Bahrain's TwoConnect and Mena Telecom as well as a consortium including France Telecom subsidiaries Orange and Jordan Telecom.
Another major intra-regional move was the recent win in Iran by the Etisalat, where the UAE-based telco has snapped up the country's third national mobile licence. My colleague Matthew Reed, Editor of our Middle East and Africa Wireless Analyst publication, feels the deal was a bargain, noting that the license fee was only US$399 million, of which Etisalat is paying 49%, in line with its 49% stake in the consortium that won the license. Etisalat’s local partner is Tameen Telecom, an Iranian public-sector investment fund. Matt notes that the new operator will reportedly pay 23.6% of revenues to the Iranian government, though MCCI and MTN Irancell pay 28%.
Matt feels that Etisalat's new operation will enjoy - and exploit - the significant competitive advantage conferred by its licence, which confers the right to be the only 3G operator in Iran for two years. Matt notes that "perhaps more than any of its peers, Etisalat has put new technology at the heart of its strategy, saying that in this way it can future-proof itself because it will be able to offer the most up-to-date services and because the latest systems are cheaper in the long run."
Matt points to the example of Egypt, where Etisalat launched a 3.5G network on its debut in the country in May 2006, becoming the country’s first 3G operator. In Egypt, Etisalat had the 3G market to itself only briefly, since Vodafone launched its own 3G network within a couple of weeks, and Egyptian market leader Mobinil launched a 3G network in September. In Iran, Etisalat will look to make the most of a much longer period of 3G exclusivity.
Matt notes that "when Etisalat launches services - in six to nine months, according to company executives - it will most likely offer HSDPA services from the outset, as it did in Egypt." Matt feels this will enable Etisalat to offer data services such as mobile broadband and target Iran’s largely untapped broadband market, without any meaningful competition.
21 Jan 2009
Spetrum caps set to hamper mobile broadband development in Latin America?
Given that I am currently tweaking the draft agenda for the annual Americas Com conference (this year: Rio de Janeiro, 31 June & 1 July), one of the lead stories in today's Global Mobile Daily is especially useful food for thought. GMD notes that the GSMA is urging Latin American regulators to relax spectrum caps which the Association feels to be hampering the development of mobile broadband services in the region.
According to a study commissioned for the GSMA, spectrum caps in Latin America are among the most restrictive in the world: a maximum of 40MHz is allowed per operator in Colombia, 50 MHz in Argentina, 60 MHz in Chile, 65 MHz in Mexico and 80 MHz in Brazil. This compared with over 300 MHz of spectrum available in most North American and European markets. Assuming this continues to be an inhibiting factor for the region's MNOs, I daresay it will be a major topic for discussion at the conference. I will encourage colleagues to consult with the good folks at 3G Americas in order to get a sense of how much discussion time is merited by this particular issues. At the event, 3G Americas President Chris Pearson will lead the usual Executive Briefing his organisation has traditionally offered to delegates.
According to a study commissioned for the GSMA, spectrum caps in Latin America are among the most restrictive in the world: a maximum of 40MHz is allowed per operator in Colombia, 50 MHz in Argentina, 60 MHz in Chile, 65 MHz in Mexico and 80 MHz in Brazil. This compared with over 300 MHz of spectrum available in most North American and European markets. Assuming this continues to be an inhibiting factor for the region's MNOs, I daresay it will be a major topic for discussion at the conference. I will encourage colleagues to consult with the good folks at 3G Americas in order to get a sense of how much discussion time is merited by this particular issues. At the event, 3G Americas President Chris Pearson will lead the usual Executive Briefing his organisation has traditionally offered to delegates.
20 Jan 2009
Informa bullish on mobile data during the economic downturn
During my time with Informa Telecoms & Media I have not had the opportunity to consult with Mark Newman, our Chief Research Officer, anything like a regularly as I would have liked. The last time I had cause to do so was in the lead-in to December's GSM>3G Middle East conference in Dubai, at which Mark was in the Chair, sharing the stage with heavy-hitters from the likes of Etisalat, Zain, Turkcell and Nawras. At that event, all of these companies made very positive noises about mobile data services in the context of the markets which they serve.
Yesterday, in Informa's telecoms.com blog, Mark reported a general feeling of optimism around mobile data worldwide. Mark began by noting the "widely held view that the mobile content sector is failing to live up to expectations, 3G has disappointed and mobile operators have thrown away an opportunity to develop a revenue stream that could ultimately surpass the voice business."
Mark feels that "if 2008 is remembered for one thing, it should be for being the year that this notion was dispelled. Until last year, the non-voice business was dominated by SMS. For a typical European operator, SMS accounted for up to 80% of non-voice revenues in previous years. But this figure has started to fall sharply. Operators such as Vodafone are seeing non-SMS services generating up to half of non-voice revenues. Investment in 3G - or 3.5G - is now generating payback."
While pointing out the erroneous nature of the idea that North America is a laggard in terms of mobile data adoption, Mark notes that Japan and South Korea continue to be the real hotbeds of enthusiasm for data services. This has been a well-worn truism for as long as I've been attending conferences and workshops themed around boosting the acceptance and profitability of mobile content, data and value-added services. I recall being asked to take over the running of a London conference about five years ago and hearing all kinds of actors in the mobile VAS value chain complaining about revenue sharing arrangements with operators and MNOs' 'walled garden' approaches. The participants were at least 90% European and content providers and aggregators were much better represented than network operators. Everyone seemed to be casting envious glances at their Japanese and Korean counterparts, speaking warmly about how the likes of NTT DoCoMo were enabling the growth of a healthy mobile content ecosystem.
Only last week, when I was asked to make a presentation on mobile social networking at the most recent Mobile Monday Istanbul meeting, I found myself referring constantly to the greater success of some of these services in the Far East. Quoting from an Informa Telecoms & Media report, I told the Turkish audience that according to a Sydney Morning Herald article published in December 2007, half of Japan’s top 10 works of fiction are now written on mobile handsets. These works, called keitai shousetsu’, each sells an average of 400,000 copies and are written entirely on cell phones complete with emoticons and common SMS abbreviations.
Today, according to Mark Newman, the ratio of prepaid subscribers to postpaid goes a long way toward accounting for the differences among markets in mobile content adoption and usage. Postpaid subscriptions account for 99% of all subs in South Korea, 94% in Japan and 90% in the US. Mark points out that these are the countries with the highest mobile data ARPUs.
Yesterday, in Informa's telecoms.com blog, Mark reported a general feeling of optimism around mobile data worldwide. Mark began by noting the "widely held view that the mobile content sector is failing to live up to expectations, 3G has disappointed and mobile operators have thrown away an opportunity to develop a revenue stream that could ultimately surpass the voice business."
Mark feels that "if 2008 is remembered for one thing, it should be for being the year that this notion was dispelled. Until last year, the non-voice business was dominated by SMS. For a typical European operator, SMS accounted for up to 80% of non-voice revenues in previous years. But this figure has started to fall sharply. Operators such as Vodafone are seeing non-SMS services generating up to half of non-voice revenues. Investment in 3G - or 3.5G - is now generating payback."
While pointing out the erroneous nature of the idea that North America is a laggard in terms of mobile data adoption, Mark notes that Japan and South Korea continue to be the real hotbeds of enthusiasm for data services. This has been a well-worn truism for as long as I've been attending conferences and workshops themed around boosting the acceptance and profitability of mobile content, data and value-added services. I recall being asked to take over the running of a London conference about five years ago and hearing all kinds of actors in the mobile VAS value chain complaining about revenue sharing arrangements with operators and MNOs' 'walled garden' approaches. The participants were at least 90% European and content providers and aggregators were much better represented than network operators. Everyone seemed to be casting envious glances at their Japanese and Korean counterparts, speaking warmly about how the likes of NTT DoCoMo were enabling the growth of a healthy mobile content ecosystem.
Only last week, when I was asked to make a presentation on mobile social networking at the most recent Mobile Monday Istanbul meeting, I found myself referring constantly to the greater success of some of these services in the Far East. Quoting from an Informa Telecoms & Media report, I told the Turkish audience that according to a Sydney Morning Herald article published in December 2007, half of Japan’s top 10 works of fiction are now written on mobile handsets. These works, called keitai shousetsu’, each sells an average of 400,000 copies and are written entirely on cell phones complete with emoticons and common SMS abbreviations.
Today, according to Mark Newman, the ratio of prepaid subscribers to postpaid goes a long way toward accounting for the differences among markets in mobile content adoption and usage. Postpaid subscriptions account for 99% of all subs in South Korea, 94% in Japan and 90% in the US. Mark points out that these are the countries with the highest mobile data ARPUs.
Overall, Mark feels that even if the most pessimistic scenarios for the economic downturn come to pass, it seems unlikely that the mobile content sector will stop growing. Mark points out that 2008 saw a switch to flat-rate and mobile Internet models and believes that 2009 will see this trend continue and will see the arrival of more-affordable mobile Internet devices. For Mark "the bigger uncertainty is whether mobile operators will accept a role as dumb pipes rather than continuing to invest in their own services and smart-pipe strategies. "
Today I should complete handing over my notes to colleagues who will be developing our annual Russia & CIS Com conference, set to take place in Moscow in early June. With the Russian MNOs having now deployed 3G networks in most major cities, our research respondents have expressed the desire to use the event to debate how best to accelerate the process of getting a return on these investments by encouraging customers to accept mobile data and content services.
19 Jan 2009
More on (mobile social) networking in Istanbul
Last week I had the great pleasure of visiting the shiny new Microsoft MEA office in Istanbul, which was the venue for this month's local Mobile Monday meeting. Part of the pleasure was being reminded of the warm hospitality I always experience when meeting telecoms people from Turkey. The pre-meeting drinks, nibbles and chatter session yielded lots of interesting new contacts. Among these were representatives of the country's three mobile operators and owners/directors of a number of value-added services companies. Mobile banking solutions seemed to be quite a well represented area so perhaps this is something set to gain traction in Turkey.
Ostensibly, I was there to speak on behalf of Informa Telecoms & Media, making a presentation on the theme of mobile social networking. This was drawn from a comprehensive report on that subject, an updated second edition of which is currently being prepared. With a 25-minute time slot, I was only able to offer a few of the ideas covered in the report. A number of those present were kind enough to indicate that they had found the presentation helpful. Judge for yourself. Natali YeÅŸilbahar, the Mobile Monday Istanbul organiser, has made the slides available here. If you want the notes which I used to provide examples and expanded comments, please let me know any time.
Mine was one of two speeches made that evening, the other being offered by Mehmet Arslantunalı, General Manager of Mobilife magazine, a telco sector publication in the local vernacular. Mehmet's presentation was also made in Turkish so I was not able to gain from it. Those of you who do understand that language are invited to have a look at the slides and fill me in on what I missed!
I understand that Microsoft is a new member of the roster of companies that have hosted Mobile Mobile Monday Istanbul meetings. I believe that the privilege usually falls to one or other of the MNOs - Turkcell, Avea or Vodafone. I am pleased that Informa Telecoms & Media will be joining this exalted company in April, at which time we will be providing the meeting facilities and laying on the catering. The venue will be the city's Mövenpick Hotel, which will also be the home of this year's Eurasia Com conference and exhibition - our annual gathering of senior telecoms people not only from Turkey but also from the CIS markets of the Caspian and Central Asian regions (Azerbaijan, Georgia, Kazakhstan, Uzbekistan etc.). Natali was kind enough to allow me drum up further local support for the event.
A number of the meetings which I arranged during the rest of my short stay should have a positive impact on the conference element of the Eurasia Com event. One which is very straightforward is the addition of a further speaker from Turkcell. Given the extensive coverage given to the issue of MVNOs possibly hitting the Turkish market in the near future, I am delighted to welcome Dr. Deniz Tunçalp to the panel of speaker. Deniz is in charge of the market-leading cellco's discussions with prospective MVNOs and as well as outlining his thoughts on barriers and opportunities for potential virtual operators in Turkey, he has offered his assistance with encouraging these companies to attend. It is my understanding that these players will come from an interesting mix of non-telecoms brands.
All in all, another useful and enjoyable trip to Istanbul - but I still haven't found time to do more than scratch the surface in terms of really enjoying the city's countless tourist sights, historical treasures and entertainment. Next time, I hope...
15 Jan 2009
(Mobile social) networking in Istanbul
Greetings from Istanbul. This evening I will be speaking at the January meeting of the local Mobile Monday chapter, sharing just a few of the ideas detailed in our (soon-to-be-updated) report on Mobile Social Networking. The organiser, Natali Yesilbahar (who works with B2B social software platform XING) tells me that services of this kind are not yet a commercial reality here in Turkey and that there is therefore likely to be a good level of interest in my short presentation. I only hope I am able to answer questions and contribute to discussions to the satisfaction of the group attending tonight. I understand this will include managers from this country's three mobile operators (Turkcell, Avea and Vodafone) as well as companies actives in the mobile VAS space, of which there seem to be a good number headquartered hereabouts.
Wearing my marketing hat, I hope that a consequence of attending this evening's meeting will be a locally raised awareness of our Eurasia Com conference and exhibition, which will take place here in Istanbul 31 March & 1 April. Opening with a Keynote Address from Turk Telekom CEO Dr Paul Doany, the event will gather telecoms execs from its host country and many more from the CIS markets of the Caspian and Central Asian regions.
Wearing my marketing hat, I hope that a consequence of attending this evening's meeting will be a locally raised awareness of our Eurasia Com conference and exhibition, which will take place here in Istanbul 31 March & 1 April. Opening with a Keynote Address from Turk Telekom CEO Dr Paul Doany, the event will gather telecoms execs from its host country and many more from the CIS markets of the Caspian and Central Asian regions.
7 Jan 2009
How (hard) will financial turmoil hit Latin American telecoms markets?
I am currently advising Sao Paolo-based colleagues about the topics which should form the basis of the conference agenda at this year's Americas Com event in Rio de Janeiro, which will take place 30 June & 1 July. It was therefore timely for me that two of the blogs linked from this one have (quite) recently taken up the theme of how far Latin America's telecoms markets will be affected by the economic crisis currently gripping us all.
The first of these commentators is Australia-based Paul Budde, who helped me with a project last year and whom I finally had the great pleasure of meeting here in London after much correspondence and many friendly phone conferences at some very unusual times of night. It became clear during our conversations, and from what I was told by contacts at telcos in Australia, New Zealand and the Pacific islands, that Paul is well-known figure on the telecoms scene in that part of the world. Paul moved mountains to arrange the presence of key people from several countries' telecoms/IT ministries at an industry gathering he chaired for me in Sydney. The feedback about his role in making this a really productive meeting was incredibly positive and Paul knows I remain in his debt. My only regret was that other priorities made it impossible for me to attend the event myself.
Closer to home, our very own Tammy Parker has thoughts on the same questions. Tammy is a Principal Analyst within Informa Telecoms & Media, where she manages the Mobile Americas Intelligence Centre, which provides thought leadership, news analysis, key metrics, forecasts and more regarding operators, service providers, vendors and trends involved in shaping the mobile communications industry across North America, Central and South America, and the Caribbean.
Better late than never, this week I stumbled upon Paul's blog entry of October 13th 2008, in which he discusses how the region's telcos are expected to fare in the near future.
Paul notes that in mid-September 2008, several Latin American governments were claiming that the US financial predicament would have no impact on Latin America, because after its recession of 2001-2003, the region had taken sufficiently strong economic and fiscal measures to avert the reoccurrence of such a crisis. He goes on to observe that this confidence quickly proved to be misplaced, given that in the first week of October, stock markets from Sao Paulo to Mexico City took a hit and national currencies slumped against the US dollar. According to Paul, following the stock exchange panic, the region’s heads of government drastically revised their position, expressing alarm at a situation that could devastate the economies of Latin America, which have been reaping for the past few years the rewards of high global demand for commodities. Paul does not believe the picture is entirely black, noting that the major Latin American economies have built up solid national reserves and that in its World Economic Outlook published in early October 2008, the IMF revised downward its previous forecasts for global economic growth. The revision, says Paul, is not too dire for Latin America, although the IMF warns that all forecasts are subject to change and that the outlook is highly uncertain.
Turning his attention to our sector, Paul believes that "to date, telecom companies appear to have dodged the worst of the crisis. For example, on 6 October, only two out of the 35 stocks listed on Mexico’s IPC managed to close higher, and they were both telecom stocks: Telmex rose 1.5%, while Carso Global Telecom gained 3.1%."
These companies are both controlled by Mexican billionaire Carlos Slim. In the mobile segment, Paul observes, "his other major investment, pan-regional mobile giant América Móvil, pared its losses to finish 1% down, a far smaller loss than that experienced by most other companies.
Paul goes on to look back at the region's recession for 2001-2003, wondering how far the the lessons of that period might be applied to the current crisis. Paul notes that "at that time, the sector that suffered the most was cable television, while mobile telephony only slumped slightly. The fixed line market came to a halt and never recovered, as countries joined the global mobile substitution trend. The broadband market, still in its infancy, experienced a delay in growth that is still evident today, in that Latin American broadband penetration is lower than would be expected given the region’s other economic indicators."
Paul's view is that if the present financial crisis deepens, the telecom services worst affected are likely to be those that provide entertainment, such as pay TV, digital media, and non-corporate mobile data services. Paul is quite bullish about mobile telephony, stating that it has become such an essential facility that it is likely to continue growing, though at a reduced rate.
Tammy's view, as expressed in a November blog entry, is that "slowing growth... will logically affect mobile operators in the region", and she notes that "Merrill Lynch recently predicted that mobile subscription growth in Latin America would remain steady in coming months but said mobile ARPUs could fall on average 6% in local currency in 2009." According to Tammy, the firm said it does not see Latin American operators cutting OPEX or CAPEX because of funding needs. I draw encouragement from this last point. A big feature of our events is the business of matchmaking between operators and vendors. I will naturally be encouraging our sales guys to flag up this relatively positive sentiment about operators' technology spending.
Paul Budde feels that broadband development will be more than ever dependant on government and regulatory efforts, and hopes that "the lessons learned from the disaster of unfettered speculation may lead to a more methodical and far-sighted approach to telecom investment, with a view to public wellbeing such as E-health, E-education, E-government, and other social services."
With this in mind, we will be working harder than ever to encourage the region's regulators and relevant government departments to weigh into the discussions at Americas Com in 2009.
The first of these commentators is Australia-based Paul Budde, who helped me with a project last year and whom I finally had the great pleasure of meeting here in London after much correspondence and many friendly phone conferences at some very unusual times of night. It became clear during our conversations, and from what I was told by contacts at telcos in Australia, New Zealand and the Pacific islands, that Paul is well-known figure on the telecoms scene in that part of the world. Paul moved mountains to arrange the presence of key people from several countries' telecoms/IT ministries at an industry gathering he chaired for me in Sydney. The feedback about his role in making this a really productive meeting was incredibly positive and Paul knows I remain in his debt. My only regret was that other priorities made it impossible for me to attend the event myself.
Closer to home, our very own Tammy Parker has thoughts on the same questions. Tammy is a Principal Analyst within Informa Telecoms & Media, where she manages the Mobile Americas Intelligence Centre, which provides thought leadership, news analysis, key metrics, forecasts and more regarding operators, service providers, vendors and trends involved in shaping the mobile communications industry across North America, Central and South America, and the Caribbean.
Better late than never, this week I stumbled upon Paul's blog entry of October 13th 2008, in which he discusses how the region's telcos are expected to fare in the near future.
Paul notes that in mid-September 2008, several Latin American governments were claiming that the US financial predicament would have no impact on Latin America, because after its recession of 2001-2003, the region had taken sufficiently strong economic and fiscal measures to avert the reoccurrence of such a crisis. He goes on to observe that this confidence quickly proved to be misplaced, given that in the first week of October, stock markets from Sao Paulo to Mexico City took a hit and national currencies slumped against the US dollar. According to Paul, following the stock exchange panic, the region’s heads of government drastically revised their position, expressing alarm at a situation that could devastate the economies of Latin America, which have been reaping for the past few years the rewards of high global demand for commodities. Paul does not believe the picture is entirely black, noting that the major Latin American economies have built up solid national reserves and that in its World Economic Outlook published in early October 2008, the IMF revised downward its previous forecasts for global economic growth. The revision, says Paul, is not too dire for Latin America, although the IMF warns that all forecasts are subject to change and that the outlook is highly uncertain.
Turning his attention to our sector, Paul believes that "to date, telecom companies appear to have dodged the worst of the crisis. For example, on 6 October, only two out of the 35 stocks listed on Mexico’s IPC managed to close higher, and they were both telecom stocks: Telmex rose 1.5%, while Carso Global Telecom gained 3.1%."
These companies are both controlled by Mexican billionaire Carlos Slim. In the mobile segment, Paul observes, "his other major investment, pan-regional mobile giant América Móvil, pared its losses to finish 1% down, a far smaller loss than that experienced by most other companies.
Paul goes on to look back at the region's recession for 2001-2003, wondering how far the the lessons of that period might be applied to the current crisis. Paul notes that "at that time, the sector that suffered the most was cable television, while mobile telephony only slumped slightly. The fixed line market came to a halt and never recovered, as countries joined the global mobile substitution trend. The broadband market, still in its infancy, experienced a delay in growth that is still evident today, in that Latin American broadband penetration is lower than would be expected given the region’s other economic indicators."
Paul's view is that if the present financial crisis deepens, the telecom services worst affected are likely to be those that provide entertainment, such as pay TV, digital media, and non-corporate mobile data services. Paul is quite bullish about mobile telephony, stating that it has become such an essential facility that it is likely to continue growing, though at a reduced rate.
Tammy's view, as expressed in a November blog entry, is that "slowing growth... will logically affect mobile operators in the region", and she notes that "Merrill Lynch recently predicted that mobile subscription growth in Latin America would remain steady in coming months but said mobile ARPUs could fall on average 6% in local currency in 2009." According to Tammy, the firm said it does not see Latin American operators cutting OPEX or CAPEX because of funding needs. I draw encouragement from this last point. A big feature of our events is the business of matchmaking between operators and vendors. I will naturally be encouraging our sales guys to flag up this relatively positive sentiment about operators' technology spending.
Paul Budde feels that broadband development will be more than ever dependant on government and regulatory efforts, and hopes that "the lessons learned from the disaster of unfettered speculation may lead to a more methodical and far-sighted approach to telecom investment, with a view to public wellbeing such as E-health, E-education, E-government, and other social services."
With this in mind, we will be working harder than ever to encourage the region's regulators and relevant government departments to weigh into the discussions at Americas Com in 2009.
6 Jan 2009
MNP remains a hot topic across a number of regions
Late last month, I received the notes put together by the Sao Paolo-based research team who have been busily preparing for this year's Americas Com event (30 June & 1 July, Rio de Janeiro). My Brazilian colleagues have been asking which hot topics should form the basis of the conference agenda, directing their questions to managers and strategists from telcos across Latin America.
One suggestion from respondents is that we include a round table session on the practicalities of implementing Mobile Number Portability (MNP). MNP was officially launched in Mexico in July last year, following a number of delays. In Honduras, the national telecoms regulator Conatel launched a public consultation on MNP in September, initially allowing operators Tigo, Claro, Hondutel and new entrant Digicel to consider proposals and offer comments. As of September 2008, Conatel had not yet made public a timetable for MNP. In the region's largest market, Brazil, the regulatory agency required the country's MNOs to go live with MNP by September 1 2008.
The roundtable suggestion seems to be a good one - we could have the optimum mix of participants with recent experience of MNP and others with a pressing need to anticipate the business and technical challenges.
Meanwhile, MNP appears to be causing some degree of controversy in India. Yesterday's Global Mobile Daily had news of the country's Department of Telecommunications (DoT) planning to begin accepting bids from applicants hoping to act as MNP clearing houses by mid-January. Bids are due to be opened on February 5th, according to local reports. The GMD piece goes on to say that "the DoT still faces key questions before it introduces MNP, most notably whether CDMA
operators will be able to automatically transfer their subscribers across to GSM services, a move strongly opposed by GSM players who say that CDMA players will transfer subs en masse to try and secure additional GSM spectrum."
I imagine that one CDMA player that could seek to gain from this alleged wheeze would be Reliance, which has finally launched its GSM services in the blue-chip market of Mumbai and has launched into the market with an aggressively priced plan offering subs free airtime worth NR10 S$0.21) per day for the first 90 days of a new subscribers' contract after an initial charge of just INR25. Reliance is offering new GSM subs local call rates of INR0.01 per minute and STD call ates of INR1.50 per minute with subs able to top up their accounts with prepaid packs offering NR10 to INR500 of value once they have used their daily free allowance. In addition, Reliance SM subs will get free unlimited talk time on the company's GSM and CDMA networks between 2200 and 0600 throughout Mumbai, Goa and Maharashtra. Reliance says it will be announcing additional prepaid tariff plans over the next three months.
In case you're surprised by the amount of detail in the above paragraph, I should admit to having grabbed most of it from the same edition of Global Mobile Daily. I won't pretend suddenly to have become an expert on the Indian mobile scene. That said, I did enjoy a (too) short stint in charge of our India & South Asia event and it was with regret that I ceded the territory to a colleague as part of a reorganisation in the Com World Series team last year. It was an exciting part of the world in which to make contacts and do business and I maintain an interest in developments there. For other readers who can say the same, I do recommend attending this year's India & South Asia Com, held once again in Mumbai - 12-13 May are the dates for your diary.
One suggestion from respondents is that we include a round table session on the practicalities of implementing Mobile Number Portability (MNP). MNP was officially launched in Mexico in July last year, following a number of delays. In Honduras, the national telecoms regulator Conatel launched a public consultation on MNP in September, initially allowing operators Tigo, Claro, Hondutel and new entrant Digicel to consider proposals and offer comments. As of September 2008, Conatel had not yet made public a timetable for MNP. In the region's largest market, Brazil, the regulatory agency required the country's MNOs to go live with MNP by September 1 2008.
The roundtable suggestion seems to be a good one - we could have the optimum mix of participants with recent experience of MNP and others with a pressing need to anticipate the business and technical challenges.
Meanwhile, MNP appears to be causing some degree of controversy in India. Yesterday's Global Mobile Daily had news of the country's Department of Telecommunications (DoT) planning to begin accepting bids from applicants hoping to act as MNP clearing houses by mid-January. Bids are due to be opened on February 5th, according to local reports. The GMD piece goes on to say that "the DoT still faces key questions before it introduces MNP, most notably whether CDMA
operators will be able to automatically transfer their subscribers across to GSM services, a move strongly opposed by GSM players who say that CDMA players will transfer subs en masse to try and secure additional GSM spectrum."
I imagine that one CDMA player that could seek to gain from this alleged wheeze would be Reliance, which has finally launched its GSM services in the blue-chip market of Mumbai and has launched into the market with an aggressively priced plan offering subs free airtime worth NR10 S$0.21) per day for the first 90 days of a new subscribers' contract after an initial charge of just INR25. Reliance is offering new GSM subs local call rates of INR0.01 per minute and STD call ates of INR1.50 per minute with subs able to top up their accounts with prepaid packs offering NR10 to INR500 of value once they have used their daily free allowance. In addition, Reliance SM subs will get free unlimited talk time on the company's GSM and CDMA networks between 2200 and 0600 throughout Mumbai, Goa and Maharashtra. Reliance says it will be announcing additional prepaid tariff plans over the next three months.
In case you're surprised by the amount of detail in the above paragraph, I should admit to having grabbed most of it from the same edition of Global Mobile Daily. I won't pretend suddenly to have become an expert on the Indian mobile scene. That said, I did enjoy a (too) short stint in charge of our India & South Asia event and it was with regret that I ceded the territory to a colleague as part of a reorganisation in the Com World Series team last year. It was an exciting part of the world in which to make contacts and do business and I maintain an interest in developments there. For other readers who can say the same, I do recommend attending this year's India & South Asia Com, held once again in Mumbai - 12-13 May are the dates for your diary.
5 Jan 2009
Paltel services hit by military action in Gaza
In my final post of 2008, I praised the determined spirit of the many telecoms people I've met from markets notable for political turmoil and other major challenges. I noted how we at the Com World Series had experienced late changes of venue and dates for events in Kenya and India, the former as a result of unrest, the latter due to the terrorist attacks on Mumbai.
It would therefore be refreshing to enter the new year without reading about how the telecoms sector is coping in some trouble spot. Alas, today's newsletter from TelecomPaper comes with word of how "Paltel Group, the provider of fixed and mobile telecommunications in the Palestinian territories, has warned that Gaza could be disconnected from the outside world as a result of the Israeli air strikes and ground assault in Gaza." The report says that currently, 90% percent of the mobile service network is down, in addition to a 'huge' number of fixed lines, either due to direct damage or because of the loss of electricity.
It would therefore be refreshing to enter the new year without reading about how the telecoms sector is coping in some trouble spot. Alas, today's newsletter from TelecomPaper comes with word of how "Paltel Group, the provider of fixed and mobile telecommunications in the Palestinian territories, has warned that Gaza could be disconnected from the outside world as a result of the Israeli air strikes and ground assault in Gaza." The report says that currently, 90% percent of the mobile service network is down, in addition to a 'huge' number of fixed lines, either due to direct damage or because of the loss of electricity.
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