I have written numerous posts about Development-in-a-Box™ and how it is designed to help emerging market countries (sometimes referred to as frontier economies) build their critical infrastructure to accepted international standards. I have also noted that it is in emerging markets where a number of business opportunities are going to emerge. The telecommunications sector (mostly because of cell phones) is the first area that has taken advantage of these opportunities [“Third World Telecom Moves to the Front,” by Heather Timmons and Kevin J. O’Brien, New York Times, 27 May 2008].
“Companies in emerging markets are on the prowl, reflecting a new order in the mobile telecommunications industry. American companies, it seems, are taking a backseat to upstart rivals overseas. … If [currently] planned [deals occur], four of the top seven operators, China Mobile, China Unicom, América Móvil and MTN-Reliance, would be based in emerging markets. Of the three remaining based in the West, two — Vodafone of England and Telefónica — have extensive operations in developing markets. The other is T-Mobile of Germany.”
The authors go on to report that American companies, which were active in emerging market countries prior to the dot-com bust, quickly retrenched and have been slow to get back in. Many of them now regret having gotten out.
“‘The focus of the wireless business is shifting rapidly from the developed Western markets to the developing world,’ said Madhusudan Gupta, an analyst based in Singapore for the research firm Gartner. Although American mobile operators were active investors in emerging markets during the 1990s, many of them quickly exited, a trend that accelerated after the plunge in telecommunications and dotcom stocks in 2000. SBC, now a part of AT&T Wireless, sold its stake in MTN after only two years. It paid $90 million to acquire nearly 16 percent. That portion of MTN would cost about $6 billion today.”
Although U.S. telecom companies saw less risk pursuing opportunities at home, European and local companies prospered in emerging market companies are now looking for global opportunities.
“The development of the mobile markets was left for years to Europeans and homegrown companies. Now these fast-growing telecommunications giants are eager to go global. John Gole, an analyst at International Data Corporation in Prague, said that recent rapid economic growth in India, China and the Gulf states had created a new breed of regional mobile operators. They include companies like Orascom of Egypt, with 71 million customers in Africa, the Middle East and Asia; Etisalat, based in Abu Dhabi, with 6.6 million customers and 10 operators in Africa; and the Zain Group of Kuwait, with 45.7 million customers and 22 operators in Africa and the Middle East. ‘These booming economies and a general economic liberalization have led to the creation of new competitors with the means and experience to expand in emerging markets,’ Mr. Gole said.”
There are still a numbers of risks, report Timmons and O’Brien, faced by companies desiring to get into emerging markets. Among those risks is increased regulator complexity.
“There are many risks for any outside company looking at Africa’s fast-growing markets, analysts say. Andre Wills, managing director at Africa Analysis, a wireless industry consulting firm in Centurion, South Africa, said: ‘You need to have a significant understanding of the African operating environment and the challenges of working across all of these different regulatory environments.'”
One of the areas in which my company, Enterra Solutions®, is involved is helping companies deal with complexity — especially regulatory complexity. By automating regulatory compliance, we can help companies keep current as regulations change (both within and across borders). The more borders a company crosses the more complex its operating environment. Enterra Solutions’ Enterprise Resilience Platform™, which blends strategic consulting, a proprietary methodology, and technology, can help close the complexity gap. Why would companies deliberately take on all this complexity and risk? The answer is simple — the opportunities are great.
“Africa, where 29 percent of the population owns a cellphone, according to Gartner, is just one of several promising markets. In India, market penetration is 34 percent, well below the United States, at about 70 percent, and Western Europe, at more than 90 percent.”
In other words, the potential for growth is much greater in emerging markets than in the established markets. A figure that accompanies the article provides the anticipated growth in selected markets over the next five years. China and India are expected to grow by 96%; the Middle East and Africa by 53%; and Latin America by 42%. Compare that to the growth rates of North America (20%), Eastern Europe (20%), Asia-Pacific (20%), and Western Europe (13%) and you can see where the greatest opportunities are knocking.