Telenor’s bold ambition to become a digital service provider
“Some 3 billion people are connected by their phones and another 1 billion will be soon, many of them in Asia,” he said. “By 2020, 80% of adults on the planet will own a smartphone.”
“Telenor has 203 million subscribers globally. Going forward it will require a lot of new work as the mobile industry is saturating, despite these new growth numbers. But mobile now offers opportunities in a lot of industries in countries that lack the infrastructure for development: finance, banking, commerce, healthcare, education and agriculture. All of these industries will be disrupted by mobile connectivity and we hope to be at the forefront of not only providing connectivity but also these new services.”
The company started its Asian adventure in 1996 with some bold moves, starting out in Bangladesh with a goal to enrol 500,000 subscribers. Today it has 56 million in Bangladesh.
“We entered Asia when others were exiting, during the Asian financial crisis,” said Mr Gravråk. “We are extremely proud of our newest greenfield, entering the Myanmar market 18 months ago and already reaching 15 million customers. We can truly say we are changing that country.”
“Telenor entered Asia because there was a fundamental belief in mobile early on that it would be able to connect people from all over. It took a gamble, but we also believe in the excellence of our execution and our long-term commitment once we enter a market. The Scandinavian culture and our flat business structure that empowers employees has found great traction in Asian cultures. Telenor has 20,000 employees in Asia.”
The company expects underlying connections will double and people will eventually use 10 times more data, all of which is enabled by using smartphones.
“Consumer behaviour is changing,” he said. “We conduct survey data in many of our markets and in Bangkok the average smartphone user spends seven hours per day on their device. Seven hours! Are they even doing any work? Of those Bangkok smartphone users, 100% of them use the Line messaging app or Facebook, beyond the levels we see in Scandinavia. This seven hours is the future of digital and consumer business, because when you spend that amount of time on an online interface and don’t need to go through a store, you have to be on mobile to get the customer’s attention.”
“Voice calls are a very small part of that seven hours, and we haven’t figured out a way to communicate to our customers during voice calls. So during their data usage we need to let them know which services we provide.
“Over half of smartphone users globally use a messaging app developed in Asia, so you can see why Asia remains vital to our growth outlook. Bangkok is often referred to as the Facebook capital of the world, with the highest penetration of users globally. This year we’re expecting a doubling of Series A funding for start-ups in Southeast Asia, so investors are serious about the region.
“We also see this potential so Telenor is establishing a digital hub in Singapore. We will look for partners to enter new territories, and they may be from different industries. Industry lines are starting to blur, as we see with advertising, a USD 500 billion global sector, meshing with telecommunications, a USD 1 trillion industry.
“We need to compete on some fronts and collaborate on others. Line, the Japanese and Korean app, has an average employee age of 27. They get it, and we need to learn from their model.
“Telenor will look to add new capabilities that we cannot provide as nimbly through mergers and acquisitions. For example, this year we added Tapad, which was founded by a Norwegian entrepreneur and delivers unified crossdevice marketing solutions that give publishers and technology providers a view of consumers across screens. They will help us as we start to add more services to know which consumers we have that use more than one of our
11 1. H. E. Lim Hng Kiang, Singapore’s Minister for Trade and Industry delivers his opening address. 2. Smiles from Thailand: H. E. Ambassador Kjetil Paulsen and Summit MC Sharanjit Leyl, flanked by Thai- Norwegian Chamber of Commerce Executive Director Thitikul Opdal and President Vibeke Leirvåg. 3. H. E. Ambassador Tormod Endresen and BI Professor Torger Reve sharing a lighter moment during a coffee break 4. No summit in Singapore is complete without the traditional lion dance. Here at the Lantern Bar at the Fullerton Bay Hotel on the first day of the summit. 6. H. E. Lim Hng Kiang and Prime Minister Erna
Solberg seated at summit 7. The opening night at Clifford Pier featured a
ostentatious seafood buffet dinner 8. Accolades to Una Skram and Ingvild Doyle of NBAS who led the work behind the scenes and secured the highest profile summit ever. 9. Team China led by ambassador Svein O. Sæther at the Summit during the speeddating session 10. NBAS President and Summit Host Hilde Nafstad of Statoil and Board Member Vidar Andersen, head of Asia at DNB, off to a good summit start. 5./11. Delegates enjoying the networking
opportunities at the summit.
“I don’t think that’s a bad thing because if you want to zero in on what has the highest probability of success, take something that has previously worked and localise it. Thailand would likely not be the first choice of location to expand the operations of western companies in the region, and that actually works in our favour as it means there’s a lot of opportunity to be the first mover on the market. Also, when you localise something then you have an opportunity to innovate and potentially make the product better, and you can then export that to other markets.”
That being said, some sectors like e-commerce - while representing a mere 3% online retail penetration across Southeast Asia - is already such a high stakes game that only those with the deepest pockets are able to compete in. This was demonstrated back in April, when Chinese e-commerce behemont Alibaba, a company with a USD 200 billion valuation, decided to acquire a majority stake in SEA’s leading marketplace Lazada for USD 1 billion.
“We see opportunities elsewhere and one of the startups we invested in the current batch is called Fastwork (fastwork. co). Essentially what they do is match freelancers with businesses. This model has been around for a couple of years by international players like Upwork (www. upwork.com) and others, but there hasn’t been any localisation before. Most of the people who are buying and selling these services are working in the Thai language, so there’s a good opportunity in making that work here.”
The overall quality of startups and their ideas has, according to Kvalseth, improved “dramatically” over the four batches at dtac accelerate along with the sheer volume of applicants – in 2013 there were 100 ideas presented and the number has climbed to 500 with the recent batch. This, he argues, leaves you with a wider array of good ideas to choose from in the end.
“Claim Di went up 15 times in valuation within a year after we invested in it and it has received additional VC funding since then as they saw an opportunity to take it overseas. Another reason for their success was the team itself as they had existing connections in the insurance industry, enabling them to grab a huge part of the market very quickly.”
Even with these success stories, dtac’s mission in not to capitalise on these startups as the ROI is very small in relation to the size of the telco. Rather, it sees itself having a more important goal in helping the government realise its digital ambitions. The BOI “Digital Thailand” initiative where digital technology is used as a driver to grow the economy and apply innovation and technological expertise in all manufacturing and service sectors.
“I think the government’s move to put the whole digital agenda on the radar is great and we can see it trickle down into some concrete things. One such thing is changing government policies and regulations to make it easier to do business in the digital landscape. That would be the most positive development we could hope for. Having this agenda give them an opportunity to prioritise some of these issues that can be bogged down by bureaucracy for years and I think the private sector has to help them with this prioritisation.”
There are other roadblocks on the way. One of the biggest challenges the domestic startup industry in Thailand is facing is having a very limited talent pool, students that graduate with a computer science degree, and there are strong bureaucratic barriers to bringing in talent from overseas as well. Kvalseth believes that success stories from big exits may one day motivate more interest in Thai students to pursue technical skills and getting involved with the startup scene upon graduation.
“I think Thailand has a lot of natural appeal to entrepreneurs from abroad, so if the government gets the regulatory environment for startups in place and manages to expand the talent pool, there is strong potential for Thailand in becoming a regional startup hub.”