Like any good business leader, Burak Ersoy wants to his company to grow. But as the CEO of lifecell, Ukraine’s smallest mobile operator in terms of market share, the native of Ankara, Turkey, says his task is made a lot more difficult by a market distorted to benefit his competitors.
A case in point: the auctioning off by Ukraine of 3G licenses in 2015.
Lifecell spent Hr 3.36 billion ($103 million) on acquiring what its parent company, Turkcell, describes on its website as “the number one package.” The outlay was approximately $20 million more than that made by either Kyivstar or Vodafone Ukraine (known as MTS until a 2015 rebranding) – the number one and number two firms respectively in the country’s mobile telecoms market.
Following the auction, lifecell moved fast to roll out 3G nationwide in a bid to get ahead of the other players. By the middle of 2016, said Ersoy, the company was the market leader in terms of mobile internet speed as well as geographical and population coverage. This forced the other providers to step up their own investments in order to keep pace.
“If we hadn’t acted as we did, the coverage and speed across the industry wouldn’t be what it is today,” Ersoy told the Kyiv Post in an interview. “As a challenger, we did this with some hope; the others then followed us.”
But the influx of users switching from competitors failed to materialize. According to Turkcell data, in the fourth quarter of 2105, lifecell could boast of 13.5 million subscribers. By the fourth quarter of 2016 that number had fallen to 12.4 million, a drop of 8.1 percent.
Portability problem
A significant part of the problem, said Ersoy, is Ukraine’s lack of mobile number portability, which means users cannot move between networks without also changing their phone number. This disproportionately benefits Kyivstar and Vodafone, both of whom entered the Ukrainian mobile communications market more than a decade before lifecell.
Kyivstar and Vodafone have together “more than 45 million subscribers,” Ersoy said. “These subscribers are captive. Between network operators the market is not liberated. As a customer you have your number, but you don’t have the right to transfer from one operator to another. People have numbers they’ve been using for the last twenty years, it’s like an address for them now. Even if they’re not happy with the service they are receiving, they cannot move.”
A standard feature of most cellular communications markets globally, mobile number portability has been on the agenda in Ukraine for a number of years.
It hasn’t happened because of habitual delays in passing of the relevant legislation by lawmakers, suspected of protected vested interests, and legal challenges in tender processes.
Ersoy, meanwhile, suggests that the issue lies with the Ukrainian government and market regulator, which are failing to put the needs of consumers at the heart of policymaking.
“The rights of customers are not what is being followed,” he said. “Now those who are strong are being followed. This is very unusual and should be corrected.”
Ersoy drew the Kyiv Post’s attention to a vote on a draft law on market regulation that was due to have taken place in the Cabinet of Ministers earlier this month, but which was ultimately delayed.
“Somehow they postponed it,” said the lifecell CEO. “We have to understand why. It’s lobbying, it’s conflicts of interest, you might call it anything. For sure it might be very beneficial for some people – but not for the customers.”
Customer education
When it comes to making Ukraine’s mobile market more valuable and better functioning, Ersoy says consumers – not just the government and regulators – have an important role to play. For too long, he believes, Ukrainians have been settling for whatever is being offered, instead of demanding more and better services from suppliers. In fact, at times, they do not even know what it is they should be asking for.
“The most fatal error for any company is that all the ideas and execution come from inside to outside,” said Ersoy.
“We, as a team, cook, and hope the customers will love and eat what we produce. But actually you have to ask the customers what they want to eat. Here in Ukraine there is another position: even the people do not know what they want to eat.”
The CEO says changing this state of affairs is a key part of his personal mission. He likes to spend as much time as possible “out in the field,” talking to customers to better understand their tastes and buying habits. The problem of the passive consumer, he believes, is not only confined to mobile communications.
“It happens wherever you see the service business,” Ersoy said. “When I see the interaction between the seller and the buyer, the seller is still the king. This is not right. We have to shift it. I’m on it, and the company is on it.”
Ersoy takes a similarly active approach in his interactions with the employees at lifecell, who number about 1,000. He says he likes to walk around and be inspired by their ideas, and gain insights from their work.
Still, he admits to being unhappy with productivity levels, and says he is trying to foster a mindset where workers take more responsibility in their areas of expertise.
“What I see is that the culture is too process-oriented,” he explained. “People don’t care about the results. If the process is going well, then everyone is happy, regardless of time and the quality. We have to give the confidence to people to tell them they can do it. We have to tell them we will support them. It’s a coaching process.”
Lifelong learning
Ersoy is now into his second year as CEO at lifecell after a decade of working in his home country at Turkcell.
He said coming to Ukraine made sense as part of his professional philosophy to always seek new opportunities to learn. Although working in Turkey gave him a thorough education in how to operate in markets where business and politics are deeply entwined, the Ukrainian mobile telecoms sector can still offer many lessons.
“I might be a very good cook,” he said. “I have the recipe. It might be the best recipe. But the ingredients of the recipe are not the same as those you get used to.”
He told the Kyiv Post that one of his biggest challenges is convincing Turkcell of the continued need to invest in Ukraine. That task would undoubtedly be made easier if the rules governing the marketplace – in business and in life – were made the same for all players.
Ersoy says leveling the playing field is his top aim.
“What’s going wrong in this country? It’s about monopoly of anything,” he said. “If you have power – it might be legislative, it might be customer-based, it might be your dominant market position – it should not be abused. What I see is that it’s being abused. We need legislation and regulation to liberate the customers’ ideas.”
