This will generate growth space for mobile phone operators. Vodafone will try to get as high a share of that as possible despite fierce competition from rivals Orange and Cosmote.
Ravinder Takkar, 45, became in May the CEO of one the ten largest companies in Romania with EUR750 million yearly revenue and EUR100 million net profit.
“The opportunities we have in this country are quite phenomenal,” Takkar said.
“Romania is also a country where penetration of data, penetration of Internet is not very high compared to its peers in Europe and compared to other parts in the world. I think the opportunity is quite significant. (Our first priority) is about bringing all of Romanians onto the Internet.”
Vodafone, the second leading mobile phone operator in Romania, does not provide information about the number of mobile data users, which, Takkar says, is on the rise.
“The smartphone penetration for us, last year compared to this year, has already doubled. Already 55% of the phones that we sell are smartphones. I see no reason why it cannot double in the next two years.”
Neither Orange nor Cosmote publish data about the trend of the number of users of mobile Internet, but the information provided by the operators indicates a surge in the data usage and smartphone buying since last fall. The growth is just beginning, Takkar feels.
“I think the mobile data opportunity is so significant in Romania at this point that our focus predominantly is on that space.”
Out of the 23 million SIM cards, generating more than EUR3 billion revenue for operators a year, mobile data services were used on only 12 million SIM cards in December 2013.
According to the communications market regulator, mobile data services were used on 12.1 million phones and 1.5 million USB modems at the end of last year. Only 4.1 million SIM cards using an Internet option were postpaid, 3 million of them used by consumers and 1.1 million by companies. Assuming EUR1 per month is paid for each SIM card using data services, the yearly spending on such services would amount to some EUR150 million and the doubling of the number of users could take the market to EUR300 million. As operators started to include data services in the call plans next to voice calls and text messages, it is difficult to calculate exactly how much users in Romania pay since the operators do not supply any figures.
After about two months since he came to Romania, the executive who has worked on various management positions with Vodafone over the past two decades says he has already defined a list of priorities for his term.
“Number one is no surprise but it is really about bringing all of Romanians onto the Internet. This is a fabulous opportunity, we would love to see more and more people come and join the connected world, the social world. We believe smartphones and our mobile network are the best opportunity to do that.”
The second priority is the enterprise segment, where Vodafone has a strong position and is working with some of the largest companies in Romania. OMV Petrom (SNP.RO), for instance, is a Vodafone customer.
“We would like to make sure that our leadership in the corporate space, in the enterprise space continues. I believe there are many many innovations and some of them we are already starting to work on with a number of customers in Romania,” Vodafone Romania CEO says.
The company wants to “to continue to build on that leadership and bring more and more of those services to our corporate customers.”
The third priority of the new CEO is the mobile payment service M-Pesa, which has a significant growth potential.
“I was surprised to hear the stats that 40% of the Romanians are unbanked, that means they have no access to banking infrastructure today. M-Pesa is a prime target for those customers.”
The M-Pesa service does not require a bank account or an Internet connection and works on a feature phone, as well. The customer’s account is associated to the mobile number and activated after they produce an ID. The service does not carry an activation fee or monthly fees, with fees charged only when transactions are made.
The service was well received by the market and the growth potential is significant, too, the Vodafone Romania CEO says.
“It’s very early days but we have thousands of customers. There’s a reasonable amount of customers that are already there and they are using it in many ways. Of course anything that is substantial that needs to get into a much bigger scale takes a little bit of time,” Ravinder Takkar says.
“We are very confident that the product and the feature and the functionality, the benefit that this offers are incredible. We have no doubts about that and I think the consumers will really like it. The work that has to be done is in building the infrastructure for distribution and getting that capability into the hands of as many customers as we can. We are actively doing that right now, building the distribution for M-Pesa is a priority.”
(English version by Loredana Fratila-Cristescu)