Winners show the way offshore

02 May 2006

A common characteristic of many of the Telecom Asia Award winners last week was how internationalized they had become.

For award-winners like SK Telecom, VSNL, NTT DoCoMo and Bharti offshore has become critical to their growth strategies, although in diverse ways.

Telco investment in Asia is vastly different from the early days of deregulation in the "˜90s. The giant North American and European telcos - the AT&Ts, Deutsche Telekoms and so on - which spent billions on carrier assets but beat a hasty retreat when the market turned.

Today they are primarily focused on their enterprise customers here.

Those that have persevered are for the most part from the region. Asia's largest carrier group, NTT (which also has one foot in the managed services camp), was one of the early investors.

But it has focused on fixed-line businesses like PLDT, StarHub and Sri Lanka Telecom, which are generating nothing like the growth like pure-play mobile, which has been the strategy of the most successful investors here.

The best at this has been SingTel, which draws more than half of its revenue from abroad from operators in southeast and south Asia. Many of them are first or second in their market, with a total customer base of 78 million.

Willing to partner

The other star investor is Norwegian incumbent Telenor, which counted 41 million customers in Asia and eastern Europe at year-end 2005, up from 22 million the year before.

It is surely no coincidence that the best investors in Asian telecoms have been small scale and willing to partner.

The very size of the Europeans and North Americans surely counted against them. They carried expectations that were out of kilter with the reality on the ground here. In companies accustomed to business metrics in the billions, the Asian opportunities amounted to mere millions.

In this category Telstra might also be included. Ten years ago its portfolio included India, Indonesia and Vietnam; now is reduced to a single cellco in tiny Hong Kong.

The other Asian carrier to watch is Best Carrier Award-winner SK Telecom, which is parlaying its wireless data and CDMA expertise into business offshore. It is making a $220 million bet in the US with an MVNO joint venture with Earthlink, due to launch next month, has sold its Nate mobile Internet platform around the region and it has cultivated a good relationship with China Unicom.

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