In our second podcast episode, Kearney partners Anna Kraft and Varun Arora talk to Thomas Chevanne, Head of M&A at Ooredoo Group.
Presented by: Kearney
Hosts: Anna & Varun
Transcript:
Anna Kraft : Good morning, good evening, good afternoon. Today we're really excited to have Thomas Chevaane, who is the current head of M&A at the Oreedoo Group. Oreedoo is one of the largest telecommunications companies in the Middle East and Northern Africa. Prior to this role, he was the Chief Strategy Officer at Indosat, and he's been a global board member of MEF. Welcome Thomas.
Thomas Chevanne : Thank you. Happy to be here.
Anna Kraft : Great, thank you. Thomas, we start each episode with the guests sharing a bit about themselves. Can you share a few highlights on your career and what you're passionate about in tech and telco?
Thomas Chevanne : Yes, so I've been in this exciting industry for 20 years. I'm from France, but I've lived and worked in almost 10 different countries in the Middle East, North Africa, and Asia. My first job ever was actually to create a startup company. And after that, I worked in consulting and also creating my own consulting company. And I was really part of this growth phase of the industry. I worked on launching five different telecom and media companies in different countries in the Middle East, North Africa and Asia. And after that I joined Oreedoo, where I became the Chief Strategy Officer of INDOSAT, our largest subsidiary in Indonesia, and then came back to the group to lead M&A at the group level across all of our footprint.
Varun Arora : Thomas, you mentioned Oreedoo and different markets and we've seen Oreedoo's journey has been a lot of acquisitions and bringing several companies together across the world. How have you got many of these companies to work together?
Thomas Chevanne : Yeah, we're very proud and happy of what we have achieved. Especially lately, you know, we've seen a very good result this year. I think as M&A, you know, it always teaches you to look at how do you fundamentally create value in a business. as opposed to a lot of activities that people spend a lot of time on, but maybe are not really adding to the bottom line at the end that's kind of one of the key recipes here is focus on a few key strategic themes and strategic projects and really let the operations kind of run the day to day with people who are closest to each market, each market being, of course, extremely different, you know, between Indonesia, Myanmar, Iraq, Algeria, Tunisia to Qatar and Kuwait.
Anna Kraft : So continuing on that theme, Thomas, where do you see the future of telecommunications companies? Where will the growth come from? What services do customers want? And where do you think telcos are best positioned to win?
Thomas Chevanne : Yeah, I think telecom companies are increasingly relevant. You know, every individual, every business, every government, needs more and more the services we provide. What we see in this part of the world is businesses going to the cloud, individuals and consumer demanding more advanced media, games, higher quality videos, real time interactions, social media. and governments also, which is a very important driver in this part of the world, driving digital transformation in each country. So I think we see telecom companies really as a key enabler of all of this transformation, in particular with services such as IoT. We see a lot of businesses and partners. asking us for solutions to enable that. We see a lot of growth being revered by AI, obviously, which is driving a bigger demand for all the data that you need to process for these businesses and this transformation as well.
Anna Kraft : Thomas, I come from a market in the Americas where, you know, business on the enterprise side, telcos, pretty much all of the major telcos are seeing a decline in revenues. So what lessons have you learned from telcos in more mature markets? What things do you think you would take away and like what things maybe you wouldn't do?
Thomas Chevanne : It's an interesting question. There are things that are being done in emerging markets that can be an inspiration for telcos in more mature markets. The way for example mobile financial services opportunities have been captured or the way we've had to operate and turn a profit on markets where you have three dollar ARPU as well and the way we look at the certain cost items as well. When we look at more natural markets, one of the key lessons learned I would say the need for scale in each of the market in which we operate. And certainly our strategy is to try everywhere we operate to try and be number one or number two. And this is why we've seen the benefit of that in Indonesia, for example, where we've done this merger last year to create a strong number two with 100 million customers. And we really see the benefit of that scale on a local basis. And I think it's something a lot of telcos in market have seen as well, as to how everywhere you operate, you need to be in a, we say, strong or dominant position in each of the individual countries. One of the other things we see is all the different ways in which we can share the burden of investment and be more focused on where we need to invest. And I think there's been a lot of reconfiguration of telecom industry into having telecom operators separate from DC companies, tower companies, fiber codes in some markets, doing increasingly partnerships to share investments. And I think that's definitely something we have embraced in terms of having different investment models, being somewhat sometimes done in-house, sometimes done within a spin-off, sometimes done through a partnership model as well.
Varun Arora : Thomas, it's interesting you talk about learning from emerging markets and separating out the infrastructure companies and the digital services company. It's interesting that we hear a lot about this telco to techco transition in Asian markets, but we don't hear a lot of that in mature European or US markets. What do you think is the driver of that, especially in emerging markets?
Thomas Chevanne : Yeah, I think to enable that transition, we need to be not a competitor but a partner for a lot of these digital companie. It's something Telcos have known for a while, but have struggled to kind of really put into action. I think being kind of a digital ready partner for this type of company is something that is a very big focus. Part of it also when you ask the difference between market in this region and the different markets in which we operate. I think there is something around the mindset as well. I think we need to keep this growth mindset. Of course, cost efficiency is very important, but if you don't look for this additional pocket of value and you give up on growth, you will not create value ultimately.
Varun Arora : You know, I remember 2017, 18, a lot of big telcos were offloading the data centers. They thought it's not core business. And now we're seeing a lot of interest back in it again. Has something changed fundamentally on the infrastructure side?
Thomas Chevanne : Yeah, I think it really depends on what is the situation in each of the markets. Certainly for us, we see it as a significant investment opportunity. We want to drive increased focus to capture the opportunity and we want to invest up to $1 billion into this opportunity, actually. And in our existing markets, we already have 60% or so market share. I think it's a function really of having the right focus because we recognize it's a very different business from the day-to-day telco business. So we need to have a dedicated team, dedicated company, different mindset and being open to partner. But in our part of the world, definitely we see it as a big growth opportunity, especially given, as I was saying, the move of businesses to the cloud.
Anna Kraft : So, speaking of new opportunities, like how to use AI in our job and how to use AI for our clients. So we decided that we would try something new in our podcast and ask chat GPT what question we should ask you. Thomas. So are you ready for your chat GPT
Thomas Chevanne : Yeah,
Anna Kraft : question? Yeah,
Thomas Chevanne : Go ahead. That's a very good idea.
Anna Kraft : Can you talk more about Oreedoo strategy to transition from a network centric to a service and customer experience centric operating model?
Thomas Chevanne : Thank you, that's a very good question. I think the key to that transition, is really about starting from... the customer needs and not from what we know about the network just to give a specific example, I think we try to move away from things around advertising and focusing on headlight speeds for customers because we notice this is not something that makes such a big difference to them actually. What they really want is a consistent service that allows them to do what they do on a daily basis, for example, watching YouTube videos without buffering. So I think the way we drive the business and even internally and the KPIs and the design is very much around starting from the customer need more than starting from the technology which I think historically has been the way telecoms have driven these things.
Anna Kraft : So one of the things that we've heard from our other Middle East partners too is that the Middle East telcos are facing a shortage of specialist talent. What is telcos role in helping to regenerate that talent base and where are you getting the talent from to rethink? your operating model.
Thomas Chevanne : Yeah, I think it's definitely a challenge for a lot of businesses, including for Teleco for sure. In the region, I think there is a lot of focus, including from the governments, on talent development and education, but clearly it is a challenge. I think for sure we have to make ourselves more attractive, and one of the ways we're doing this is how we change our culture, even things around like working from home and training and how we look at these things. So I think we try to be... much closer to the need of the job market today. So I would say how challenging it has been to attract and retain talent also has created, in a sense, an opportunity for us to get that message across and drive some of the change of culture. processes and habits that you know we wanted to drive anywhere and now we are we are really pushing this work. It's really something that can be an opportunity actually for us to drive with Kench.
Varun Arora : Do you want to talk of an example about a partnership because you talked about ecosystems and how developers can tie up with external players?
Thomas Chevanne : Yeah, so as operator, we know that to stay relevant, we have to build an ecosystem around us. We've done that in many areas. In fact, we have a dedicated team to do that, and we've done that with Microsoft on joint cloud go-to-market google on APG, car companies on IoT and other things. The key thing that we try to focus on is how as Telco, we organize ourselves to be faster and more agile as a partner. and how we kind of scale that up right and do that almost on an industrial basis and We have something like 250 partners now working with us and you present something like 20% of our cash flow So our colleagues in this area are doing a great job and I think it's really as a mention no matter of our focus and being very clear also that We're not trying to compete in this area, we're trying to be an enabler of partners.
Varun Arora : That's right. And, you know, we saw the Open Gateway Initiative where the three of the big seven or big four techs came together with Telcos. So in the Middle East itself, where do you see the digital progression five years from now? And how do you contrast it with Asia Pacific or Indonesia where you've also spent some time?
Thomas Chevanne : Yeah, I think first in terms of the way I would say international investors and people look at the region, I think definitely there's a shift. You know, we see more and more interest to invest into this region. Of course, the the growth in the region has been, you know, has been a key driver of that, specifically for Qatar. I think the World Cup has also been a fantastic showcase of what this country can do as well as really put it even more in the in the spotlight. Definitely now I see that coming into the Middle East. I think what I see in this region is really this transformation of businesses and governments into really going into the cloud. Certainly, I think the regulation, the government, are kind of understanding the need to enable that. And we see a lot of positive drive and so on from the governments as well. So I see that really catching up into digitalization drivers to the cloud coming into this region as well.
Anna Kraft : So one of the things that you talked about earlier is culture change and you mentioned the bringing the World Cup in and what that changed. Like what's Oradu's role and like how do you think about partnering with some of these big, international events to drive growth in the business, change the way people think about telcos.
Thomas Chevanne : Yeah, thanks. I have to say the World Cup was an absolutely amazing experience. For me personally, as a French person even more, but I think for everyone here and everyone who came here, I think I was personally super impressed by what the country has done and frankly what my whole radio has done. I think when we did the opening ceremony, there was more traffic than during the Super Bowl, for example, in the US. It was like the first 5G World Cup. And it was quite amazing because actually for the... users, you know, you're going to a stage where they really expect that now when they go to an event. It's kind of a key part of the experience, you know, they, everyone expects if you go to a, to an event that you can stream it live, they can, you can go on Instagram and, and I would say even many people don't even expect that they have to go on Wi-Fi, they expect to do it on their 4G or 5G network. So I think anyone who thinks around events now has to think along this line as well as to, you know, how we, what's the digital experience on this, on this event. for the public, even for sponsors and businesses and everyone around it. And I have to say, obviously it was a very high pressure environment for my colleagues in Qatar and for our technology team, but frankly it was very, very impressive what the team has achieved there.
Anna Kraft : So I have another question when you look at the markets that Oradu serves, they're so different, right? How do you balance the needs of those like really varying markets and like? Do you try to provide a consistent service across the markets? And anyway, I wonder about that. How do you think about that? The markets are so different.
Thomas Chevanne : It's quite a unique viewpoint on the industry. You can't imagine something more diverse than from the Gulf, Qatar, Kuwait, Oman to Indonesia or Myanmar for sure. I think there are a few things that have to be consistent. There are a few things where we really have to adapt to the markets. The core strategy about, like I say, the need for scale, the need to differentiate the investment model for different parts of the business. the need to be a key partner enabler. So some of the core strategy pillars, have to be the same. But when it comes to kind of the execution of that, and how do you design networks, how do you price offers, how do you design services, of course, you have to do that from the market and you have to be as close as possible to each of the market. And that's why I mentioned when you start from the customer needs, then you will just intuitively do that because the customer needs are different. The priorities are different when you are in the countryside and you need reliable connections to do basic services or you are in a market like Qatar where it's the first commercial 5G network in the world, and so you have a completely different expectation of service. So I think we really have to adapt the execution, but with a consistent core strategy.
Varun Arora : Thomas, last question from me. And I'm reading a book around Africa right now. And I'm seeing that this variety in development. In fact, Singapore's prime minister was in Africa just earlier this week. Do you see 5G impacting Africa in the next few years? Or is it more marketing?
Thomas Chevanne : Yeah, I think when we look at customer needs, I think we should not look at it from starting with the technology, customers and businesses, they need connectivity and they need additional services on top of it, right? And the best way to provide it can be through fiber, can be through 5G, can be through 4G. I think I still go sometimes, we are a bit too focused on each of the G as opposed to the specific need of the... of the customers. So I think it's really, really end-to-end. You need to look at what other customer needs in each of the markets and how do you enable that being through 4G, 5G, tomorrow 6G, or fiber or any other technology that suits their need best, rather than starting from the technology.
Anna Kraft : One more question for me Thomas that you made me think about when you were just talking about that and I was thinking about earlier Being from France and you talked about scale being important so What advice would you give to the European telcos to help drive scale so that they can better invest in their networks?
Thomas Chevanne : I think when you are used to working environments where the cost pressure is much higher and the output is much lower, I think sometimes you can be much more creative on how to be cost efficient. Certainly when I was in Indonesia, I think the way some of these operators are able to turn a profit on very, very low outputs is something that... you could look at re-engineering a bit the way we do things in more mature markets actually, kind of like a zero cost approach. I think the other thing is what I saw is about in these very large scale markets, how do you enable automation more, right? And I think when you have a larger customer base, the business case for you is even easier. So I think you're looking at automation a bit in a different way as well. And I think there are things there also that probably people in sometimes natural markets could learn from us.
Anna Kraft : Yeah, I totally agree. I do. I do. Sometimes, that's a challenge I have with my clients here in the US today it's hard for them to take lessons from emerging markets because they're a bit too wrapped up in the problems that have been and the weight that they carry from the legacy networks that they have.
Thomas Chevanne : Yeah.
Anna Kraft : So... Thomas, we like to wrap up each episode with five questions. We ask everyone the same question, the same five questions. So are you ready for that? Okay, so first one, what motivates you?
Thomas Chevanne : having an impact.
Anna Kraft : What do you like to do when you're not at work?
Thomas Chevanne : I spend time with my 11 and 13 year old daughters and the outdoor, hiking, diving, climbing, mountaineering, paragliding.
Anna Kraft : Okay, nice, that sounds like fun. Lots of adventure. No soccer in there?
Thomas Chevanne : Soccer is to watch, I don't really play. Ha ha ha.
Anna Kraft : Why is the entire telecom industry more relevant than ever?
Thomas Chevanne : Well, I think in simple words, we enter a world where every individual, every business, every organization relies on us every day. So I think you can't get any more relevant than that.
Anna Kraft :That's true if you could change one thing in the industry, what would it be?
Thomas Chevanne: I think precisely having a more positive outlook. I think we are a highly relevant industry and sometimes there's just a little bit too much doom and gloom talking compared to what we are and what we can do.
Anna Kraft : Yeah, I totally agree with that. Okay, last question. What is your most recommended book or podcast?
Thomas Chevanne: Business Wars with David Brown podcast.
Anna Kraft : Okay, great, I think that's everything then.
Varun Arora:Alright Thomas, thank you for talking to us.
Thomas Chevanne : Thank you.
Varun Arora : I hope the listeners enjoyed this podcast as much as Anna, Arun and I did. Have a wonderful evening and rest of the week.
Thomas Chevanne : Okay, thank you. Thank you very much. Thanks for your time. Thank you guys.
