Tele2 CEO: the sector feels price growth, but the competition is active: offers from under the table

Rising prices and staff shortages are also challenges facing the telecommunications sector. Despite the pandemic and its negative consequences, the Tele2 Group’s revenues last year amounted to 268.7 million. EUR, net profit – 64.9 million. The operating profit margin was 28.1 percent. Compared to 2019, revenue grew 7%, profit 14.8%, and the profit margin a year ago was 26.6% lower. This year half. performance continued to improve.

P. Masiulis, CEO of Tele2 for Lithuania and the Baltic States, is currently looking forward to 5G frequency auctions.

– How does Tele2 work in a pandemic? Does it contribute to better results?

– Telecommunications are basically an area less affected by the pandemic. We have painful moments when everything is closed, the isolation is maintained and the stores are closed, then we cannot sell the equipment. And equipment sales continue to make up a significant part of the business.

For example, in March and April of last year, we experienced a very steep drop, but then we quickly adjusted, started selling by phone, and found a different contact with our customers.

And the use of communication services is basically only increasing: when people communicate remotely, there are more video calls, video conferencing, more mobile communications are used, there has really been a very strong increase. As the purchase of computers and phones grew. We do not fall into that area of ​​activity that suffers.

– Now in Lithuania there is a rapid growth in the prices of goods and services, how is this reflected in the telecommunications sector?

– Prices are rising, we feel very strong. First of all, what we feel is that the supply of equipment and telephones is somewhat disrupted. We already feel stronger in September. Even Apple has circulated a message that there are planned outages due to missing chips. The lack of chips is relevant for practically all technologies.

We may not feel that the equipment needed to expand the network is lagging, but the provision of telephones is more difficult.

Equipment prices are also increasing, especially for network construction. Inflation is really felt and I don’t know if it will end. It’s been every year – there’s always inflation in this industry as technology changes.

– Could this also affect the prices of services to consumers?

– Services – not yet, we don’t plan. Some services have been affected in the past as prices have risen slightly. But I think the price increase is small, significantly lower than the price of the equipment we bought.

The main thing in Lithuania is that we have a very good situation in terms of quality of service and prices. If we compare the prices of Lithuania with all EU countries, they are lower. In countries where purchasing power is similar or even lower than in Lithuania, prices are higher. It seems to me that in the EU we are second or third from the bottom in terms of cheapness; perhaps only in Bulgaria prices are slightly lower, but there is also much lower purchasing power.

I think this is a fantastic situation. If you look at the prices in Europe, whether you go to Germany or Italy, you won’t be able to make 50 euros a month. And with us – 6-7 euros, there are plans even for 5 euros, even 10 euros. People, I think, have this in mind, compared to other European countries, the prices here are low in terms of the quality offered.

– Don’t Germans go to Lithuania to buy Lithuanian SIM cards when roaming charges are no longer in Europe?

– You know, I had those thoughts, but at the last minute a regulation was implemented in the EU that, in principle, we cannot sell to foreigners. But the EU is moving towards that project. Decentralization of communications, deregulation The EU is probably the most active in the field of communications. We look forward to deregulation. So imagine the possibilities that Lithuania has throughout Europe. It’s fantastic.

However, this would force us to reduce roaming rates in other countries, and here we can no longer adjust, we get the charges they give. But the EU regulates them, and the ultimate goal of the EU, as far as I understand them, is to be zero or close to zero, then everyone can compete. Sure, the big operators will have a hard time allowing such a thing, but I think it is possible.

– How would you assess the competition between communication operators in Lithuania? In the past there were famous price wars, now everything seems to be over.

– Covered from the outside. For example, if you go to the salons, you will visit and get many discounts at various salons. And for that reason, we see that the market does not sleep. She can not sleep. You may not see that difference in publicly available prices, they don’t seem to change. But in reality, there are such so-called postal offers.

– The 5G frequency auction is still being postponed in Lithuania – What plans would you have, do you plan to invest more here?

– Currently, Tele2 in Lithuania, Latvia and Estonia only makes regular investments in network expansion; we are waiting for the 5G tender.

As far as we know, an auction should already take place in the fourth quarter. We really want a license and we build a network right away.

The specificity of 5G is that it is about ultra high bandwidth but short range frequencies. We will begin to put this connection where it is most needed: populated areas, especially large cities.

It is not worth expanding this connection on the roads; It is not clear if the connection will be on the roads. Maybe I will, if necessary. But in principle, in terms of usability, it is more relevant in densely populated areas, where there are many people who can use such technology immediately.

– How much could it cost to develop 5G network In Lithuania?

– Now we are still waiting and we will evaluate what the frequency prices will be, then we will plan. However, if a network were built with the same coverage as the current one, that price would be ten times higher than what was already invested in the past. Due to the fact that the frequency of the base stations must be higher, it must be calculated very strategically. 5-6 times more stations are needed than usual.

– Currently, there are more and more initiatives in the world to develop satellite communication – expands businessman Elonas Muskas Starlink Networkand Apple has announced that the thirteenth version of the iPhone will support satellite communication. How do you rate such unconventional competition?

– We know about this, but such services do not compete directly because the satellite cannot provide the same Internet speed, it is more for sparsely populated areas. There are almost no such territories in Lithuania, because in practice 100 percent. territory covered by mobile communications. This could be more relevant in the maritime, automotive or shipping industries, the Internet of things. In Lithuania, it is not so necessary, where the usual internet and the price are much lower, and the speeds are much higher, and the quality is better.

– There has been a recent trend for telecommunications companies to integrate television or other media services into their operations. Is this a coherent and logical direction for the development of the sector, as you see it?

– It’s everywhere. We also provide TV, we have partners and many customers – we offer the Go3 package to customers who want it.

– How do you assess the current situation of the labor market?

– I’m really a bit negative about the difficulty of finding staff. It started first with the people who received benefits; they weren’t looking for much work. Now those benefits are gone, but the market is not very active yet. For the first time we are faced with this situation: although it seems that there is a pandemic, people need work, but it is difficult to find workers.

We even have a program like this: we pay bonuses to our employees so they can find colleagues. I don’t know how long this is going to last, I can’t explain it, I don’t know all the nuances, but it’s not a good situation.

– He has led Tele2 since 2003 and since then the company’s performance has reached heights. Have you not considered a career change yourself?

– No, I’m not considering it now, I think we just have to get up.

– Where could the company continue to grow, what innovations do you intend to offer to customers?

– We have thoughts, but the above must be done, not revealed. But the variety of strategic directions that we are considering, at the moment, is clearly the main thing: the development and maximum use of 5G.

– Thanks for the conversation.