The business case for the German Electronic Toll Collection (ETC) system

One of the most controversial topics recently discussed in the political scene in Germany is the proposal by the German Ministry of Transportation to introduce a toll fee for passenger cars in the country.

In Germany until now, passenger cars pay no toll on roads and motorways. With about 60 million registered passenger cars and over 12.000 km of motorway infrastructure (‘Autobahn’), there is probably no other country worldwide that lets passenger cars take advantage of so many kilometres of roads for free and without any kind of toll.

This is about to change once the Ministry receives blessing for its proposal from the political landscape in Germany. Obviously, many aspects have been fiercely discussed already, ranging from legal issues regarding compliance with EU regulatory laws, to concerns on data privacy through to the question of the overall economics of the new system.

The future of NSN: a happy-end at last?

There are reasons to be concerned about the future of Nokia Siemens Networks (NSN).  Since the merger of the Nokia and Siemens telecoms infrastructure businesses in 2007, the Joint Venture never had a single profitable year:  operational losses were

-€1.3bn, -€0.3bn, -€1.6bn, -€0.7bn, -€0.3bn

in the years 2007, 2008, 2009, 2010 and 2011 respectively. The cumulative operational loss over 5 years is -€4.2bn. The average annual loss amounts to -€0.847bn over the period.

So something radical had to happen. It did. In November 2011, NSN announced that it would refocus its business on mobile broadband.  As part of the re-organisation and strategic shift, the company announced that it would get rid of 17,000 employees worldwide.  A few thousands more will be transferred to other firms with the carving out and selling of a number of product lines. In total, about 1 employee out of 3 should go.

Mobile Money study for IFC

IFCOur consultancy partner in Canada, Intelecon Research & Consultancy, recently completed a project on mobile money for the International Finance Corporation (IFC). The full report (available at ) provides a theoretical framework and methodology that is a powerful tool for assessing any country’s m-money development potential.

The Mobile Money Study provides insight into the type of business model most appropriate in a specific country context, the sort of partnerships needed, the type of regulatory environment required to enable m-money development, and – finally – the developmental paths that m-money might take.

Four countries – Brazil, Nigeria, Sri Lanka, and Thailand – each of which represents a different world region, socioeconomic situation, and financial context – were visited and analyzed in terms of m-money business models. We also studied the two most successful m-money countries – Kenya in the developing world and Japan in the developed world – to compare them with the four countries in our study. The United States was included as a reference point and as an advanced country in terms of electronic payment (e-payment) cards (e.g., debit and credit).

Vietnam’s failed telecom privatisation

Vietnam is an interesting country for telecoms.  In the mobile space, it counts seven (yes, 7!) operators:

  • the three giants ‘Viettel’ (controlled by the Ministry of Defense), Mobifone and vinaphone (both controlled by incumbent fixed line operator VNPT);
  • the four ‘battling’ challengers S-Fone (controlled by Saigon Postel, now that SK Telecom has pulled out of the market), EVN Telecom (controlled by the Electricity of Vietnam EVN), and Vietnamobile (majority controlled by Hanoi Telecom) and Beeline (majority controlled by GTel); the later two are joint ventures with foreign companies Hutchison and VimpelCom, and seem to be struggling.

Source: INVESTAURA, 2010

So in short: 5 out of 7 operators are directly controlled by state companies.  Does this have to be?  OK, private companies in Vietnam were only introduced in 2001, but still, does the government needs to control, directly or indirectly, 5 out of 7 mobile operators?

Huawei’s success wave: who can stop them?

Some people have asked us recently: who is next?   After market consolidation of suppliers, in the form of Alcatel-Lucent in 2006 and Nokia Siemens Networks in 2007, followed by the bankruptcy of Nortel Networks (2009), is this the end of the game?

Last year we heard some rumours that one particular European supplier might give up.  This year we hear rumours about another one.   We are not here to comment rumours – having said that, rumours are a sign that some people, employees and customers are worried.

They had better be.  Huawei has been massively successful in the last 10 years.  Turnover was USD2.7bn in 2002 and USD21.7bn in 2009, a CAGR of 35% over the period.  They have been eating the cake of all other telecom suppliers.

So what is the secret?  Three things: vendor financing at terms you can only dream of, massive investment in R&D, and very dedicated staff who are also shareholders, so it seems.