LIVE FROM THE GSMA MOBILE ASIA CONGRESS 2010: Executives from Bharti Airtel and Telenor yesterday discussed the unique requirements of operating in emerging markets, with Pankaj Vaish, Managing Director of Communications and High Tech for consultants Accenture, setting the tone by warning that “while the opportunities are great in this market, the challenges are equally significant.”

Sanjay Kapoor (pictured), CEO of Bharti Airtel in India and South Asia, noted that the time-lag between developed economies and emerging markets are “really shrinking”, with the developing world able to “hop skip and jump technologies – by the time we get to 4G and 5G  technologies, probably we will be in-line with the rest of the world.” This is coupled with a population demographic that is skewed in favour of users, for example with more than half of the Indian population being under 25 years-of-age – “the great thing about the youth is that their habits and consumption is very akin to the developed world, and therefore if the digital divide between the developed world and the developing world has to be bridged, then this segment becomes the most pertinent one.”

However, Kapoor also noted the potential for other underserved markets, for example describing rural India as “a country by itself.” Rural India is home to 71 percent of the country’s population, but with teledensity at just 24 percent in March 2010 – although this itself was up significantly from 2 percent in March 2004. “This clearly tells you the potential that still sits on the table,” he says.

International expansion was highlighted as a potential path for future growth, following Bharti’s expansion into Africa with the acquisition of assets from Zain. “We clearly find that the models that we are operating in this part of the world are replicable in many other parts of the world that are still emerging. And therefore one of the ways you can extend your service and the top line and bottom line is expanding the boundaries. We have found ourselves on a journey to Sri Lanka, Bangladesh and now Africa, so obviously that is one way that growth that is possible, if you can replicate your model, and you can drive synergies.”

Sigve Brekke, head of Telenor Asia, noted that the company was well aware of the challenges of entering markets such as India. “I must admit we really thought hard about that; we knew that India is not adding another country, India is actually adding a continent.” In a market driven by “world class” rivals, “what we have seen in India is tougher than any of our international operations.” “But the decision was to go in, because we saw the growth potential,” he said.

Unlike many of its rivals, while Telenor has controlling stakes in its Asian businesses, it is not attempting to harmonise its brands, products and services across its different markets. “Our operational model is not to take out a lot of common operating platforms across many different countries. We operate under different brands, we have different types of pricing concepts and different types of services, because we think it is so important to be close to where the customer is. In every market where we operate, they are different,” Brekke noted. The company does enable staff to transfer between businesses in order to share best practices – “we try to take our synergies through people,” he said.

Interestingly, Brekke also highlighted a strategy of taking small steps with regard to technology rollouts. “We are very careful about moving into 3G. We are operating on 3G in Malaysia, we have experience. We choose to stay out of the 3G race in India and in Pakistan, and in Bangladesh we are also operating on 2G and we have seen very promising growth in data coming from a pure 2G platform.” This means that the operator is steering-clear from low-cost unmetered data services, in order to control its capex needs.