Russia-based telecoms operator Vimpelcom (NASDAQ:VIP) is to find new revenue streams, move to an asset-light model and pursue “significant consolidation opportunities” within its existing footprint, said CEO Jean-Yves Charlier. Speaking during…
Russia-based telecoms operator Vimpelcom (NASDAQ:VIP) is to find new revenue streams, move to an asset-light model and pursue “significant consolidation opportunities” within its existing footprint, said CEO Jean-Yves Charlier.
Speaking during today’s Q2 results call, he declared that it was “time to profoundly reinvent Vimpelcom,” refocusing on digital as the “traditional telecoms model has run out of steam.”
The agreed Wind/3 Italian JV, also announced today, represents the start of this strategy, he added. The new company will pursue a convergence strategy and signal the exit from a market in which Vimpelcom was a distant number three. Wind had already inked an Italian tower sale, and assuming its JV is approved by regulators will consider a combined tower sale.
Vimpelcom will aim to achieve “number one, or strong number two” positions within geographic markets comprising three or four players.
As part of this, it will carry out “selective consolidation opportunities,” said Charlier, who has been on the job for 100 days. “Many of the markets in which we operate have not yet consolidated…and we want to be the consolidator,” he declared.
The company will however “not consolidate across borders,” and also eye disposals in smaller markets such as Laos and Zimbabwe, he noted. In Zimbabwe, Vimpelcom’s 60% ownership of Telecel has locked it into an impasse with the Robert Mugabe government, which is pushing a sale of the asset, reportedly to a state-owned ICT entity such as Zarnet.
With a view to a globalised, asset-light strategy, Vimpelcom will “dispose of tower portfolios, just as we have done in Italy” and “selectively enter into network sharing agreements,” particularly in larger markets. He said that with 50,000 towers, the company had one of the world’s largest tower portfolios.
Emerging markets strategy
The company will focus on the “massive opportunity around data growth,” given that less than half of its subscribers [ex Italy] have a data plan and only 20% of them have a smartphone, the CEO said.
It is in these developing markets that Charlier sees the most opportunity for Vimpelcom to pursue its new digital strategy, becoming a “serious provider of mobile financial services” as many of its subscribers are unbanked.
Another main pillar of the digital strategy will be around content, taking advantage of the fact that “many of the global internet giants are not present in those [emerging] markets,” which do not demand English-language content. Vimpelcom would look to become a content aggregator in some markets, and a content producer in markets in which it is “all about local content.”
Summing up, Charlier said: “I see more opportunity to reinvent the telecoms model in emerging markets than in developed markets.”
Vimpelcom divides its businesses into Russia, Italy, Algeria, Pakistan, Bangladesh, Ukraine, Kazakhstan and Eurasia (Kyrgyzstan, Uzbekistan, Armenia, Georgia, Tajikistan and Laos). It is also present via Telecel Globe in Zimbabwe, Central African Republic, and Burundi.
