Vodafone’s Indian fate delayed…again By Pauline Renaud 54 q&a UK incumbent BT has announced two major steps forward for its TV subsidiary BT Vision over the last month. Hot off the heels of regulatory approval for controversial IPTV JV YouView, of…
Vodafone’s Indian fate delayed…again By Pauline Renaud 54 q&a UK incumbent BT has announced two major steps forward for its TV subsidiary BT Vision over the last month. Hot off the heels of regulatory approval for controversial IPTV JV YouView, of which BT is a partner, the operator announced plans to add iPlayer, public broadcaster BBC’s popular VOD service, to its portfolio.
Will branching out into TV prove a success?
Andy Baker, director of BT Vision, speaks to TelecomFinance’s Jason Rainbow about his plans for the platform.
Jason Rainbow: Why does BT appear to be placing its bets on 3 kinds of boxes: TV, YouView and computer?
Andy Baker: The future for any television service is about being able to offer consumers the choice to watch what they want, when they want and wherever they want to. Consumers want to be in control and be able to watch content on a variety of devices.
BT sees the future in giving consumers the choice to combine the best of TV with on demand content and an internet connection.
JR: How does BT see TV as part of the services it offers?
AB: TV forms an integral part of our offering, since consumers are increasingly interested in buying bundles of service from a single supplier. TV sits alongside our broadband and telephony offerings for consumers.
JR: What strategic partnerships are currently in place, and which ones do you envision having in the near future?
AB: BT has over 120 different content partners and has strategic relationships with device manufactures.
We’re always open to new partnerships to ensure we bring innovative services to its customers.
JR: Is BT aiming to be an agnostic pay TV provider?
AB: BT Vision is a service that is provided to BT broadband customers, however we continually review the ways in which we can deliver service to consumers.
JR: After revealing that BT Vision had added only 53,000 subscribers since March, taking its customer base to 520,000, how does BT plan to encourage more subscribers in the long term?
AB: This is a very competitive market, but BT is committed to TV for the long term. Our stated strategy is to build a scale TV business while continuing to launch new services.
We strongly believe that a combination of flexible pricing and attractive content will appeal to customers who do not want to be forced to pay for content they do not want.
JR: What does BT intend to do to enhance its TV offering?
AB:Just recently we announced the launch of 3DTV as well as the launch of BBC iPlayer on BT Vision.
We will also be releasing the top 10 latest release blockbusters in HD, every month.
We have a content deal with ABC TV On Demand, meaning we can offer hit American shows such as “Cougar Town,”
“Private Practice,” “Desperate Housewives,” “Criminal Minds”
and “Brothers & Sisters.”
BT Vision Film Club, our on demand film subscription service, offers a range of film services from major Hollywood studios, including Picturebox, WarnerFilms, Sony Pictures Television Guy and quality independent titles from Fim4OD.
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JR: How much does BT invest in its TV services – how will this change in the future?
AB: We do not reveal specific figures; BT’s investment in TV is done so alongside its overall investment in consumer services.
JR: What advantages does BT have over its rivals, such as Virgin Media, which also offers TV and broadband?
AB: At our recent quarterly results we just announced a bumper quarter for broadband. We have gone from 600 new The future of BT on TV Andy Baker, Director of BT Vision November 2010 | www.telecomfinance.com 55 q&a customers per week to >4,500 new superfast broadband customers a week in just under 6 months.
In comparison it took Virgin Media the last 2 years to get to a 90k customer base.
We also have a price advantage. BT Vision customers who take a bundle of broadband and calls from just £17.99 a month can add the BT Total Sports package, which comprises Sky Sports 1, ESPN and BT Vision sports for just £6.99 a month.
This combination works out at £257 cheaper than Virgin Media, or £20 a month.
JR: What is exactly will be BT’s role in IPTV venture YouView?
AB: BT is an equal partner in the venture alongside the BBC, ITV, Channel4, TalkTalk, Arqiva and Five. BT also has a role as a retailer in finding ways to take YouView to market.
JR: How does BT expect to make money from YouView?
AB: YouView will be operated on a cost recovery basis and therefore BT (as an equal partner) will not aim to exploit the platform for commercial gain. When the service launches, we think YouView will enhance our existing TV service, BT Vision.
JR: How does BT plan to cater for the expected surge (and unpredictability) in demand for capacity once YouView is rolled out in the first half of next year?
AB: Launching BT Vision taught us how broadband can enhance the television experience, and the importance of operating a best in class network able to meet demand.
56 q&a US independent towers group American Towers this month announced that it is to buy the towers assets (up to 1400 existing towers and up to 1800 towers under construction over the next 2-3 years) of South African cellco Cell C for US$430m.
Following the deal, the company is now present in the US, Brazil, Mexico, Chile, Peru, Colombia, India and South Africa.
TelecomFinance’s Claire Landon spoke with Hal Hess, EVP International Operations and President, Latin America and EMEA, and Stephen Harris, Director of Business Development Europe, Middle East and Africa, to learn more about the company’s plans for Africa, Latin America and beyond.
CL: With so many towers assets available these days, how do you choose which ones to target?
ATC: We have three criteria for deals: a stable macroeconomic and political environment; a growing wireless business; and a counterparty that will make a good partner.
CL: So, South Africa meets all three of these?
ATC: South Africa is widely perceived as the most stable market in Africa, and while it is mature, there is still a lot of growth left. Evidence of this is fixed-line operator Telkom deciding to spend R6bn (US$874m) to launch a new mobile unit, 8ta, which will provide a good opportunity for using existing towers. Plus, we are confident that Cell C will make a good partner.
CL: How will you finance the acquisition?
ATC: We haven’t finalised this. However, we are very well capitalized and could finance this transaction with existing liquidity- although our aim is obviously to pay for the acquisition as efficiently as possible. The likelihood is that it will be a combination of local debt supplemented by equity from us and local partners, which will own 25% of the group. We will try to use development bank sources. We can’t give you a debt/ equity breakdown yet, but we can tell you that South Africa is a pretty advanced market.
CL: What’s next, now that you’re in Africa?
ATC: We’ve established a good base for further expansion in sub-Saharan Africa, and there are certainly countries that fit our criteria. With Millicom, Vodafone/Vodacom, MTN and Bharti/ Zain present in many of these, it makes sense.
It’s a very attractive market, and if approached selectively, there will be lots of room for growth.
CL: How soon do you expect to look at further deals?
Will you look to get involved with Bharti’s grand African infrastructure sharing plan? How realistic do you think that plan is?
ATC: We are always looking, and the next 18 months are set to be very interesting. For Bharti, it depends on whether those projects meet our criteria.
We think that they may find Africa very different to India, due to its diversity in terms of markets and the variety of regulations, local ownership and levels of advancement. One key question is the timeframe they have in mind.
CL: Did you look at Vodafone Ghana’s towers, which just signed a 10-year, 750-tower management agreement with Eaton Telecom?
ATC: Yes, we did. Working with Vodafone is definitely something that’s of interest to us.
CL: Do you think that Indian towercos will have an Hal Hess, EVP International Operations and President, Latin America and EMEA Stephen Harris, Director of Business Development Europe, Middle East and Africa American Tower, global power q&a November 2010 | www.telecomfinance.com 57 advantage in Africa because of their experience in low cost markets? Do you expect to find yourselves coming up against them?
ATC: We haven’t seen them yet, so that’s hard to answer although we’ve read about their objectives. We’ve been operating outside the US for 10 years and are present in five Latin American markets.
We can draw on a lot of IP from other operations, and are confident of our competitive position. Where we are now is thanks to our ability to maintain leverage at a reasonable level, which is currently 3.2 times net debt to LQA EBITDA .
It may sound high, but most tower companies are at a much higher level – our two biggest US competitors are closer to 5.5-7 times.
CL: Are you looking for assets in the Middle East? What about STC’s towers?
ATC: We look at the Middle East in as much as it is part of EMEA, but we are not looking at STC’s towers. It goes back to our three criteria for investment. Saudi Arabia is quite a mature market, so it’s hard to see the growth opportunity relative to the opportunities we believe exist in Sub-Saharan Africa.
CL: Moving across the ocean, how are your operations going in Latin America? Hal, over the summer, ATC
highlighted that region as its growth engine.
ATC: We have launched operations in Chile, Peru and Colombia in the last four months – adding these markets to our current presence in Brazil and Mexico – acquiring towers from the local affiliates of Telefonica in all three countries.
Chile, for its part, has auctioned 3G spectrum to two new companies cable and broadband provider VTR and Nextel International and we have signed a contract with VTR.
CL: Do you aim to work with larger multinationals in Latin America?
ATC: Like Africa, Latin America is home to several large international telecoms companies, and this characteristic makes it easier for us to create economies of scale and participate in negotiations for transactions in multiple markets with one place.
CL: Are you looking at the tower sales at Vivo and Telemar/Oi?
ATC: If towers owned by these companies were to be sold or monetised in some way, we would obviously be interested if on the right terms.
CL: How would you sum up your activities outside your home US market?
ATC: We view our business as the rational evolution of the wireless market. Using our shared infrastructure model is more efficient for carriers, and our independent participation brings trust to a situation that would otherwise be seen as competitive.
Our model is economically efficient, environmentally friendly and government friendly.
We view ourselves as a cautiously optimistic company, and you can see from our track record that we are not afraid to enter new markets.
We facilitate competition in our markets, levelling the field for smaller companies that couldn’t normally afford a proprietary network.
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