Big may be beautiful, but small is manageable

17 Jun 2014
00:00
News
Commentary

The events and conference business seems to be heading down two distinctly different paths: big flashy showcases filled with exhibitors, side events and networking parties or more focused events that address a specific market segment in detail concentrating on information sharing, and often run as user groups of particular vendors.

The telecoms industry itself seems to going down the same two routes with the emergence of the big multinational groups trying to be all things to all people, despite the different demographics of each country they serve as opposed to smaller national network operators that are targeting niche market segments.

Over two years ago I wrote about the communications industry being at the crossroads and having to decide which path to take because it was surely suicidal to do nothing.

In the past, telecoms operators had both the cash and profits to warrant big spending, although most opted to throw most at network rollouts and IT infrastructures rather than innovative (and risky) digital services.
Today it’s either grow by acquisition (organic growth being all over in saturated markets) or spreading and investing in innovative non-core businesses.

Sounds easy, but it is definitely not so for C-levels with telecoms DNA or their stakeholders used to getting fat without having to take any risks. And risk is the one factor that they all seem averse to. The very same risk that has created gigantic digital and social networking players that can now swallow telcos in one gulp.

So what is the solution, if any? Acquiring innovative new companies is one, but you have to be pretty sure they will become successful before boards will invest. If they are acquired they should be left to continue doing what they do best – innovate and disrupt, and not be tempted with by management that neither understands the business nor has the guts to take the necessary risks.

Buying more mature innovative digital players will cost much more and will likely come with a revenue stream, but again, there is no guarantee that becoming part of “big brother” will ensure that business keeps flowing. Most likely, and from experience, the opposite will occur. Those innovative entrepreneurs in blue jeans, black tees and sneakers don’t really like board rooms and report writing. They probably wouldn’t be as successful in their own business if they did.

According to the GSMA, the Asia Pacific region accounts for half of the world’s mobile subscribers, and will remain one of the world’s fastest-growing mobile markets past 2020. “The bulk of the APAC subscriber base is concentrated in four major markets: China, India, Japan and Indonesia, in order of size. Together, these account for three quarters of the region’s subscribers, and more than one-third of the global total.”

But the region is also hugely diverse, ranging from digital pioneers such as Australia, Japan, Singapore and South Korea to “discoverer” markets such as India, where the focus is on building networks in rural areas and offering affordable mobile broadband services.”

And here, in the preceding paragraph, lies the secret of success. Network operators in those four markets stand out in terms of innovation, investment in digital technology, profit maintenance (and even growth) and healthy share prices.

They are focussing on their key home markets, partnering sensibly with innovators, sponsoring innovation from within their home countries and challenging the out-dated regulations imposed on them.

Apart from SingTel in Singapore almost all the other operators have not sought global expansion or have rescinded from it, like Telstra in Australia. And all of them are experimenting with new services targeting niche markets such as health care, mobile money, gaming and media.

Like the conference market is finding, big might be beautiful but small may be more manageable.

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