On 6 April, Eelco Blok, currently COO, will begin as KPN’s new CEO. A new strategy should also be expected at that time, to follow on the 'Back To Growth' plan that ran from 2008 to 2010. We have already looked at the main thrusts that could come out of the new plan ((see our Research Brief “KPN: looking ahead to new CEO and strategy”). One possibility raised was that of a structural separation, leaving still open the question: should KPN focus on its network, or just on sales & marketing?
You could say that there are two types of telecom companies. First, there are the companies that focus on passive infrastructure. These then do forward integration to help fill the network. Example: Reggefiber. The focus is still on ducts and cables, but Reggefiber also moves as an active operator and service provider, under the name Lijbrandt.
The other type of telecom company starts with sales & marketing. They then integrate backward by adding active network components. This allows the company to better differentiate and improve margins. Example: Tele2 Netherlands. This company began as a reseller, on both the fixed and mobile market, and now operates the necessary active equipment for both. That is why for mobile, the company is an 'infrastructure-heavy' MVNO, and for fixed, an unbundler. Based on the acquired 2.6 GHz license, Tele2 could even be termed a real MNO.
As regards to fixed telephony, this is more difficult to achieve, as a fixed network is not so easily duplicated. That is, it is not so easily duplicated unless you dramatically cut roll-out costs, but even a newcomer like Jelcer (fibre through sewers) cannot claim such significant savings, to the point that everyone could have their own fixed network. So until that situation changes, we must make do with concepts such as separation, open access and unbundling.
The question remains: what will be the tenor of KPN’s new strategic plan? Will network get priority, or will the focus shift to services? And also: will the company advance a medium-term plan for the next three years, as have Telefonica, BT and Telekom Austria? Or will KPN look further ahead, to 2015, as have Deutsche Telekom and France Telecom? In fact, the short plan fits with the vision of KPN as a backward integrated marketing company, and the long plan with KPN as a forward integrated network company.
