Nerijus Ivanauskas, chief marketing officer of TEO – Lithuania’s incumbent operator that is 60 percent owned by TeliaSonera – discusses the company's current strategy.
Eurocomms.com: In 2010, TEO’s revenues and profits fell for the third year in a row; when do you anticipate arresting this decline?
Ivanauskas: TEO is very dependent on the overall situation in the market. As the Lithuanian telecommunication market has been in decline in recent years, TEO has also experienced the same trend. However, we believe TEO has achieved good results. The company’s revenue dropped by five percent in 2010 compared to an overall market drop of over 11 percent, while we remain the market leader in terms of revenue and profitability.
The size of your workforce is on an upward curve during the last five years, which seems to buck the industry trend. What jobs are being created?
The size of the group’s main workforce has remained relatively stable during recent years. Growth has come from our subsidiaries, such as Lintel, which operates in the labour intensive call centre business, and our Baltic data centre. Both these companies have shown strong growth in revenues and market share.
Your broadband internet customers are increasing rapidly in number and Lithuania has one of the best penetration rates in the world; how much further can you grow this segment?
Lithuania is a clear leader in technological innovation and fibre technology expansion. However, internet usage is below the EU average and we do not see that changing dramatically in the near future. Surveys show that internet penetration in Lithuania will continue to rise, but only by a couple percent per year. Much is expected from the FTTH network, which is able to provide much higher bandwidth.
Users of your GALA TV services can now access services such as Facebook and Flickr on their TVs. This represents a wider shift in the telecoms industry – how important is giving customers such value-added services to your overall strategy?
Value-added services serve as a basis of differentiation as well as a significant source for ARPU increase.
Much has been made of the impact OTT players are having on operators – do you view them as competitors or potential partners?
TEO has neither the intention nor capacity to compete with global internet players. We believe that our customers will benefit the most by using both advanced global services and local content services on TEO state-of-the art infrastructure.
Is your preference to produce your own services in house or develop partnerships with third parties?
The majority of services and also the software needed to run them are created within TEO. However, if there is a cost-effective and sustainable external solution we will gladly enter into partnerships.
What other services do you have in the pipeline that you can tell me about?
We are continuing to invest in advancing IPTV alongside other additional services.
Are customers paying a fair price for the quality and amount of services you provide?
Prices for TEO’s state-of-the-art internet, IPTV and voice telephony services are below the EU average. Given that economic growth is starting again, we expect ARPU increases in selected business areas, such as broadband and pay-TV.