Evgeniy Pickersgill, Gars Telecom commercial director is answering Cnews’ questions.
Cnews: How has the Russian telecommunication market adapted to the crisis in your point of view? Which services were the most popular ones among a corporate sector in 2009?
Evgeniy Pickersgill: Corporate clients have been satisfied with present solutions for the recent 6-7 years. Nothing is changing on this market — client requires telephony and internet. Gars Telecom product portfolio as well as our rivals’ ones (Beeline Business and Comstar) composes nearly 30 kinds of services. But the locomotives are always internet and telephony. It takes quite a lot of time for the market to accept other services, and most often it happens under the vendors’ pressure.
Before the crisis, the situation was saved due to the market growth — companies were easily spending extra money on vendors’ fun. But with the crisis not only extra money expired, but the client faced the lack of money on the basic internet and telephony. For the whole recent year b2b telecommunications market participants “were in a cold sweat”. Up to half of clients have changed service provider, and about 15% have been closed! Market seizure is not fatal yet (but in some segments it is still compressing), but it has definitely lost at least 20%.
Cnews: How have the strategies of telecommunications market participants been changed recent year, to your mind?
Evgeniy Pickersgill: Before the crisis we were pulling after two great locomotives — commercial real estate market and business activity growth. Gars Telecom was developing “premium” segment of a corporate market. High-quality services. High-quality client service. Premium prices.
But one of this sector features is its close close connection to development market: the most companies rent their offices. There are different office classes, which on their turn divide tenants to classes. We were focusing on the clients in B to A+ class offices. They belong to the large and medium high-marginal business. Premium communications market in Moscow is shared between “Sovintel”, “Comstar” and “Gars Telecom”. The carriers’ revenues have risen proportionally to the commercial real estate tenancy rates. With no difficulties we were earning $4 from square meter per month.
For the last 5 pre-crisis years in Moscow at least million new or renewed square meters have been put into operation. That numbered 40-80 million dollars of new stable revenues per year! But everything has changed in an instant.
Cnews: Which prior tasks were you solving in 2009? Which the most sufficient projects were realized?
Evgeniy Pickersgill: In autumn 2008 market changed completely. It happened, that most of all crisis, as it is popular to say today, “feared” mainly our segment — development and corporate communications market. “Premium segment” died as well as all “pocket carriers” did. Suddenly they had to compete at prices and real abilities. Not all participants have coped with it. I flatter myself, that Gars Telecom’s data on the landscape changes is much closer to reality than data of analytics and the clients’ PR departments, because we experienced how many employees each of our clients had fired out. This data can be considered as the average market by the whole corporate market erosion due to the fact that Gars Telecom clients are the representatives of all industries.
5% of the companies with month account from $5000 have been closed. With no doubts they are mostly financial groups. Herewith about 78% have reduced staff by 13-25%. 92% have overviewed tariffs; 66% have refused some services and decreased total consumption of services.
Among medium companies — consumers of premium services (tenants of high-class offices) — 20% just closed. They disappeared, even leaving furniture, accounting and business machinery. 81% of the remaining companies have cut the stuff. Some of them have cut the stuff from 200+ employees to 15-20!. 93% have overviewed tariffs, 38% have refused some services and decreased total consumption.
What has happened to the developing companies hardly can be described. Yesterday leaders disappeared from the market, having lost sufficient part of their real estates. What is important — a trend to change an office was noticed among medium companies. And on telecommunications market to change office means to change a carrier. Less than one third of medium clients move to a new office with an old carrier. Companies of this segment don’t possess complicated infrastructure and the services depending on the carrier.
The first migration wave was on autumn 2008. The companies found a lot of space occupied and if it was impossible to refuse a part they moved away. The second migration wave was more smooth but exhaustingly long, that nobody could forecast — it started in march 2009 and ended in the beginning of this year. The third migration wave has started, or even is lasting at the moment. Herewith commercial estate market of the lowest classes lost less than others (20-30%, not more), but now, then premium has become more affordable, it is being filled noticeably faster.
Cnews: Thank you