The value of experience
Despite many of its customers keeping a tight reign on spending, Olivier Campenon, BT’s Global Services vice president for the EMEA region, remains quietly optimistic about the coming year
The economic crisis has caused many enterprises to think twice about costly capital expenditure projects, even in some of the booming markets of the Middle East. BT's Global Services vice-president of EMEA, Olivier Campenon, says that in cautious times, the need for an experienced partner is even greater.
"It's probably more critical than before because of the crisis," he says, explaining that trial and error is too costly.
"The decision makers of a company have a difficult task, and where you have to work in a certain level of uncertainty and you don't know how fast the market will pick up, there is a certain level of risk; you don't know how long the crisis will last and whether or not to take a big risk," he says. "Or whether you should just adopt a ‘me too' approach, where you do a like-for-like with your competitor's services. That's a risk that needs to be measured."
As one of the elder statesmen of the telecom industry, UK fixed line incumbent BT has a deep well of experience from which it can draw. From looking after UK-based multi-nationals in the 1980s and 1990s, the Global Services division now has 37,000 employees spread across 53 countries providing networked services and consultancy services to other telcos and enterprises.
Serving multinational companies is "the core business", according to Campenon, who says that consultancy work makes up the remainder. "For us it is not only the planning, as many consultants could do, it is also the operations, as few consultants could do," Campenon says. "That's really what makes us different. We've done it before, we have the people who know how to operate and they can not only talk about it, they can also implement it."
Although the heightened risk of doing business during such tough economic circumstances can be seen as an opportunity for BT to offer guidance, it has prompted the company to exercise caution and put its own growth plans on hold. Campenon says that Global Services practises what it preaches, and is reviewing its priorities to make sure it is focused on key customers.
Campenon says that while it could be described as not seeking new business, he says the nature of BT's approach is to work with only "a few" customers. "We are serving 300 customer here today, so it is very limited. We're not chasing hundreds of other customers so it was not a big change. We were already focusing on a few customers but what we've done is to say that today, we are not accelerating our development say in Pakistan, because we would like to keep that focus."
BT's Global Services division has been singled out by BT chief executive Ian Livingston as the poor performer among the teleco's various divisions. In BT's last quarterly report, Livingston said that "Global Services is making progress although there is still much to do".
In the three months to end of June, Global Services contributed just over GBP2 billion ($3.27 billion) of revenue, slightly less than the firm's retail division but more than wholesale and local loop unbundling divisions. However, quarter-on-quarter revenue has declined and during the quarter to June this year the division made a loss of US$203 million (GBP124 million).
The troubles are partly attributed to a "market trend of lower value and shorter contracts and longer sales lead times as customers delay decisions in the current economic climate", and BT says it expects "a lower order intake" in 2009.
Campenon acknowledges the slowdown in infrastructure spend but he says it is difficult to pinpoint which particular areas have less demand as so much depends on the individual businesses. "What is going to be interesting to see is when that is going to step up again, and what I am hearing is that it will probably come early next year. But it will not take off, it is stabilised now, and it will take off slowly. I would say that it won't be the same. No other company will come back to where they were before, because they will have used the crisis to reshuffle and rearrange and reprioritise what it is that they do."
For Campenon, the acquisitions and new licences issued in the region will be the main drivers of growth, and as the walls of protectionism continue to crumble he says operators need to prepare for greater competition at home as well as diversifying by investing abroad.
Future growth is largely dependant on the region's regulators; as the arbiters of change they can decide to usher in more competitors, but the situation is complicated by the overlaps between the state and enterprise, Campenon says.
"Like everywhere else in the world, it has to be a competitive green field approach. Some of these regulators are directly dependant on the same ministry as the one who owns the incumbent. That creates a tricky situation where the opening of the market might have an impact on the incumbent," he says.
"Our clear message to all of the regulators has always been: this is a short term view. The opening of the market is something that will be beneficial to the incumbent because it forces them to get ready for competition, and that competition will arrive."
One example is VoIP. Many countries in the region are reluctant to unblock access to sites such as Skype for fear of cannibalising lucrative international calls.
"It is a typical reaction to say let's be careful and maintain as much protection as I can on my voice minutes, because I am making a certain level of profit.
"The regulator is here to ensure that this is done properly. And I think it needs more regulation rather than less regulation and again that's the experience we have had everywhere. That you need more regulation, but that regulatiuon is to enable new access to take place.
When asked if telecom operators in the Middle East are meeting their customers' needs Campenon is diplomatic in his response. "There is a real opportunity for them to go further," he says. "This is not blaming them, but it is part of the opening of the market; the more competition they are going to see the more incentive they are going to see for them to evolve and the better they are going to get in their service to customers. At the same time, there are a few spots where they are advanced.
Campenon says that in the mobile environment some operators have developed some attractive marketing services and packages.
"As soon as you have to invest and develop new services it forces you to listen to the market and think about how to do it, and this is the beauty of it," he says. "That is why it is great for them, because there is capability for improvement, and it's great for us because that's where our role is key in this market and that's where we see potential in the Middle East because of all this development that needs to happen that's where BT can help them accelerate on this deployment."
Overall effect of increasing competition can only be good for the region, as new entrants raise the technological bar. "One of the criteria for external investors looking at countries in the Gulf is going to be the ICT capabilities, because that will help the businesses development and performance. It is something which really needs to be seen by each country as an important element for each country's own development," he says.