Vodafone Romania aiming to capture the full potential of convergence

Achilleas Kanaris, the CEO of Vodafone Romania, sat down with Business Review to share his views on Romania as a society and a growing economy. He also brought up two scenarios for the local economy in light of the National Recovery and Resilience Plan (PNRR) and revealed the company’s main strategic directions on the local market. Turning Vodafone Romania into a more agile and fast-paced technology company that Romanians can continue to trust and rely upon for home & office solutions, as well as making the most out of convergence solutions, are among the CEO’s top priorities.

By Anda Sebesi

You’ve been living in Romania for a few months now. How are you finding it as a society and economy, and how does it compare to the other European countries with which you are familiar?

I would start by saying that I like Romania and its people very much; it’s a vibrant country with a bright future ahead. I believe that it has significant economic potential, but this potential could be better capitalised through a more strategic approach to economic development. I have two important convictions in this regard. First, that the country must seize the opportunity of PNRR funds, which can drive transformation towards a more resilient, future-proof economy with higher productivity and competitiveness, a highly skilled workforce, and capability for innovation and technology integration. Embracing this opportunity could help Romania get ahead of other countries, even some in western Europe; otherwise, it will be left behind.

My second conviction is that we need to let the private sector drive the development. In my opinion, the government should work very closely with the private sector, but it should also allow it to take the lead in terms of defining what needs to happen. So, to recap, let’s recognise that the coming period will either represent a great opportunity or a major risk for Romania, and let’s put the private sector in the driver’s seat. This will all make a huge difference in how Romania positions itself within the EU over the coming decade.

What do you think about the Romanian telecom industry? Is it more competitive than those of other countries?

The Romanian telecom market is certainly one of the most competitive markets, at least among countries in Europe. At the same time, it is one of the best markets in Europe from a technology and infrastructure point of view, providing consumers with high quality services at very affordable prices. This is the result of the high level of competition on the market, but also of the considerable investments the industry has made over the years, which have enabled consumers to benefit from new services and technologies as soon as they became available. Vodafone has invested more than EUR 5 billion in the market ever since we launched our services here, and the acquisition of UPC was another testament of our appetite to continue growing and investing in the local business.

Romania is known for having a telecom market with very low prices – among the lowest in Europe. Do you think this is sustainable over the long term?

Indeed, Romanian consumers benefit from some of the lowest tariffs for telecom services in Europe, while also enjoying some of the highest quality services. This has generated an extremely favourable situation for consumers, and that is the positive side of the story. However, extreme competition on the mobile segment is harming the market in the long term, because the more margins get squeezed, the more prices deflate, but unfortunately, the same cannot be said about our raw material costs. That’s the other side of the story, where we have been seeing constant pressure on costs – increased costs for energy (as a telecom operator we are a big energy consumer), equipment, labour, etc. So, in my opinion, the practice of continuously lowering prices that we have been seeing on the local telecom market is no longer sustainable.

I’m therefore seeing two very different scenarios for the Romanian industry’s future. It’s either going to become an amazing market that will act as the platform for the country’s digitalization or a market where we’ll continue our race to the bottom in termsw of prices, we stop investments, we have no more development of 5G, and no more ultra-high speed broadband networks. Based on how things stand today, these two scenarios have about the same likelihood of coming true.

The telecom industry is going through big changes all across the world. What are today’s biggest trends?

Building on the previous question, I think that improving overall efficiency and ensuring sustainable development is a key focus for telecom companies, especially in the context of the growing level of investment required for next generation networks and state-of-the-art digital capabilities to serve customers. On the technology side, 5G is a key enabler of the digital future and it opens up a whole new era in terms of connectivity and communications services. 5G technology will power the digital industrial revolution. All industries can benefit from it, from automotive, healthcare, and manufacturing to agriculture, transportation, and many others. There are numerous use cases that demonstrate the overall value of 5G, such as industrial automation, smart cities, autonomous vehicles, smart agriculture or remote health monitoring and assistance.

Demand for IoT solutions will continue to grow. More and more companies are starting to embrace IoT-based digital solutions for digitalizing production units, route optimisation, fleet monitoring or energy management. Smart cities also rely on technologies such as 5G and IoT.

What are your plans and objectives for Vodafone Romania? What types of changes do you intend to implement in the coming years?

We are on the verge of reshaping Vodafone Romania and turning it into a more agile and fast-paced technology company that Romanians can continue to trust and rely upon for their home & office solutions. Convergence also remains one of our key priorities for the future, and my ambition is to capture its full potential as a growth driver for the fixed and pay TV segment, but also to leverage

our convergent offering so that we can provide truly convergent services to customers, going beyond the benefits of acquiring both fixed and mobile services from us. We are not there yet, but we’re definitely aiming to become a much bigger player in the fixed segment, with a more relevant and compelling convergent offering for Romanian consumers.

Another priority for us is transforming the way we interact with our customers, through all of our digital assets, and to significantly increase the rate at which our customers use digital tools and interact with our digital platforms. Though we have seen a higher appetite and usage of these digital tools during the pandemic, there hasn’t been a clear shift in customer behaviour. We want to accelerate this shift by providing a far better and more meaningful experience of interacting with our digital platforms.

Furthermore, we want to become more of a technology company and grow our business beyond our core connectivity services, moving into the area of digital services for both the enterprise and consumer segments. On the business side, Vodafone has actually been a technology provider for many years now, especially for larger companies, having provided complex digital solutions like IoT and ICT, which go far beyond connectivity. We want to consolidate this approach in the future and bring it to the consumer segment as well.

Will Vodafone eventually become a tech services company (other services than telecommunication)? What is the long term strategy for Vodafone Romania?

Especially for our enterprise customers, we already provide a wide range of digital solutions that bring much more value added for their business and that exceed by far the area of the traditional telecommunication services. Our existing portfolio includes productivity solutions, cloud services, security, and eCommerce solutions, just to name a few.

We are in a very good position to integrate all the features and capabilities that make up a complete digital solution, in order to become a technology and digitalization partner for our retail and business customers.

Are there any differences in vision and strategy between Vodafone Romania and the global Vodafone Group?

We are perfectly aligned in terms of vision across the entire Vodafone Group. On every market where it operates, Vodafone pursues its mission of connecting people for a better future, by being a key contributor to the digitalization of societies and economies, reducing digital gaps so that no one is left behind, and contributing to a sustainable future for our planet. What are Vodafone Romania’s priorities for 2022? Should we expect any new services or offers?

This year, our priority is to get complete internal alignment with the new strategy and vision of what I call “the new Vodafone.” In terms of our customers, our focus in 2022 will be on enhancing our digital assets and services for both retail and business customers, as well as on delivering truly convergent fixed & mobile services. You will see more solutions being provided for small, medium, and large enterprises, and you should also expect your interactions with Vodafone to significantly improve across all our digital assets.

Vodafone Romania has the second largest number of customers on the market. Do you intend to become number one or is it more important to develop the business without necessarily focusing on your market share?

We obviously seek growth, and our new strategy is built around being as relevant and competitive as possible on the market. However, growth will not necessarily come from the current market share, but rather from new areas of opportunity that we’re seeing in digitalization, ICT & IoT, and integrated technology services that we can provide to both households and enterprises. It’s well-known that we are a leader of the global IoT business; some people are even using the analogy that Vodafone is the Google of IoT. Consumer digital services are also extremely exciting; we have examples of these services being developed on other markets, and we will embark on this journey as well.

How important is it to have customers for both fixed and mobile services? What are Vodafone’s plans for developing its fixed (internet and TV) infrastructure?

I believe customers will look for integrated technology solutions for their homes and businesses, so they’ll choose a provider with a holistic approach that offers mobile & fixed convergence, together with adjacent services such as connectivity for smart homes or cybersecurity.

The unfortunately fortunate CEO

Achilleas Kanaris, the CEO of Vodafone Romania, shares his professional story with Business Review and sets some coordinates for young people who are thinking of pursuing a career in the telecom industry.

By Anda Sebesi

Vodafone Romania CEO Achilleas Kanaris’s original career plan after graduating from university in the UK as an engineer was to go back to Greece and run a business together with his father. But since he had some doubts about this move, he decided to give consulting a try. He was hired by Booz Allen Hamilton, a major US-based consultancy, and stayed in London for the job. Then the opportunity to jump into the telecom industry came along, and that’s when he joined O2. Later, Vodafone reached out with another amazing opportunity for Kanaris, who was already a big fan of the brand.

“When I went to Greece to join the Vodafone sales organisation in a supporting role, I was unfortunately fortunate, because the business was not doing well, and the financial crisis was also hitting the country right when I went back, in 2009. We therefore had to deal with both crises at the same time. That was a fantastic learning experience for me, because it really helped me focus, grow, be really quick in my decision-making process, and very clear about where I want to go,” Kanaris recalls. He adds that Vodafone Greece has been used as an example of how you can turn around the fundamentals of a business when you are in a tough situation. “It was a great professional school, a fantastic journey of personal growth, and it helped me develop a philosophy that I’ve been following ever since,” he says.

Kanaris has been at the helm of Vodafone Romania since July last year, and he says that the Romanian business is substantially larger than the Albanian unit he previously managed for almost four years between 2018 and 2021, and that it operates on a far more competitive market. “This motivates me and pushes me to evolve even further. Vodafone gives me the chance to grow on a professional level. It is an organisation that continuously innovates; it is fearless, committed, and brave, yet human-centric – and these are values that I also stand by.” He explains that the covid-19 pandemic required Vodafone Romania to deliver in days what it would have normally done in years. “We had to move all our operations online,” he says. While it was a tremendous challenge for an operator like Vodafone Romania, with all its call centers and shops, the lesson for Kanaris was that anything was possible. “The pandemic was an negative situation that led to a very positive outcome – it provided a platform for venturing out into new areas, including decision-wise. And the major takeaway is that we came through by empowering each team member. Each and every one of us has proven our ability to individually drive collective change,” Kanaris notes. He adds that now, on its journey towards becoming a fully fledged technology company, Vodafone doesn’t just rely on top-down, take-it-or leave-it decisons. “It’s actually a set of ideas that we discuss, sense-check, and co-create with the whole organisation. Hence our company motto: #togetherwecan.”

According to Kanaris, having access to anything and everything through a mobile devicee, at any time, saving valuable time, enriching our lives with information, and connecting with people wherever they are, is the most important aspect of the huge technological leap of the last 15 years. “You can now use your mobile phone and reliable high-speed networks to access e-health solutions, mobile banking, education, utilities, all the way to search & rescue services in case of emergency. This has changed the way we live and operate, and telecoms have played a central role,” Kanaris adds.

Asked to give some advice to young people who are thinking of a career in the telecommunications industry, Kanaris puts it simply: “Start now and be prepared for the unknown, and stay open to disruption and to constantly reinventing yourself. You’ll have the chance to closely witness the industry’s shift from bare connectivity to technology and digitalization. Years from now, you’ll look back and see how much the world has changed – and you will have been a part of that change.”

7 Romanian scaleups to watch in 2022

As 2022 starts out with big plans for Romanian companies and investors, there’s more excitement around early-stage ventures and rapidly-growing firms than ever before. The triumph of a good team relies on many factors, including founder types, business models, capital, and products. BR has compiled a list of some promising companies in various verticals by looking at three crucial variables: at least EUR 1 million raised in the last year, internationalisation projects, and global recognition.

By Claudiu Vrinceanu

Rapidly-growing firms are in the eye of investors

BUNNYSHELL

In 2021, Bunnyshell closed a EUR 1.1 million funding round that was led by Early Game Ventures. It was EGV’s second investment in Bunnyshell, which helps businesses automate processes and manage cloud applications and infrastructures in just a few clicks, without requiring specialised staff. The fresh round allowed the company’s founders to speed up expansion on international markets and develop a global partner network. Bunnyshell accelerated its growth based on strategic partnerships and announced new joint projects at the local and global levels.

DRUID

Druid, a startup specialising in the development of intelligent virtual assistants (chatbots) for enterprise organizations, raised USD 2.5 million last year through a Series A financing round, led by GapMinder VC with an investment of USD 2.2 million and completed by Early Game Ventures and private investors. Plus, Druid recently signed its first partnership with South African company Tangent Solutions. CODE OF TALENT

Code of Talent raised a EUR 1.7 million Series A equity financing round which was led by Catalyst Romania Fund II and supported by existing investors ROCA-X and SeedBlink. Code of Talent is a solution dedicated to employee training. Any content – course materials, textbooks, procedures, and business programmes – can be turned into learning paths and application paths based on microtasks or microlearning. Code of Talent’s 2021 was marked by a continuous increase in the number of users (already reaching 100,000) as well as international expansion, with the platform being available today in no less than 18 languages.

SEEDBLINK

SeedBlink, a platform that democratises access to early-stage investments, closed a Series A funding round worth EUR 3 million last year, of which EUR 1.1 million – double the initial target – came from crowd investing. With the new funding, SeedBlink advanced its plan to become one of biggest investment platforms in the European tech startup ecosystem. The company has already started its internationalisation process.

FLOWX.AI

FLOWX.AI, an enterprise platform that enables banks and financial institutions with complex IT infrastructures to build fast and modern digital experiences that are unbounded from the limitations of legacy systems, raised EUR 7.35 million in seed funding in 2021. The round, which was one of the largest European seed rounds of the year, was led by PortfoLion; the other institutional investors were Day One Capital and SeedBlink. The company has begun using the investment to expand into the European and US markets and recruit more than 20 employees by the end of the first quarter of 2022 to meet demand from banks.

DIGITAIL

Digitail, a cloud service for veterinary surgeries and customers, raised USD 2.5 million in a seed round led by byFounders and Gradient Ventures (Google’s AI fund), joined by Partech and a series of angels. The startup had thus far been backed (in a 2019 pre-seed round) by Fast Track Malmo. The Iasi-born tech scaleup is already a global company and its products are currently being used by 2,000 veterinarians in 16 countries.

FAMEUP

FameUp, a mobile platform for micro-influencers, raised a EUR 2.5 million round from Early Game Ventures and other investors, including Daniel Dines.The startup already has a global footprint, allowing any Instagram user (Facebook and TikTok to soon be added) with at least 500 followers to make money by promoting various brands, products or services.

Key international trade trends that will influence Romania in 2022

2022 will see less support being offered to Romanian companies for internationalisation After 2019, the darkest year for Romanian exports in the post-crisis period of 2008-2009, the first year of the pandemic (2020) was an even tougher one in terms of the evolution of the country’s trade balance: covid-19 eroded exports by 9.9 percent compared to the previous year.

By Claudiu Vrinceanu

Romania remained the only country in the region with a significant trade deficit in 2021. Despite the economic recovery measured by GDP growth, the advance of exports was lower than that of imports. The chronicity of the deficit in foreign trade led to a result of -22 billion euros.

This trend was global and it was due to the crisis generated by the covid-19 pandemic. In fact, exports are still in trouble regionally. Romania's trade deficit also increased last year, and the export advance in 2021 reached 19 percent, mainly due to the base effect in the context of the disastrous 2020. What will happen in 2022? What are the trends dominating international trade today and how are they impacting Romanian companies and the decisions of our business leaders?

EXPORT GROWTH TO ERODE IN 2022

According to Eurostat data, Romania's economic position will remain weak in the regional context, mainly as a result of the fact that Romania was the only country in the region with a significant (and growing) trade deficit in 2021. Bankers are already anticipating a slowdown in annual export rates in 2022 to levels well below 10 percent. The main reasons are the disappearance of the base effect created in 2020 by the introduction of restrictions and the persistence of the health crisis, doubled by the possibility of severe climate deterioration from regional markets. The downward trend in export growth in 2022 is global. For example, German exports are likely to increase by four percent this year compared to last year, and thus by just half as much as last year, according to the Federation of German Industries (BDI).

EXPORT PROMOTION POLICY STILL PROBLEMATIC

Romania may have once had big plans when it came to its export promotion policy, but today, the issue has been largely abandoned. As a comparison, other European countries are increasing the role of economic diplomacy, and western authorities are coming up with numerous programmes and measures to support exporters. For example, instead of the existing export promotion programme, where many issues related to internal controls have been discovered, no new solutions have been proposed in the last year in Romania to reform the export aid system. Regardless of how well-intentioned the Romanian government might be, 2022 will see less support being offered to Romanian companies for internationalisation, due firstly to the reorganisation and cumbersome creation of new ministries in the economic sector – a process that lasts between 3 and 6 months – and secondly, due to the limited available budgets. But at a macro level, a structural recovery of the economy that doesn’t just involve quantitative growth but also an improvement of competitiveness is necessary to avoid losing out to other markets.

MORE MONEY ON THE TABLE FOR GLOBAL VENTURES

The value of venture capital and business angel financing granted to Romanian tech companies doubled in 2021 compared to 2020, which also significantly increased the number of global initiatives driven by domestic startups.

Investors are now looking for the next Romanian unicorn and they say that we are at a historic moment that we’ve never experienced before. Forecasts are optimistic about the private capital that will finance the expansion of innovative Romanian companies in 2022.

A SWOT analysis of Romania’s construction market in 2022

While 2021 brought the first major concerns for the local construction sector, 2022 began with several ominous signs, including price hikes for materials, a pause in approvals for new buildings in Bucharest, as well as a medium-term threat: the potential elimination of fiscal facilities for construction companies. A brief SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) of the Romanian construction sector highlights internal and external risks as well as short and medium-term growth opportunities.

By Claudiu Vrinceanu

Worker migration and the difficulties associated with recruitment affected construction companies last year

STRENGTHS

The biggest strength of Romania’s construction industry is related to the positive evolution of the real estate market, which has grown steadily amid conditions generated by the pandemic, the changes in the labour market, and the general economic uncertainty, all of which have led to a re-evaluation of real estate investment strategies. In this context, the outlook in the field remains positive, with the National Strategy and Forecast Commission predicting increases between 6 and 9 percent over the next four years, above GDP dynamics. This development is feasible due to the low cost of financing, the prospect for infrastructure development, and the implementation of programmes with the European Union. is that even though it grows every year, Romanian companies in this sector have the lowest survival rate. Fewer than half of local construction companies still operate within four years of opening, according to IBC Focus data, so it is not easy to uphold a profitable business in the field.

Worker migration and the difficulties associated with recruitment affected construction companies last year. Furthermore, price increases for construction materials led to eroding profitability and delays in execution due to builders’ attempts to renegotiate contracts with investors.

Even as these cost increases are being passed on to investors, demand for construction remains high. Half (48 percent) of the 100 strongest builders in Romania are expecting higher workloads in the next 12 months. Romania’s construction sector also has the lowest level of technological innovation in the region. Still, significant progress continues to be expected in the field.

OPPORTUNITIES

One source of satisfaction is local administrations’ openness to digitalization and smart city projects.

Local public authorities are open to implementing digitalization solutions, but they lack funds and qualified staff. Meanwhile, big developers say they have the money and that they would support projects that could increase transparency and predictability and reduce response times from authorities. In general, the Bucharest construction market will experience a slow pace of development due to the city’s urban planning issues. The growth in construction activity will come from new infrastructure projects (highways, railways, etc.), therefore many large general contractors will invest in machinery and infrastructure systems.

THREATS

The labour shortage in the construction sector was especially felt in the second half of 2021. Due to the ever-growing pipeline of projects, market players are anticipating a severe crisis in this segment. According to Graphein, while Romania will have a lot of money available for investments in infrastructure and digitalization through the Recovery and Resilience Plan, it will struggle to find enough people to carry out the work.

Labour shortages have been a major national problem for some time now. Romania lacks workers, engineers, and qualified architects to execute its development plans.