Seeking to escape a cycle of falling prices and tight regulation, big telecom operators from Vimpelcom (VIP.O) to Telefonica (TEF.MC) are set to reinvent themselves as internet players to escape the industry\u2019s straight-jacket of low growth.<\/p>\n
Next week\u2019s Mobile World Congress in Barcelona will feature phone companies in various stages of acceptance that the industry\u2019s predictable, decades-old business model based on selling data packages by the millions is running out of steam.<\/p>\n
Beneath the facade of shiny new phones and dusty debates over network technical implementations, Europe\u2019s largest annual technology fair will see top phone companies parading far-reaching business makeovers.<\/p>\n
Spain\u2019s Telefonica (TEF.MC) is set to introduce a broad plan it calls the \u201c4th<\/sup> Platform\u201d to help both consumer and business customers keep greater control over their data rather than giving it away to web giants Google, Facebook and Amazon.<\/p>\n Russian and emerging markets operator Vimpelcom (VIP.O) is tearing up many parts of the telecom rule book to remake itself as a tech player in the fast-growing world of messaging apps.<\/p>\n US telecom giant AT&T (T.N) has inked a series of huge deals to diversify by acquiring Direct TV for $67 billion and is awaiting approval to buy Time Warner for another $110 billion.<\/p>\n \u201cRegulatory and pricing pressure on telecom operators forces them to look to adjacent areas for new sources of revenue and margins,\u201d said attorney Tom Levine, head of Allen & Overy\u2019s global telecoms practice.<\/p>\n \u201cThere isn\u2019t a consensus on how to do this.\u201d<\/p>\n It\u2019s also an open question whether the industry is structurally capable of big change. Telcos have dreamed for decades of breaking free of the shackles of consumer regulation and branching out into Internet services in their local markets, only to be consistently beaten by newer, global upstarts.<\/p>\n These dramatic changes come as telcos brace to offer new networks ready to handle not just spiralling data use on phones but in cars, in factories and offices and even crop fields. The new generation of 5G networks will provide them new business options but also spells mounting competition from computer, internet and industrial players with digital plans of their own.<\/p>\n Russia has emerged as the world\u2019s most advanced laboratory for telecom companies seeking to reinvent themselves as Internet players, as classic telecom business pressures, Western economic sanctions and government rules that reduce Silicon Valley giants to small local players create space to combine forces.<\/p>\n Vimpelcom, Russia\u2019s No.3 operator, has undertaken a top-to-bottom overhaul of its business while gearing up for deeper Internet partnerships with the likes of streaming music and online taxi services. The company also focuses on emerging markets from Bangladesh to Algeria and is the world\u2019s sixth largest operator in terms of number of mobile customers served.<\/p>\n Megafon, the No.2 network provider, has acquired control of sister company Mail.ru, a major Russian Internet player – the Russian equivalent of Verizon buying Facebook – and plans to offer a new mobile version of social media site VKontakte.<\/p>\n Top Russian telecoms player MTS (MTSS.MM) is so far sitting on the sidelines, but its executives have signaled they too believe their long-run future lies in Internet services.<\/p>\n Meanwhile, Telefonica sees its \u201c4th<\/sup> Platform\u201d strategy as a way to stoke faster growth and compete aggressively with globally dominant internet players while being a logical evolution of existing businesses, a senior company source said.<\/p>\n The strategy builds on its long-standing investments in communications services, its broad geographic reach across Europe and Latin America and efforts to offer advanced money-making services on top of basic communication connections, but does not require making huge new investments, the source said.<\/p>\n \u201cNow is the turn of the fourth platform: the data. That is Telefonica\u2019s (new) equity story,\u201d the source said of its bid to boost margins by, for example, enabling customers to analyze mountains of data to make their own businesses run smarter.<\/p>\n Other phone companies are taking more modest steps.<\/p>\n Norway\u2019s Telenor (TEL.OL), another emerging markets operator, has pushed into data analytics, while Vodafone (VOD.L) is making inroads in new industrial internet and connected car applications, through its 2014 acquisition of Cobra Automotive.<\/p>\n Still, many telecom operators take a dim view of some of the aggressive moves being made by these peers, especially when it comes to business models based on commercializing customer data.<\/p>\n Deutsche Telekom (DTEGn.DE), Europe\u2019s largest telecom operator by revenue, sees this as no-go territory in privacy-conscious Germany. Instead, it is focused on making strides into new connected industrial arenas and cloud computing.<\/p>\n Telekom\u2019s main growth story is likely to remain the United States where it revolutionized the mobile industry by offering unlimited data plans and international roaming packages. Using aggressive marketing, T-Mobile has gained at the expense of rivals, making it nearly as big Telekom\u2019s core German business.<\/p>\n France\u2019s Vivendi (VIV.PA), which embarked on a grand misadventure last decade to combine telecom and media assets, offers a cautionary tale for investors betting on these new reinvention stories.<\/p>\n For telecom operators used to predictable cash flows and firm regulatory boundaries, the main issue may be cultural: Most just don\u2019t have the stomach for such drastic transformation.<\/p>\n \u201cWorking out how to bring in that entrepreneurial DNA, without disappointing users\u2019 expectations of reliability, and recognizing the financial expectations of institutional shareholders, is not easy,\u201d Levine said of healthy dividend payouts which remain the industry\u2019s main draw to investors.<\/p>\n Reuters<\/strong><\/em><\/p>\n Picture source: Alamy Image<\/strong><\/em><\/p>\n Picture used for illustrative purposes alone<\/strong><\/em><\/p>\n","protected":false},"excerpt":{"rendered":" Seeking to escape a cycle of falling prices and tight regulation, big telecom operators from Vimpelcom (VIP.O) to Telefonica (TEF.MC) are set to reinvent themselves as internet players to escape the industry\u2019s straight-jacket of low growth.<\/p>\n","protected":false},"author":7,"featured_media":3144,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[31,49],"tags":[],"_links":{"self":[{"href":"https:\/\/kt10.khaleejtimes.ae\/index.php\/wp-json\/wp\/v2\/posts\/3143"}],"collection":[{"href":"https:\/\/kt10.khaleejtimes.ae\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/kt10.khaleejtimes.ae\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/kt10.khaleejtimes.ae\/index.php\/wp-json\/wp\/v2\/users\/7"}],"replies":[{"embeddable":true,"href":"https:\/\/kt10.khaleejtimes.ae\/index.php\/wp-json\/wp\/v2\/comments?post=3143"}],"version-history":[{"count":1,"href":"https:\/\/kt10.khaleejtimes.ae\/index.php\/wp-json\/wp\/v2\/posts\/3143\/revisions"}],"predecessor-version":[{"id":3145,"href":"https:\/\/kt10.khaleejtimes.ae\/index.php\/wp-json\/wp\/v2\/posts\/3143\/revisions\/3145"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/kt10.khaleejtimes.ae\/index.php\/wp-json\/wp\/v2\/media\/3144"}],"wp:attachment":[{"href":"https:\/\/kt10.khaleejtimes.ae\/index.php\/wp-json\/wp\/v2\/media?parent=3143"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/kt10.khaleejtimes.ae\/index.php\/wp-json\/wp\/v2\/categories?post=3143"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/kt10.khaleejtimes.ae\/index.php\/wp-json\/wp\/v2\/tags?post=3143"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}RUSSIAN LABORATORY<\/h2>\n
DO THEY HAVE THE DNA?<\/h2>\n