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Emerging markets more important than ever for the Telecom Industry.

The Telecom Industry has had an eye on the emerging markets for years, but in the light of the credit crunch, it is more obvious than ever that there are great expectations on the emerging markets. At the MWC in Barcelona 2009, many companies highlighted their solutions and services for these markets and several prominent people, including Carl-Henrik Svanberg, CEO of Ericsson and Robert G. Conway, CEO of GSMA, mentioned the emerging market opportunities as an important recession antidote.

Due to lower mobile penetration rates, the telecom sector sees high potential for growth in the emerging markets, especially now, when the developed markets have been hit hard by the economic downturn. The downturn are of course also challenging for the emerging markets, but many in the telecom industry believe that these markets are more resilient to the downturn (Vittorio Colao, CEO, Vodafone) and that that the fundamental drivers for growth are unchanged (Jon Fredrik Baksaas, CEO, Telenor). Jeffrey Sachs, economist, director of the Earth institute and special adviser to the U.N., went even further and said that "It is the emerging markets and the developing world more generally which will likely lead the world out of this recession."

If the emerging markets are a savior for the telecom industry, what are the effects of the industry on the citizens of these markets?

First of all, investments in both traditional- as well as telecom infrastructure should undeniable be beneficial. Also, the services and solutions that will succeed in these markets should, due to basic market economy conditions, be of great value for the users and help citizens of the developing world in their daily lives. And last; the timing of this focus on the emerging markets doesn’t only have to do with the financial crisis. We have now reached a time where mobile technology makes it possible to “skip” a communicational evolutionary step and enable the opportunity to “connect the unconnected” in parts of the world where a fixed internet line never was a viable financial option. This will give more people a chance to enjoy the digital revolution that people in developed markets have come to take for granted. Albeit, in the form of a handheld wireless device instead of a desktop computer.

Time will tell whether or not these expectations will be honored, but on paper and in theory, it looks as if there is a high potential of a win-win situation between the telecom industry and the emerging markets.

Johan Svanberg

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