Market leader strategies:
case Sonera
Seminar on Mobile operator
strategies and games
22.10.2003
Valtteri Hietaluoma
Agenda
Barriers

Entry barriers:
–

Exit barriers
–

Investments, skills and other charges needed to enter
into business.
Costs on abandoning the product or business
Market equilibrium
–
If free entry and exit exists, demand and supply
should be in balance (=market equilibrium) then profits
always should be nominal
Barriers and profitability
Low entry barrier  lot of competition  low returns
Low exit barrier  stability in supply and demand  stable returns
Exit barriers
Entry Barriers
Low
Low
High
Low, stable
Returns
High, stable
returns
High
Low, risky
returns
High, risky
returns
Market leaders tasks
 Expanding the total markets
– expansion is risky; failure can be fatal
 Protecting the market share
– customer satisfaction
– quality
– benchmarking
 Expanding the market share
–
–
–
–
product innovation
market segment innovation
distribution innovation
promotion innovation
Agenda
Demand in MOB
 different demand in different market 
different strategies
– in growing mobile phone penetration areas
focus is on capturing market share
– in mature market focus is on operations cost
efficiency, because ARPU falls
 Saturation point is almost reached in Europe
– penetration wont grow anymore
Supply in MOB
 Relatively low entry barrier
– roaming  no network investments needed
– lot of competition
– ARPU will continue falling
 Relatively low exit barrier
– license can be resold
– little employees and infrastucture needed
 play-off phase?
– lot of exits may occur
Barriers and profitability
Exit barriers
Entry Barriers
Low
Low
Low, stable
Returns
High
Low, risky
returns
Mobile operator business
High
High, stable
returns
High, risky
returns
UMTS




high price paid for licenses
hype is over
UMTS breakthrough delays
payback delays
Trends
 Growth from where?
– from out-market
– from services
– by differentiating products
– marketing is playing key role in this process
 Exits may occur various ways
– mergers
– aquisitions
– bankcruptcies
Agenda
Telia-Sonera´s Group Strategy
 Concentrate on Nordic and Baltic region
– boost margins
– consolidate position
– improve operational efficiency
 Customer-oriented approach
– product- and service offerings packages
– user-friendly services
– benchmark the European service industry
Mobile operator´s market shares in
Finland 1.3.2003
Teleoperaattoreiden markkinaosuudet 1.3.2003
Saunalahti
DNA
9%1%
Radiolinja
29 %
Sonera-Telia
61 %
TeliaSonera Finland Oyj
Sonera´s revenue composition in 2001
new services
11 %
fixed line services
34 %
mobile
communications
55 %
TeliaSonera Finland oyj´s growth
areas:
 broadband services
– Get acces customers
– Start introducing value added services
 mobile data services
– introduce new multimedia person-to-person and
content services