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Summary

In January 2017, Tata Communications AV, the Dutch wholly owned subsidiary of Tata Communications Ltd., acquired a 35% share of Teleena to become the MVNE’s largest shareholder. This move brings together wholesale specialists from very different backgrounds that combined are better placed to meet the global connectivity demands of customers today and in the future.

Positioning effectively for global connectivity customers

In its announcement, Tata Communications cited the move as part of its long-term strategy for the development of global mobility and Internet of Things (IoT) services. Similarly, it provides a boost for Teleena in the same arena. Alone, each of these companies has a major gap in the capabilities needed to meet the increasing demands for low-cost, efficient, and effective global connectivity for people and things. Together, they are far better positioned.

As we explained in our 2014 report Mobile Subwholesalers Must Evolve to Survive, global connectivity provides an opportunity for MVNEs, such as Teleena, facing an increasing squeeze as the margins in the domestic mobile value chain reduce. The provisioning, billing, and support services MVNEs specialize in are a great start in meeting the enablement needs of new global connectivity providers, especially in the IoT market. However, MVNEs are woefully lacking in international reach. That is the domain of global CSPs and international wholesalers such as Tata Communications.

With a global network spanning 710,000km and direct connections into hundreds of fixed and mobile operators, Tata Communications has the ability to connect to virtually any destination. Yet, as we highlighted in our 2016 report Internet of Things: The Wholesale Opportunity for CSPs, international wholesalers such as Tata Communications that don’t have a service platform are at a significant disadvantage when competing against the likes of Deutsche Telekom, Telefonica, and Vodafone that do.

By bringing together the functionality of an international wholesaler and an MVNE, Tata Communications and Teleena are strengthening their positions significantly. However, the integration must be done intelligently. One of the issues of the international connectivity market is that there is not enough room in the value chain for multiple links. This is especially the case for low-ARPU IoT services. Therefore, Tata Communications and Teleena must work together to deliver a single proposition at a price acceptable to the market and not expect to double up on their profits.

Appendix

Further reading

Mobile Subwholesalers Must Evolve to Survive, TE0012-000514 (August 2014)

Internet of Things: The Wholesale Opportunity for CSPs, TE0012-000581 (November 2016)

Author

Catherine Haslam, Senior Analyst, Telecoms Wholesale

catherine.haslam@ovum.com

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