I wasn’t able to make it to the opening day of the ITU summit in Geneva, but I am keeping an eye on the various press releases sent so far before visiting the event tomorrow.
The main one attracting my attention is the announcement by the World Bank of its endorsement of the $215 million, ten-year Central African Backbone Program (CAB Program). According to the release, “this program will support the countries of the Central African region in developing their high-speed telecommunications backbone infrastructure to increase the availability of high-speed Internet and reduce end-user prices. The CAB Program will also help countries harmonize the laws and regulations that govern the ICT sector to increase private sector investment and improve competition.” The programme is supported in its initial phase by 3 Central African countries (Cameroon, Chad and Central African Republic - CAR) and will be followed by another eight countries - the Republic of Congo, Equatorial Guinea, the Democratic Republic of Congo, Gabon, Niger, Nigeria, São Tomé and Principe, and Sudan.
Central Africa includes some of Africa’s least developed telecoms markets. The landlocked countries in particular are experiencing difficulties in benefiting from the various submarine cable projects being launched, connecting West and East Africa to the rest of the world. Hopefully the CAB programme will support Central African telecoms markets and help them develop broadband services, a key factor in the region’s economic development.
This will continue to be a major topic of discussion at the African events in the Com World Series, with AfricaCom coming up in Cape Town next month, and the sub-regional events in 2010: East Africa Com in Kenya in April, West & Central Africa Com in Senegal in June, and the new Nigeria Com in Lagos in September.
29 Sept 2009
Turkey's telecoms market looking towards Western Europe
I am Istanbul to meet key operators and vendors ahead of our Eurasia Com event in the city in March, and it is interesting to have a first-hand view of the Turkish market.
One thing that I found particularly striking over the last couple of days is the prominence of Turkcell as the major telecom brand in Turkey. This position is usually held by the fixed-line incumbent and its mobile arm, particularly in recently liberalised markets (Turkey only liberalised in 2005). Here, Türk Telekom does own close to 100% of the fixed voice market, but its mobile subsidiary Avea is largely distanced by Turkcell, who leads the market in many ways: number one mobile operator in terms of subscriptions, mobile broadband leader (the operator launched HSPA at the same time as its 3G network earlier this year), and an omnipresent brand. Its strategy of targeting high-end segments has certainly paid off, as it is now seen as the high quality operator in the market.
Another thing I realised through the conversations I’ve had is how far Turkey has come as a telecoms market in the last few years. In just a few years of competition, the regulator and operators have wasted no time to catch up with developed markets, to the extent that Turkish companies now benchmark themselves against Western European markets rather than closer ones such as Eastern Europe. Here are a just a few areas to watch in Turkey’s maturing market:
- MVNOs: regulation should be effective in 2010 but in the meantime “pre-MVNOs” (most successfully football club brands) are already in place on a simpler reseller model, where the host operator still owns the SIM and the customers ; from next year, a fuller MVNO model should attract other types of brands such as retailers; mobile operators are gearing up for this new market, and SIM card vendors and MVNEs should also benefit from new opportunities;
- Convergence, with triple play and potentially quadplay offerings: Turkcell with the acquisition of ISP Superonline among other moves, Türk Telekom with fixed and wireless offerings and the potential launch of IPTV next year;
- New strategies to deal with increased competition: operators are expressing a strong interest in new ways of serving their customers with segmentation strategies and lifestyle offerings;
- Managed services in the ICT sector: as already done by alternative operators Koç.net and Superonline, Türk Telekom is looking into moving its wholesale strategy towards managed services to better serve its corporate clients.
Next year’s Eurasia Com event will include a special focus day on Turkey. The draft agenda will be published this week, to be followed by a call for speakers.
One thing that I found particularly striking over the last couple of days is the prominence of Turkcell as the major telecom brand in Turkey. This position is usually held by the fixed-line incumbent and its mobile arm, particularly in recently liberalised markets (Turkey only liberalised in 2005). Here, Türk Telekom does own close to 100% of the fixed voice market, but its mobile subsidiary Avea is largely distanced by Turkcell, who leads the market in many ways: number one mobile operator in terms of subscriptions, mobile broadband leader (the operator launched HSPA at the same time as its 3G network earlier this year), and an omnipresent brand. Its strategy of targeting high-end segments has certainly paid off, as it is now seen as the high quality operator in the market.
Another thing I realised through the conversations I’ve had is how far Turkey has come as a telecoms market in the last few years. In just a few years of competition, the regulator and operators have wasted no time to catch up with developed markets, to the extent that Turkish companies now benchmark themselves against Western European markets rather than closer ones such as Eastern Europe. Here are a just a few areas to watch in Turkey’s maturing market:
- MVNOs: regulation should be effective in 2010 but in the meantime “pre-MVNOs” (most successfully football club brands) are already in place on a simpler reseller model, where the host operator still owns the SIM and the customers ; from next year, a fuller MVNO model should attract other types of brands such as retailers; mobile operators are gearing up for this new market, and SIM card vendors and MVNEs should also benefit from new opportunities;
- Convergence, with triple play and potentially quadplay offerings: Turkcell with the acquisition of ISP Superonline among other moves, Türk Telekom with fixed and wireless offerings and the potential launch of IPTV next year;
- New strategies to deal with increased competition: operators are expressing a strong interest in new ways of serving their customers with segmentation strategies and lifestyle offerings;
- Managed services in the ICT sector: as already done by alternative operators Koç.net and Superonline, Türk Telekom is looking into moving its wholesale strategy towards managed services to better serve its corporate clients.
Next year’s Eurasia Com event will include a special focus day on Turkey. The draft agenda will be published this week, to be followed by a call for speakers.
25 Sept 2009
Vivendi's high growth markets strategy and the changes of investors in emerging markets
A couple of weeks ago, French group Vivendi announced a deal with Brazilian broadband operator GVT. The agreement, which is still being finalised, will give Vivendi a 51% stake in the Brazilian company, allowing it to bring the growing operator its expertise of new markets such as IPTV services. According to Jean-Bernard Lévy - Vivendi's chairman - it fits the group's strategy of development in high growth markets.
It's interesting to see Brazil come back to the spotlight as a highly investable market, after a few years when Latin America was not among the top markets with major potential. But I wonder about Vivendi's position regarding Africa. A few weeks ago, the group was the main contender for Zain's African operations, but moved away from the opportunity. Vivendi still owns a majority stake in Maroc Telecom, a major investor in North and West Africa, but will it now focus more on other regions as the next growth opportunity?
In a recent article, my colleague Matt Reed asked whether Africa was losing its appeal for some investors: "Falling ARPUs, rising competition and the recession have certainly forced investors to reappraise African markets, and some have decided that it is time to head for the exit", he says. But despite those challenges it remains an attractive market: "there is still potential in Africa for the realistic investor. Mobile penetration in Africa was just 40.62% at end-June. The arrival of new undersea cables on the coasts of sub-Saharan Africa could foster the emergence of a new generation of data services. And operators in India, for example, manage to run profitable businesses despite very low ARPUs" he adds.
Instead of a sudden lack of interest in Africa's telecommunications market, we may witness a change of the main stakeholders involved in the market: as Zain, but also Telefonica and Portugal Telecom are moving away from the continent (the Spanish and Portugese groups recently sold their stakes in Morocco's Meditel), other groups are moving in or growing their investment portfolios: Indian operators Bharti, Essar and Reliance, French group France Telecom, and Egypt-based Orascom are all making moves in the region.
2009 has been so far a busy year in M&A news in emerging markets, and it looks like it's set to continue.
It's interesting to see Brazil come back to the spotlight as a highly investable market, after a few years when Latin America was not among the top markets with major potential. But I wonder about Vivendi's position regarding Africa. A few weeks ago, the group was the main contender for Zain's African operations, but moved away from the opportunity. Vivendi still owns a majority stake in Maroc Telecom, a major investor in North and West Africa, but will it now focus more on other regions as the next growth opportunity?
In a recent article, my colleague Matt Reed asked whether Africa was losing its appeal for some investors: "Falling ARPUs, rising competition and the recession have certainly forced investors to reappraise African markets, and some have decided that it is time to head for the exit", he says. But despite those challenges it remains an attractive market: "there is still potential in Africa for the realistic investor. Mobile penetration in Africa was just 40.62% at end-June. The arrival of new undersea cables on the coasts of sub-Saharan Africa could foster the emergence of a new generation of data services. And operators in India, for example, manage to run profitable businesses despite very low ARPUs" he adds.
Instead of a sudden lack of interest in Africa's telecommunications market, we may witness a change of the main stakeholders involved in the market: as Zain, but also Telefonica and Portugal Telecom are moving away from the continent (the Spanish and Portugese groups recently sold their stakes in Morocco's Meditel), other groups are moving in or growing their investment portfolios: Indian operators Bharti, Essar and Reliance, French group France Telecom, and Egypt-based Orascom are all making moves in the region.
2009 has been so far a busy year in M&A news in emerging markets, and it looks like it's set to continue.
8 Sept 2009
Looking at Turkey's telecoms market in times of increased competition and economic challenges
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.
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.
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.
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