Achilleas Kanaris, the CEO of Vodafone Romania, sat down with Business Review to share his views on Romania as a society and a growing economy. He also brought up two scenarios for the local economy in light of the National Recovery and Resilience Plan (PNRR) and revealed the company’s main strategic directions on the local market. Turning Vodafone Romania into a more agile and fast-paced technology company that Romanians can continue to trust and rely upon for home & office solutions, as well as making the most out of convergence solutions, are among the CEO’s top priorities.
By Anda Sebesi
You’ve been living in Romania for a few months now. How are you finding it as a society and economy, and how does it compare to the other European countries with which you are familiar?
I would start by saying that I like Romania and its people very much; it’s a vibrant country with a bright future ahead. I believe that it has significant economic potential, but this potential could be better capitalised through a more strategic approach to economic development. I have two important convictions in this regard. First, that the country must seize the opportunity of PNRR funds, which can drive transformation towards a more resilient, future-proof economy with higher productivity and competitiveness, a highly skilled workforce, and capability for innovation and technology integration. Embracing this opportunity could help Romania get ahead of other countries, even some in western Europe; otherwise, it will be left behind.
My second conviction is that we need to let the private sector drive the development. In my opinion, the government should work very closely with the private sector, but it should also allow it to take the lead in terms of defining what needs to happen. So, to recap, let’s recognise that the coming period will either represent a great opportunity or a major risk for Romania, and let’s put the private sector in the driver’s seat. This will all make a huge difference in how Romania positions itself within the EU over the coming decade.
What do you think about the Romanian telecom industry? Is it more competitive than those of other countries?
The Romanian telecom market is certainly one of the most competitive markets, at least among countries in Europe. At the same time, it is one of the best markets in Europe from a technology and infrastructure point of view, providing consumers with high quality services at very affordable prices. This is the result of the high level of competition on the market, but also of the considerable investments the industry has made over the years, which have enabled consumers to benefit from new services and technologies as soon as they became available. Vodafone has invested more than EUR 5 billion in the market ever since we launched our services here, and the acquisition of UPC was another testament of our appetite to continue growing and investing in the local business.
Romania is known for having a telecom market with very low prices – among the lowest in Europe. Do you think this is sustainable over the long term?
Indeed, Romanian consumers benefit from some of the lowest tariffs for telecom services in Europe, while also enjoying some of the highest quality services. This has generated an extremely favourable situation for consumers, and that is the positive side of the story. However, extreme competition on the mobile segment is harming the market in the long term, because the more margins get squeezed, the more prices deflate, but unfortunately, the same cannot be said about our raw material costs. That’s the other side of the story, where we have been seeing constant pressure on costs – increased costs for energy (as a telecom operator we are a big energy consumer), equipment, labour, etc. So, in my opinion, the practice of continuously lowering prices that we have been seeing on the local telecom market is no longer sustainable.
I’m therefore seeing two very different scenarios for the Romanian industry’s future. It’s either going to become an amazing market that will act as the platform for the country’s digitalization or a market where we’ll continue our race to the bottom in termsw of prices, we stop investments, we have no more development of 5G, and no more ultra-high speed broadband networks. Based on how things stand today, these two scenarios have about the same likelihood of coming true.
The telecom industry is going through big changes all across the world. What are today’s biggest trends?
Building on the previous question, I think that improving overall efficiency and ensuring sustainable development is a key focus for telecom companies, especially in the context of the growing level of investment required for next generation networks and state-of-the-art digital capabilities to serve customers.
On the technology side, 5G is a key enabler of the digital future and it opens up a whole new era in terms of connectivity and communications services. 5G technology will power the digital industrial revolution. All industries can benefit from it, from automotive, healthcare, and manufacturing to agriculture, transportation, and many others. There are numerous use cases that demonstrate the overall value of 5G, such as industrial automation, smart cities, autonomous vehicles, smart agriculture or remote health monitoring and assistance.
Demand for IoT solutions will continue to grow. More and more companies are starting to embrace IoT-based digital solutions for digitalizing production units, route optimisation, fleet monitoring or energy management. Smart cities also rely on technologies such as 5G and IoT.
What are your plans and objectives for Vodafone Romania? What types of changes do you intend to implement in the coming years?
We are on the verge of reshaping Vodafone Romania and turning it into a more agile and fast-paced technology company that Romanians can continue to trust and rely upon for their home & office solutions. Convergence also remains one of our key priorities for the future, and my ambition is to capture its full potential as a growth driver for the fixed and pay TV segment, but also to leverage our convergent offering so that we can provide truly convergent services to customers, going beyond the benefits of acquiring both fixed and mobile services from us. We are not there yet, but we’re definitely aiming to become a much bigger player in the fixed segment, with a more relevant and compelling convergent offering for Romanian consumers.
Another priority for us is transforming the way we interact with our customers, through all of our digital assets, and to significantly increase the rate at which our customers use digital tools and interact with our digital platforms. Though we have seen a higher appetite and usage of these digital tools during the pandemic, there hasn’t been a clear shift in customer behaviour. We want to accelerate this shift by providing a far better and more meaningful experience of interacting with our digital platforms.
Furthermore, we want to become more of a technology company and grow our business beyond our core connectivity services, moving into the area of digital services for both the enterprise and consumer segments. On the business side, Vodafone has actually been a technology provider for many years now, especially for larger companies, having provided complex digital solutions like IoT and ICT, which go far beyond connectivity. We want to consolidate this approach in the future and bring it to the consumer segment as well.
Will Vodafone eventually become a tech services company (other services than telecommunication)? What is the long term strategy for Vodafone Romania?
Especially for our enterprise customers, we already provide a wide range of digital solutions that bring much more value added for their business and that exceed by far the area of the traditional telecommunication services. Our existing portfolio includes productivity solutions, cloud services, security, and eCommerce solutions, just to name a few.
We are in a very good position to integrate all the features and capabilities that make up a complete digital solution, in order to become a technology and digitalization partner for our retail and business customers.
Are there any differences in vision and strategy between Vodafone Romania and the global Vodafone Group?
We are perfectly aligned in terms of vision across the entire Vodafone Group. On every market where it operates, Vodafone pursues its mission of connecting people for a better future, by being a key contributor to the digitalization of societies and economies, reducing digital gaps so that no one is left behind, and contributing to a sustainable future for our planet.
What are Vodafone Romania’s priorities for 2022? Should we expect any new services or offers?
This year, our priority is to get complete internal alignment with the new strategy and vision of what I call “the new Vodafone.” In terms of our customers, our focus in 2022 will be on enhancing our digital assets and services for both retail and business customers, as well as on delivering truly convergent fixed & mobile services. You will see more solutions being provided for small, medium, and large enterprises, and you should also expect your interactions with Vodafone to significantly improve across all our digital assets.
Vodafone Romania has the second largest number of customers on the market. Do you intend to become number one or is it more important to develop the business without necessarily focusing on your market share?
We obviously seek growth, and our new strategy is built around being as relevant and competitive as possible on the market. However, growth will not necessarily come from the current market share, but rather from new areas of opportunity that we’re seeing in digitalization, ICT & IoT, and integrated technology services that we can provide to both households and enterprises. It’s well-known that we are a leader of the global IoT business; some people are even using the analogy that Vodafone is the Google of IoT. Consumer digital services are also extremely exciting; we have examples of these services being developed on other markets, and we will embark on this journey as well.
How important is it to have customers for both fixed and mobile services? What are Vodafone’s plans for developing its fixed (internet and TV) infrastructure?
I believe customers will look for integrated technology solutions for their homes and businesses, so they’ll choose a provider with a holistic approach that offers mobile & fixed convergence, together with adjacent services such as connectivity for smart homes or cybersecurity.