Generation of thirty years
Can we say that this generation is more active in the business, what methods of communication he prefers and how do you interact with them?
There are several trends that are now in fashion among the new generation. The youth segment (this category of subscribers we include people from 14 to 24 years) respect for reasonable consumption. They do not consider fashionable luxury, most of them advocates of a healthy lifestyle. Generation Z and Y are trying to give more time to sports, nutrition, value their time and, as a consequence, the availability of services. For example, we found that young people are extremely irritating to the filling a variety of ID cards and questionnaires on e-commerce and media platforms. They are looking for a more simple and quick solution.
An important trend is the acceleration of the rhythm of life and care of the cash. Payments in large cities with the use of plastic, less committed, people often pay with their mobile phone. We see this trend, momentum mobile payments are growing at 53% annually and reach tens of billions of rubles. E-wallets in the past and not relevant to this audience.
In addition, this generation does not like to waste time talking, and often writes or sends voice messages to each other. Therefore, the availability of applications and the speed of the Internet play a particularly important role. We see a direct correlation between the speed of loading video on the smartphone and satisfaction of the young customers.
To summarize these trends, it becomes clear that in product strategy, it is important to rely on technological advantage in speed and quality of communication. The faster the Internet the better service and the higher satisfaction of our client. For example, MegaFon’s average speed in LTE throughout the country of 32.2 Mbps, while the global average is 26.1 per Mbps, while the national average is only 19.5 per Mbit/s.
How do you choose a promising business areas and how to develop technology? For example, your competitor MTS has a venture capital Fund.
In 2018 we have traveled all over the world and have looked, as there are corporate venture funds, how do big companies work with start-UPS. In addition, startups are asked how they prefer to build interaction with corporations. And eventually came to the conclusion that CVC-model (corporate venture capital) itself is interesting, but the really successful cases in the world can be literally counted on the fingers — is that a BMW Garage.
We went the other way — created a technology sandbox in the middle of 2018 launched the Innovation Board. This is the main corporate body making decisions about piloting startups, startup ideas, or start-up teams. The members of the Board — managers of key business areas, so the tender does not distract them from their main job and they remain focused on their revenue. Technology sandbox makes recommendations, and when the managers sit in the chair members of the innovation Board, they see the stream of generated solutions. These decisions will either reduce their costs, or simplify business processes.
New projects and team to run in the sandbox come through direct contacts, accelerators and funds, through an analytical search in different databases. Thanks to the sandbox we have redefined corporate and procedural issues in our work with start-UPS, significantly reducing the barriers to entry of young teams. We now have only two conditions for entering the selection: the pilot needs to run a maximum of three months, and the cost of its implementation must not exceed 3 million rubles. Our approach is proven: in less than a year since launch, we reviewed about 800 ideas, 30 of them took in the work, and 10 for operatively and scaled in “the Megaphone”.
What is the solution?
This is an interesting solution in the field of big data — correct markup arrays of big data, construction of data models, one upright, the robotic platform voice synthesis for use in call centers and other public venues service. For example, in development we took the recommendation engines and use their “Megaphone” TV, our online streaming platform with a wide library of content, which more than 5.3 million subscribers. Since we don’t produce content, we have signed contracts with all major studios that produce feature, short or animated content. And it is essential for us to provide the most personalized offer for each of the 5.3 million customers of our service.
You only are looking for startups or you still have the founders?
There are several directions. Sometimes one of the leaders of the team sees interesting idea, and then the team picks up the contact and talks with startup. We are also actively working with accelerators, such as FRII and “SKOLKOVO”. The third direction — work directly with the funds. Our team focused not only on the Russian market, we are actively working with teams from Silicon valley, Israel, Western Europe, and also partners with global presence in developed and emerging markets.
Startups interested in accessing the expertise of MegaFon, our client base and the ability to test hypotheses. MegaFon is looking for new effective solutions, funds, in turn, focused on value growth. Thus, we create a unique win-win model for all parties. The projects in our company “Megalabs” born hits such as “MegaFon” TV, digital Bank card of “MegaFon”, the service smart advertisement “Megaphone. Target.”
You can see the difference between young and Mature employees, is there any difference from what it was five years ago?
The difference is huge. In the HR strategy of “MegaFon” is the block that I pay a lot of attention. It is a strategy for the development of digital talents. The sector which we represent, is actively developing and constantly requires new solutions. As core values we adhere to the employer brand. We work closely with major technological universities in the country, supplying the Department of interesting business cases, which, because of various reasons do not have time to work on their own. In 2018, for example, we had 150 events whose primary purpose is to solve a pressing business problem, look at interesting candidates, and to reward them by grants or to invite.
It is important for us to practice to show that we are not just a Telecom company, a multifaceted high-tech Corporation. It attracts new personnel, taking into account the huge competition business developers, programmers, data sientists. And it is very important how the employer brand “sounds” for young people, highly qualified personnel. In this environment, there is a very important rating of Universum and its category “IT specialty”. We in this ranking has risen by more than 20 positions. Our goal is to occupy a place in the top 10 employers in Russia in the near future.
Who uses the services, products, what age are most actively spends money on telecommunications and related products?
We are represented in all segments and age, and socio-demographic, because we have almost 80 million subscribers. We analyze the needs of these customers and, accordingly, we see the consumption pattern of each of them, know that they are important and interesting. In 2012 we started to build the first team, who were engaged in big data Analytics, studied the customer experience and needs.
Through data analysis, in 2017, we submitted a tariff line of a new generation. Her promotion was based just new consumption patterns, not just in gigabytes and minutes. We changed the dialogue with the customer in our advertising, in sales, in retail stores and at the heart of communications were laid to the needs of the client began to use imperative verbs: look, talk, see, write. Sales instantly increased, the proportion of the line “jump!” in the structure of revenues and the subscriber base is growing steadily, today it is used by more than 18 million customers.
The state and competition
A little over a year since the merger of “Euroset” and “Coherent”. Do you feel that competition with the brand salons of “MegaFon” declined? How has your income from retail?
Merger with the “Connected” was preceded by the separation of “Euroset”, which belonged to us and “Vympelcom” at parity, 50 on 50. The new player is an asset with good potential: 5000 conveniently located stores in areas with high traffic. But the reaction of some Telecom players in creating it, in my opinion, were overly protective. So, competition for traffic has led to the abandonment of commodity margin on all the top brands including Apple. And this is not an example of constructive competition. I very much hope that the rationality of the market return.
We, as the operator, must inevitably contain the network and to spend money on customer service. Own 2000 saloons and 2000 points partner retail is a powerful instrumental base for the promotion nedelkovski services, on which we focus.
Now “Tele2” “Rostelecom” is ready to create a single player. How will this affect the key market players, particularly in “the Megaphone”?
De facto merger began earlier, when “Rostelecom” became the shareholder of “Tele2” and gave the company its mobile assets. Of course, the single player can trigger a new cycle of lower prices in the fight for the customer. More than a year ago, the company launched a converged product. The goal was quite clear — the stabilization of their own base. After all, the average level of churn in the mobile segment is around 40%, and in the fixed-line market it is significantly less 10-12%. When you make cross-offer you multiple reduce the chance of the customer because the man is quite difficult and troublesome to switch to another offer.
Absolutely reasonable, that in Russia began to actively promote convergent products, it is immediately picked up by other companies. Today is an industry trend, so the single player can increase pressure on pricing.
How do you feel about the “law of Spring” and the sovereign Runet? How this law is a serious cost for operators?
“The law of Spring” I take it as imputed tax and refer to him as the same inevitability. It is a very serious cost. I don’t even dare to give an accurate assessment. We do this by realizing that help solve public tasks including. And as long as this condition is equal for all players in the industry, its relative impact is leveled because all conduct business under the same conditions.
Is it high load? Tomorrow at 35-40 billion roubles for the five-year horizon, which we articulated earlier, this is a lot of money for any company. If I had a choice, I would invest the money in marketing, and creating products and services for customers. But the law is the law that we are following.
Sovereign lesbian you with the operators consulted?
No, not consulted. I heard that the state assumes the funding of this equipment on himself and it will not fall on the shoulders of business. What I’m worried about as CEO and, most importantly, what we absolutely don’t want to risk taking impact on the availability of services. Russia now has the world’s lowest price per Gigabyte, filling in the client packages large enough and the traffic volumes per subscriber are growing annually at a rate of about 40%. In this business model need to survive.
On the one hand, it’s a sad picture, with another — is both the challenge, risk, and new opportunities. We are limited in the formation of the cash flow, because the accepted 40% increase in traffic. To do this you can either smart decision, or just “pouring” money to buy more iron and put on their network to build more base stations, lay more optics. But then the attractiveness of the business is greatly reduced. Therefore, we need constantly to think about new possibilities, this leads us to introduce innovative products and services that go beyond the classical Telecom and does not involve mere voice services.
Care exchanges and new technology
What was the attachment of “MegaFon” in the study of big data?
Comprehensively, we did not count them. But you need to understand that these costs included investments in Capex on the analytical platform and Opex for the maintenance of the respective teams.
But we definitely know figure run rate for the digital revenue that we receive from the use of tools of big data Analytics: revenue is already more than 1 billion rubles per month. This is extra money that we earn, guessing preferences of the client. Big data Analytics in the company is now working not only on sales, products and marketing, but also on the optimization of investments. We divide the region into mikrorynki and associate them with the category Manager — high value or low value. Subscribers high value should be full access to all services, including Concierge and roaming options. Low value is, as a rule, pensioners who often only need voice communications. Our task in these mikrorynki is to build a network to meet the habitat subscribers. The result of data analysis looks like a heat map of the city inscribed with a layout of base stations. If before we could make inaccurate predictions — and in this respect the movement of the station at 50 to 100 m is essential — and these errors were forgiven, but now the times have changed and we can’t afford unnecessary expenses. So now we are actively pursuing models of smart Capex for even more effective coverage of our network.
A year later, the base station will be a 5G?
An important advantage of 5G is that technologically, many things become available due to the reduction of delays in data transmission. Everyone understands that in the near future, the country’s economy can not develop without the 5G. 5G network in major cities will grow and cover them completely, but in a continuous coating 5G throughout the country today there is no need neither the state nor the operators, nor the clients themselves. Customers is not necessary, because devices with these chipsets in the next few years will not be enough. Operators — because this high level of Capex. Consequently, the state does not have, because you do not have operators and customers.
5G network will evolve, and where there is a high concentration of traffic or the challenge to build for some industrial enterprises the program of digitalization. That is, they will occur pitting, primarily in Metropolitan areas and large industrial facilities.
I am sure that we will see the fifth generation this year. The pilots we introduced in 2018, MegaFon conducted the first video feed during a match Russia — Turkey prior to the opening of the FIFA world Cup, revealed an innovative medical project in remote ultrasound and held a live video of surgical procedures for Russian doctors.
And what is the role Yota “MegaFon”? It remains a separate company, although similar to another tariff.
Yota came in our perimeter, not only with its modern, bright and brand marketing, which the previous shareholders and team established in the company. Yota was of interest to us the fact that has now become our most important competitive advantage is the frequency, giving the possibility to transmit large amount of data through our networks at the highest speeds. And if before the Yota was a startup, but today it is tens of billions of rubles of our revenue and an excellent example of the younger generation ready for the challenges and experimental developments. For us, it’s a great proving ground for innovation and testing of new products. Therefore, in future we are planning to keep the Yota brand and continue grocery experiments that, if successful, we can quickly and effectively zoom inside the “Megaphone”.
Brand Yota is not much overlap with MegaFon, so long as the results of the company konsolidiruyutsya in our reporting, we are not so scared that Yota reasonable cannibalisim database of subscribers of “MegaFon”.
From time to time emerge stories about the automatic connection by operators to subscribers. Why such situations occur, it is really error or conscious steps operators?
Paid subscriptions are including native demand, and very often it is a pull, not a push model. It is important to understand that in the majority of cases the operators themselves are not beneficiaries, but only intermediaries between web sites and personal account of the subscriber. In my opinion, a paid subscription service and imposed as a kind of business is necessary not only to devalue but also to lower the drain. At least it will reduce the load on our contact centres, as a maximum — will improve customer experience and perception.
But a paid subscription is used by all operators without exception. Their volumes are severely reduced, although to get rid of this kind of business tomorrow is impossible, evolution is going to happen and soon enough.
Media wrote that the departure of “MegaFon” with the London stock exchange is connected with the strategy of digital transformation. What projects are possible to realize thanks to the care of the exchange?
Care of the London stock exchange were strategically established on several factors. First, the change of the business strategy of the company, which aimed to transform from a traditional telecommunications player in the technology company. Second, partnerships with public players. Thirdly, we clearly understand that the transformation will allow us to make deals with a higher ratio of risk-return. The risk tolerance needed to be lower, and in the presence of a large number of shareholders and shares on the stock exchange it is not always possible. Most important, the fourth criterion was the time that the leadership team was spending on compliance with the rules of the exchange. It was necessary several times a year to travel to meet with investors to spend the time and money. While my job now is to focus the team on new product development, optimization, operational efficiency, better customer service infrastructure.
Another important factor is stock quotes. As soon as Russian assets have become more exposed to geopolitical risk factors, quotes ceased to be a real indicator of the development of the company and how much it costs. In these conditions it was difficult to keep the motivation of the team, which tied to the value of the securities. All five of these items were in the complex is extremely important.
Now the main shareholder and the Board of Directors gave the management team the opportunity to take more risks: the transition to a new business model, the development of the ecosystem of digital services, creating new projects inside the company will allow an increase in revenue and net profit. Since last year we have substantially increased the number of products developed within the “MegaFon” or together with partners. Among such projects — the digital map, on which I have already spoken, while on top of a pure payment platform we are launching the products “high value added” — credit, insurance, investment. In February, we introduced the world’s first financial credit marketplace with the largest banking organizations in the country — Gazprombank, Raiffeisenbank and AK bars Bank. By the end of the year if the pilot proves successful, we will extend it to the entire audience of customers.
Due to the transformation in the last year alone we qualitatively and quantitatively expanded the number of products for corporate clients and public sector, actively working in the direction of the Internet of things, Smart City, cloud computing and solutions services in the field of business processes. For example, digital services, replacing the tedious recruitment processes or digital products in law, from drafting contracts through chat-bots to the formation of opinion on the court rulings for ten seconds.
After transformation plan to reach the SPO?
It is difficult to think, but this option I do not exclude.
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