News From Telecom World

How Telenor Succeeded With Its Emerging Market Strategy

Posted on: December 30, 2008

Telenor took a big step seven years ago when it decided to expand in international markets. At that time Telenor was just another midsized European incumbent telecom operator. That strategy of international investment paid off and now Telenor is the 7th largest mobile company in the world. The impressive part is that Telenor has not sacrificed margins in the race for growth. Many of Telenor’s competitors – Vodafone , Deutsche Telekom – have started to emulate its strategies. Let’s take a look at the critical success factors and what can be learned from this.

Forrester Research did a case study on Telenor and praised its strategy and execution. The key take points include: right time, targeting of emerging markets, policy of full management control (avoided joint ventures) and deployment of a repeatable methodology (for example the djuice brand).

Over the past seven years, Telenor — the incumbent telco in Norway — has transformed itself from a small operator with limited opportunities in a tiny country into a major global telecommunications group. How? By leveraging repeatable strategic methodologies and pursuing an innovative twin-track geographic strategy. While rivals were investing in developed economies, Telenor focused on making money in emerging markets — and timing this investment when they were experiencing explosive growth in mobile. Telenor has been so successful that competitors are now copying its approach. Vendor strategists can learn from Telenor that size need not be an inhibitor: What matters most is the right strategy, at the right time and precision in execution.

How did Telenor decide to invest in Pakistan? According to a presentation by Telenor it identified 5 criteria before entering Pakistan:

1. 1. High growth potential
2. Forward looking telecom policy
3. Investment friendly climate
4. Good regulatory execution
5. Acceptable political and economic situation

These are all excellent points and are stated very well. Luck was on its side as well. Telenor came to Pakistan in 2005, during the telecom boom and the growth exceeded its own expectations and projections.

Telenor sees many opportunities, now that it has network and grasp on the market. It is working on new strategies which include a focus on mobile Internet, mobile broadband and diversification in new directions and regions. It has acquired a microfinance bank, which will be an interesting development to watch. Telenor has also entered the Indian market by taking a stake in Unitech Wireless.

Here’s the outlook for Pakistan by 2010-2011 shared by Telenor with its investors:

* SIM penetration over 70%
* Market share above 25%
* EBITDA in mid thirties
* Capex/sales belwo 25%

A word of caution though – the network quality is something Telenor needs to keep working on.

Source: State of Telecom Industry in Pakistan (Blog)

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