World News Telecom operators in SAMENA facing stiff competition from Internet-based companies

Telecom operators in SAMENA facing stiff competition from Internet-based companies
 

Telecom operators in SAMENA facing stiff competition from Internet-based companies is originally published by and copyright of The Prospect Group.



What are the major issues that telecom operators are facing in South Asia, the Middle East, and North Africa (SAMENA)?

BOCAR BA: The question is very simple. As a telecom operator, are we going to survive tomorrow? What is the future for telecom operators? The reason for that question is that today we need connectivity. We need super broadband. If you look at the numbers, in our industry, we have about 3 billion people connected. Every day we have applications developed that are hungry for bandwidth. So we are witnessing a data tsunami on the network. This is the current situation today.


Now we all talk about, in term of trends in the market, IoT, the Internet of Things. Just to give you some prediction and forecast, for one mobile subscriber, we will have 10 connected objects. We are struggling today to provide broadband and connectivity bandwidth. What will be the situation be tomorrow if we have 50 billion connected devices? It’s a problem. It’s a huge challenge that we have to face. How do we go about it? Investment. We need to invest into infrastructure. To invest, we need to have friendly policy for investment. This is where the dialogue starts with the government. On one side investment, we need more spectrum. We need also taxation, tax optimization, price of the spectrum. In some countries worldwide we have irrelevant taxes applied to the telecom sector.


So these are the different discussion that we have engaged with the regulator on one side, policy makers, Ministries of Finance, to see how we can come up because today everybody knows and that’s a given that ICT is a vertical, a sector that will foster growth. If we integrate it with healthcare, aviation, transportation, e-Government. So it’s critical for the lifestyle of our future generation children to have ICT as a foundation of the digital economy.


In some of the countries that fall within your geographical area of reference, telecom operators are still government linked and/or government owned. In these markets, what does the model for investment look like going forward?

BOCAR BA: In many countries in the world, yes we have a complete real private sector. In some other countries, the government is behind the private sector. Now, even though it’s owned by the government it does not mean that it is run as a public company. It is completely, in terms of governance, run as a private company. We have this case in many countries in the Middle East. Now, I believe this is the first step where government is initiating activities. We have Telecom operators.


As we go, those companies will be opened for privatization. So it’s a gradual privatization. And we are not facing today any problem, because we still have competition. We have investors coming into those markets willing to compete with established companies. And we have seen it in the Middle East, we have seen in Africa, where for example, companies are owned by the government, then they call for privatization and then slowly by slowly we are having the government getting out of that company. We have the case in Africa in Senegal. We have the case in Turkey, Turk Telecom for example, its minority shareholding is the government. So I believe the situation is improving and it does not stop the competition.


We see a lot of consolidated players operating across borders in SAMENA. How will continued merger and acquisition activity impact infrastructure investment?

BOCAR BA: Merger and acquisition is not a model that will facilitate investment. It’s by default. Given the current market conditions that we are seeing. I believe in the near future, it’s going to be very difficult for small operators to sustain and to remain. We are heading towards major acquisitions that will happen, consolidation, and that will be the only way to survive. Now those, the reason of those acquisition is not because of the traditional competition. It’s because we have new type of competition coming up in our industry and we need to face that competition. This is the reason why we are going through consolidation.


How are the operators working to face these new, internet based, competitors in the market?

BOCAR BA: The arrival of so called internet companies. We call them internet players. The challenges created by these people is not really in term of market share. It is about fairness of the competition. When I was referring about type of competition, today the competition is regulated in our market. These new players who are a part of the eco-system and we need to deal with them, we need to collaborate with them. But also at a governmental level, they are not under our ministries and the regulator’s jurisdiction. So we consider them non-regulated competitors. So it is an unfair competition. So what are we saying? We are saying, yes we are welcoming you because we need your application. They provide lots of value in our eco-system. The way that our governments are managing this competition, we consider it as unfair. Hence we need to sit around the table, see how those new players could join our market, add value, but being regulated as we are regulated.


The other way around would be to have more incentives for the current player which are reporting to the current jurisdiction so we can face those new competitors. So it’s a dialogue. This is the initiative that we are taking is, we are talking to government, helping them, educating them about what’s happening. But at the same time, we are discussing with those competitors to see that, based on the investment that we have made on our network, they are more than welcome to use our network, provided that they share the cost of the investment, the CAPEX.


How would respond to critics who say that this is much easier said than done?

BOCAR BA: Yes, absolutely. But it’s a very long dialogue because it’s easy to say that I am talking from an operator perspective, but at the same time that’s the reality. That’s the reality. Operators of spending billions of dollar to build an infrastructure. They belong to the private sector. Investors need to have a return of investment. And that was not planned in our forecast. So, we call for a collaboration, for a discussion to see how we can join hands to serve the same person which is called by the government, consumer, that we call customer.


What are some of the key consumer trends in the region?

BOCAR BA: Well, the consumer is becoming more and more demanding. I believe there is work that we haven’t done enough of today, which is to educate much more. The consumer is very well aware about the technology. But if they want to have an optimal use of the technology, they need to have connectivity. If they want to have the best service, we need to educate them about the cost of service. So we are looking customer care. We want to make them satisfied. We want them to enjoy the digital dividend.


But it has a cost. It is unfair that we are the only one bearing the cost on our shoulders. Someone has to pay the bill, whether it’s within the eco-system, whether it is government, us, consumers, advertisers, internet players, or we all have to share the cost. But, yes we would like to serve them. We would like to provide them the best quality of service. We have those data tsunamis coming into our network. We need to increase the capacity. It has a price. We have to figure out, to develop a new model where at a reasonable and affordable price, they can have the best service. And this should be done with all the stakeholders.


Telecom operators in SAMENA facing stiff competition from Internet-based companies is originally published by and copyright of The Prospect Group.