Panellists:
Martin WeissExecutive VP Strategy & Corporate Development, Millicom
Sergey PlykinGroup Director Strategy, VimpelCom
Philipp Meier-ScherlingHead of Telecoms EMEA, Deutsche Bank
Patrick BellenbaumPartner, Solon Management Consulting…
Panellists:
-
Martin Weiss
Executive VP Strategy & Corporate Development, Millicom -
Sergey Plykin
Group Director Strategy, VimpelCom -
Philipp Meier-Scherling
Head of Telecoms EMEA, Deutsche Bank -
Patrick Bellenbaum
Partner, Solon Management Consulting (moderator)
Where are the growth areas in the telecoms industry? Is convergence the next big thing? What is the best business model to adopt to become a successful operator?
These are some of the questions industry experts discussed during the strategy panel at the recent TelecomFinance conference.
The discussion started on an upbeat note with Philipp Meier-Scherling, head of telecoms EMEA at Deutsche Bank, noting that investors are much more willing to take risks and back telcos than they were a few years ago. According to him, “financial markets are very receptive to new ideas, so management teams have to be bold enough to make changes”.
So what are the growth areas that telcos should explore in the years to come, asked Patrick Bellenbaum, a partner at Solon Management Consulting.
Although mobile financial services, m-health and m-learning are often considered as key in the telcos’ strategies, Martin Weiss, executive VP strategy and corporate development at Millicom, argued there is still growth in the old business model in the developing world.
In certain countries where the population is increasing rapidly, “there is still 10-20% growth per annum just driven by people going into mobile telephony…so you have a double digit growth industry without changing anything to your business model”.
Weiss however agreed with his fellow panellists to say that financial services and entertainment hold opportunities for operators as consumers want more than telephony services. “The mobile phone is the gateway to the world,” he commented.
Convergence in developing markets
The debate heated up when Bellenbaum asked about convergence between fixed-line and mobile operators. It is a trend currently gaining momentum in developed markets, he observed with reference to the €7.7bn acquisition of KDG by Vodafone. But is this happening in other parts of the world as well?
Sergey Plykin, group director strategy at VimpelCom, appeared to be pessimistic. We have yet to see “an example of a successful triple-play or quadruple-play operator in the developing world,” he said.
Weiss strongly disagreed. There are definite opportunities of fixed-line and mobile integration in emerging markets, he said, and invited Plykin to take a look at their operations in Guatemala and Honduras.
Plykin remained unconvinced, saying the model in those countries does not seem very convincing at present.
Weiss conceded a successful strategy in one country cannot necessarily be replicated in another country. “There is not one cookie-cutter solution for what the ideal model is,” he said, citing the example of Bolivia where there is scarce fixed-line infrastructure in place.
Quick, decentralised and bold
Despite the absence of a unique strategy model, the panellists agreed to say that telcos need to adopt a few principles to achieve growth: being quick, being decentralised, and placing bets.
“It’s about trial and error…you need to be very entrepreneurial, very quick. These are the things the big incumbents haven’t done,” Weiss noted, citing the example of Zimbabwe, where mobile finance services boomed in just a few weeks following the acquisition by a telco of a local bank.
Plykin weighed in, saying operators need to identify where the consumer demand is, place a bet on a project and then make sure that project is on track shortly after.
However, they are challenges to venturing in new areas, particularly in developing markets. “If you want to invest in new ventures in Africa, you need to have appetite for a lot of risk,” Weiss stressed.
One difficulty includes bridging the gap between the strong entrepreneurship in Africa and turning ideas into successful businesses, he said, mentioning the absence of seed funding as one of the main issues.
Before the panel drew to a close, Bellenbaum asked the panellists to rank opportunities for telcos to gain momentum. All agreed that the priority is in-market consolidation, arguing that the situation in five or more player markets is not sustainable. The next step, they said, is convergence. “For us, it’s a wait-and-see situation,” VimpelCom’s Plykin noted. “Vodafone did us a great favour by investing in KDG because now we can see how it goes.”
The final step is expanding to new countries because “good deals are very few and far between”, concluded Weiss.
