Vittorio Colao, 51, says operators should have a return on investment in mind when they invest in network development, and that sharing infrastructure makes sense for operators with long-term plans.
He was in Bucharest last week and attended a press conference where the Romanian subsidiary announced the launch of a trial 4G network that already covers 10 large cities.
Asked if the Vodafone group planned such a collaboration on the Romanian market, Colao said he could not offer details about the Romanian market, but made general comments on the situation of the Romanian market.
“I don’t know about Romania specifically, this is a question for my colleagues, in general I think that more network sharing will happen and more opening and mutualizing of investments should happen.”
Vodafone Romania will invest around EUR100 million next year, with a large part of investments to go to the development of the communications network. Orange Romania has also recently finalized investments of over EUR100 million in its network and will continue to invest in the network’s expansion.
Cosmote, no. 3 on the market, has invested tens of millions of euros in its network and plans significant investments next year as well.
In fact all major communications companies on the Romanian market, including Romtelecom, RCS&RDS and UPC, have and will continue to make significant investments in their networks, despite the fact that this will be the fourth consecutive year of decline for the Romanian communications market amid the recession and regulation.
Vittorio Colao added that on a communications market such as the Romanian one the development in parallel of several different mobile and fixed telephony networks with national coverage, which require investments of several million euros per year, would be a waste of money unless operators worked together to cut costs.
“A country like Romania cannot have 4 different mobile networks and 3 different fixed networks, it’s a waste of money. We need to focus on the return of our investments more, so Romania has the advantage of having long-term serious players – Vodafone, but also Orange, Deutsche Telekom, companies like this should have return on investment in their mind and I have no problem to share some infrastructure with a competitor if I get reciprocal conditions somewhere else.”
Cost cuts could also come from Romtelecom sharing its existing network.
“Romtelecom should think the same way – they have an infrastructure, they need to increase the return, they should open it up. Of course if you open the network [the return on investment] by definition will be more than if you only use it [the network] alone.”
The executive says Europe should seek to make a return on investment because it cannot afford to waste capital and that sharing infrastructure makes sense among operators with long-term plans.
“I have no problem sharing my network with Orange in Spain or with Deutsche Telekom in Germany because we are long-term operators. Then we compete “like hell” in the shops, in the streets over customers, that’s fine, but the return on infrastructure investment I think is important.”
Vodafone Group CEO on:
Investments in Romania’s 4G network:
We believe in this market. This is a 20-million country, it has an economy which is, I would say, competitive, not “super” expensive. Of course it can improve in terms of efficiency, in terms of public sector, but if I look at the European context, this is a mid-size economy with conditions that are not expensive and prices have already come down, so if I can add a few euros of value to every customer because of data, it could be a good investment.
The Future of the telecom industry:
I see one potential big positive and one risk. The potential big positive comes from data and from the enormous possibilities that we have thanks to smartphones. Fast broadband is making these into objects that we need more. I always say this is the last thing that we drop before getting into the shower. Think about it: In Europe the average usage of a smartphone is 350 MB [of data] per month, in the US it’s 800, but on LTE it’s 1.5 GB. So we have a future of incredible opportunity, we have to build economic value, which is the job of competition. What could go wrong? I think regulators have to be careful because regulators taking away money with mobile termination cuts, trying to regulate spectrum, competition, privacy, all these things individually are right. The problem is if you put ten of them together, you kill an industry that actually is very helpful for the society, so my plea to regulators and policy makers is ‘”Please take the long-term view, think about the benefit to bring to people and to companies and moderate the regulation.”
(English version by Daniela Stoican)