Head of Tele2 Estonia Chris Robbins finds that the Estonian telecom market is so client-unfriendly that growing business volumes is a piece of cake.
The Tele2 Group will get a new CEO this fall. (Current CEO Anders Nilsson announced his resignation earlier in July – ed.) Will there be changes in Estonia?
I rather think not. The telecom world is so small that everyone knows everyone. Kjell Morten Johnsen is very dedicated to the group. The Estonian unit was on the radar for years as results were slipping, but I doubt he wants to make major changes now that things are on the up again.
When you came to run the Estonian branch two years ago, you promised innovation. What have you finished in terms of that plan?
What I imagined coming to Estonia and what I promised my bosses was that Estonia could become a test market for our products. The market here is small but representative. But there were so many things here that needed to be fixed, starting with the simplest: sales, marketing – everything. I spent the first year seeing to that. We reached innovation last year when we started working with startups. We are currently working with six startups and I believe there is room for another two or three. We laid down rather strict criteria for them: first of all, the solutions they come up with must offer our clients additional value, and secondly, their products need to be ready to market in three months. We have a very good partnership with Avocado. We also launched our own television service. A business that’s been around for 100 years, but a big deal for us nonetheless.
Speaking of television – why do we have a situation in Estonia where clients are offered a faster broadband connection only if they order the ISPs television package?
There are no technical reasons involved. In truth, your internet connection will actually become slower if you also use it to watch television. Telecoms all over the world use this practice to sell more. It’s just marketing and an example of bad practice. Tele2 does not do it.
A few weeks ago, Eesti Ekspress wrote how Telia offers the most expensive internet packages – to be fair, the others are not far behind – that buy clients a very poor service. What is up with that?
When I first came to Estonia and learned that internet costs four-five times more than the European average here, I couldn’t believe it. To be fair, there is competition as far as mobile data is concerned and plan prices are favorable when compared to Europe. But what is happening on the home internet market is just insane. We have the second most expensive service in Europe. It is also crazy what business clients are charged. Whereas this has no technical basis. Estonia has the best fiberoptic cable network, the best towers, while our high-speed internet share is just 11 percent – I have never seen anything of the sort. There is no reason other than Telia dominating the market, lack of competition and the company pretty much doing what it wants.
Why not offer a cheaper alternative? I can basically see the cell tower from here.
We are trying to bring prices down. We are charging half of what Telia is asking for a fiberoptic link. We invested over €8 million in Estonia in 2019 and finished construction of 341 base stations. Our network development goal for 2020 is to boost internet speeds and volumes all over Estonia.
But when can I get a cheap high-speed internet connection?
Telia is also changing, they are offering some clients cheaper contracts following these articles. The Estonian regulators could also take a look around and grow a backbone. But it costs €70,000 to build a cell tower. I hope change will come with 5G.
Do you not share towers?
We share around 20 percent of masts. However, once we get 5G, all three service providers cannot attach their antennas to existing towers as they would simply collapse. 5G will need to be developed as joint infrastructure. Because these masts need to be no more than 300 meters apart, it’s unthinkable for every ISP to build its own towers.
When will Estonia get 5G?
It is being tested in Sweden. We are discussing it in Estonia and can do it as soon as politicians reach an agreement and ISPs sign cooperation memorandums. The technology is there. Some people are against 5G and I believe it will take as long as a generation for people to get used to the idea. It took people 12 years to get used to 4G. But to be honest, high-speed internet is not the only thing than can be achieved with 5G. If that is all we want, 5G connections are not needed.
Why is it that if a person wants home internet and lives 100 meters from the cell tower, it still costs €20,000?
That is another example of how there’s no competition in Estonia. If you have the only cell tower in the area, you can charge as much as you like. In truth, the most expensive part of the work is planning, the physical connection costs less than €100. It’s not rocket science, economic theories have long since shown that competition helps bring down prices and improve quality.
A question from investors. Tele2’s share price has fallen by 7 percent this year. How do you plan to make them money with the Estonian branch?
We cannot hike our prices as Tele2 is known as the cheapest option in Sweden. Luckily, there is immense growth potential in Estonia, looking at the market situation. I believe that once the economy recovers, we can expect growth in the double digits and 30 percent in terms of profit. We are no longer concentrating on major clients. They often require a lot of work while the prices are low. We are focusing on smaller companies – an entrepreneur is still an entrepreneur regardless of whether they employ a single person or ten. Then it turned out there is new demand for office and IT solutions, so we are offering those. We have found new clients on the business-to-business side of things.
How has the coronavirus crisis affected you?
We lost €0.6 million in roaming fees. But ours is a subscription-based business, so the coronavirus did not directly affect our results. We are waiting to see whether the crisis will bring a new wave of restrictions as that might take a toll on industrial clients and these effects could affect the first quarter of next year.