monica.paolini posted on October 23, 2009 11:57
Yota's international ambitions
Yota has announced that it will extend its operations to Belarus, Nicaragua and Peru. I talked to Yegor Ivanov, Director of Business Development, about how Yota plans to manage this expansion.
Just as they did in Russia, Yota does not feel constrained to follow established industry rules. I think I found out why. Most people at Yota do not come from the telecoms industry and this seems to be working to their advantage. They believe they can change the way the game is played, and have tried to do so in Russia already with remarkable success.
In the new markets, Yota is not partnering with a local operator, the most commonly followed path for international expansion. Yota has a controlling stake in the local greenfield operators, established partnerships with non-operator players, and are trying to duplicate the Russian model where it makes sense. In Belarus they have complete ownership of the operator. In Nicaragua, Yota’s retains 75% of the ownership, in Peru 88%.
Yota believes that it is easier to work with a local partner that is not an operator (i.e., less potential for conflict) and with strengths that Yota can more effectively leverage. In Nicaragua, Yota is working with a distribution player that has a good understanding of the specific domestic market. In Peru, Yota has worked with a partner to get the desired spectrum allocation.
Yota will use the same RAN vendor, Samsung, in all the new markets to keep a tight time-to-market schedule. Yota got the spectrum in Nicaragua in September and they plan to be live in Managua by the end of the year. They have a few Russian engineers on the ground to ensure that all they learned in the Russian deployment will be used in the new environment. In both Belarus and Nicaragua, Yota has access to 60 MHz of spectrum in the 2.5 GHz band, the same band they use in Russia. For the backhaul, they mostly rely on fiber, with wireless backhaul were fiber is not available. In Managua, they believe fiber is available to connect the planned 20 base stations.
At the same time, the competitive environment may different, so Yota’s marketing approach is not necessarily the same as that used in Russia. In Belarus, Yota will mostly duplicate the Russian approach, leverage the same media content partnerships, and offer comparable plans.
In Nicaragua, however, a different approach is needed. There, as it is the case in many Latin American countries, voice may be just as important as data in getting market share. Voice calls, especially international ones, are typically very expensive. An operator that offers low cost call is well placed to attract customers. So Yota will be shifting the focus from media content, which has a key role in their Russian service proposition, to VoIP. VoIP will be offered from service launch, while it is still not part of the service plan in Russia (the WiMAX connection can be used for VoIP of course, but Yota does not yet offer its own VoIP service, as far as I know).
It will be interesting to see how this approach works in different markets. Life can be difficult for greenfield operators without an established local presence in the industry, but this may also make it easier to introduce innovation and competition as they do not have legacy ties.