I am currently spending most of my time on the next Eurasia Com congress (Istanbul, 23-24 March 2010), researching the market and building the conference programme. As part of my research I have turned to some of the region’s experts for insights and ideas. One of them is Bob Fonow, Managing Director of RGI Ltd, an operations turnaround specialist, general manager and cross-cultural management consultant to corporations and governments worldwide. I first met Bob at the launch South East Asia Com event in Malaysia last year. As the region’s market was relatively new to me, he gave me a great insight into its telecoms opportunities and business practices. Since then, he has attended several events in the Com World Series, bringing his expertise and leading very interesting debates with the speakers and other participants. He will chair the opening keynote at the next Eurasia Com congress. I took this opportunity to ask him 5 questions about the region’s market.
What are the key trends in Eurasia’s telecommunications market today?
“Central Eurasia is at the beginning of a great change in telecommunications geopolitics. Up to now international telecommunications has been primarily an issue of several putative global carriers such as ATT in the United States, BT and Deutsche Telekom in Europe, NTT/KDD in Japan and to a lesser extent Singapore Telecom. Overlaying these massive fiber installations are several mobile conglomerates such as Vodafone, Zain and in future perhaps China Mobile.
The new world of telecommunications may look much different than it does today. The existing international carriers are run by smart people, who will be able to keep significant market shares in an expanding global market. However Russia and Turkey are well placed to take leading positions in international networking and Internet development.
There can be little doubt that the 21st Century is the Eurasian century and Russia and Turkey at the geographic fulcrum of this trend, perfectly positioned in the Eurasian land mass. Russia is the northern bridge between China, Asia and Europe. Turkey is the land bridge between both Europe and the upper Middle East and CIS, and the most important land route from Africa into both Russia and northern Asia.
Currently almost all of the large international fiber routes follow the circumference of the middle oceans from the Atlantic, through the Mediterranean to the Indian ocean and Malaccan Straights, and back across the Pacific. There is still very little connectivity across the northern or middle Eurasian land mass. As Turkey and Russia add capacity or leading capacity consortia, the relative power and influence of several carrier networks will change. Turkish, Russian, Iranian and CIS carriers may be the biggest beneficiaries.”
What are the key markets to watch and why?
“Turkey seems the most vibrant and exciting to me. Young people in Turkey seem to be excited by the Internet and mobile applications in a way reminiscent of China and Japan, rather than the US and Europe.
Russia is always interesting. But the country has an extremely complex regulatory regime that makes it difficult for competitors to build networks quickly for the revenues needed to sustain start up and growing businesses. Cronyism remains a problem.
Cyprus and Azerbaijan are smaller markets, but there is intense interest in telecoms development in the countries.”
How is the global economic situation affecting Eurasia’s telecoms sector, and how are companies responding to it?
“The large carriers have the revenues and regulatory advantages to sustain themselves during the recession. Smaller carriers and start ups, for example wireless broadband and WiMAX start ups, are experiencing difficulties raising capital from private equity markets and banks.
The companies with financial strength were in a good position earlier this year to acquire assets cheaply. But values are increasing again.
How are companies responding in the recession? Almost every company today uses the same technology service platforms. The key to success is clever marketing and sales, customer support and cost controls, and making sure you have the right people in the right positions. Of course, that’s the key to success anytime! Good management usually survives and eventually wins.”
Which services or technologies are likely to have the biggest impact on the market in the years to come?
“In the medium term, HSPA and LTE will expand broadband mobility in urban areas with dense populations. WiMAX is likely to find a niche in smaller towns and villages, and in specific applications in urban environments. Wealthier neighbourhoods in cities will see more fiber to the home.
The big question is what is going to come out of China? Huge numbers of developers are at work on mobile applications and social networking. Today it’s still aimed at the China domestic market, but it is naive to believe that only the United States in social networking or Scandinavia and Korea in mobile will lead global innovation in the future.”
How important is the Eurasia Com congress for the region’s telecoms industry and what do you expect to take out of the event?
“Last year I was impressed by the energy of the conference, especially the breakout sessions on new applications by start up companies, and the presentations from medium sized countries like Tajikistan. The morning on Turk Telecom and Turkcell had comprehensive presentations that illuminated the importance of Turkey in telecommunications geopolitics. Overall it was an excellent blend of technology and business.
This year I am limiting myself to two conferences. This is the one I wouldn’t miss.”
If you are i terested in joining Bob at Eurasia Com by becoming a speaker, I am currently confirming the programme, so don’t hesitate to contact me for more information.
16 Oct 2009
13 Oct 2009
Africa still very much the centrepoint of M&A activity
The failure of the MTN-Bharti was only annouced a couple of weeks ago, but the South African group is not wasting time to move on: rumours say that it is looking towards its rival Zain. Zain group caught the eye of a number of potential investors recently (including Vivendi, which is now turning to Latin America for expansion), and is now the object of interest from an India-based consortium which includes no other than Bharti. So, will the previous friends become rivals in a bid for a stake in Zain? If MTN does get a interest in the group, will it not create competition issues in the many African countries where both groups have strong operations?
On another front, Indian operator MTNL is trying to build its position in Africa too. According to my colleagues at Global Mobile Daily, MTNL'schairman, R.S.P. Sinha, "told local press that his company had expressed interest in buying state-owned Zambian operator Zamtel and had already signed a nondisclosure agreement with the operator". The interest of several Indian operators in Africa makes sense. They are renowned for running low-cost operations for low revenue markets, which would suit the continent.
With these never-ending M&A talks, it looks like the face of Africa's telecoms is shifting. New players are about to make a strong impression, not just from the investment side, but also from the vendor side. As relations between operators and their suppliers are changing to become more partnership-based, large vendors may take a more important position on the market. And although Ericsson is still the major player in Africa, it seems that the Chinese vendors are keen to grow their presence (they certainly made their mark at last week's ITU summit, benefiting from the absence of the major European and American companies).
On another front, Indian operator MTNL is trying to build its position in Africa too. According to my colleagues at Global Mobile Daily, MTNL'schairman, R.S.P. Sinha, "told local press that his company had expressed interest in buying state-owned Zambian operator Zamtel and had already signed a nondisclosure agreement with the operator". The interest of several Indian operators in Africa makes sense. They are renowned for running low-cost operations for low revenue markets, which would suit the continent.
With these never-ending M&A talks, it looks like the face of Africa's telecoms is shifting. New players are about to make a strong impression, not just from the investment side, but also from the vendor side. As relations between operators and their suppliers are changing to become more partnership-based, large vendors may take a more important position on the market. And although Ericsson is still the major player in Africa, it seems that the Chinese vendors are keen to grow their presence (they certainly made their mark at last week's ITU summit, benefiting from the absence of the major European and American companies).
7 Oct 2009
Big ideas for world telecoms but not much excitment at ITU in Geneva
It’s day three at the ITU summit in Geneva and this year’s event has its ups and downs. While the exhibition is rather small and quiet (with some big industry names shining by their absence), the Forum is well attended and generating the expected mix of self-congratulation, wishful thinking, big ideas and complaints about the missing/misdirected regulation, investment, technology developments etc.
The big talk of today was climate change, and its impact on the telecoms industry. On the one hand, operators and vendors need to work on more eco-friendly ways of running networks, while on the other hand telecoms technologies can help reduce carbon emissions. Emerging markets have a different position on the issue from developed economies. Poorer parts of the globe are the main victims of climate change, without enjoying the benefits of what caused it, as was reminded by the Vice-President of Sierra Leone. But on the other hand, emerging markets are where some of the most innovative ecological solutions are tried, not for their green credentials but because they are cheaper to build and run (solar power for base stations has been pioneered in Africa and India for instance).
Talking of emerging markets, the infamous digital divide is still a big discussion point, particularly in what concerns broadband access. The ITU’s Telecommunications Development Bureau released new statistics that showed that while mobile access is growing hugely in emerging countries (now overtaking subscription numbers of developed countries), broadband access is severely hindered by costs. The average monthly cost for broadband access in the developing world is ten times higher than in developed countries, and represents 300% of monthly gross national income compared to just 2% in the developed world. With such shocking statistics, it’s no wonder the ‘Broadband for All’ session was so well attended today, with people standing at the back of an overheated room. The debate went over the usual challenges unfortunately without providing any new solution: lack of backbone in emerging countries, inadequacies of universal service provisions, lack of funding, insufficient initiatives from the major players, and of course the state of the global economy putting projects on hold.
Other topics of discussions included the evolution of the telecoms ecosystem and business models within it. In particular, the relations between vendors and operators, and between vendors themselves, are changing. From a position of client/supplier or competitor, many major players are developing partnerships, or calling for more to be developed. For example, Paul Excell (Chief Operating Officer – Innovation at BT) called today for a global open ecosystem for innovation for instance.
I haven’t heard a lot of mentions of the economy, but I'm hearing some reassuring 'feelgood' phrases such as "let's be proud to be in this industry" (courtesy of Stephan Scholtz, CTO of Nokia Siemens Networks), the kind of phrases we heard at Mobile World Congress earlier this year and I remember hearing when I first started in telecoms in 2001.
Thankfully, the mood about our forthcoming AfricaCom event is rather upbeat, and I’m expecting a livelier mood among the audience.
The big talk of today was climate change, and its impact on the telecoms industry. On the one hand, operators and vendors need to work on more eco-friendly ways of running networks, while on the other hand telecoms technologies can help reduce carbon emissions. Emerging markets have a different position on the issue from developed economies. Poorer parts of the globe are the main victims of climate change, without enjoying the benefits of what caused it, as was reminded by the Vice-President of Sierra Leone. But on the other hand, emerging markets are where some of the most innovative ecological solutions are tried, not for their green credentials but because they are cheaper to build and run (solar power for base stations has been pioneered in Africa and India for instance).
Talking of emerging markets, the infamous digital divide is still a big discussion point, particularly in what concerns broadband access. The ITU’s Telecommunications Development Bureau released new statistics that showed that while mobile access is growing hugely in emerging countries (now overtaking subscription numbers of developed countries), broadband access is severely hindered by costs. The average monthly cost for broadband access in the developing world is ten times higher than in developed countries, and represents 300% of monthly gross national income compared to just 2% in the developed world. With such shocking statistics, it’s no wonder the ‘Broadband for All’ session was so well attended today, with people standing at the back of an overheated room. The debate went over the usual challenges unfortunately without providing any new solution: lack of backbone in emerging countries, inadequacies of universal service provisions, lack of funding, insufficient initiatives from the major players, and of course the state of the global economy putting projects on hold.
Other topics of discussions included the evolution of the telecoms ecosystem and business models within it. In particular, the relations between vendors and operators, and between vendors themselves, are changing. From a position of client/supplier or competitor, many major players are developing partnerships, or calling for more to be developed. For example, Paul Excell (Chief Operating Officer – Innovation at BT) called today for a global open ecosystem for innovation for instance.
I haven’t heard a lot of mentions of the economy, but I'm hearing some reassuring 'feelgood' phrases such as "let's be proud to be in this industry" (courtesy of Stephan Scholtz, CTO of Nokia Siemens Networks), the kind of phrases we heard at Mobile World Congress earlier this year and I remember hearing when I first started in telecoms in 2001.
Thankfully, the mood about our forthcoming AfricaCom event is rather upbeat, and I’m expecting a livelier mood among the audience.
6 Oct 2009
Hope for broadband access in Central Africa
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.
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.
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