Telia’s CEO: price is no longer the most important factor for Lithuanians

However, he is concerned not only about the biggest local rivals, namely, Tele 2, Bitė, but also about such big data giants as Amazon, Google, and Netflix. He admits that no pause can be made in this market, and that consumers are the biggest winners in such situation. On Friday, Mr. Dan Strömberg presented intermediate financial results of the company as well as expectations for the remaining period of the year. Cable internet communication is of particular importance to the company. In six months, compared to the same period last year, income of Telia increased by 2.4%, i.e. to EUR 183.8 million. The biggest impact on the financial results of the half-year was made by continuously growing sales of combined Telia One services and cost control.

Despite the saturated and extremely competitive market, the number of Telia clients continued to grow. Compared to the data of June 2017, in the last 12 months, the number of smart TV users increased by 10.6% – up to 220,000, the number of active regular payment-based mobile connection users – by 6.9%, and the number of fibre-based internet users – by 6.3%.

However, to attract clients, one needs to fight, since competition in this market is huge. “We have never seen the competition as fierce as in Lithuania. The reason lies in the fact that we are on a relatively the same level as our rivals. Tele2 is maybe slightly bigger, but also works brilliantly, for this reason, we cannot simply float and do nothing. I guess such competition is a good thing. This is, actually, how it should be. We put every effort in trying to cope with the competition by offering a better quality connection, focusing on a higher involvement of clients and more qualitative service. Our strength is combination of cable and portable internet. I am confident that this is the future. This is the reason, why we still have cable connection in Norway. We have always felt that we could not survive in Norway without a cable connection,” he said. “Both Telia and Tele2 compete actively over clients, mobile internet connection and fibre-based internet connection at home. As Mr. Strömberg put it, the winners in this situation are the clients: “They receive increasingly more offers and more products. Besides, I do not think Tele2 and Bitė are the only rivals. I am concerned about the future developments with regard to Google, Amazon, and Netflix. We have to observe them closely, see a wider picture and find our niche. They are very big, and we are small. This is the reality.”

Nevertheless, he admitted that the continuous competition in the areas of mobile and internet connection affect and adjust their profits. He said that price is no longer the most important thing. The telecommunications field is nothing new for Mr. Strömberg. In 2013–2015, he was the CEO of Omnitel (it is now part of Telia Lietuva after the merger). From 2016 to July this year, he took the position of the Chairman of the Board and CEO of Telia Eesti AS. He did not deny that he had noticed differences in clients’ wishes in 2013–2015 and nowadays. “Before, price was everything. Prices, prices, prices – they were the most important in Lithuania. Yes, they are still important (he laughs) but this way of thinking has changed. Clients want better quality now. Even rivals speak of this more. Quality means not only good quality of connection but also qualitative service and communication with clients.”

When asked of how the company was affected by the decision of the European Commission to abolish the roaming service fee and provide the customers with the possibility to make phone calls and surf the internet in the European Union at the same price rates as at home, Mr. Strömberg without hesitating said that the effect was positive. “I think that the main mistake was that such decision was not adopted earlier. I used to find it strange that upon the entry of another country, mobile internet connection was discontinued. I always thought that they were my clients, so I could never understand, why they turned off the services provided by my company.

So, it was right to do that. Yes, it has affected our profits but our customers use the internet abroad, more thus, they use our services more actively. Eventually, it is a win-win situation,” he added. Mr. Strömberg thinks that actions with 5G were too soon. In Q2 2018, Telia made one more step forward in technology change when it was the first in the entire country to have started re-broadcasting smart television through mobile LTE 4G network. This technology has replaced the old digital terrestrial television (DVB-T) the re-broadcasting of which will be discontinued as of this autumn. Late June, the number of 4G+ and 4G++ base stations which ensure a particularly fast mobile connection amounted to 870 in the Telia mobile network and already accounted for 66% of the whole mobile connection network. However, Mr. Strömberg claimed that we would still have to wait for the 5G connection.

“First of all, I think that such phone producers as Huawei and Nokia were too quick with the introduction of 5G in their devices. There are still no mobile connection stations to support 5G. And they have to be there. I suppose a few years are still needed for this technology. I my view, Tokyo will see the breakthrough as late as in 2020. First, 5G will be useful in some locations. For instance, in places where mining works are conducted and where works need to be controlled and supervised remotely. This will be beneficial for business clients. How this will affect private consumers? I guess we will have to wait for a result. 4G connection covers almost all needs of private consumers. I am not saying that we will not have 5G connection. It is only that everyone is already talking about 5G. It’s like a matter of fashion. What we see now is more like testing but not the real use of the connection,” he noted. He also forecast that with the technology developing and moving forward so fast, cable phones will gradually disappear.

“I cannot foresee when this will take place exactly but I am sure that we will no longer have them. I guess cable phones will still be there for at least 5 years,” he said.