Te­lenor’s bold am­bi­tion to be­come a dig­i­tal ser­vice provider

Norway-Asia Business Review - - Contents -

“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.”

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