News, views and commentary from the telecoms sector across emerging markets and developing countries worldwide

Friday, 29 May 2009

Where will MNP go live in 2009? How should MNOs respond?

With Mobile Number Portability now about to hit the Indian market, the country's technology media are following the debate about how much impact this is likely to have.

Jatinder Singh, writing for Voice & Data magazine, notes that MNP has been a long time coming:

"After years of discussions and apprehensions by major telecom operators, MNP or mobile number portability, is finally going to make inroads into the Indian telecom market. [The] TRAI has approved the pan-India implementation of MNP, and [the] DoT has framed the timeline of its implementation; it is expected to hit the market by year-end."

Singh notes that MNP will be phased in piecemeal, region by region, starting with Delhi, Mumbai, Kolkatta and Chennai, with nearly 18% of the total cellular subscriber base given the option to change service providers while retaining their current mobile numbers. Singh also expresses the opinion that MNP may force operators to improve quality of service in order to avoid losing customers to rival MNOs.

So, how seriously are India's operators taking MNP in terms of threats and opportunities it might create? A range of views are reported in Jatinder Singh's article:

Kuldeep Goyal, Chairman and MD of BSNL, which currently occupies 4th place in terms of mobile market share with 11.95% of subs according to WCIS, seems upbeat about MNP, saying "It would certainly offer opportunities in the Indian telecom market. We are positive with our market share and would be eyeing more customers once things are in place."

From market-leading Bharti Airtel, Dr Jai Menon (Director, Customer Service and IT) notes that MNP has had varying levels of impact in markets worldwide.
"We are ready and believe that it allows more and more customers to come to our network and enjoy the services," says Dr Menon. Also speaking for Bharti Airtel, Deputy CEO Sanjay Kapoor told the Business Standard earlier this month, that MNP "is more relevant in countries where you have long-term contracts", going on to explain that because "India is a prepaid market... number portability won’t be a game-changing opportunity for anybody." For Kapoor, the vast, price-sensitive prepaid segment is already so inclined to regular churn with "the exit and entry cost on prepaid connections... so low", that he does not believe MNP "really adds to value."

It is, perhaps, tempting to assume that a newer market entrant would be welcoming MNP much more enthusiastically, mindful of an improved opportunity to grab customers from established rivals.

Raymond Yu of telecoms think tank Ovum, writing earlier this month, however, contends that all MNOs are vulnerable to MNP-driven churn. He cites the cases of Greece and
Lithuania, where the largest operators actually managed to increase their market shares immediately following the introduction of MNP. Yu also recalls the case of Hong Kong, where although all MNOs experience a large number of ports, "this is not unique to the customers of the market leaders."

In India, considerations of this kind may account for the apparently quite muted repsonse of new kid on the block Sistema Shyam Teleservices. The Voice & Data article quotes Vseovolod Rozanov, the company's CEO, as saying "it is more of an opportunity than a threat. However, looking at the experiences of global markets, the influence on change in the market share is not very dramatic." This is not to suggest, however, that Rozanov is completely disinterested in MNP. In a recent Economic Times article he is quoted as saying "
number portability will... drive growth for us." The Sistema-backed operation, which has now harmonised its brand with that of the giant Russian cellco which is part of the same group, has, according to WCIS, yet to break the 1% mark in terms of market share.

The Bharti Airtel CEO's comments about market conditions in India somewhat diminishing the relevance of MNP are echoed, to a degree, by remarks made by the head of the telecoms regulatory agency in Uganda. In this case, however, market size rather than the behaviour of prepaid users is being put forward as the argument against imminent deployment of MNP.

A recent Cellular News story quotes
Patrick Masambu, Executive Director of the Uganda Communications Commission, as saying that "at this stage, number portability is not something we see as a remedy in this market." Mr Masambu feels that the Ugandan market needs to grow further before the costs could be justified. He added, however though that once the country has passed the 10 million subscriber mark, then MNP could be viable. I find it a little curious that Mr Masambu chooses 10 million subs as the trigger for more actively considering MNP. If you read his comments without knowing the size of the Ugandan mobile market, you might imagine that the country has rather fewer than the 10 million subscriptions. According to WCIS, however, the country had 9.95 subs as of March this year. Hmmm...

In neighbouring Kenya, the deployment of MNP may also be some way off, if a recent article from the country's Standard newspaper is to be believed. The Standard's Robert Ndingwa notes that the Communications Commission of Kenya (CCK) has just three months to go before its September 2009 deadline to implement its version of number portability but states that the regulator is yet make a decision on whether to licence local number portability operators, "leaving consumers at the mercy of dominant mobile service providers." Ndingwa alleges that the CCK "prefers, instead, to hide behind its so-called principle of technology neutrality in the new market structure it introduced."

With some operators and regulators apparently lukewarm about the need for and effects of MNP, it might be worth asking whether views of this kind might mask a degree of fear about number portability. If so, Ovum's Raymond Yu dvises operators in particular not to be too worried, suggesting that each MNO must decide whether to view MNP as a threat or an opportunity and then devise an effective strategy in response.

Yu argues that "essentially, there are two ways to react to the introduction of MNP: either promote it or keep it under covers." In most cases, challenging operators would take the aggressive stance, says Yu, "whereas dominant operators are initially more reluctant to push MNP."

Yu notes that popular strategies for promoting MNP include making it a normal part of the sales process and using marketing to increase consumer awareness and perception of the facility to retain their numbers when switching providers. Strategies to defend against MNP include, according to Yu, simply not advertising it, implementing strong win-back strategies in line with porting requests and employing stronger loyalty and retention initiatives.

Let's see which of these options are chosen by MNOs in India - and in Uganda and Kenya, should MNP become a reality any time soon. According to Raymond Yu, other markets to watch for MNP deployments this year include Ecudaor, the Dominican Republic, Peru and Thailand.


Wednesday, 27 May 2009

TeliaSonera poised to take over Latvian operations - but only once we've ridden out the downturn

My focus here tends to be on the telecoms sector in states to which we can, without too much controversy, attribute the sometimes contentious labels 'emerging markets' or 'developing countries'.

Not a great deal of time is spent here, therefore, discussing events in Europe - even the less-highly developed countries thereof. That said, I retain a strong personal interest in the Central and Eastern parts of the continent, not least because I lived and worked in Poland in the early-mid 1990s, a time of fast-paced socioeconomic change, the effects of which I felt at first hand. For me at least, a decade after I was travelling around the CEE region from my Polish base, the gaps between Western and Eastern Europe seem smaller all the time. I've often wondered for how much longer it will be meaningful to think in terms of there being a distinct CEE region.

One CEE state which I've not yet visited is Latvia, which is a glaring omission given that I have a distant family connection to the country. I daresay I will remedy this before too long. Until then, I follow telecoms sector developments there via the usefully informative blog maintained by Juris Kaža, am a Latvian-American journalist living in Latvia.

Today, Juris posted a very recent video interview with Kenneth Karlberg, President of Mobility Services for giant Scandinavian telco TeliaSonera, which owns a 49% stake in Latvia's incumbent fixed-line operator Lattelecom, which in turn owns 23% of LMT, the country's second-ranked mobile operator in terms of share of subscriptions. LMT's other shareholders are state-owned TV and radio broadcaster VAS Latvijas Valsts Radio un Televīzijas Centrs, a Latvian state privatisation fund and TeliaSonera. Again, I think I understand from the interview with Mr Karlberg that the Scandinavian telco would like to acquire any shares it does not already hold in the company:

When, then, might TeliaSonera be able to consolidate its position in Latvia? According to a recent article in Baltic Course magazine, any sale of Government telecoms assets will have to wait "until after the economic crisis is over." This view comes straight from Economy Minister Artis Kampars, who is also quoted as saying that "running a company, whose main goal is to generate as large a profit as possible for its owners, is not a government function". This does not mean, however, retreating from that function with undue haste, according to Mr Kampars who feels the sale of Lattelecom shares "must be organized so that it brings as much money as possible for the state." For Kampars, to do this will involve waiting for the Latvian (and global) economy to begin to recover from the current malaise. "In the meantime," says Kampars, "we have to streamline the company's management and expand the company's business also outside Latvia in order to increase the value of the company."

This streamlining, if carried out, seems set to hit the pockets of some senior people on the Latvian telecoms scene. The Baltic Course article states that in Kampars' opinion the current Lattelecom council, which has eleven members, needs to be downsized by reducing the number of council members elected by the state of Lavia as well as by TeliaSonera. Mr. Kampars also believes that the salary for Lattelecom board chairperson should not exceed the salaries paid to board chairpersons at other government-run companies. From that, I infer that there does exist some considerable gap.

Russia & CIS Com 2009: a good place to do business in the region

I'd like to pass on my good wishes to everyone working to deliver another great Russia & CIS Com conference and exhibition in Moscow this year. The 2009 iteration of this useful annual event takes place 2-3 June at the usual venue, the Radisson SaS Slavjanskaya Hotel.

It was my pleasure to produce the 2007 and 2008 versions of this event during my enjoyable stint with Informa Telecoms & Media so I will be interested to hear about how a new wrinkle in the design of the agenda works out.

We observed last year that while delegate numbers were strong on the first day, the crowd was noticeably thinner on the second day. We were keen to improve this situation in 2009 and beyond for the sponsors and exhibitors whose support makes the event possible. I think we worked out what was causing the problem.

With most of the events in the Com World Series, of which Russia & CIS Com is part, the conference gathers delegates from quite a large number of countries. The Moscow event, in contrast, tends to appeal mainly to telecoms sector executives from the Russian Federation, Ukraine and Belarus only. Quite a high percentage of visitors come from the many telecoms businesses based in Moscow itself. Whereas out-of-town visitors to a conference tend to spend most of the two days of any event at the venue, those based in the venue city find it harder not to keep stepping out to keep on top of their day-to-day responsibilities. I think for a lot of the Muscovites in attendance, one day works out as a reasonable time commitment to the conference, but two days is a bit more of a stretch.

The device we dreamed up to resolve this was to split the agenda into two distinct chunks - each a conference within a conference, I suppose. So this year's Russia & CIS Com features one highly cellular-centric day of discussions and another which is focused more on wireline and fixed-wireless broadband, IPTV etc. Even in this age of accelerating convergence between fixed and mobile networks/services/technologies, we thought there is still a meaningful distinction between the "mobile crowd" and the "fixed crowd", at least for now. My hunch is that this will work well, delivering two somewhat overlapping crowds across the two days. I expect to hear that sponsors and exhibitors have gained from this and I daresay my former colleagues have briefed them on how to maximise the networking opportunity.

One returnee from the 2008 speaker panel is Konstantin Tikar, General Director of the Belarusian incumbent fixed-line operator, Beltelecom, whose mobile unit, CDMA operator Belcel has recently struck a revenue share deal with Velcom, the local subsidiary of mobilkom austria. According to a recent Total Telecom article, market-leading GSM operator Velcom will soon begin selling mobile broadband services in partnership with its rival Belcel. The article states that the 50/50 revenue-sharing agreement will see Velcom take control of Belcel's retail mobile broadband sales and customer service operation, while Belcel will manage and operate the infrastructure side of the business. Services will run on Belcel's EV-DO network, which currently supports data rates of up to 3.1 Mbps. With the country's GSM operators having yet to deploy W-CDMA networks of their own, this deal enables Velcom to get a 3G mobile broadband proposition to market ahead of rivals MTS Belarus and Turkcell-backed Life :) Belarus.

My guess is that Belcel will benefit greatly from having the much more successful Velcom handling the sales and customer service side of things. The CDMA operator's mobile market share has remained stuck at under 2% since the summer of 2006. Fifty percent of something significant has to be better than one hundred percent of not very much, I guess.

Mr Tikar is quoted in the Total Telecom story as saying "The cooperation [announced] today allows Belcel to increase the quality and capacity of its network significantly," while Velcom CEO Helmut Duhs observes that the agreement "provides our customers with a mature mobile broadband service and future-proof option to upgrade, once even more advanced technology becomes available in Belarus."

I'd like to congratulate my former colleagues on securing some strong speakers for Russia & CIS Com 2009. Among those joining Mr Tikar on stage at the conference will be:

If you aim to do business in that part of the world, I'd urge you to build a trip around a visit to the conference and exhibition.

Refreshing news for emerging markets MVNO proponents?

Kirène Mobile avec Orange: new MVNO on the scene in Senegal; graphic from

In March I asked which of India or Africa would be the first to see mass-market MVNOs. I tentatively concluded that perhaps India looked the better bet.

In that discussion, I made reference to a presentation by Carlos Valdecantos of mmChannel, a technology company dedicated to the development and management of digital entertainment services and platforms on a B2B format. In this presentation, Carlos argues that while Africa, taken in the round, might not yet be ready for the wide scale development of MVNOs, certain markets could possibly prove to be more attractive for investors in prospective virtual mobile operators. For Carlos, the high-potential markets are South Africa, Ghana, Morocco, Algeria, Tunisia and Egypt. This is due to their meeting several criteria that he sets:
  • good market size (population level, GDP)
  • strong economic liberalisation
  • dynamic telecom sector
For Carlos, mid-potential African markets for MVNOs are Namibia, Mozambique, Cameroon, Gabon, Congo and Equatorial Guinea. These are described as having a reasonable mix of suitable market size, developing economic policies and economic reform underway. In this model, a further group of low potential markets is defined as being countries which "show an interesting opportunity in some of the key characteristics but completely fail to meet others." These are: Botswana, Tanzania, Kenya, Uganda and Sudan.

This leaves a large number of African countries which Carlos describes as "no go markets" for MVNOs.

Yet it is from one of these "no go markets" that news comes today of an MVNO being launched. According to a Cellular News item, Kirène, a mineral water brand in Senegal says that it has launched an MVNO in the country, running on the Orange Senegal network. The mobile service will be branded as "Kirène Mobile avec Orange", with the Mobile Virtual Network Enabler (MVNE) services being supplied by Transatel.

Quoted in the article is a gentleman I've had the pleasure of meeting more than once on the conference circuit, Philippe Vigneau, Transatel's Director of Business Development: "Being a forerunner for both companies, this project was really important to us. First of all because it was the first partnership concluded in Africa on a brand agreement (with Orange). On the other hand it is the first time that a food-industry brand, turns to a worldwide operator to develop a mobile telephony offer."

I will watch with interest to see how successful this enterprise turns out to be. Is Senegal the right place for such a venture? Or is Carlos Valdecantos right to content that the country is among the "no go markets" for prospective MVNOs?

I am also intrigued by the notion of a food and beverage sector brand getting into the MVNO business. In his presentation, Carlos observes that there is likely to a strong correlation between the long-term profitability of an MVNO and the strategic assets the company/brand brings to its mobile venture. He cites assets and examples including:

  • systems + billing + customer base - example: Tele2 using fixed-telephony IT infrastructure to support virtual mobile service offerings across Europe.
  • differentiated value proposition/specific target segment - example: ay yildiz, an MVNO aimed at Turkish immigrants in Belgium, with special prices on calls to Turkey and Turkish language customer support.
  • access to customers/sales and recharge channel - example: Fresh Mobile, an MVNO offering in the UK from the Carphone Warehouse, the country's leading independent mobile phone retailer.
  • access to huge customer base - Tesco Mobile is the MVNO offering of the UK's largest supermarket chain, which has a distribution channel unrivalled in its pervasiveness; the chain also collects rich customer data via discount card schemes.
On my travels in Turkey, I've also heard it suggested that Istanbul's big three football clubs, each of which has a fanatical fan base numbering in the millions, might enter the MVNO space once market conditions make it feasible.

I am much less clear what a mineral water brand brings to an MVNO project, much less in a potentially very challenging market such as Senegal. That said, I have never visited the west African country and could not comment on the degree to which Kirène is a dominant, well-loved brand. Perhaps brand equity alone will be enough to make this enterprise succeed.

Saturday, 23 May 2009

See you in Abu Dhabi? I'm afraid not

I am writing this at home, cursing the congestion on British roads. What should have been a 40 minute car journey to Heathrow Airport took nearly two and a half hours, causing me to miss my flight to Abu Dhabi. The outcome of a hasty discussion with senior colleagues was that there was little point in my travelling tomorrow morning (I would have got there too late for the function my firm is hosting) and that it would be too expensive jumping on an Emirates flight to Dubai at short notice.

So, I headed home. Why the clockwise section of the M25 was completely clear while the offending anti-clockwise section was still snarled up is beyond me. This is the first time I have ever missed a flight in my life, and I do feel a bit foolish. So, no report from Monday's Telecoms Leaders conference, I'm afraid. My wife and son are quite pleased to have me around for the UK Bank Holiday weekend, so it's not the end of the world, I suppose. I'm still a bit annoyed though. Deep breaths...

MECOM/Telecoms Leaders: see you in Abu Dhabi?

Later today I am getting on a plane headed for Abu Dhabi, UAE. I'll be dividing my time between Abu Dhabi and Dubai from Sunday to Wednesday, heading back home in the small hours of Thursday morning.

If any regular readers of this blog would like to connect for a face-to-face chat about all that's going on in emerging markets worldwide and to establish whether we can help one each other somehow, I'd be happy to see what I can fit between already planned meetings. My day job is as a telecoms sector executive search/selection consultant so I may be able if you're looking to attract new talent for your telecoms sector business (operator, technology/software vendor, regulator) or if you're seeking a new opportunity for yourself. I'm also just keen to get closer to as many markets as I can, learning from new contacts and sharing what I know in return. If any of this is of interest and if you're going to be in Dubai/Abu Dhabi from Sunday 24th to Wednesday 27th, let's see if its worth trying to connect. In the first instance, email me at I will pick it up in real-time.

On Monday, I plan to spend a good chunk of the day at the excellent Telecoms Leaders 2009 conference attached to the annual MECOM trade show held in 25th-27th May at the Abu Dhabi National Exhibition Centre (ADNEC). Telecoms Leaders looks very worthwhile, with contributions from speakers including:

This is all organised by the lovely people at IIR Middle East, whose support has been truly appreciated as my firm has worked to organise a networking reception we are hosting tomorrow. I know they will be delighted to get further registrations for Telecoms Leaders and/or for the other related conferences and workshops taking place at the ADNEC this coming week. So: roll up, roll up...

I shall try to find the time to blog on the highlights of the conference more-or-less in real time - but the road to hell is, as most of us know, paved with good intentions. So, no promises...


Thursday, 21 May 2009

More snags for strategic investors eyeing Iran

I was saying only yesterday that telcos looking to invest in the Islamic Republic of Iran have faced some daunting problems. This came up in a brief discussion of Etisalat's stalled attempt to grab the country's third national mobile licence, as well as the problems Turkcell faced when trying to get hold of the second licence a few years ago.

I also mentioned that last year I hosted a conference at which Russian cello MegaFon signalled its interest in the third licence.

At that same conference, the Iranian delegation in attendance were talking up the attractiveness not only of the GSM/UMTS concession but also of two other investment opportunities - the sale of WiMAX-suitable spectrum and the part privatisation of the country's national incumbent wireline operator, TCI. One party interested in the latter opportunity now seems to have hit snags of its own, according to to TelecomPaper.

Telekomunikasi Indonesia, says the article, had announced in January that it planned to form a consortium with unnamed Iranian Government agencies to purchase a 20% stake in TCI. The article cites reports from the Jakarta Globe, whose journalist has been told by Telkom Vice President Heri Supriadi that the deal will not go ahead until "political hurdles" are cleared.

The TelecomPaper article suggests that one of these hurdles would be the matter of Telkom's US shareholders, which include pension funds, being forced to sell their holdings because of the US sanctions against Iran.

More ways to get mobile phones into the hands of health care workers and micro-entrepreneurs in developing countries

Earlier this week, I had the pleasure of doing my (very) little bit to promote the HopePhones initiative organised by the good people at FrontlineSMS:Medic. This is about collecting unwanted handsets and putting them into the hands of community health workers in developing countries. I noted that free postage and collection centres are currently only available to US residents, and asked non-US readers to get in touch if they knew of similar schemes closer to home. One of these has come to my attention, via the comments page on the excellent blog maintained by Ken Banks.

It seems that residents of New Zealand are able to take part in a somewhat similar scheme, thanks to Enable Community, a not-for-profit organisation also working to provide access to affordable communications services in the developing world. They do this through the collection and re-use of mobile phones in partnership with Vodafone New Zealand, community groups, churches and businesses and with micro-enterprise organizations in developing countries which are supported by Tearfund, a Christian relief and development agency building a global network of churches to help eradicate poverty.

If you have any doubts about how mobile phones can enable poor people in developing countries to become more independent and more active in productive economic activity, I'd encourage you to visit the Enbale Community website's 'impact' section, which features some powerful stories from Indonesia and the Phillipines.

If you don't know of any initiatives similar to HopePhones or Enable Community in your country, perhaps you can investigate whether something similar could be set up. If you work for an operator, it could be a powerful part of your firm's commitment to corpotate social responsibility...

I say this because, although US residents seem to form the single largest group of readers of this blog, according to the visit statistics, visits from New Zealand are very rare indeed... so it would be good to learn what other readers could do in terms of this kind of activity.

Wednesday, 20 May 2009

Iran: Zain poised to take advantage of Etisalat's troubles?

Many people who visit this blog regularly will probably have been following the saga of Iran's third national mobile licence. This is something I've personally tracked for some time. Without claiming any particular expertise or any direct involvement in the various twists and turns, at times I've been just about close enough to some of the interested parties to maintain an interest.

In 2008 I hosted a conference in Moscow. The Deputy CEO of Russian cello MegaFon, Sergei Soldatenkov, was among the speakers and did not seem to be in stealth mode when firing questions to a speaker from an Iranian delegation, which was on hand to raise the visibility of the third mobile licence auction and other investment opportunities in their country's telecoms sector.

At other times, I've had reason to spend time in Istanbul. So Turkcell is a company which I find myself watching with interest. The market-leading Turkish cellco had to go legal after a painful, untimately unsuccessful attempt to secure Iran's the second national mobile licence. South Africa's MTN eventually took advantage of Turkcell's rebuttal by the Iranian Government.

A foothold in the Iranian market does, on one hand, look like a rather rich prize for courageous strategic investors in the telecoms space. The latest mobile penetration figure from WCIS is just 72.02%, which is low for a country with a well-educated, youthful and growing population. Moreover, the third national mobile licence comes with a useful two-year exclusivity period with regard to the provision of 3G services. On the other hand, the Islamic Republic is not a market in which a foreign telco can establish full ownership of an operation. Local investors are required by law, with the non-Iranian party limited to a 49% stake in a telco.

Etisalat weighed all of this up and decided to proceed with what turned out to be a winning bid.

Many of you, however, will be aware that this deal now appears to have gone sour. This is due to different problems to those encountered by Turkcell a few years ago. Complications around getting into Iran, however, do seem to be something of a recurrent theme.

I've received news updates about the stalled Etisalat deal almost daily for around a week now. The most recent one came yesterday from Cellular News, whose article reports the UAE-based telecoms group is in talks with Iran’s telecoms regulatory agency in an effort to retain the recently acquired licence. As the article reminds us, the regulator earlier withdrew the 2G and 3G concession which was awarded in January, claiming that Etisalat failed "to give necessary guarantees and licence fees on time".

Quoted in the article, Mohammed Omran, CEO of Etisalat, is keen to assert that "The Iranian regulator did not strip Etisalat of the country’s third mobile licence; but disagreement with its local partner may have cost the company the licence. The local partner that controls the consortium that was awarded the licence wanted to change the terms of the deal, which put it at odds with the Iranian regulator."

The Cellular News piece indicates that Zain may be waiting in the wings in anticipation of Etisalat not being able to turn this around. Zain are reported to have stated that the asking price may be too high considering the current economic climate. The Iranian Government, however, may be unimpressed by any attempt to cite economic woes as justification for a significantly lower bid. According to Cellular News, a spokesman for the Iranian regulator has stated that "the price proposed by Zain should not differ by more than 5% from Etisalat’s proposition."

Tuesday, 19 May 2009

Donate your unwanted cellphones and do some good

One of my favourite blogs is the offering from Ken Banks of FrontlineSMS and nGOmobile fame. Ken, whom I once had the pleasure of meeting very briefly at the Mobile World Congress, devotes himself to the application of mobile technology for positive social and environmental change in the developing world, having worked on projects with these aims in Africa for the last 15 years.

Of the various initiatives in which Ken has taken a leading role, FrontlineSMS may be the one with which readers of this blog might be most familiar. For those who are not - this is free software that turns a laptop and a cellphone into a central communications hub, enabling users to send and receive text messages with large groups of people through mobile phones.

One group to have taken advantage of this solution is FrontlineSMS:Medic, a team committed to supporting community health workers in the developing world using mobile technology. In Ken's latest blog post today, he talks about the launch of the FrontlineSMS:Medic team's HopePhones initiative, which is about encouraging people to donate unwanted devices for resuse by community health care workers in developing countries.

Those donating phones have the postage covered (if posted within the USA) and collection centres are being setting up across the US. This looks easy, compelling and worthwhile for US residents. If you're not in the US, you may know of an initiative closer to home. If so, do let me know via the comments function on this blog. I'll happily promote.


Monday, 18 May 2009

Nokia's cheapest emerging markets phone vs. El Vergatario

Emerging markets winner? The Nokia 2720 Fold - picture from Cellular News

Just when I'd finally recovered from the side-splitting hilarity of discussing the (allegedly) saucily-named low-cost cellphone recently launched in Venezuela, along came another emerging markets handsets story to remind me of the fun.

The (nudge, wink) Vergatario will cost the man and woman on the streets of Caracas a mere USD15. It's recently been reported in the press that this represents only 25% of the cost of manufacturing and distributing the device. According to the country's state news agency, there is "a long-term project to export phones from Venezuela to the rest of Latin America". It will be interesting to see whether the Chavez Government would be interested in subsidising cheap phones for the masses beyond the borders of their Bolivarian Republic. Last year, I had the opportunity to visit the HQ of Venezuela's renationalised national incumbent wireline operator, CANTV. I learned a little about the company's (and the Government's) desire to use ICT/telecoms as a driver of Bolivarian socialism - but not enough to speculate with any degree of confidence about whether this could include underwriting the cost of handsets in markets where CANTV's mobile unit, Movilnet, would not have the opportunity to recoup the subsidies during the subscription lifecycle of the customer. I suppose it's theoretically possible that an arrangement could be worked out with friendly operators elsewhere in Latin America, or even elsewhere in the world.

Let's assume for a moment that something of that sort does not turn out to be feasible. With which handsets would a non-subsidised El Vergatario be competing on the global low cost devices market?

One suite of such handsets has been launched recently by Nokia, according to a Cellular News item I received today. The Finnish device maker says the new phones are aimed at emerging markets and come preloaded with a range of Nokia's mobile internet services. The Nokia 2730 classic, Nokia 2720 fold and Nokia 7020 each come Internet-ready, and work with Nokia's range of emerging markets services.

The article quotes Nokia's Alex Lambeek, who says "we've seen mobile technologies catalyze the growth of the informal sector across the world, empowering local entrepreneurs and having an immediate and lasting impact on people's lives. Services like Nokia Life Tools and Ovi Mail, combined with the mobile phones we're launching today, bring powerful solutions that can be the gateway to knowledge, entertainment and people, without the need for a PC."

According to extensive Nokia consumer research, states the article, nearly 50% of consumers in emerging markets would indeed rather connect to the Internet over a mobile phone than a PC.

An interesting component of Nokia's service bundle is Ovi Mail, "which has the potential to be the first digital identity for many people in emerging markets" Unlike most other email services, the Cellular News article reminds us, "an Ovi Mail account can be created and used directly on a Nokia device without ever having to use a PC." The article indicates that since the launch of the beta service in December 2008, around 90% of Ovi Mail accounts have been created on a Nokia phone rather than a PC.

How do these devices stack up price-wise against the Venezuelan phone?

The most affordable of the set of three is the Nokia 2720 Fold, a compact clamshell handset expected to begin shipping in Q3 2009 for an estimated retail price of EUR 55 (USD74) before subsidies and taxes. By my maths, El Vergatario comes in at around USD60 when not subsidised by the Venezuelan state, so it does look competitively priced vs. a comparable device from Nokia. The Venezuelan handset, however, is a CDMA standard device. Presumably a GSM version would need to be on offer if the Chavez Government really does mean to export the phone.


Friday, 15 May 2009

Salty name, sweet subsidies: more on the Venezuelan handset phenomenon

Recently, when I quickly added a short piece here about the low cost handsets launched this month in Venezuela, it seems I left out some interesting details.

The detail that has been grabbing headlines across the UK's mainstream news media is the name given to the device, El Vergatario. Prior to reading these recent stories, I vaguely remembered the name of the phone and even more vaguely recalled reading somewhere that the term meant something like 'the excellent one'. (That's enough vagueness, Ed.*)

So imagine my bemusement at seeing UK newspapers rubbishing the idea that the monicker of this remarkably cheap device is so innocent. Numerous Fleet Street hacks have converged this week on a different understanding of the handset's unusual name, i.e. that it is a freshly coined vulgarism from a Venezuelan city known for its inventive slang. On Monday, the Guardian, to take one example, delighted in presenting President Hugo Chavez as a smirking practitioner of double entendre. "Whoever doesn't have a Vergatario is nothing," said the Venezuelan leader, with the Guardian suggesting that this remark was an off-colour joke.

Word quickly travelled back to Caracas about the Guardian's story. Yesterday the paper was reporting that President Chavez had used a televised speech to rebut the notion that some Venezuelans had been offended by the handset's name:

"In the Guardian they think it's something rude. That is a big mistake. They are ignorant," said Chavez. "He cited the Spanish language reference dictionary, the Real Academia Española, which defined vergatario as an adjective signifying quality and value," reports the UK paper, whose backtracking is slyly qualified by its assertion that "the etymological debate spread to websites today and broke largely along political lines, with Chavez supporters championing the non-vulgar interpretation."

Whatever the case, in the following clip from the President's regular TV show, he does seem to be playing for laughs. My Spanish is far too limited to understand the gags. If anyone wants to post a translation of his words in the comments box, do please go ahead!

All very amusing. Less impactful in terms of making the news, but perhaps of more immediate relevance for readers of this blog (i.e. people working in telecoms in emerging markets) is the question of how Vetelca (the Venezuelan state-ZTE joint venture assembling the phones) is able to put a fully-featured device into the hands of the consumer for just USD15. I daresay the price of the Chinese-made components is not excessive. Good old handset subsidies, however, perhaps play an even more important role in arriving at the low retail price of the phone. As the original Guardian article on the device noted, "a government subsidy which cut the retail price to a quarter of the manufacturing cost is likely to make the Vergatario an immediate hit."

It might therefore be more apt to call El Vergatario a low price handset than to call it a low cost handset.

* apologies to Private Eye

Thursday, 14 May 2009

M&A activity set to change the landscape of SE Europe; Central Asia to follow?

The emerging markets focus of this blog has led me, in the main, to round up and review developments in low teledensity countries of Africa and Asia, with only occasional detours into somewhat more mature markets in Eastern Europe, Central Asia, Latin America and elsewhere.

This time, however, being here in Vienna (dodging the rain and catching up on paperwork right now) has inspired me to look a bit closer to (my) home.

According to a recent TeleGeography article, Greek telecoms group Cosmote has reportedly reached an agreement with Oger Telecom regarding the takeover of Romanian mobile operator Zapp. Cosmote's existing Romanian operation occupies the third position on the market with 22.55% of the 28.55 million subs, according to the World Cellular Information Service. Zapp is a much less significant operation, with 0.96% of subs - and this is down from 1.82% a year ago.

What, then, is the point of this prospective acquisition? Gaining a 3G proposition seems to be the answer - Cosmote Romania is, as the TeleGeography article notes, the only mobile operator in the country without a UMTS concession.

For a long time, Zapp was the Romanian market's lone CDMA operator. Although Zapp had already got into third generation service provision via the deployment of a existing CDMA EV-DO network, the company decided last year to use UMTS/HSDPA technology for its 2100 Mhz network as opposed to CDMA2000. I daresay had Zapp not gone down this route, the company would be a less attractive acquisition target for Cosmote.

Zapp is an extremely small part of the Oger Telecom portfolio, which includes South African cellco Cell C and Turk Telekom, Turkey's dominant wireline operator which has, according to another recent TeleGeography story, formed a joint working group with its parent company to prepare an offer for the Kyrgyz state-owned telecoms operator Kyrgyztelecom. That article states that the privatisation of Kyrgyztelecom "has been on the Government’s agenda since 1998, although little progress has been made" and that "in July 2008 Turk Telekom declared that it was considering bidding for the 77.84% stake in the telco, but two months later was barred from participating after it failed to pay a required security deposit within the deadline." According to this story, these difficulties have not deterred the Turkish operator from coming back for another attempt.

While keen to improve its proposition in Romania, Cosmote might appear to be in the midst of evaluating how much of the rest of its southeastern Europe footprint it would like to retain. As well in Romania, currently the group has operations in Albania and Bulgaria. Until recently, the Cosmote footprint also extended to Macedonia, a market from which the Greek group exited via the sale of MNO Cosmofon to Telekom Slovenije. On 31st March reported that the Slovenian incumbent had beaten Turkcell to the punch with a successful EUR 190m bid for the Macedonian cellco. That article notes that as well as operating a 3G-HSDPA network, Cosmofon has also acquired six regional WiMAX licenses and launched a nationwide WiMAX network.

Were Cosmote to consider retreating further from the Balkans, one party unlikely to approve would be Deutsche Telekom. A recent MarketWatch article indicates that the giant German telco's purchase of a 20% stake in Cosmote's parent company OTE is motivated by a desire to offset increasing competition from cable and Internet operators on DT's home turf - specifically by expanding its footprint in high-growth markets such as Bulgaria, Romania and Albania.

Wednesday, 13 May 2009

The challenges of doing business in Zimbabwe (continued)

In March I wrote about how the trouble political and economic situation in Zimbabwe seemed to be continuing to deter big telcos from seeking to exploit the country's under-penetrated market. One of the many challenges I mentioned then was the operator Econet Wireless suspending post-paid services due to foreign currency shortages.

Since then, it seems that the same operator has had to suspend the sales of prepaid lines, which must have been very damaging given the overwhelming preponderance of prepaid users in the customer base of any operator in an emerging market.

Happily, according to an report from TeleGeography, market-leading Econet Wireless, has resumed the sale of prepaid SIM cards, following recent upgrades to network capacity and regulatory clearance to charge users in foreign currency.

Tuesday, 12 May 2009

CDMA to GSM migration: another one jumps ship in Africa

Reports of the death of CDMA have been greatly exaggerated. That has been the theme of of few articles I've posted here. In March I blogged on claims made about the standard being in rude health in Nigeria. A month earlier, I was writing about operators betting on CDMA in India. That article, however, did report on the seemingly unstoppable rise of the GSM family and the constantly eroded global market share of CDMA. Contributing to this trend is the phenomenon of former CDMA operators migrating to the more successful technology. An example of this is currently underway in Africa.

I learned via Telegeography yesterday that Rwandan mobile operator Rwandatel is continuing to switch users from CDMA mobile phones to 3G-enabled GSM handsets.

According to the article, which quotes RwandaTel CEO Patrick Kariningufu, the MNO is handing out new GSM handsets to an estimated 20,000 subscribers mainly located in rural areas. The move is said to be part of the company's response to increased competition.

The country's mobile market is currently split two ways - but the slices are very differently sized. MTN's Rwanda outpost has 82.61% of the country's subscriptions according to WCIS. Until late last year, Rwandatel, as a purely CDMA operator, was doing OK in terms of slowly chipping away at MTN's dominant position. The decision to migrate to GSM/W-CDMA was made some time ago, however. A Global Mobile Daily note of December 5th indicates that while the new network was launched around that time, the operator, a unit of Libya's Lap Green, had hoped to make the move to GSM earlier last year but was prevented from doing so by equipment shipping delays caused by the post-election violence in Kenya.

Both cellcos will be preparing for the impact of a new challenge to the status quo. This comes in the form of a soon-to-be-launched Tigo-branded MNO, the newest part of the Millicom International Cellular empire.

In November, GMD reported that Millicom had been awarded Rwanda's third mobile operating license by the Rwanda Utilities Regulatory Agency, which reportedly rejected competing bids from Zain and Telecel Globe, a company owned by Orascom Telecom. Millcom's new operation will offer mobile and fixed-line services.

Market-watchers will be interested to see if Rwandatel's migration to GSM will be enough for the operator to compete effectively vs. this new entrant and the well-established MTN operation.

Monday, 11 May 2009

Advice for emerging markets cellcos looking to replicate the success of M-Pesa

I am fortunate to be receive, on a regular basis, very insightful reports from the TIME practice of management consultants Arthur D. Little. The most recent of these is upbeat about m-payment services. Some advice is offered to the various value chain players in emerging and developed markets. For the former, the advice seems to be directed largely at mobile opertators, from which we might infer that MNOs have the opportunity to establish themselves as the key players in developing countries.

Mobile operators, attracted into the m-payment space by minimal competition from conventional payment-channels in emerging markets, are advised to take "an active role in shaping the regulatory environment" because the competing financial industry may lobby for policies and regulatory mechanisms designed to keep MNOs at bay. Mobile operators are also urged to "focus on low value/high frequency transactions and have a special focus on remittances". Finally, Arthur D. Little advise operators to continue to build up cross-border partnerships to ensure cross-border interoperability of remittance services across emerging markets.

In March ran a feature which noted that mobile financial services have continued to gain traction, particularly in developing countries.

"Mobile financial services fall into two distinct camps; additive and transformational banking", states that article. Additive banking is defined as "services targeted at markets that already have traditional financial services at their disposal." Transformational banking is defined as "the practice of extending banking and payment services to those people who do not have ready access to banking facilities" - i.e. largely people in developing countries or migrant workforces in more developed countries.

The article notes that transformational banking is currently grabbing a good deal more column inches than additive banking and cites the well-known example of M-Pesa, initially launched by Kenyan cellco Safaricom and later launched in Afghanistan and Tanzania by MNOs Roshan and Vodacom Tanzania respectively.

Sunday, 10 May 2009

Report tips China Mobile, MTN, America Movil as 'best postioned to grow' - but does not consider Middle Eastern, Indian players

graphic from Telegeography's GlobalComms Insight

New research from TeleGeography’s GlobalComms Insight includes predictions about wireless and broadband subscriber growth globally for the next five years. A key finding seems to be that "growth in the value of the telecoms services market will not keep pace with subscriber growth." This feels right. As the report authors note, subscriber growth these days largely comes from countries with very low GDP per capita - i.e. emerging markets.

This is all fine. I am curious, however, to know how the people behind TeleGeography's GlobalComms Insight selected the eight leading service providers studied in the report and positioned on the graph above. It is not without value to consider the global competitive position and the growth prospects of China Mobile, MTN, America Movil, Vodafone, Telefonica, Verizon, BT and NTT. But wouldn't this report be a lot more interesting if telcos headquartered in the Middle East were put into the mix? I hear so many people articulating the view that these relatively cash-rish players are among the best placed to take advantage of the current challenging economic climate - in terms of finding and securing acquisition targets at knock down prices from sellers wanting to raise cash ASAP.

Where, then, would Etisalat, QTel or Zain sit on the graph?

One aspect of this report which does seem useful is ensuring that China Mobile is discussed. The authors call the giant cellco "one company that has managed to buck the general trend, thanks to the blistering mobile subscriber growth in its home market" and note that even this company, "the world’s largest wireless service provider by subscribers is feeling the pressure, as evidenced by last week’s news that it will expand its global footprint by buying a stake in FarEasTone of Taiwan."

I'd also be interested to see where the report authors would place Bharti Airtel in their calculations. Back in February, I considered the view that the rapidly diversifying market-leading Indian MNO might likewise be compelled by competitive pressures at home to look more seriously at international growth opportunities.

Friday, 8 May 2009

Indian mobile giant continues to diversify and considers reorganisation

Mobile entertainment? Or highly practical applications designed to assist people out of extreme poverty? Last month I pondered the question of which of these is most likely to grow strongly in emerging markets.

In a recent interview with the Economic Times, Bharti Airtel Deputy CEO Sanjay Kapoor made the case for the giant Indian cellco becoming a major player in both areas. Certainly, the MNO is keen to be much more than a provider of highly commoditised voice and SMS. Says Kapoor: "we are moving away from share of telecoms to share of the customer’s wallet. We will do so by being in a position to offer a wide array of services."

Bharti Airtel is, according to Kapoor, "already the largest music company in the country" selling "more music than any other music company - both, in revenues and, volumes".

In terms of services aimed at India's poorer citizens, Bharti Airtel sees "a big opportunity in banking, says Kapoor, notiing that "about 85% of the country’s population is unbanked."

Diversifying the business may call for changes to the way in which the company is organised. In March, Global Mobile Daily noted that the operator is planning to split its business into separate operating units, according to local reports. That article stated that the firm would reportedly appoint new CEOs to each of nine operating units, which would include separate units for its mobile, broadband and DTH businesses.

Thursday, 7 May 2009

Chavez unveils super low-cost mobile phone

In early March, I seemed to amuse a couple of regular visitors to this blog with my jocularly-titled discussion of the telecoms sector of a selection of countries with left-of-centre regimes.

One stop on that tour was Venezuela, whose state-owned cellco Movilnet
was set to launch a low-cost mobile phone on the local market.

The launch date for this handset is coming up soon. Very soon. Tomorrow, in fact, according to a recent TelecomPaper article. So you'd better get yourself to Caracas sharpish if you fancy one.

Unveiled (see pic) by Hugo Chavez himself, the new C366 El Vergatario is the first mobile phone to be built on Venezuelan soil. Produced in partnership with ZTE of China, the phone will feature MP3 playback, FM radio, and a camera.


Wednesday, 6 May 2009

Good prospects for WiMAX as Uganda's mobile market grows strongly?

According to a recent Cellular News item, a new report from Pyramid Research predicts that mobile penetration in Uganda is expected to increase from 39.0% in 2009 to 70.7 % by 2014, driven by successful market liberalisation and increased competition.

Assuming the 39.0% is Pyramid's forecast y.e. 2009 figure, this is rather more optimistic than the 31.03% predicted by Informa Telecoms & Media.

The Pyramid report's author, Sylwia Boguszewska, anticipates that Uganda will see the second highest percentage increase in terms of mobile subscriptions in African countries - with only Cameroon's market set to grow more strongly.

Boguszewska notes that as a result of the liberalization process, the Ugandan mobile market is now contested by five mobile operators, three of which are well-established: MTN Uganda, Uganda Telecom, and Zain Uganda.

As Boguszewska explains, these longer-standing players have been joined more recently by Warid Telecom Uganda (in Feb 2008) and by Orange Uganda in March this year. A sixth entrant is set to join the fray soon. I understand that this will be an operation associated with the Ugandan arm of Indian eBusiness solution provider Anupam Global Soft, which, according to a Cellular News story from last summer, is owned by India's Reliance Communications and holds mobile and landline licenses. That same article stresses how far it might be unwise for any prospective new entrants to test the patience of of the country's regulator, the Uganda Communications Commission (UCC) with a delayed launch, recounting how HiTS Telecom came under fire for failing to launch on time. The recent launch of the France Telecom-backed Orange-branded MNO was facilitated by this failure on the part of HiTS Telecom. As was noted in Global Mobile Daily in March, France Telecom acquired a 53% stake in the Ugandan HiTS Telecom operation in October last year.

Released a little ahead of Pyramid's report was a Global Mobile Daily Uganda market update. This indicated that Uganda Telecom dominated mobile growth in 3Q08, with net additions nearly seven times as high as in 3Q07. It also reported strong interest in its W-CDMA services.

The GMD update suggests that Uganda Telecom's performance was thanks to the Libyan investor Lap Green, which acquired a majority stake in Uganda Telecom in 2Q07, and subsequently put in place an expansion strategy worth USD 115 million.

MTN Uganda, however, continued to report the highest ARPU in the market at USD9, and Uganda Telecom the lowest at USD5 in 3Q08.

The GMD update continues with an review of Internet services in Uganda, "which continued to grow in popularity, with fixed-broadband subscriptions increasing by 15% year on year in 3Q08."

"With total subscriptions reaching 4,050, fixed broadband is still the main mode of Internet access", continues the article, with mobile broadband accounting for only 500 subscriptions in 3Q08. Nonetheless, Informa Telecoms & Media estimates that mobile broadband subscriptions increased 150% quarter on quarter. According to Informa, deployments of fixed WiMAX are planned by licenced operators Infocom and TMP this year, following on from the launch of mobile WiMAX by Warid Telecom in December 2008.

Tuesday, 5 May 2009

Russian cellco happy to do business in Georgia's disputed regions

Today's Guardian newspaper carries news of the Tbilisi Government denouncing an army mutiny as a "Russian-backed attempted coup". While the Russian Government has yet to respond, "the Kremlin has frequently rubbished claims of agreements between its special forces and Georgian elements hostile to Saakashvili's government", states the article. Even from within Georgia, there are those who are not inclined to believe today's claims, which were articulated to Reuters by the country's defence mininster David Sikharulidze. Georgia's former defence minister, Giya Karkarashvili, does not believe these claimes, telling reporters in Tbilisi he was sceptical of claims of a planned coup attempt, suggesting they were fabricated by the government to dampen opposition.

Clearly, the tensions which sparked last August's conflict in South Ossetia remain unresolved. In March, I reflected here on how this impacts the telecommunications industry in Georgia, as part of a longer piece on telecoms service provision in the world's various unrecognised states, disputed territories and breakaway republics.

In that entry, I noted that Russian cello MegaFon has attracted criticism in some circles for, as UK lawyer Anthony Julius alleges, operating in South Ossetia since 2004, and in Abkhazia since 2003 without "a licence to operate in either region".

Recent news suggests that MegaFon is not uncomfortable working in these regions, both of which are recognised by the vast majority of UN member states as integral parts of the territory of Georgia.

Last Monday (27th April), Telegeography carried news of the Russian MNO completing the purchases of Aquafon and Ostelecom, two mobile network operators in Abkhazia and South Ossetia respectively. The article provides a useful recap of MegaFon's recent activities in these territories:
  • The GNCC (Georgia's telecoms regulator) won a claim that before the August conflict operations controlled by MegaFon covered only part of the former Autonomous Republic of South Ossetia, but that in August the operator unlawfully expanded its coverage area and exceeded the conflict zone to include the regions of Gori and Kareli.
  • In October 2008 the Administrative Panel of the Tblisi City Court rejected MegaFon’s appeal against the GNCC's ruling on the Russian's cellcos "unlicensed use of radio frequency spectrum within Georgia's sovereign territory".
  • In December 2008 CommsUpdate reported that the same court turned down a secondary appeal by MegaFon seeking the dismissal of a USD360,000 fine imposed by the Georgian National Communications Commission (GNCC) for operating without a licence in South Ossetia.
MegaFon's recent purchases suggest the company is unconcerned by these problems. The operator may be buoyed by news of recent news of profits rising by 37.2% in Q4 2008.

According to a recent Cellular News article, sales rose by 25%, EBITDA rose 28.5% and the margin rose to 50.8 percent from 49.4 percent a year ago. CEO Sergei Soldatenkov cites cost savings as key: "We have thoroughly managed the structure of our expenditures in response to the slowdown in economic growth." CAPEX will be cut from USD2.2 billion in 2008 to around USD1 billion this year, according to the article.