“We are hurrying to be number one”
Lars Nyberg, President & CEO of TeliaSonera, a Finnish-Swedish telecommunication company, which holds 80 percent stake in Spice Nepal Pvt. Ltd., the operator of Mero Mobile, was in Kathmandu to announce an ambitious plan to invest USD 250 million in the next two years in Nepal. Excerpts from an interview:
What’s the major focus of your visit here?
We have made a major investment in Nepal. I was part of taking the decision to invest here and I wanted to come and meet the people here.
Could you please share the relation of TeliaSonera with Spice Nepal?
We have acquired the majority of the companys stake (80 percent), so we have consolidated Spice Nepal into TeliaSonera. We believe firmly that you need a local partner in every country you go to because every country is special. We want to be a Nepali company and we cannot become one without a local partner. We know how to run a mobile network; we have done it for many years. We are good at it. That’s what we bring to our local partner. On the other hand, our local partner needs to explain us how the market here works, how the consumers here think. As telecommunication is a regulated market, you need to have relationship to understand the local government and its priorities.
So what is your understanding of the Nepali market and its consumers so far?
Though it’s very early for me to comment on this, it is clear that Nepal is a country in its early development phase. In other words, it is not a rich country. But there are quite a number of people here and we believe that Nepali economy will develop overtime, whether through hydroelectricity or through your 7 million people who are working abroad. As the Nepali economy grows, the people will want to be able to communicate and we know how to help them to do that. We want to build a very good mobile network in Nepal. We take three things as our USPs – quality network, customer service and competitive pricing.
You are using GSM technology but CDMA too is growing fast and gaining foothold in the rural areas of Nepal. What are you thinking in this regard?
We have been focusing on GSM standard everywhere we operate and we are now even investing in the next generation – not even 3G but 4G – LTE (Long Term Evolution) technology. You have 2G in Nepal and you may call it 2 and half G as there is a little bit of data transfer facility as well. Now we have here a little bit of 3-G as well which can transfer more data. With 4G, you can process tons of data. My opinion is that for at least a couple of more years, the next thing for Nepal will be voice mail. Our home markets, Sweden and Finland, have become data markets – voice is becoming less and less important and data is becoming more and more important. Nepal is not there yet. It will get there eventually but right now and for a number of years, it’s a voice market.
How has been the performance of Spice Nepal since TeliaSonera took over?
We are rolling out the new network, which will ensure better coverage. We are covering about 30 percent of the population today and we want to cover at least 85 percent. I am in a hurry, so it can’t take years. It has to happen now and, to cover those additional people, we need to improve the quality of network. But it is not that simple to expect too much. It’s a complex issue. You cannot just put the switch on and all of a sudden everything works. It doesn’t work that way. You have to put the best management and best processes in, then you have to invest highly in the network. That’s what we have been preparing and doing and I expect to see some real increase in the number of sites being operational in the coming couple of months because our plans for coverage by the end of this year are very ambitious.
How do you take the competition from government-owned Nepal Telecom?
Competition is good. And I think Nepal Telecom has done a reasonably good job. I think if we put all our efforts into Spice Nepal, we can give them a real match. It is good for the Nepali people because competition is good. I think our biggest opportunity lies within Spice Nepal. I don’t think we are doing some really good job to be honest with you. Look what we have done in the last couple of years. I think we can do much better.
How do you project the growth prospects?
Well, we didn’t invest in Spice Nepal to make quick profits in 2009 or 2010. Of course we want to make profits but fundamentally I believe that mobile penetration in Nepal will be 100 percent maybe in the next ten years. Just consider the stat – 28 million people, 60 percent penetration going to be 100 percent – I want to be a part of that. The penetration is 140 percent in Sweden so I think we can do it here as well. I want to be the number one and we have to be much better to get there. And I think we can do that.
You mentioned that the global financial meltdown hasn’t had an impact on your business. How have you been managing to stay unscathed?
Well, the question that I got in the press conference was whether we have money for that big an ambition. And I said, yes, we have the money. We hadn’t been affected by the global crisis till the end of 2008. Of course we will be affected like everybody else. But I think telecom companies are affected less by the global financial meltdown as compared to automobiles and other industries. We are a successful telecom operator in 20 countries. We are number one in most of these countries and we have the resources to invest in Nepal.
What sort of basic challenges have you faced while operating in developing countries? How fundamentally does it differ from operating in a developed country?
There is a big difference – political systems are different. I mean you have seen your political system very, very radically changed in the last couple of years and may see the same for a couple of more years. We have more stable political system in our country. Infrastructure, or the lack of it, is a big issue. We have to put generators at our every base station here. We don’t do that in Sweden because we always have power. We have battery back-up for half an hour because the power is always back in half an hour. But that is not so here. And I think also the bureaucracy is different. There is bureaucracy in the developed countries as well, but I feel it’s a little bit difficult to deal with the bureaucracy here. Maybe we don’t yet totally understand how it works here. It sometimes takes longer to be familiar with those things. But we will learn for sure.
Are you considering scaling down your service charges to make it competitive with that of Nepal Telecom?
We realise that the average revenue per user is lower here for us than in other countries. But there are many examples where markets can be successfully invested in even if the average revenue per user is pretty low, maybe a couple of dollars less. That’s our challenge for sure. We have to make sure that we can make money even if the consumer spending is low. And I am pretty sure we can do that. I know the roaming and inter-connection charges are some issues but we now have agreements with other operators, so we will sort that out soon. The most important thing is that our customers don’t perceive us more expensive than the others.
Besides mobile services, are you looking for investment opportunities also in other sectors?
In Nepal, the expansion of mobile network coverage is the quickest way to bring all the citizens within the reach of telecommunication services. Our investments in the mobile network use the most modern technologies from the world class vendors. This ensures the readiness for a smooth evolution path from GSM to 3G and beyond, which in turn allows us to continue to offer high quality and innovative services to our customers. In Nepal, our investment focus is on our network coverage and capacity, and further on developing our transmission and transport networks to cater to a growing demand for mobile data and internet.
How is the market share of TeliaSonera in other Asian countries? What strategies are you adopting in those countries?
We have been in this part of the world for more than ten years. In the early 1990’s we were founding partners of some of the operations in Eurasia that are now key contributors to TeliaSonera’s performance. By combining local expertise and our international experience we develop our business to become the leading telecom operator in this part of the world. We have a strong track record of creating value in this region. Our success is based on providing high-quality services and networks to our customers.
In the emerging markets of Eurasia, TeliaSonera has majority-owned operators with strong or leading brands in eight markets: Nepal, Kazakhstan, Azerbaijan, Georgia, Moldova, Tajikistan, Uzbekistan and Cambodia. We are also minority owners of MegaFon in Russia and Turkcell in Turkey, including Turkcell’s subsidiaries in the Ukraine and Belarus, and have a financial holding in Afghanistan.
There are other telecom players trying to enter the Nepali market. What are your plans to counter them?
TeliaSonera is a significant long-term committed industrial investor and plays an important role in developing the infrastructure and contributing to the economic growth in Nepal. We are a reliable and respected player with local approach, and value our position as being a guest in Nepal. Our success is based on being able to provide high quality services and networks to our customers.
To ensure that all your objectives are fulfilled in Nepal, what are your plans?
Development of telecom infrastructure is an important economic stimulant and generates material tax proceeds to Nepal. With a young and large population, low mobile penetration and expanding economy, Nepal provides a valuable opportunity for growth. The growth potential lies in expanding the customer base and increasing mobile voice usage. Looking ahead we also see mobile data taking off with an emerging demand for mobile broadband. Our success is based on providing high-quality services and networks to our customers. Strong growth obviously means sizeable investment need.
TeliaSonera is one of the largest, if not the largest, foreign investor in Nepal through its subsidiary, Spice Nepal or Mero Mobile, the number two operator in Nepal, and TeliaSonera is committed to continue investing into Nepal. By combining local expertise and our international experience we develop our business to become the leading mobile telecom operator in Nepal.
