Emerging markets – emerging opportunities
A credible strategy for addressing emerging telecoms markets requires both commitment and major investment.
A great deal gets written about emerging markets for connectivity services. The reality though is that most global telecoms service providers are still principally dependent on developed markets for their turnover, like North America and western Europe. Many are keen to talk up their plans for developing business in less mature economies, but are at an early stage.
Developing a credible service offer for emerging markets, especially one founded on the ownership of network assets, is a tough proposition that requires dedication as well as major investment. The creation of a winning proposition for emerging markets entails risk, forcing service providers to question what will best add value for their customers, and therefore return them a profit.
Indian telco Bharti airtel is one major telecoms name to have made a major strategic push for new business in a number of under-served parts of the world, where it is now refining its service offer for the benefit of wholesale and enterprise customers with an interest in those markets.
“The decision to focus on emerging markets strategically was not one we took lightly,” says Drew Kelton, Bharti airtel president of enterprise services. “Why do emerging markets matter? Just look at the expansion plans of pretty much any major international enterprise and check where they are evaluating for their next move. Overall what we’re aiming at is to be the partner of choice for emerging markets for service providers and multinational organisations. There’s a huge
“Why do emerging markets matter? Just look at the expansion plans of pretty much any major international enterprise.”
Drew Kelton, President of Enterprise Services, Bharti airtel
opportunity that’s there for the taking.”
Kelton says the basis of the company’s strategy involves leveraging its considerable investment in a number of submarine cable assets that land in emerging markets in Asia, the Middle East and Africa (see boxout).
“We want to build on those assets to provide solutions or points of presence to other service providers who don’t have our breadth and depth, also perhaps playing an indirect role in satisfying the needs of their end user customers,” says Kelton. “What they don’t want is just another carrier selling capacity.
We’re there for customers to offload non-core activities in these emerging regions, something we know about because we outsource our own non-essentials. If you have a need for an access network in India, or Kenya or Nigeria, but it’s not core to your main business, talk to us.”
Some wholesale customers eyeballing emerging economies might want something as simple as a basic 100-site MPLS network in India or Asia, he says: “They might be looking for someone who can deliver the whole proposition, from access network to managed services. They want to plug and play into a market, ideally in partnership with someone who’s not competing with them in their home market. They also want to talk to someone who’s got a good presence in that emerging market on the ground. And they’ll want to use that partnership to be able to take their enterprise customers on a journey. We can be that partner, or be one of a number of partners, they use to bring that journey about.”
Kelton says Bharti airtel is well on the way to being a full service provider in most of the regions where it has a presence: “We’re already providing MPLS services for multinational organisations, but also mobile phone services, broadband and more,” he says.
Africa – a continent of possibilities
Bharti airtel has made substantial advances in infrastructure on the ground in Africa with its acquisition of the network assets of Zain. This gives it access and backhaul capabilities in 16 countries, which combined with its stake in the recently launched EASSy cable, and the capacity it has taken on the TEAMS system, gives it a vital stake in Africa’s fast emerging market for data services. It’s a market with expected compound annual growth of up to 85% over the next few years.
Establishing a global presence to meeting growing demands
Bharti airtel has been building a strong offer in a number of emerging markets for communications services. This emerging markets focus is based around a strong domestic presence in the company’s home market of India. This proven competence in delivering services in markets where average revenue per user is low is helping the company extend its brand into surrounding countries in south Asia, as well as look at other emerging regions like the Middle East and Africa.
Africa, as is well known, has been historically under-served with submarine cable capacity. It is has also been hampered by limited terrestrial network coverage, and prohibitively costly wholesale bandwidth pricing. These challenging circumstances are already well on the way to changing, thanks in no small part to the stake that Bharti airtel has taken in the continent’s communications, on land and at sea.
Bharti airtel now has a domestic mobile network in 16 African countries, equipping it with access and backhaul capabilities. It now plans to form strong local access partnerships beyond the present 16 markets, while integrating its existing stake in Africa.
Through its diverse cable assets and expansive global network, Bharti airtel is also now connecting Africa to the rest of the world by subsea cable. The East Africa Submarine System (EASSy), of which Bharti is one of the major backers, only launched in the summer of 2010, but is already planning to more than double its current available capacity this year. Demand for the 10,000km, fibre-optic cable, that runs from South Africa up the continent’s east coast and on to financial and commercial hubs around the world, has already outpaced initial forecasts.
The EASSy upgrade will use the latest 40Gbps wavelength technology, helping to further drive down bandwidth costs in sub- Saharan Africa. EASSy is already the largest African submarine system in operation.
From Asia to Europe and beyond
Bharti airtel is the only carrier that offers three paths between Asia and Europe thanks to its stake in the SeaMeWe-4, EIG and IMEWE cable systems.
The most recent of these to launch was IMEWE (India-Middle East-Western Europe), connecting India to Italy and France via the Middle East. The 13,000km long three-pair fibre-optic cable lands also in Pakistan, the UAE, Saudi Arabia, Egypt and Lebanon, and has a potential capacity of 3.84Tbps.
“The IMEWE system has the aim of significantly enhancing connectivity from Asia to western Europe and the Middle East by offering high-speed and diverse connectivity” says Ajay Chitkara, CEO of Bharti airtel’s Global Data Business. “IMEWE is backed by
many of the same companies responsible for development of the successful SeaMeWe-4 cable system, commissioned in 4Q 2005 to meet the growing international telecommunications requirements of the Asia, Middle East and European regions. With data traffic still exponentially increasing in the region, the IMEWE launch is well timed to meet this growing demand, and well as answer calls for greater redundancy on the important route between south east Asia and Europe.”
Closer to home
Overall, Bharti airtel has now invested $500 million to create its global infrastructure, including trans-Pacific as well as transatlantic routes. But is it certainly not neglecting developments in its home market of India.
Here it has strong domestic market presence with extensive terrestrial connectivity. Its national long distance infrastructure includes about 130,838km of optical fibre, more than 7,000 MPLS and SDH PoPs, and over 1,700 PoIs with local exchanges.
Bharti owns dual Indian landing stations in Chennai and Mumbai to allow for connectivity to diverse destinations. Its integrated suite of global and local connectivity solutions spans voice and data, including IPLC, Ethernet, IP transit, managed MPLS services, voice termination services and carrier outsourcing solutions based on next-generation high-speed submarine and fibre networks. With these assets and services, it gives other data and voice operators the reach and coverage they need. The next 12 months will see Bharti airtel working to develop a similarly rich service offer for all the emerging markets it now addresses.
EASSy is the first east coast system to connect a direct route to Europe thereby helping to deliver data traffic faster to key internet peering points in Europe and North America. It connects Mtunzini in South Africa to Port Sudan (in Sudan) with landing points in nine countries. This cable system is expected to prove a boon in the proliferation of broadband connectivity to all parts of Africa, a prerequisite for the successful production of e-commerce, internet, and other broadband applications and projects on the continent.
“It’s still early days for us in Africa though,” says Kelton. “We’re looking at leveraging our subsea cable investments, and talking to all the major service providers we can. We’re able to be an indirect channel partner for them, helping them to address the massive opportunities that exist for them and their customers. Because of our assets, there’s no-one else they need to negotiate with. The whole domestic access scene in Africa has got a lot of maturing to do. The areas of major excitement at the moment are South Africa, Kenya and Nigeria.”
Most of Africa, he says, still remains constrained by piecemeal infrastructure: “There have been insufficient bilateral arrangements between economies which has made it often very expensive to move traffic around,” he observes. “In the 16
markets where we have a network, we’ve now got a lot of simplification and standardisation to work on, in areas like voice rates for example. By 2011, we’ll have all this in place, everything cleaned up. We’ll be looking at who’s buying services there, which industries are the biggest consumers of connectivity services, and which parts of the world want to do business there. I know that China is taking a good look at Africa, for example.”
Kelton says Bharti has a head start in know-how when it comes to scaling and operating networks, and developing services, in developing markets: “We’ve done it in India, Sri Lanka, Bangladesh,” he says. “In Africa it’s a country by country proposition though – a tricky standardisation process. We’re developing a go-to market strategy for all 16 countries. This has got to be customer-led, not ‘build and hope’. In time we’ll have developed a fully integrated proposition – something we’re speaking to customers about already.”
Traffic around Asia
Bharti airtel has made large investments in creating a robust network catering to developing markets of Asia and the Middle East.
The Far-East Connect Network enables it to serve the requirements of customers in the high growth markets across Asia and the Pacific. It is uniquely designed to meet both the expansion and the diversity needs of customers in Asia and the Pacific region.
The Far-East Connect Network has many unique network elements that span across the region and comprises of airtel’s network assets on multiple cables routes i2i, SeaMeWe-4, APCN2, JUCN, AAG and also a proposed investment in another high-speed network between Singapore and Japan. This would now enable Bharti airtel to extend its reach to Australia, Brunei, China, Hong Kong, India, Japan, Malaysia, Singapore, South Korea, Taiwan, Thailand, the US and Vietnam.
To serve the customers in the Middle East region, Bharti airtel has created a Middle East Connect Network and is the only outside operator with capacities on multiple cable routes in the region. Bharti airtel offers the unique advantage of at least three multiple paths on every cable route. Bharti has added over 17Gbps capacity to the region and has made investments that connect the India-Middle East-Europe route via three alternative paths on SeaMeWe-4, IMeWe and EIG. These paths provide the much needed diversity and capacity to the region For the developing telecoms markets of Asia and the Middle East, Bharti is continuing to invest to help carry traffic from India around the region, says Kelton: “We’ve got around 2,600 enterprise customers in India alone that want to take traffic in and out of the country, many looking for distribution capabilities in other Asian jurisdictions,” he says. “Our strategy is to keep moving up the value chain, from straight capacity services to areas like managed services and virtualisation. We can take the customer on a journey with these value-added areas. We’ll take the risk, and let the customer take what they need for their business according to their needs. We’ve got a compelling message for CIOs everywhere whether they’re looking at data replication, algorithmic trading or call centre operations. Instead of the lowest common denominator, we can provide something of tangible value to the customer.”
Kelton says it is important to stay realistic when talking about growth in new technology adoption in emerging markets: “Providing cloud services in a developed Asian or Middle Eastern market is one thing, but other markets, like India, are not quite ready for that just yet,” he explains. “I say, let’s not rush into some sort of ‘cloud everywhere’ utopia.”
He says Bharti is busy expanding a value-added offer within its home market of India, especially in regions where there are particular economic strengths – for example financial services in Mumbai, and stock exchanges and data centres in Chennai: “We’re starting to build some interesting ideas around those markets,” he says.
“Customers are defi nitely excited about our message in emerging markets, but want to see the basics in place first.”
Drew Kelton, President of Enterprise Services, Bharti airtel
There are also opportunities in particular vertical sectors on the Asian subcontinent, in addition to regional hotspots, says Kelton: “We’re active in, for example, media distribution, which is a very exciting space,” he says. “We just launched a Digital Media Exchange to address that market. There are 1,200 Bollywood films per year to distribute, and other popular content like football matches from the UK’s Premier League.”
Kelton stresses that all things are not equal when evaluating possibilities in emerging markets: “What’s a value add for India is not the same as it would be in the US,” he says. “Customers are definitely excited about our message in emerging markets, but want to see the basics in place first.”
Bharti airtel Limited
Phone +91 124 422 2222 Fax +91 124 424 7207