Norway’s mobile telecoms provider Telenor is bolstering its digital operations in line with the growth across the mobile advertising market. The company has plans to set up a new business unit to grab a slice of the industry, with a particular focus on Asia.
Telenor to roll out mobile advertising business
Operators such as Telenor are facing challenges from increased competition from messaging services such as WhatsApp as well as digital content providers including Netflix.
Sigve Brekke, CEO of Telenor, told Reuters:
“A lot of digital players are coming in and taking parts of the value chain. It’s a very demanding situation for mobile players right now and we are forced to make a decision on what we want to do going forward.”
In line with these plans, Telenor aims to set up a separate business unit to tap the Asian mobile advertising market. Technology will be based on Tapad, a US start-up, which develops cross-device advertising software. Telenor acquired Tapad in early 2016 for $360m. Brekke explains:
“We will try to use Tapad as an entry into mobile advertising as a separate business unit in our Asian growth markets. [Telenor] needs to be able to do business in a different way going forward.”
Indeed, it’s not a far-fetched move given that over 90% of the company’s 211m subscribers come from six markets operating in Asia.
Global mobile advertising is predicted to top $100bn in revenue this year. That’s a 16.5% share of all media spend. Mature markets already account for the lion share of that spending, with the US, China and the UK as top spenders. However, Asian, Indian and Indonesian mobile advertising markets are growing rapidly, doubling each year.
Brekke expects an annual growth of 1% across networks, compared to up to 30% growth within digital. He says:
“You can choose to be a ‘dumb pipe’, a network provider or you can try to take a larger digital position.”
Whilst just 2% of the company’s revenues in 2015 came from its digital businesses, the latest move is set to boost that figure. However, Brekke adds Telenor isn’t going to join the entertainment content craze and whilst it’s planning further acquisitions this year, he rejected any claims of major purchases.