Financial Times, 8 January 2014: CEO Hans-Holger Albrecht's tech tips for 2014
The Financial Times: the tech outlook for 2014. A guest post by President and CEO Hans-Holger Albrecht.
It’s no secret that more and more telecoms firms have been looking to emerging markets as the frontier for growth. But what will be the market drivers in 2014 as companies look to expand? What trends will the industry’s savvy players look to exploit? Here are 10 trends for 2014 to watch out for.
1. Demand for data in emerging markets will become an ever more important part of revenues, and drive operator investment in infrastructure.
Latin America has seen a year-on-year growth of 16.8 per cent in data subscribers, and Africa has surpassed that growth rate with an increase of 36.4 per cent year-on-year. This represents an excellent opportunity for operators to expand into digital and offer more services for 21st century lifestyles in emerging markets, where many consumers access the internet for the first time from their mobile phones. Internet access through feature phones is also allowing millions to have access to the web. But it also means operators will need to increase investment in upgrading to 3G and 4G networks in emerging markets to cope with the increase in traffic and speed requirements.
2. Mobile financial services will continue to grow quickly, and the convergence between mobile and financial sectors will accelerate.
Across emerging markets, as much as 80 per cent of the population is unbanked. Mobile money is a solution for consumers without easy access to a traditional retail bank, and empowers these consumers to spend money online on goods and services they previously wouldn’t have been able to access. In some countries, mobile financial transactions already account for 25 per cent of GDP. This will only rise in the coming years. As usage of mobile money increases, operators should also be ready to work together with governments and financial institutions who will want to play a role in managing the transition to a mobile and digital economy.
3. We will see a spike in ecommerce across emerging markets.
Ecommerce is the answer to many emerging market shoppers’ problems: the desire to avoid traffic jams and overcrowded city centres, the need to order products not available to buy in more remote regions, certainty that the products purchased are not stolen or counterfeit. Consumers in countries like Brazil and Nigeria will bypass the bricks-and-mortar shopping malls that ruled western retail for decades and go straight to online shopping platforms. Jumia, a leading ecommerce platform in Africa, is already the fourth most visited website in Nigeria – Africa’s most populous nation. Jumia is the first African company to win the award “Best New Retail” in the prestigious World Retail Awards.
4. More handset manufacturers will begin to produce cheaper smartphones closer to their target markets.
Many emerging market consumers can’t afford an iPhone. But they want a smartphone and it is in operators’ interests to make that happen. We have seen examples of local manufacturers such as Congolese VMK stepping in to fill this void with locally-designed smartphones and tablets, as well as premier brands like Apple creating lower-end products like the iPhone 5c which is opening up markets, like China, that have been difficult for Apple to crack in the past. Operators will be looking for cheaper smartphone suppliers, to enable them to get as many consumers as possible browsing the web and using data services.
5. From entertainment to shopping, social media to news, users will want more apps and will expect a high level of local adaptation.
Smartphone users in emerging markets – from China to Colombia to Ghana – want their own apps that solve their everyday problems, provide entertainment in their language and help them communicate with friends and family. We will see more apps which have their own version for individual countries, cities and even neighbourhoods. Hello Food in Ghana allows customers to order food from their local suppliers. Deezer in Latin America provides an alternative to international music apps by focusing on Latin genres in Spanish and Portuguese language. Hello Taxi, a local taxi booking app, was recognised in Brazil as the number one start-up of the year.
6. Networks in Brazil may face network challenges with the boost in mobile data traffic around the World Cup.
While Russia has invested heavily in boosting mobile infrastructure ahead of the Sochi Olympics, similar plans have not gained industry confidence in Brazil. Already prone to bottlenecks even with its relatively low rate of smartphone penetration, Brazil could face service outages during the World Cup. Regulators have come down hard on operators in the country, urging winners of the 4G spectrum auction to upgrade as quickly as possible. However, these operators have struggled to keep up with 3G demand, leading The Economist magazine to label Brazil “The next big blackout”.
7. Latin America will see the bundling trend increase as consumers want more services in one package.
The middle income countries of Latin America have begun to catch up to developed markets in their demand for triple and quadruple play mobile, fixed line, cable and broadband packages. Operators will look to encourage this trend, allowing them to retain customers more easily and offer smartphones at reasonable prices for middle and low income consumer segments.
8. Governments in emerging markets will increase their investment in mobile and digital infrastructure and innovation.
Emerging markets want to have a piece of the digital economy, and will drive forward initiatives to improve internet access to boost jobs, productivity and growth as stagnation in developed markets means that export-led growth models are unsustainable. Uruguay has begun by providing a laptop for every child in the country. And commentators have started to refer to Santiago as “Chilecon Valley” following the government’s Start-Up Chile programme. Mobile operators can take advantage of this trend by offering solutions for entrepreneurs through mobile products and services like mobile money.
9. Cities will be smarter and better connected, offering more points for consumers to take full advantage of mobile services.
Emerging economies will continue to look for ways to get ahead and become more competitive by wiring their rapidly growing urban centres. Mobile operators will seize this opportunity to help cities solve their challenges and improve their citizens’ everyday lives. For example, earlier this year my company, through its subsidiary Tigo, put wifi on public buses in Kigali, Rwanda. In Colombia, Medellin was named most innovative city of the world by the Wall Street Journal.
10. Governments in emerging markets will jump on the e-government bandwagon at an ever-increasing rate.
The opportunities for mobile operators to collaborate with governments in this space are huge and many governments are looking to bring their services online. Two districts in south India have recently announced the implementation of online welfare disbursement and registration of marriage certificates. China’s education ministry plans to use egovernment platforms to provide rural students with adequate education using mobile apps. Millicom has enabled the Democratic Republic of Congo to pay teachers’ salaries via mobile, helping to fight payroll corruption. It also allows Tanzanian parents to register the birth of their children via mobile through its mobile operator Tigo.
Hans Holger Albrecht is president and chief executive of Millicom
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