NEW YORK-Silvio Scaglia, chief executive officer of Omnitel Pronto Italia S.p.A., called it the “What we are doing today that others will do tomorrow” plan.
The Italian carrier has executed a series of steps to further its goal of making its mobile telecommunications services a landline replacement, Scaglia said June 16 at the “Wireless & Satellite Conference,” sponsored by Donaldson, Lufkin & Jenrette Securities Corp.
In May, Pronto Italia deployed new cell sites with a radius of 50 miles, double that of the older models, Scaglia said. The company ties the compensation of all of its employees to results of frequent customer-satisfaction surveys, and this “gives us a consistent advantage over competitors.
“Our market share has gone from about 27 percent in February 1997 to more than 40 percent today, although we charge a price premium of 5 (percent) to 7 percent over competitors,” Scaglia said.
For corporate customers, Omnitel Pronto offers five-cents-per-minute calling plans for conference calls within work groups; 16-cents-per-minute plans for companies to call a preset list of their preferred customers; 25-cents-per-minute outside the first two groups.
Furthermore, long-distance wireline calls for business or personal reasons are quite expensive in Italy, so Omnitel’s wireless service can beat them on price, he said.
Having discovered that off-peak discount rates to consumers cause a network-straining migration to off-peak usage, Omnitel Pronto developed two alternatives. Customers can designate a single four-hour, off-peak period anytime between 10 a.m. and 10 p.m. Alternatively, they can take advantage of zoned billing plans in which all calls at any time within their domicile city are charged off-peak rates.
“Our strategy is a continued attack on wireline with wireless through product development,” Scaglia said.
“By the end of 1998, we will have $2 billion in revenues and 4 percent of the total Italian telecommunications market. By 2005, we will have $6 billion in revenues and 16 percent of the total.”
Prepaid plans
For Luxembourg-based Millicom International Cellular S.A., which has 33 cellular operations in 20 countries, prepaid calling is key to its growth strategy in developing markets, said President Marc Buels. The carrier has introduced prepaid services in 15 of its markets so far.
“It helps manage bad debt in the more difficult markets, like Asia, and allows us to broaden our distribution channels,” he said.
Millicom has operations in a number of Asian countries, including Cambodia, Pakistan and the Philippines, the latter being the only one of its markets in that region that has experienced a “slowdown.”
The carrier also is a national license holder in several Latin American countries, including Bolivia, Honduras and Paraguay.
“We have announced the sale of our assets in Latin America, but are still working on the plan,” Buels said.
Meanwhile, it is expanding its presence in Eastern Europe, where it has interests in a dozen Russian cities.
“Ours is an [Advanced Mobile Phone Service] strategy, creating a big footprint,” he said.
Millicom also is the 100-percent owner of Multinational Automated Clearinghouse S.A., which handles an estimated 70 percent of the market for clearing Global System for Mobile communications calls.
“Four to five years ago, MACH didn’t exist, but it had revenues of $3.7 million and cash flow of [$500,000] at March 31,” Buels said.
“We are looking forward to an increase in roaming traffic, especially in Europe.”
Nextel expands
While Millicom may be exiting Latin America, Nextel International Ltd. sees that region, as well as Asia, full of opportunities for its enhanced dispatch services, said Keith Grinstein, president and chief executive officer. Nextel’s goal is geographic diversification to help ensure against financial vulnerability by dependence on a single region or country.
“Almost every day, there’s a rumor about a currency crisis or a political coup-often false or not affecting subscriber growth. What is affected in Asia is [average revenue per unit],” Grinstein said.
“Parts of Asia remain very good, but some are flat. We try to invest in a geographically diverse way. That’s why we’re trying for Japan and other blue-chip Asian markets.”
Even in the best of times, however, selling integrated Digital Enhanced Network services in Latin America and “to some degree” in Asia, is more difficult than migrating existing dispatch customers, like those in the United States, to enhanced services, he said.
“We believe there’s a huge demand for iDEN. A typical U.S. customer may buy five to seven phones. We are looking at a number of accounts (internationally) for 500 to 1,000 phones,” Grinstein said.
“The ramp-up will be slower. We are looking to garner 1 (percent) to 2 percent of the population or 10 percent of the overall wireless market in the international markets we’re in.”
