Multiplying Yotas

At the ITU meeting a couple of weeks ago, it announced a trial for the new
mobile WiMAX version, 802.16m, and a new WiMAX phone to be launched.  Yota
is moving at a fast pace these days and its ambitions are no longer limited to
the Russian market.

Yota has announced that it will extend its operations to Belarus, Nicaragua and
Peru.  I talked to Yegor Ivanov, Director of Business Development, about
how Yota plans to manage this expansion.

Just as they did in Russia, Yota does not feel constrained to follow established
industry rules.  I think I found out why.  Most people at Yota do not
come from the telecoms industry and this seems to be working to their advantage. 
They believe they can change the way the game is played, and have tried to do so
in Russia already with remarkable success. 

In the new markets, Yota is not partnering with a local operator, the most
commonly followed path for international expansion.  Yota has a controlling
stake in the local greenfield operators, established partnerships with
non-operator players, and are trying to duplicate the Russian model where it
makes sense.  In Belarus they have complete ownership of the operator. 
In Nicaragua, Yota’s retains 75% of the ownership, in Peru 88%. 

Yota believes that it is easier to work with a local partner that is not an
operator (i.e., less potential for conflict) and with strengths that Yota can
more effectively leverage.  In Nicaragua, Yota is working with a
distribution player that has a good understanding of the specific domestic
market.  In Peru, Yota has worked with a partner to get the desired
spectrum allocation. 

Yota will use the same RAN vendor, Samsung, in all the new markets to keep a
tight time-to-market schedule.  Yota got the spectrum in Nicaragua in
September and they plan to be live in Managua by the end of the year.  They
have a few Russian engineers on the ground to ensure that all they learned in
the Russian deployment will be used in the new environment.  In both
Belarus and Nicaragua, Yota has access to 60 MHz of spectrum in the 2.5 GHz
band, the same band they use in Russia.  For the backhaul, they mostly rely
on fiber, with wireless backhaul were fiber is not available.  In Managua,
they believe fiber is available to connect the planned 20 base stations. 

At the same time, the competitive environment may different, so Yota’s marketing
approach is not necessarily the same as that used in Russia.  In Belarus,
Yota will mostly duplicate the Russian approach, leverage the same media content
partnerships, and offer comparable plans. 

In Nicaragua, however, a different approach is needed.  There, as it is the
case in many Latin American countries, voice may be just as important as data in
getting market share.  Voice calls, especially international ones, are
typically very expensive.  An operator that offers low cost call is well
placed to attract customers.  So Yota will be shifting the focus from media
content, which has a key role in their Russian service proposition, to VoIP. 
VoIP will be offered from service launch, while it is still not part of the
service plan in Russia (the WiMAX connection can be used for VoIP of course, but
Yota does not yet offer its own VoIP service, as far as I know). 

It will be interesting to see how this approach works in different markets. 
Life can be difficult for greenfield operators without an established local
presence in the industry, but this may also make it easier to introduce
innovation and competition as they do not have legacy ties. 

Monica Paolini is the founder and president of Senza Fili Consulting and can
be contacted at
monica.paolini@senzafiliconsulting.com.    Senza Fili Consulting (
www.senzafiliconsulting.com)
provides advisory support on wireless data technologies and services financial
modeling, market research, business plan support, business development, RFPs,
due diligence, and white paper preparation.    Independent advice, a strong
quantitative approach, and an international perspective are the hallmarks of our
work.