Believes it has found the opportunity in mass and low-end markets
Experience and lessons from India driving much of the change in Asia ops
SPEAK to Sigve Brekke (pic), executive vice president and head of Telenor Asia, and you realise that India has left an indelible mark on both the man and the Telenor group.
And this is not even taking into account his little bhangra jigs (a bit stiff with the shoulder movements) he gets into in rallying and raising the spirits of his Indian team after they, along with all the other operators, had their 2G licence taken away by the courts.
Or the taking to the streets dressed in black with dhols (double-headed drums) and tables pounding a rhythmic beat with arms raised and fists clenched, while chanting slogans.
No – beyond this fun part of his job, there are the invaluable learning and priceless awareness that has come from running operations in what he describes as “absolutely, the world’s most competitive telco market.”
“India is by far, the lowest tariff market but – provided you can build volume and have very efficient costs – the margins can be good,” he says.
The clearest example is that Telenor entered India with the lowest tariffs and “we will always be the lowest,” vowed Brekke in a town-hall meeting with his team there, the video of which is on YouTube (skip to the 5-min mark to watch his bhangra moves).
Despite playing the cost game, he reiterates that Telenor’s Indian operations will be profitable by the end of this year. “This proves that it is possible to make money [serving mass low income markets] – you just have to think differently.”
What’s interesting is that Telenor is applying the hard lessons learnt in India (with its Uninor unit) throughout its Asia operations. It is in Bangladesh with Grameen Phones, Pakistan with Telenor Pakistan, Thailand with Dtac and Malaysia with DiGi.
Myanmar, where it recently won one of the two new licences awarded, will be its sixth Asian market.
In Thailand, one of its hottest selling products is one-hour access to Facebook. This does not expire daily or weekly but is valid for one month.
As Brekke highlights, even those living in remote areas and financially tight will have a need to communicate and stay in touch with friends and family.
“They can’t afford one-month access, but when you understand the cash economy and can wrap your head around the fact that poor people or the mass market do not equal low margins or unprofitability, then you realise the big opportunity that waits,” he says in an interview with Digital News Asia.
This opportunity can only be tapped if you have mastered operations excellence, where a new mindset which involves outsourcing as many facets of the infrastructure as possible is needed. This is then coupled with the need to offer the right type of content to each market in the right package, and with the critical devices being in the right price range.
It is all about ‘micro thinking.’ Surprisingly, operators can actually make higher margins in this market, Brekke believes. Those margins will not come from voice but data.
Which is why Telenor Asia has embraced the slogan ‘Internet For All’ and made it its raison de entre.
As Brekke notes, “We (mobile operators) are making the same mistake with the Internet that we did with voice – thinking that the demand will only come from the cities, the middle class and above. But we at Telenor are saying, ‘Let’s leapfrog and go direct to the mass market and connect everyone.’ We feel it is a huge opportunity for us if everyone has the power of the Internet in their hands.”
But giving the masses the connectivity is still not enough. Telenor recognises that it needs to figure out what type of content will drive consumers to get online and, of course, the smartphones must be cheap enough.
Here Brekke actually feels that the phones must crack the US$50 barrier. “You need good quality smartphones which cost between US$30 and US$40 each, and I challenged Samsung with this recently,” he shares.
Such will be the demand for content from Asia’s mass markets that Brekke actually predicts Asian content providers will rise to challenge the likes of Google and Facebook in the future. He is watching what is happening in China, Korea and Japan, in particular.
Future-proof operating model
In tandem with the explosion of content, driven by access to the Internet For All, Brekke predicts a major shift in the telco industry. “In the future mobile operators will be Internet companies.”
And in arriving at this future, the industry must become much more customer-focused, just like the Internet companies of today. “This is what it will take to survive in this world,” he says.
In the telco world, keeping your eyes on the ball means being competitive in all aspects of the business, being good in marketing, and launching new products.
“We are not really customer-focused,” Brekke admits. “But we are about to move into this new state and mainly because there are very few industries which know as much about their customers as we do.”
If this sounds like big data meets analytics meets targeted marketing, it is.
At the same time, in order to become this refined and finely-tuned marketing and sales machine, Telenor will change other aspects of its operating model too.
It will reshape how it works, moving away from the telco model where the technology is inhouse, to a partnership model with outsourcing at its core, where vendors will manage its network.
Again, India has shown it the way forward here. Telenor actually has five vendors managing its network. Brekke says the complexity is justified by the price competition between the vendors.
In India, it has outsourced its entire IT, call centres and network. “We just have a sales and marketing team on the ground,” he says.
He does acknowledge that the deep-rooted telco mindset of owning the network as the ultimate symbol of differentiating from the competitors is very tough to break.
“But I really want to challenge that. In the future, and I am talking about between three and five years, it [owning the network] won’t be a differentiator anymore. But your customer focus will,” he says.
Reminded that DiGi and Celcom Axiata signed a comprehensive infrastructure sharing agreement in January 2011 where actual progresss has been very slow due to the mindset that the network is the differentiator, Brekke acknowledges: “It has taken some time and has been held back by this telco mentality of wanting to own the network.
“But we will get there,” he vows. “Your machinery is not the differentiator anymore. Your customer focus is.”
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