Telcos are in survival mode - Turk Telekom

AMMAN, JORDAN: Hakam Kanafani calls for fundamental shift in telco strategy
Hakam Kanafani, CEO, Turk Telekom Group, said operators must share LTE infrastructure.
Hakam Kanafani, CEO, Turk Telekom Group, said operators must share LTE infrastructure.

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Telecom operators must collaborate with each other and work more closely with regulators and governments in order to survive, according to Hakam Kanafani, CEO, Turk Telekom Group.

Speaking at the Arab Advisors Group’s Convergence Summit in Jordan, Kanafani said that telecom operators are facing “survival questions” and must reassess the way they operate and invest in infrastructure.

“We are facing survival questions. When your data grows that much and the revenue is stagnant, then you have to be in survival mode. Something is wrong with the way we are doing things,” he said.

He added that telcos should consider new models for deploying infrastructure, including a far more collaborative approach to LTE networks. He warned that if telcos continue to lower prices and tread the same path with LTE that they did with 3G, they will be “finished”.

“We must put a plan out to the regulator and explain how we are going to invest in LTE,” he said. “We cannot invest three or four networks in each country. It is a waste of money, effort and is making other people richer.

“We must think of a way where we can have one LTE network which we can all utilise. There has to be a change, internally, we need to limit the way we subsidise handsets. We have to think of other ways, other than lowering prices, we have to.”

A significant part of the problem facing operators stems from over-the-top players according to Kanafani.

“Today telecom companies are subsidising Apple products, worth $50 billion a year. We are creating their network of distribution, their infrastructure. No one denies customers love them, but we have to change our business models. Today we are going through tremendous price wars amongst ourselves. The regulator is only regulating the telco industry,” he said.

“Do you know how many employees work in YouTube? Only 650. Google generates a lot of money, but doesn’t necessarily pay as much taxes as we do.”

He added that telcos pay some of the highest taxes in the region, and yet face greater regulation than the OTT players. “We have to look at our self interest.”

The CEO warned that if telcos continue to operate in the same way as they do at present, they could lose 50-60% of their value. “We have to unite and face regulators, subscribers and our governments," he said.

Kanafani also stressed that cutting prices was not a sustainable strategy for operators and questioned the reasoning of analysts that criticised operators that dared to raise prices. “Last year we raised our prices at Turk Telekom twice. When I face analysts they say to me that I’ve raised prices, it’s as if it’s an allegation.

“The coffee you are drinking, the tie on my neck, the watch you are wearing have one thing in common: they will be more expensive next year, whereas telco prices will be lower next year. We have to make some radical changes to save our industry.”

 

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