Top five joint ventures

25 November 2014 |

2014 has seen the launch of a large number of joint ventures, as telcos increase collaboration to offer a more unified communications network across the globe. <i>Capacity</i> investigates five of the most eye-catching partnerships.

Sonera and DNA
Nordic operators Sonera and DNA have joined together to create Suomen Yhteisverkko Oy – which translates as “Finnish Joint Network” – a new partnership which has been created for the deployment and operation of radio networks across Finland.

Analysts at Business Monitor International (BMI) have said that the maturity of the Finnish market means that there are few opportunities for long-term investors. However, the venture will initially focus on northern and eastern Finland, an area which makes up 50% of Finland’s area, but holds only 15% of the population.

Revealed in August this year, the venture is also designed to help TeliaSonera with its target of reaching 99% 4G coverage in Finland by the end of 2018.

“The build-out in eastern and northern Finland is an important part of our ambition to improve customer experience and the efficiency of all our networks,” says Robert Andersson, head of TeliaSonera’s business region Europe.

This taps into BMI predictions that the majority of “investment will be focussed on high-bandwidth infrastructure such as fibre and LTE”, with the two companies aiming to improve customer experience in terms of coverage, speed and quality.

Suomen Yhteisverkko Oy will build and operate a common radio access network for 2G, 3G and 4G technologies, exclusively owning all of the infrastructure. The two companies are also planning to combine their 800MHz frequency blocks to offer faster 4G connection and increase capacity for their customers. Both Sonera and DNA will continue to offer rival services to customers in the common network area.

The venture will be jointly managed and governed, with Sonera owning 51% and DNA the remaining 49%. It will be headed by DNA’s previous head of networks Antti Jokinen.

Ooredoo and Rocket Internet
In April 2014, Qatari operator Ooredoo and Rocket Internet partnered to create Asia Internet Holding, to develop e-commerce and other digital services across Asia.

Rocket Internet was founded by the Samwer brothers in Germany in 2007 and works to replicate successful internet ventures in emerging markets.

Asia Internet Holding builds upon Ooredoo’s strategy to increase its e-commerce presence, and will aim to create and develop online businesses in Asia, initially covering 15 markets. Growing smartphone penetration and limited fixed-line infrastructure are reinforcing mobile as the preferred medium for e-commerce in Asia.

“A fundamental shift is happening, as more people buy goods and services online through their mobile phones; this is even more evident in our Asian footprint,” says Nasser Marafih, CEO of Ooredoo Group.

A recent report from eMarketer also highlighted Asia as the e-commerce market to watch, predicting that “China alone will make up more than half the region’s e-commerce sales this year, jumping to 70% by 2018”.

Asia Internet Holding hopes to develop companies across the region, ranging from online retail and marketplaces to payment platforms. Successful ventures in the region over the last few years include, a price comparison site operating in Asia and South America,, an online taxi experience also operating in South America and Asia, and, a Pakistan-based online retail store.

“Our partnership will accelerate the development of Asia Internet Holding in the region,” said Oliver Samwer, co-founder of Rocket Internet. “By partnering with an operator like Ooredoo, we can jointly bring better services to customers.”

The two companies will be equal partners in Asia Internet Holding and at the time of writing the venture was still awaiting regulatory approval.

Vodafone Greece and Wind Hellas
Created in February 2014, Victus Networks is designed to manage the radio access and transmission networks of its parent companies, Vodafone Greece and its rival, Wind Hellas. The venture began operations on March 10 2014, and is implementing a partial active radio network sharing (MORAN) initiative for 2G and 3G technologies in Greece.

An attempt to merge the two companies was abandoned in 2012, due to Vodafone’s concerns that the Greek economy would default on its debt.

It now seems that the pair have found common ground with the 50:50 split venture, which will concentrate mainly in regions of Greece beyond large urban areas.

Executives at both Vodafone Greece and Wind Hellas have estimated that up to 70% of their provincial 2G and 3G networks could be shared, as well as 40% of nationwide “urban” areas. However, Wind Hellas will not receive access to any of Vodafone’s 4G LTE infrastructure, and the latter has also confirmed that the deal excludes its 3G infrastructure.

Developed from the ground up, Victus Networks has been involved in the initial design phase through to full management of the networks, and is now run by Nikos Babalis, previously CTO at Wind Hellas and also head of core network at Vodafone from 2005 to 2008. The 15-year venture employs more than 250 engineering staff from Vodafone, and Wind has agreed to invest more than €150 million over two years in construction and equipment.

Greece has certainly been a turbulent place for business over the last few years, but analysts at BMI are now saying that the sector “appears poised for a significant overhaul, as Vodafone sees an opportunity to intensify its competitive assault on the dominant provider, OTE”.

In a recent report, the firm notes that the creation of Victus Networks is one way that Vodafone is attempting to thwart OTE’s dominance.

“OTE has taken steps to fend off the rising competition, making an acquisition bid for wireline operator Forthnet’s pay-TV business in July 2014, only to see traditional rivals Wind and Vodafone pool their minority shares, together adding up to nearly 40%, in order to thwart OTE’s plans,” BMI summarises.

With Greece in need of a compelling alternative to OTE, Vodafone could be that player, and Victus Networks is undoubtedly a step in the right direction.

Telstra and Telkom Indonesia
In a bid to develop Indonesia’s enterprise market, the country’s largest telecoms provider has teamed with Australia’s Telstra to establish a joint venture.

The venture will largely focus on Indonesian enterprises, multinationals and Australian companies operating in the country, and is designed to deliver network application and services (NAS) to those players.

Indonesia is in an early stage, fast-growing NAS market, and we believe partnering with Telkom Indonesia will provide the joint venture with many benefits,” a Telstra spokes-person told Capacity. “It will also provide the continuity of NAS solutions to Telstra customers as they seek growth in Indonesia.”

Analysts at Analysys Mason expect Telkom Indonesia’s fixed mobile offering to soon be “obsolete”, so the partnership with Telstra seems a natural fit for the operator to expand its offerings into other areas. With a large enterprise government base, Telkom Indonesia has an impressive domestic connectivity reach and the company’s enterprise division has a strong sales force which predominantly sells connectivity to customers. “This sales force will be the primary sales channel to market, along with Telstra’s enterprise sales force,” Telstra said.

As well as NAS, initial services from the joint venture will include locally supported managed data network services, security services, unified communications and cloud solutions such as infrastructure-as-a-service (Iaas) and software-as-a-service (SaaS).

The deal forms part of Telstra’s strategy to build up its business services division and shed non-core assets, which has also seen the company expand into cloud computing via the acquisition of O2 Networks earlier this year. Telstra also sold its stake in directories business Sensis in January, as well as its Hong Kong mobile business CSL in December, to raise capital for its new ventures. With a start date in 2015, the venture will involve 15,000 members of staff in three continents, but it is yet to be officially named.

The brand for the joint venture will be determined by Telkom and Telstra to best leverage the respective strengths of the two brands and reflect the market opportunity. Its management structure is also a work-in-progress, but it will be headed by Phill Sporton, who has left his position as a Telstra executive for the role. Sporton – who has relocated to Jakarta – will be responsible for building the team up from scratch to ensure the company delivers on its objectives.

IHS Holding and MTN Nigeria
Following a trend sweeping the African marketplace, tower management specialist IHS Holding and MTN Nigeria have agreed to launch a joint venture to create a tower company in the country.

Tower sharing has become something of a phenomenon across Africa, and the deal between the two companies is designed to reduce MTN’s operational cost, boost network efficiency and expand the company’s voice and data capacity.

IHS will have full operational control of MTN’s 9,151 mobile network towers in Nigeria, and will market infrastructure-sharing services to other mobile operators and ISPs in the country.

“There is massive growth potential in Nigeria,” says Issam Darwish, CEO at IHS. “Broadband will be the most important factor. Part of the reason mobile operators are selling their towers is to free up capital and resources to concentrate on this opportunity.”

And that certainly seems to be the case with MTN Nigeria, which expects the separation of its mobile network towers to allow it to focus more heavily on developing other areas of the business.

Michael Ipoki, CEO at MTN Nigeria, says that it “reflects a major part of our strategy to optimise network quality and technological assets towards creating value and driving innovation to meet our customers’ needs, now and in the long term. We will continue to embrace strategies that enhance our services to our customers while ensuring our long-term business continuity, without compromising best practice”.

IHS and MTN are only one example of such a venture in Africa, with Bharti Airtel and Helios Towers penning a similar deal in July 2014. The deal saw Airtel sell 3,100 telecoms towers in four countries across Africa for approximately $500 million. Later in September, the operator sold 3,500 of its African mobile masts to Eaton Towers.

“As markets mature, tower sales and sharing makes commercial sense as the competitive advantage shifts from network coverage to differentiation by quality and service, and cost efficiencies,” says Peter Takaendesa, analyst at Mergence Investment Managers. “The regulator has recently sanctioned mobile operators in Nigeria for poor network quality of service, which suggests there is still room to compete on network coverage and capacity in the country.”

Pending regulatory approval at the time of writing, the venture is hoped to finalise at the end of 2014. The new company also commits to $500 million in additional investment for tower upgrades, as well as a four-year maintenance agreement to improve MTN Nigeria’s offering.