1

How to How to compete compete

in a in a

liberalized liberalized

Telecommunications MarketTelecommunications Market

ADRIENS Millennium Edition

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ObjectivesObjectives

This presentation:Gives an appreciation of the global

marketplace for trade in services.Defines the changing global &

regional telecommunications market. Presents industry best practices

(strategies) for taking advantage of the market signals.

Introduces a “road map” for service providers.

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…Consumers are spending differently…

1.1. In the In the Agrarian AgeAgrarian Age, 70% on goods, , 70% on goods, 30% on services.30% on services.

2.2. In the In the Industrial AgeIndustrial Age, 60% on goods, , 60% on goods, 40% on services.40% on services.

3.3. In the In the Infotronics AgeInfotronics Age, 50% on goods, , 50% on goods, 50% on services.50% on services.

4.4. And moving to 30% on goods, 70% And moving to 30% on goods, 70% on services.on services.

Source: Ruthven, P, Social Landscape of the 21st Century, IBIS Business Information, 1997:14

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1. Markets are being 1. Markets are being globalized…globalized…

1. Markets are driven by freedom to move goods & services; freedom to move people, and freedom to move capital.

2. The deepening of the free flow of factors of production (globalisation) is powered by free trade (liberalization), developments in technology, and changing consumer behaviour.

3.3. The The framework of the rulesframework of the rules within which within which economic activity takes place is economic activity takes place is defined in defined in the frameworkthe framework of the WTO, FTAA & the of the WTO, FTAA & the CSME.CSME.

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The CSMEThe CSME means competitiveness means competitiveness

Article 46 allow for the free movementfree movement of of five categories of workers –five categories of workers – university university graduates, media workers, sportspersons, graduates, media workers, sportspersons, artistes and musicians; artistes and musicians; & the& the harmonization and transferability of social security rights, the elimination of the requirements for passports, permit of stay & permit of work.Labour mobility:Labour mobility:1.1. Makes for more efficient allocation of Makes for more efficient allocation of

resources.resources.2.2. Reduces Reduces labour market pressurelabour market pressure, , regulates regulates

the pricethe price of labour, of labour, increases productivityincreases productivity, , adjusts movementsadjusts movements in wages & productivity, in wages & productivity, & boost output.& boost output.

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Organizations Perceived as Beneficial to the Region, 2005

0 20 40 60 80 100

Percentages

ECTEL

WI Cricket

LIAT

OPPS

OECS

ECCB

CSME

Source: World Bank Survey of OECS Countries, 2005

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Why is there support for CSME?• …Regional growth & purchasing

power 1. Between 1961-2002, average per

capita GDP growth for a median Caribbean country was 2.8%, higher than Latin America in every decade (World Bank, 2005).

2. There is an expanding middle class in the Caribbean society, a highly liquid financial system, and evidence of the making of a credit society.

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Some countries are among the most indebted economies (% of GDP, 2003)

0

20

40

60

80

100

120

140

160

180

200

Leb

anon

Guy

ana

St.

Kit

ts a

nd N

evis

Arg

enti

na

Jam

aica

Ant

igua

and

Bar

buda

Dom

inic

a

Gre

nada

Uru

guay

Bel

ize

Phi

llip

ines

Bra

zil

Tur

key

St.

Vin

cent

and

the

Gre

ns.

Bar

bado

s

Mal

aysi

a

Indo

nesi

a

St.

Luc

ia

Egy

pt

Pan

ama

Col

ombi

a

Tri

nida

d an

d T

obag

o

Ecu

ador

Mex

ico

Hai

ti

Bul

gari

a

Tha

ilan

d

Bah

amas

, The

Sur

inam

e

Sou

th A

fric

a

Source: Country authorities and Fund staff estimates.

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…persistent human capital flight….

0

2

4

6

8

10

12

2004

E AfricaE AsiaW AfricaN AmericaS AmericaW AsiaS EuropeN EuropeC AmericaCaribbean

The Caribbean may have the lowest number of migrants in the OECD countries, but has the fastest rate of increase & the highest emigration rate in the world.

Source: IMF, 2004

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…youth purchasing power (%)

Education/Sec Unemployment

Antigua/Barbuda 81 13

Dominica 91 56

Grenada 88 24

St Kitts/Nevis 100 11

St Lucia 77 37

St Vincent/Grenadines

67 39

OECS 81 32

Jamaica 67 52

Trinidad/Tobago. 69 40Source: Wendy Cunningham, World Bank, June 7, 2005

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The telecom market…

Worldwide telecommunications revenue totaled $2.1 trillion in 2004, up 9.4 percent from 2003. The U.S. market accounted for $785 billion, while other regions spent a combined $1.4 trillion.Overall spending on telecommunications will grow at 10.5% annual growth rate. Among the 25 major industry growth segments, the product winners include Web Conferencing and Video Conferencing; & Prepaid Telephony, including wireless and Internet. Source: Telecommunications Industry Association (TIA) 2005 Market Forecast

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…but penetration rate is lowTeledensity(Main lines per 100

persons)

ICT Access(Internet users per

10,000)

Caricom Avg.

27.70 507.96

Canada 65.51 2,014.15

USA 66.45 5,014.91Source: Caricom Secretariat, 2003For the OECS, regional cellular penetration increased from 2.3% in 2000 to an estimated 63% by end the first quarter of 2004.Direct investment increased from EC$108m in 2001 to EC$234m in 2004. (World Bank, 2005)

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4. How to become an industry winner

In market driven by fierce competition, converging technologies, and customer power, become a ecome a brand-ledbrand-led industry industry winner by building capacity, and winner by building capacity, and increasing efficiency. increasing efficiency. Industry winners have:

1. Modernize their IT infrastructure to reflect current technologies in an effort to maintain market share and increase revenues.

2. Adapted & re-engineered their processes to get rid of production and distribution rigidity.

3. Adopted an aggressive posture in small markets. Digicel, AT&T Wireless (Cingular) have been very active, purchasing licenses and launching service throughout the region in an attempt to secure their position as regional players.

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4. Control Pricing & service

• Bring expenditure in alignment with revenue in order to cushion against price movements.

• Reduce overheads by outsourcing selective services.

• Target investment capital in product lines in which you have competitive advantage.

• Reduce unit price of instruments in high demand market in order to maximise revenue from accessories.

• Establish industry standards for employees.

• Raise productivity levels.

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Thank you for your Thank you for your

patience!patience!

YourYour commentscomments,, questionsquestions && outbursts outbursts are welcomeare welcome