Eurasia Com: doing the business in Turkey and the CIS

Back in January, I wrote about the Eurasia Com conference which the good folks at Informa Telecoms & Media host annually in Istanbul, taking place in either March or April. At the time, I thought it was unlikely that I would be able to attend. Happily, it did turn out to be possible after all,  meaning that I am able to report some of what was discussed at the Conrad Hotel on 23rd and 24th March.

For those not familiar with the event or with the wider series of related conference-plus-exhibition events of which it is a part, a few words of explanation:

• Informa's Com World Series evolved from what was once known as the GSM (and later GSM>3G) World Series of events. The GSM series was itself a spin-off of the GSM World Congress (now Mobile World Congress), of which Informa was the original founder.
• The GSM World Series brought scaled-down versions of the main event to a selection of locations ranged around the world's emerging markets. In each location, the aim was to gather large numbers of decision-makers from the mobile operators of the region around the host city. These locations included cities in Africa, Asia, Latin America and Central and Eastern Europe.
• The Com World Series brand was introduced a few years ago to reflect a perceived need to offer meeting points for a broader community than just GSM mobile operators. The organisers were mindful of the idea that the previously quite sharp fixed-mobile distinction was becoming increasingly fuzzy around the world. They thought about what had once been pure play mobile operators offering other kinds of broadband service, either by building new networks (copper, fibre, fixed-wireless) or in partnership with established fixed-line operators. They thought about new mobility propositions from companies whose previous offerings had not been in the cellular space. They thought about incumbent fixed-line operators merging with previously quite separate mobile business units (think in terms of what Deutsche Telekom is doing all over the CEE region).
• Throughout this evolution, Informa's series of events has stuck to a pretty successful business model, which is still in place today - operators (and other telecoms service providers) attend for free, with most of the revenue coming from any organisations with products and services to sell into the operator space. This includes the major network technology vendors and all manner of software companies, systems integrators, consultancies etc.
• Eurasia Com is a relatively new part of the Com World Series, although this year's iteration was the fourth to take place in Istanbul, having been relocated from Almaty, Kazakhstan, where the event first took place in 2006.
• The challenge which the organisers face - and which I feel they met pretty successfully this year - is bringing together a crowd from what are quite diverse markets. A large Turkish contingent (representing the likes of Turk Telekom, Vodafone Turkey, Turkcell, Avea and Koc.net) mixes with delegates from the former Soviet republics of Central Asia and the Caucasus, making it necessary to arrange for everyone to gain from presentations in Turkish, Russian and English. If you attend next year, expect to spend some time wearing a headset which pipes the simultaneous interpretation right into your ears.

That, then, is a little about the event, its origins and how it works on the day. The challenge mentioned above (making the conference relevant for both Turkish delegates and for guests from the CIS) was dealt with this year by having elements of the second day billed specifically as a 'Turkey focus' session, thereby acknowledging that there probably do exist some differences between the concerns of the local audience of those of the visitors from the former Soviet republics where market conditions are quite different.

I am pleased to report that this worked well. As a veteran of more conferences than I care to remember, I have got used to seeing events looking busy on day one and feeling a lot less vibrant on the second day. At Eurasia Com 2010, delegate numbers were, I think, possibly even higher on 24th March than they had been on 23rd.

So, what was discussed during these two days of slideware, panel sessions and offline networking? Well, in the sessions I managed to catch, highlights included:

• Informa analyst Gemma Bunting cautioning delegates to remain open minded about real mobile penetration rates across the CIS, noting that multi-SIM usage makes accurate measurement quite difficult and pointing out that in the supposedly saturated Russian market over 20 million subscriptions were added by operators last year.
• Informa's Bunting noting that ARPU is declining sharply in some markets - Uzbekistan was given as an example - USD 9/month in 2007, dropping to USD 4/month by 2009.
• Gemma Bunting wondering about the impact of Tele2's acquisition of a mobile operation in Kazakhstan and observing that the Swedish group is known for its aggressive pricing.
• Ineke Botter, CEO of Azeri cellco Bakcell indicating the a mobile money offering from her company might not be iminent but was certainly "on the roadmap".
• Mustafa Kiral of Russian telecoms investment group Altimo indicating that his company is in the market for opportunities to acquire majority stakes in telecoms operators in emerging markets - African markets were mentioned.
• Altimo's Kiral sounding lukewarm at best when the conference Chairman asked if Altimo is considering investments in the wireline space.
• Mehmet Hasanov of Aztelekom talking up the revenue potential of the wholesale business and wondering why telcos' marketing people are generally so inclined not to get excited about it.
• A few snippets about the planned privatisation of Tajiktelecom.

I was not surprised, also, to learn more in offline conversations than I did from listening to presentations. The lesson here, for those few conference veterans who do not already know, is that it's important to get proactive at these gatherings - get among the delegates and speakers, working the room and maximising the opportunity to develop a good number of valuable contacts under one roof.

My guess is that 2009 was at least moderately challenging for conference organisers and that delegate numbers across the events industry may have been negatively affected by financial worries on the part of target audiences. My recent experience in Istanbul, however, just went to confirm that there continues to be no substitute for making face-to-face contact with potential new clients and partners and that events of this type can be a pretty good one-stop-shop for doing so. I would also particularly recommend this and other events in Informa's Com World Series for the way in which they gather crowds from given higher growth regions around the globe.

Eurasia Com: doing the business in Turkey and the CIS

Football fever goes mobile

I am a football addict (translation for US readers: soccer; I don't have anything against the gridiron game, but I don't understand why it's called "football" when only the kicker and punter use their feet). My own team drifted out of contention for any honours this year a long time ago, but I retained an interest at the business end of the 2008-09 season by watching the European Cup final and the FA Cup final in quick succession. The last throes of football fever before a long, dry summer of cricket and other minor irritations.

Football fever in Turkey, however, never seems to die down. I think of myself as a fanatic, but my dedication to my team pales, I think, into insignificance when compared to the mania for the game demonstrated by followers of Istanbul's big three clubs - Beşiktaş, Galatasaray and Fenerbahçe. Thanks to a friendly reader of this blog, I am now aware that the latter two of these footballing powerhouses have entered the mobile services space, thanks to arrangements with Avea, the cellco associated with national incumbent fixed-line operator Türk Telekom.

On visits to Turkey, I'd heard that the time is not yet right for full-blown MVNOs to make their market debut in the country - something to do with how the services would be taxed. So, as confirmed by the friendly Istanbul-based reader of this blog, the two football clubs' offering is based on a reseller business model for now.

Galatsaray's fans, doubtless disappointed with their team finishing 5th in the Turkcell Süper Lig (sponsored by the county's market-leading MNO), might be consoled just a little by the prospect of cheap calls via GSMobile. That said, I'd guess today's appointment of fomer Ajax and AC Milan genius Frank Rijkaard as team manager is probably a bigger deal.

Fenerbahçe followers, meanwhile, probably much not less annoyed at only finishing 4th in the table, can take advantage of the service of Fenercell.

Beşiktaş fans, as far as I understand, do not have a club-branded mobile offering to enjoy. The fact that they won the league title and saw their deadly rivals under-performing probably more than mitigates the disappointment, though.

Each of these clubs has a huge fan base. Access to subscriber data about a very loyal customer base could be a massive advantage to a prospective MVNO. So it will be interesting to see how these enterprises fare.

Football fever goes mobile

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 telecoms.com 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.

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