Complaining about the regulatory landscape has been de rigueur in European telecoms for many a long year.
Srini Gopalan, Head of Europe at Deutsche Telekom, is no different from many of his peers, naming it as one of two key challenges he faces moving forward.
The former Bharti Airtel and Vodafone exec has been leading the operator’s hotchpotch of opcos outside of Germany since January last year.
He describes it as “an extremely strong portfolio of businesses” that registered revenue growth “for the first time in many years” in 2017.
Indeed, sales rose 1.2 percent to €11.6 billion as the number of mobile customers across 12 markets including the Czech Republic, Greece and Poland jumped by 890,000 to reach 48.8 million.
With converged services available across all markets except Albania, the number of broadband lines also grew by 254,000 to hit 5.65 million.
However, EBITDA declined three percent to €3.75 billion due to increased investments and higher costs related to the services it supplies to enterprises.
Gopalan, speaking to European Communications at Mobile World Congress earlier this month, is keen not to be judged on the performance to date.
“You can’t look at financials in the first 12 months...I always say in the telco business you get paid 12 months late,” he says.
“The challenge for me is how to take what is a really good set of assets and make it grow and make it truly hum and sing,” he adds.
To make this happen, he wants the regulatory environment to change and Deutsche Telekom’s opco in Romania to improve its declining performance.
The former appears to exercise him much more than the latter.
“The regulatory mindset in Europe is still driven by the twin objectives of customer protection and fiscal deficit management which I think is really dangerous,” Gopolan says.
“Neither of those are bad things,” he is careful to add.
He says he has “no issue” with the likes of roam like home regulation – the fact that this hurts industry revenues is “fair enough” given the quid pro quo of it being “a good thing” for consumers.
But, says Gopolan: “The right investment climate for [the telecoms industry] doesn’t seem to be part of the regulatory agenda.
“The important investment stuff doesn’t get prioritised as much as the consumer protection stuff.”
He singles out the European Commission’s Electronic Communications Code – still yet to be implemented into law 18 months after it was first mooted – for criticism.
The wide-ranging proposals put forward in September 2106 included new broadband, Wi-Fi and 5G deployment targets, tweaks to competition, investment and spectrum regulation, as well as stronger consumer protection rules.
“In its current draft it doesn’t encourage investment,” Gopolan says.
“I have no problem with uniform regulation across Europe but in needs to be on things that matter to investment as well not just consumer protection.
“Consumer protection is a good thing, however, it needs to be balanced with creating the environment to drive investment.
‘It’s that balance that’s missing.”
The European Commission did not respond to emails from European Communications.
At an individual country level Gopolan says Deutsche Telekom has had “very constructive” conversations.
Citing the likes of smart cities, he says countries in eastern Europe in particular have a “unique opportunity” to use digitalisation as a “real force” for change.
Without naming names, he says some countries “get it” but others appear to follow the Commission’s lead.
“What we need is government policy that actually starts seeing digitalisation as something that is an investment in improving GDP and quality of life rather than a way to finance a fiscal deficit,” Gopolan reiterates.
“The minute you see digitisation as a fundamental for your economy the way you regulate fibre, the way you create incentives to invest… all of that changes.”
His other main challenge is improving the performance of Telekom Romania.
The opco lost 464,000 mobile customers and 12,000 broadband subscribers last year, leaving it with 5.3 million of the former and 1.2 million of the latter.
This lead to a 1.3 percent fall in revenues and a 5.1 decline in EBITDA.
“It is a very traditional legacy company where we had to change quite a lot,” Gopolan says.
He estimates the opco is “six months behind” Poland – another business that required a turnaround but which was “one of the highlights” of his first year in charge.
In particular he cites “huge improvement” in customer and employee satisfaction scores in Poland.
These are two key indicators Gopolan likes to focus on when judging a turnaround, but he says there is more to do in Romania.
“I’ve not yet seen the kink in the curve of employee and customer satisfaction that I’d like to start seeing at this stage of a turnaround,” he laments.
Compared to getting agreement in Brussels, Gopolan should find this much easier to fix.