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

CIS: Belarus set for 3G while Ukraine faces delays?

President vs. Prime Minister: 3G licence auctions to be a casualty of political strife?

Political squabbling and paralysed decision-making now looks set to stymie the development of 3G mobile services in of one of Europe's worst-performing economies.

According to a WCIS estimate, there are just 250,000 W-CDMA subscriptions in Ukraine, whose total number of mobile subs stands at around 50.7 million. Just one UMTS licence has so far been awarded in the country, and the very low take-up of 3G services probably has a lot to do with the fact that the lone licensee is not one of the leading mobile operators best-equipped to maximise the value of the technology.

Instead, the single 3G licence was given to state-owned incumbent fixed-line operator Ukrtelecom in late 2005. The use of the word 'given' is quite deliberate here - only one licence was issued and this was handed to Ukrtelecom without a tender, a move which predictably caused consternation on the part of Ukraine's two leading MNOs. It was thought at the time that the point of giving the concession to the public sector telco was to make it a more desirable proposition for potential investors ahead of a planned privatisation. Nearly four years later, Ukrtelecom is still in state hands.

As recently as February this year, the Global Mobile Daily service from Informa Telecoms & Media reported that Turkcell was interested in the Ukrainian incumbent wireline operator. The Turkish cellco has already established a presence in Ukraine via its controlling stake in Life:), the country's third largest mobile operator by subcribers. I have read or heard nothing since then about the Turkish company's plans to purchase Ukrtelecom so I have to assume that this interest came to nothing. Perhaps a well-informed reader could comment.

With Ukrtelecom having failed to make 3G services a truly mass-market proposition, and mobile penetration having passed the 100% mark some time ago, the telco's private sector rivals were presumably looking forward to the opportunity to grow revenues by offering mobile broadband services. The chance to do so, however, now looks in doubt, as Sabina Zawadzki of Reuters wrote last week.

This is because the Ukrainian President, Viktor Yushchenko, has overturned a Government decision to allocate radio spectrum resources for mobile phone network use, thereby casting doubt on a 3G licence tender scheduled for next month.

Things certainly move fast in the East European country. It was only late last month that Ukraine's National Communications Regulatory Commission announced plans to sell a single 3G licence.

The President's decree, referring to the spectrum's use by the military, cited the need to saferguard Ukraine's defensive capabilities.

This could, of course, be a quite genuine concern on the part of Mr. Yushchenko. Those who watch the country's political scene, however, could be forgiven for wondering if the 3G auction might really be a casualty of the poor relations between Yushchenko and Ukraine's Prime Minister, Yulia Tymoshenko, a former ally of the President.

Ms. Tymoshenko and Mr. Yushchenko have not seen eye-to-eye for some time, with their difficult relationship characterised by some uncomfortable clashes. In August 2008, for example, the President's office accused Ms. Tymoshenko of betraying national interests by not backing Georgia in its conflict with Russia. In January this year, when Russian gas reached Europe via Ukraine after a two week interruption of supplies, Yushchenko said the deal clinched by Tymoshenko was a "defeat." Moscow and Kiev had been locked in a prices and debt row that cut supplies to about 20 European countries. As this year unfolded, the Ukrainian Parliament Parliament sacked Foreign Minister Volodymyr Ohryzko, a Yushchenko ally, citing his aggresive stance against Russia, and dismissed another Yushchenko ally, Defence Minister Yuri Yekhanurov, over allegations of corruption in his Ministry.

With this strife in the background, there exist precedents for Mr. Yushchenko blocking proposed transactions favoured by Ms. Tymoshenko's Government. Last month, for example, he halted the privatisation of the Odessa Port plant two weeks before its auction.

Yushchenko and Tymoshenko are both expected to run in a presidential election on 17th January, with polls showing the PM would face former premier Viktor Yanukovich in a second round. Yushchenko's popularity ratings are apparently in single digits.

Perhaps this process will need to play out before Ukraine's mobile operators can expect to get their hands on 3G licences.

MNOs in neighbouring Belarus, meanwhile, have received more positive news about the prospects for mobile broadband there. To date, only second generation mobile services are available from the country's four cellcos. The third-placed player (by market share), BeST, formerly a state-owned company 80% of which was acquired by Turkcell in 2008, in July awarded Chinese vendor ZTE a contract to build a new UMTS network. This followed the allocation of suitable spectrum to BeST by the State Commission for Radio Frequencies (SCRF). Since the takeover by the Turkish MNO, BeST has adopted the same Life:) branding as the Turkcell-controlled operator in Ukraine.

Now, according to the Belarusian Telegraph Agency, a working group for the SCRF is supporting the initiative of the Information Technologies and Communications Ministry to allocate UMTS radio bands to MTS (owned by the giant Russian cellco of the same name) and Velcom, which is controlled by the mobilkom austria group.

My understanding is that both Belarus and Ukraine have the somewhat underdeveloped wireline infrastructure which can offer good opportunities for mobile operators to grow wireless broadband revenues. Whether the economic conditions in both countries will allow for really strong mobile broadband growth, though, remains to be seen. With licensing delays in Ukraine, perhaps it is in Belarus that industry watchers will get the earlier opportunity to track the customer adoption of 3G services in this part of the world.

CIS: Belarus set for 3G while Ukraine faces delays?

Zain (Africa) Speculation Watch: Episode 11 - Enter Etisalat?

Etisalat's Jamal al-Jarwan: "We are interested in Zain."

Episodes of the Zain Africa Speculation Watch mini-series are not usually aired on consecutive days. A highly relevant news item yesterday from John Irish of Reuters, however, could not pass without comment here.

Irish reports that Jamal al-Jarwan, CEO of International Investments at the UAE's Etisalat has told the news agency that his firm is interested in buying a 51% stake in Kuwait's Zain group. The Etisalat man, however, declined to comment on whether the Abu Dhabi-headquartered group was already talking to Zain about the possibility of taking a stake. Reuters was also quick to pick up a 'no comment' response from Zain spokesman Ibrahim Adel.

Intriguing stuff, then. Given that in the African context, the Zain and Etisalat footprints only overlap in Nigeria, and given that Jamal al-Jarwan has said his company is interested in Zain "as a whole", I suppose we must assume that the UAE telco is equally keen on the Kuwaiti firm's African and Middle Eastern assets. This opens up the possibility of a rather different scenario than the one discussed at length here and elsewhere in recent weeks, i.e. the prospect of a Europe-based group such as Vivendi acquiring just Zain's African operations.

How likely, then, is a deal of this kind? I can't even begin a detailed analysis here today, but perhaps it's worth observing that Etisalat's 2Q results suggest the company is in better health than some might have expected. While the UAE telco's 2Q net profit of USD 656.1 million was down 19% percent from a year earlier, this beat forecasts from analysts surveyed by Reuters earlier this month. The news agency's Firouz Sedarat reported that Etisalat is confident its growth in revenues achieved will help the telco to expand and develop its national and international business units. The company reports reduced operational expenditure in the first half of this year and a strategy of being more selective than before in choosing its international investments. Sedarat writes that Etisalat has been expanding overseas as it faces stiffer competition in its home market, where some analysts have predicted that job cuts could reduce the population, thereby impacting on the company's profits and those of rival telco du.

Acquiring a controlling interest in Zain would certainly be an aggressive continuation of this international expansion strategy.

A more modest - but nevertheless significant - move would be the purchase of a unified fixed/mobile licence in Libya. The availability of this concession was discussed here just a few days ago. At the time, I focused a bit more on the interest that Turkcell is said to have expressed in this opportunity. Now, though, we have more information about Etisalat's potential bid, thanks once again to John Irish of Reuters, who wrote yesterday that the UAE telco would invest at least USD 500 million in the network if it won the competition.

Dubai-based journalist Peter Cooper agrees that geographical diversification into emerging markets could be a powerful counterbalance to the numerous challenges Etisalat faces at home in the UAE. However, Cooper feels there exists the possibility that overseas investments "may not shine or [may] even prove disappointing" and that growth for the company may be difficult to achieve. Cooper reckons "a fair assessment might be that Etisalat is entering a period of stagnation or modest decline" and that the only strategy for safeguarding or raising profits, therefore, is to cut the cost-base. He notes that many large corporations around the world are currently going through this painful process, and after a long period of high growth it would be surprising if useful economies could not be found in any company. Staffing levels are the most obvious focal point for any strategic review at Etisalat, Cooper believes, along with a review of operational efficiency.

Peter Cooper's article was written ahead of the announcement of Etisalat's interest in acquiring a controlling interest in Zain. I wonder how far this development will cause him and others to revise their view of the UAE group's prospects?

Zain (Africa) Speculation Watch: Episode 11 - Enter Etisalat?

Opportunities and challenges for mobile players in Iraq and Libya

A number of telecoms news services this week picked up a story from Waleed Ibrahim of Reuters, who writes that Iraq's Finance Minister Bayan Jabor has announced the approval of two new mobile phone licenses for auction soon, one of them for a 3G network.

So, which telecoms groups might fancy setting up shop in what is the world's sixth most unstable country according to the 2009 Failed States Index produced by Foreign Policy magazine and the Fund for Peace?

A Cellular News piece, reporting the same item, states that Etisalat and Turkcell would be interested in bidding for a mobile license in the country. The Turkish cellco certainly seems to have a taste for adventure, having established an operation in Belarus, a country which under the leadership of President Alexander Lukashenko has been barred since 1997 from membership of the Council of Europe for election irregularities, and which has also attracted criticism for its record on human rights and freedom of the media.

Turkcell, then, is not shy of a challenging environment, something which is also evidenced by the operator's thwarted attempt to enter the Iranian market in 2004-2005. Earlier this month, DevelopingTelecomsWatch visited the issue of whether involvement in the Iranian market - and in the Syrian market - could derail South African telco MTN's mooted merger with giant Indian cellco Bharti Airtel. This is because banks involved in the transaction might fall foul of restrictions on dealing with these two countries which are set by the U.S. Treasury's Office of Foreign Assets Control (OFAC).

One country which might have proved problematic in these terms until quite recently is Libya. Now, however, relations between the USA and the North African country have improved to the point where such concerns should not be an obstacle to companies seeking to invest in Libya - and it seems Turkcell are keen to take advantage of this improved investment climate. According to a recent TelecomPaper story, the operator plans to bid for a licence to provide fixed and mobile phone services in Libya, announcing that the country's stable economy and per-capita income indicates the domestic telecoms market has high growth potential.

In February, the Global Mobile Daily service from Informa Telecoms & Media reported on the availability of this new licence, noting that the General Telecommunication Authority (GTA) of Libya had launched an international tender for a mobile and fixed-line concession in the country. As this report indicated, the Libyan telcoms market is currently monopolised by state-owned incumbent fixed-line operator General Posts and Telecommunications Company (GPTC), which owns 100% of mobile operators Libyana and Al-Madar. According to the GMD report, the GTA hopes the entrance of a new player will stimulate the country's telecoms market. That said, the status quo does not seem to have discouraged Libyans from embracing mobile technology and it should be stressed that the country is not under-penetrated. According to the World Cellular Information Service, Libya's mobile penetration rate is currently a hefty 141.58%. I am therefore a little uncertain what Turkcell might mean when it refers to the country's high growth potential. Perhaps the relatively low take-up of 3G services to date offers a nice opportunity. Or perhaps Turkcell is most excited about the chance to challenge the incumbent telco in the fixed-line voice and broadband space.

The Iraqi mobile market would appear to offer a lot more room for growth for Turkcell and any other companies keen to pick up one of the two new licences. Mobile penetration there stands at 67.47% according to WCIS.

However, aside from the general instability of the country mentioned at the top of this article, Iraq offers a challenging environment for mobile operators in some other ways. The imposition of fines by the authorities, for example, seems to happen on a fairly regular basis. Global Mobile Daily reported on 28th May that all three of the country's mobile operators had been fined for poor service, with Zain Iraq, facing the heftiest fine (USD 18.6 million) and Asiacell and Korek Telecom each being fined a little more than USD 1 million. The report notes that this is not the first such penalty for Zain, which had previously been fined USD 9 million.

This, however, does not appear to have prompted Zain to consider withdrawing from Iraq. A Reuters article last month quotes the group's CEO Saad al Barrak as saying the company will continue to operate in Iraq: "It's not a crisis at all. It's normal... to get some penalties here and there," Barrak said. According to Zain, the poor quality of service which caused the imposition of the fine is due to jamming by U.S. forces trying to prevent insurgents from setting off bombs.

Asked by Reuters whether Zain planned to halt its operations in Iraq in response to the fine, Barrak replied: "never."

This is not to suggest, however, that we can expect Zain Iraq's management to accept Government criticism and intervention in meek silence. A week before his group CEO's comments, Ali al-Dahwi, who heads up the operation in Iraq, used strong language to protest how his company is treated by the Iraqi authorities. "We kept our mouths shut for a long, long time from speaking the truth because this has something to do with the safety of the Iraqi people. One hundred percent we are sure (it is) interference and jamming," he told Reuters.

Dahwi said Zain Iraq tried to talk to the Government to explain why the service was suffering but met "deaf ears." He claims that the decision to impose the fine was based on "hearsay," rather than scientific proof. "The more we played Mr. Nice Guy, the more we were abused," he said. "It seems to me there are many members of this government who talk the talk about encouraging investment but when it comes to walking the walk, the only thing they care about is their political position, not Iraq, how to get reelected."

Iraq, then, is a market not without challenges for those courageous enough to invest there. I will be interested to see if Turkcell, a company I've followed closely for some time, will indeed make this move - and make the move into Libya, where it's less obvious to me that there is good room for growth.

Opportunities and challenges for mobile players in Iraq and Libya

Mobile Merger Mania Mystery Tour 2: No Turkish Delight for T-Mobile?

Richard Moat: What's in store for the recently-appointed MD of T-Mobile UK?

We're going a bit off the usual 'emerging markets/developing countries' beat again today, I'm afraid. Bear with me. For a few reasons, this is a story I care about.

Having worried a little, however, about the possible effects of a Vodafone UK-T-Mobile UK merger on the area where I live (the northern bit of London's commuter belt), it now looks as if my fears are not to be realised.

Well, that's if I choose to believe my former colleagues at Informa Telecoms & Media. Informa's telecoms.com news site ran an article on Monday that seems to suggest any buyout of T-Mobile UK now looks unlikely. The article mentions a recent announcement by UK telecoms and media watchdog Ofcom which indicates that the regulator is satisfied with the level of competition in the country's mobile sector. According to analysts, the article contends, this means that the change caused to the UK mobile market by any consolidation would risk drawing regulator attention. One such analyst, Michael Kovacocy, of Daiwa Securities, is quoted: "Assuming rational operator behaviour, we would be inclined to believe that an already weak case for buying T-Mobile has been made weaker for the big three UK mobile players," says Kovacocy.

Although he also features a simular quote from Michael Kovacocy, the tone of an article written on the same day by Dominic White of Mobile News, however, is quite different. Two months ago, White asked whether recently appointed Richard Moat was about to become the shortest-serving MD ever of T-Mobile's UK operation. White feels now that this possibility "seems more likely after it emerged that Deutsche Telekom has hired investment bankers at JP Morgan to explore so-called 'strategic options' for the group." White argues that more often than not, language of this sort is code for putting the business up for sale.

As well as my fears for how a sale of T-Mobile UK might affect my local area (where the cellco has its HQ), I'd also be disappointed to learn of Richard Moat not being given the chance to get stuck into his new job, not least because I found him to be a friendly and helpful contact when I was working more actively in Europe than I am now.

For a long time, I took advantage of my familiarity with Central and Eastern Europe (having lived and worked there in the early-mid 1990s) to organise and host telco sector conferences and networking events in locations such as Prague, Budapest and Bucharest. In the latter, I met Richard Moat for the first time. Richard was then heading up Orange Romania, where, during his four year stint at the helm, revenues grew from from EUR 624 million in 2004 to EUR 1.31 billion in 2008. The cellco also retained its market-leading position, keeping just ahead of Vodafone Romania and dealing with a trading environment made more competitive by the arrival of new entrant in the mobile space RCS&RDS.

While speaking at the 2006 version of the Informa Telecoms & Media CEE region conference in Bucharest did not demand a major time commitment from Richard, I found he was happy to jump on a plane and take a day out of the office when the event moved to Prague the following year. As well as making a great presentation in Prague, Richard made himself available for a chat, during which he shared useful insights about the telecoms sector in Romania and the wider region. My impression is that Richard is the kind of CEO really appreciated by analysts and journalists as well as conference organisers because he is keen to find the time to share his views and contribute to discussions around issues facing the industry. During his stint in Romania, Richard seems to have been similarly generous with his time when talking to local telecoms sector magazine/news portal Comunicatii (which, by the way was always a useful media partner for my events). This interview with Comunicatii's Ion Vaciu, recorded in February, is an example of that:

Of course, Richard Moat - and Deutsche Telekom - may be able to stick rather than twist. As Dominic White of Mobile News notes, Germany's incumbent telco could hold onto its UK mobile business, but he contends that "what is known is that Vodafone has had a peek at the business and is considering making a bid that would prompt a massive shake-up of the UK mobile sector."

White discusses an issue previously raised here at DevelopingTelecomsWatch - that if Vodafone were to try and buy T-Mobile UK, or to merge their UK businesses into a 50:50 joint venture, it would command more than 40% of the UK market, which would be more than enough to attract the attention of the Competition Commission, which typically investigates any deal that gives a company more than 30% of a particular market. White notes, however, that analysts think a deal might get through the hoops, pointing out that in markets such as France and Germany there are operators with more than 40% market share. White also reminds us that the UK is the only major European market with five mobile networks, a throwback to the turn of the millennium when the government raised GBP 22.5 billion selling 3G licences, including one to the new entrant 3, which was mentioned by the telecoms.com article as the only contender for a deal with T-Mobile UK which would not attract a response from the regulators. This point is made, I assume, because of the late entrant having a significantly smaller share of UK mobile subs than any of the other four network operators.

According to WCIS, the UK mobile market is currently split as follows in terms of market share:

1. O2 - 29.27%
2. Vodafone - 21.38%
3. Orange - 21.35%
4. T-Mobile - 21.31%
5. 3 - 6.69%

My feeling is that if 3 UK were somehow to tie-up with T-Mobile UK, it would surely be a case of the latter purchasing the former. I say this because of how much I've read lately about 3's parent company Hutchison Whampoa looking to raise cash rather than spend it. For example, the group has confirmed it is in talks to sell its stake in the Orange-branded Israeli MNO Partner. The group may also sell a stake in 3 Italia to investors from the Middle East, according to a Cellular News story earlier this month.

Dominic White believes that the UK 3G auction held earlier this decade, "and the way it was rigged to generate maximum value for the government" has hamstrung the mobile industry in this country ever since - too many networks and tremendous pressure on each player's profit margins. He notes that Deustche Telekom has already written down the value of T-Mobile UK after a year in which it underperformed the rest of the industry. According to White, Vodafone is considering a bid within the range of GBP 2.5-3.4 billion.

For Michael Kovacocy, these numbers do not look right. In the telecoms.com article, he warns any purchaser against overpaying and argues that only "a bargain basement price" of GBP 1-2 billion makes any sense.

Terry Sinclair of Citigroup, however, likes the idea of Vodafone picking up T-Mobile UK. In Dominic White's article, Sinclair is quoted as saying that the combination could boost Vodafone’s earnings by GBP 200-300 million within three to five years. Needless to say, continues White, that would mean a lot of cost cutting, which is the main reason for the tie-up: "if your revenues aren't growing enough the only way to boost profits is to squeeze your cost base." He feels that Vodafone would also be able to put more customers over one network and would have extra buying power and a greater footprint to roll out new products and services.

If it really is as hard for mobile operators to make good margins in the UK as has been suggested here today, this could provide a rationale for Deutsche Telekom seeking to get out of Britain and into somewhere which offers better prospects and/or a neater complement to the German telco's many operations in Central and Eastern Europe. DTW has previously noted suggestions that a favoured option could be some form of asset swap with Vodafone, whereby Deutsche Telekom would get its hands on Big Red's Turkish operation, which has struggled to compete effectively with market-leading Turkcell.

A fairly wide range of opinions, then, on whether the UK mobile market is about to consolidate. So it remains worth watching.

Mobile Merger Mania Mystery Tour 2: No Turkish Delight for T-Mobile?

Double A Side: Zain Africa Speculation Watch: Episode 8 + Iran 3rd Mobile Licence Saga Update

Vivendi's Lévy: no comment on Zain Africa rumours
Picture: ⓒ 2008 The IBTimes Company

Intrepid reporters from Reuters can often be relied upon to grab telecoms big hitters on the sidelines of conferences and other events. Reuters people seem to be well trained in the dark art of thrusting a mic at the luminaries and bagging a headline-worthy quote.

Last month, for example, the ambitions of Russian cellco MTS were revealed to a Reuters scribe on the sidelines of the of the St Petersburg Economic Forum.

This week, however, the news service has done quite so well. A Reuters reporter sprang on Jean-Bernard Lévy, Chairman of French media and telecoms conglomerate Vivendi, who was present yesterday at a forum in Aix-en-Provence, France. Regular readers of this blog, particularly those gripped by the drama of Zain Africa Speculation Watch the mini-series should be able to guess which question was asked. The answer? Not too illuminating.

Levy declined on Saturday to say whether his company is interested in acquiring the African operations of Kuwaiti telecoms group Zain. "I have no comment to make on this," was Lévy's reply.

So we are none the wiser - unless you're the kind of conspiracy theorist who infers something significant from such a minimal response.

I was one of those for whom the notion of Zain selling its African operations popped up out of nowhere. I remembered colleagues returning from a pan-African telecoms sector conference and reporting that Chris Gabriel, CEO of Zain's African unit had spoken in terms of having a war chest for further acquisitions. Much had also been made of Zain's stated ambition of being a major global player and of the strategic important of Africa in that context.

Zain Africa Speculation Watch kicked off on on 12th June, almost as soon as I had started to hear rumours. Another reason this was all rather surprising was that only days before that, there had been suggestions that Zain might be looking to acquire a significant asset on the African continent -France Telecom's stake in market-leading Egyptian cellco Mobinil. Readers interested in that part of the world cannot have failed to notice the long wrangle that has gone on between France Telecom and the other major shareholder in Mobinil, Orascom Telecom, itself a Cairo-headquartered company.

This tussle seems to have been initiated when the two sides found themselves at variance over strategy for Mobinil. According to Alastair Sharp, the Egyptians were keen to invest more heavily than the French wished to, disagreeing over Mobinil's budget and expenditure, marketing strategy and start up of 3G services. Since kicking off in April, this has become quite a heated business, with famously outspoken Orascom Telecom Chairman Naguib Sawiris accusing France Telecom of being "in the business of value destruction".

Sneaking onto the end of today's musings - by virtue of being Zain-related - is the matter of Iran's third national mobile licence. In common with Zain Africa Speculation Watch and the Sawiris-France Telecom battle, this is another fairly long-running story to which it is probably not unfair to apply the label 'saga'.

The saga started with the UAE's Etisalat and local partners winning the valuable Iranian concession, which comes with a useful period of exlusivity regarding the provision of 3G services. This later went sour and by mid-May, I was noting here that Zain appeared to be waiting in the wings to pick up the licence and get into the large, growing and still helpfully under-penetrated Iranian mobile market.

This is now looking unlikely.

On Friday, TeleGeography was picking up reports from an Iranian newspaper which indicated that a new tender will be held to find a strategic investor to launch the country’s third national mobile network. Iran’s telecoms minister Mohammad Soleimani was quoted as saying that Zain had been offered the third operating licence in May, but had "not fulfilled obligations".

A Cellular News take on the same story talks in terms of confusion about whether Zain had not only been "offered" this licence but had also actually secured it, mentioning reports from mid-May about the Kuwaiti company having been "awarded" the concession.

The article continues, however, by noting that Zain said it had only been invited to renew its negotiations as the leader of the consortium that came second in the original bid process. As the article states, "if Zain was formally awarded the license, then it has kept very quiet about it."

For seasoned Iran watchers, this is all a bit déjà vu. As the Cellular News piece reminds us, there was also controversy over the country's second national mobile licence. This had been snapped up by a company 51% owned by Turkcell in 2004, but the deal fell foul of a clamp down on foreign investments by conservative forces in Iran. The Turkish cellco was accused of having links with Israel - clearly a complete no-no. After a year of wrangling, the licence was reissued to South Africa's MTN, which was happy with a minority stake in the new operator.

Two sagas, then, that I enjoying watching. Happily, a little news about both was breaking at around the same time. Hence this Double A Side update from DTW.

Double A Side? Use of that term betrays the fact that I'm old enough to have been brought up on vinyl. Having turned over a chunk of Sunday to writing this, perhaps I'll slap something mellow on the turntable and just leave the sagas to one side for now.

Double A Side: Zain Africa Speculation Watch: Episode 8 + Iran 3rd Mobile Licence Saga Update

Azerbaijan: as the Ministry pushes 3G licences, the market is eyed by giant Russian cellco

It's time to take a break from writing about the rumoured sales of Zain's African assets to Vivendi (or whichever potential buyer is the flavour of the day), although I daresay there will be cause to return to that theme before too long.

Instead, I wanted to take the opportunity to take a look at a part of the world about which I got to learn a little while producing three annual iterations of a conference for telecoms execs from the former Soviet Republics of Central Asia and the Caspian region. One of these countries, Azerbaijan, is, according to recent local reports, moving closer to making 3G mobile licence awards, with the the Ministry of Communications and Information Technologies planning to distribute spectrum by the end of this year.

This is apparently not the Ministry's first attempt to bring 3G services to Azeris. According to a brief TeleGeography report, the MCIT submitted a 3G frequency use proposal to the country's cellcos in July 2008, "but few developments have emerged since."

Now, according the the Minister, Ali Abbasov, all the three of the country's GSM operators have already applied to the Ministry for 3G licences. These three operators are: Azercell, Bakcell and AzerFon (brand name: Nar Mobile), with market shares of 58.66%, 22.29% and 18.00% respectively as of March 2009, according to WCIS. A fourth player, CDMA operator CATEL/FONEX has just over one per cent of the country's mobile subs.

Given that oil-rich Azerbaijan is potentially quite an attractive market, it is striking that only one of these operators is associated with a significant multi-country group - market-leading Azercell is controlled by Fintur Holdings, a joint venture between giant Scandinavian telco TeliaSonera and Turkey's Turkcell. Fintur Holdings, via a mix of majority stakes and management control arrangements, is also active in Kazakhstan, Moldova, Georgia, Uzbekistan, Tajikistan, Cambodia and Nepal.

Strikingly absent from the Azeri market are big Russian cellcos, two of which, Vimpelcom and MTS, have each built a multi-country footprint across other parts of the former Soviet Union. This may be set to change, if recent comments from the latter company's CEO are interpreted as representing a firm commitment to further international expansion.

Speaking to Reuters on the sidelines of the of the St Petersburg Economic Forum earlier this month, MTS CEO Mikhail Shamolin said "there are two countries (where) we are not present yet and I believe we should be present... Kazakhstan and Azerbaijan."

Shamolin added that MTS is not thinking in terms of start-up operations in either country, which seems sensible given that mobile penetration in Azerbaijan and Kazakhstan stand at 71.11% and 93.81% respectively according to WCIS. "We are looking at acquisition opportunities there," said Shamolin. "We are waiting until the right time comes. When this opportunity shows up then we will consider it carefully." He added that the company was not holding specific talks with any Kazakh or Azeri firms.

In Azerbaijan, you would have to guess that TeliaSonera and Turkcell will look to hold on to their market-leading MNO. So let's see which of Bakcell or Nar Mobile might be targeted for an MTS takeover.

Azerbaijan: as the Ministry pushes 3G licences, the market is eyed by giant Russian cellco

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

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:

• Gulnara Khasianova, General Director, SkyLink
• Donna Kordner, CEO, Tele2 Russia
• Michael Chobanyan, Managing Director, CDMA Ukraine
• Garrett Johnston, Group Director of Strategic Marketing, MTS
• Pavel Kuznetsov, CEO, Central Telegraph

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.

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

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 snags for strategic investors eyeing Iran

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."

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