THE TOUGH economic situation has brought various challenges to the so-called alternative telecom operators. But these firms are taking inventive steps to make the most of the current market situation. The Slovak Spectator spoke with Peter Máčaj, CEO of Slovanet, Stanislav Verešvársky, CEO of Swan, Igor Kolla, CEO of Antik Telecom, Róbert Štajgár, sales director of Energotel, and the acting director of Železničné Telekomunikácie, Rastislav Cenký, about the methods their companies are employing to remain competitive in challenging economic times.
The Slovak Spectator (TSS): What are the biggest challenges facing the Slovak telecom sector?
Peter Máčaj (PM): During the course of 2011 we have been registering a moderate decrease in the general telecom market, especially due to the influence of a reduction of prices in mobile communications and in the segment of services for the corporate sector and state administration as well as the impacts of the economic crisis and a push for savings. Along with this, the demand as well as the supply of internet connection services keeps growing. Under the pressure of competition, telecom operators must cope with decreasing average revenues generated per customer because customers are asking for increased services for the same or even a lower price. We are creating space for investment into our new services, especially by optimising processes and reducing operating costs in areas where this does not affect the product’s quality. Along with all of these, corporate customers currently have only minimal interest in making direct investments in telecom solutions; they prefer the purchase of comprehensive services that secure their needs.
Stanislav Verešvársky (SV): The biggest challenge is the economic one – to keep one’s business in a development trajectory under the circumstances of a second wave of recession when customers are forced to think about savings possibilities rather than development projects. This situation is a real challenge because only those operators who are able to offer services that bring savings together with the realisation of development programmes can succeed. From the long-term view, this trend is offered by services based on convergent voice-data-internet services or various forms of outsourcing and cloud computing.
Igor Kolla (IK): The current times are particularly about the growing demands of users who want more quality services for lower prices. Communication via video and the increased usage of interactive devices such as smart phones and tablets are a trend. The product portfolio of our company follows these trends. Ten years ago we started providing internet services at a speed of some megabits per second. Today, at the same price, each customer has a speed as high as 70 megabits per second in our fibre-optic network. A few years ago we added, without an increase in price, the possibility of making calls and two years ago we added IPTV (Internet Protocol television) with over 70 channels in the basic offer. Now we are considering how to bring this same quality and scope of TV services to all residents of Slovakia. We are managing to move forward also thanks to the global view we get from our daughter company Antik Technology developing telecom devices and facilities.
Róbert Štajgár (RŠ): Like the whole economy, we in the electronic communication sector feel the impacts of the global economic crisis. Competition is tough and pressure to cut prices while securing the high quality services we provide is enormous, while the opportunity to enter new markets is limited. In spite of this, telecom operators are working to increase their turnover. Limited investment in building fibre-optic infrastructure is a problem. One solution might be financing from [EU-supported] structural funds. But OPIS, the Slovak government’s Operational Programme for Informatisation of Society, is delayed and financial support is still unclear. A new law on electronic communications took effect on November 1 and time will tell how it will affect the telecom sector. The sector is also waiting for an announcement from the Telecommunications Regulatory Authority of its selection process for allocation of frequencies for LTE technologies.
Rastislav Cenký (RC): The telecom sector has been travelling through difficult times for some period of time now, affected most by regulatory measures and significant technological changes. These factors impact each other and bring new challenges, especially within internet connectivity. Slovakia faces a challenge in introducing broad-band internet into towns and cities that still do not have it, with the help of EU funds.
TSS: How can alternative telecom operators remain competitive?
PM: Slovanet, as an alternative operator, is able to respond more flexibly to market changes in supply of products and services and can combine technologies. We can better and more inventively adapt to the particular requirements of corporate clients and design and implement solutions to fit their needs while large telecom operators mostly offer only standard solutions. We are also one of a small number of companies that continue to acquire smaller operators and make targeted investments in regional fibre-optic and coaxial networks while the global telecom operators have been forced to halt imminent investments into infrastructure under the influence of the crisis. Through these activities we are enlarging our coverage and gain savings and the number of our customers is growing. These create a further advantage with respect to smaller and more local internet providers, who are not able to invest enough in new technologies and at the same time increase the quality of services for their customers. For large operators, households, as well as companies are accustomed to a growing standard in the offer of products and services and that may be an unattainable task for smaller telecom companies. So as an alternative operator we use both of these advantages – we are large enough while at the same time we are not too large.
SV: It is of key importance that an operator is able to implement development of its services, offers, networks, services and support, and utility operations so that they meet the interest of customers, enabling the operator to create profit and finance its further development. Innovations are a key theme, especially during a crisis, because an operator must be able to know how to offer its customers more via its services so that the customer does not switch to somebody more innovative, effective, better-focused and cheaper to achieve savings. But I do not understand competitiveness only as a parameter expressed by price, but rather as a parameter based on the price to performance ratio. Many times alternative telecom operators are distinguished from the traditional ‘incumbents’ and the international telecom operators, in a given scale at a given market, only by their ability or inability to finance their development projects. I see examples of both types of such situations for alternative as well as traditional operators.
IK: Antik is a regional operator. We are endeavouring to adapt our products to the possibilities of people living in the regions where we offer our services. Our product is set to the price level of citizens’ pockets in eastern Slovakia where people expect to get for their hard-earned money a product of value. We have been following this strategy from the very beginning and thanks to it we have reached an interesting share of these markets. To achieve this we have to watch our costs much more carefully than any national or global company. For example, we order many components for our network directly from producers and we even design key components ourselves, which distinguishes us from the competition.
RŠ: It is always about the way in which an operator attracts customers and the size of the service provider does not matter. Thus the alternative group, if we can even term it in this way, has to provide a customer with a comprehensive service at a satisfactory price. The customer wants quality and as few problems as possible. A customer welcomes built-to-suit solutions that an alternative operator is able to provide in an increasing range. When we look some years back to the period when the competitive environment germinated and compare it with the current situation it is obvious that the alternative operators have grown in terms of their skills and abilities, built competitive networks, especially fibre-optic ones, and provide quality services. Somewhat paradoxically, during the crisis when pressure from the large operators in acquisitions and investments abated due to their savings measures, smaller operators could breathe more easily. Alternative operators have also realised that they have to cooperate with each other and that is shown by creation of various associations that aim to use synergy and capitalise on investments.
RC: In our company we believe that the usual dominant factors, such as extension of infrastructure and upgrade of technologies, are not a sufficient solution in remaining competitive and believe that the emphasis is moving to all support services. Of course, the price of services provided remains a significant factor.
