ECONOMY

Carlos Slim’s Cash Cow Lures a Brash Rival With Years of Success

Chris Bannister’s fledgling Colombian mobile business has no profits, no revenue and no customers.

What the company does have is lawsuits to fend off. Scores of them, penned by the lawyers of some of the giants of the mobile industry, like billionaire Carlos Slim’s America Movil SAB and Spain’s Telefonica SA. What they all seek, in one fashion or another, is to block Bannister’s company, Wom, from ever signing up a single subscriber.

Why all the fuss about some little startup run by a foreigner who barely speaks a word of Spanish? Because Bannister, a 61-year-old Brit with a flair for the outlandish, has made a career of showing up in far-flung places and using over-the-top publicity campaigns to quickly grab market share from the entrenched mobile carriers. He did it in Vietnam, Azerbaijan, Poland, Nigeria, Sweden and, most recently, Chile.

It was that last one that really caused alarm in C-suites across Bogota.

There, with the backing of the same man who’s seeding the Colombian venture — the Icelandic entrepreneur Thor Bjorgolfsson — Bannister carved out a 20% market share for Wom in a span of just five years. A chunk of that business was taken from the Chilean units of America Movil and Telefonica.

And Colombia appears ripe for disruption. The subsidiaries of those two companies dominate the market, where mobile carriers on average charge customers $3.46 per gigabyte of data, one of the most expensive rates in the region. Bannister says he can easily beat that price.

“All I have to be is a bit better, a bit cheaper and create a brand that people love, and I’ll get 25% of market share, minimum,” Bannister said in a recent interview from the company’s Bogota headquarters. “It’s that simple.”

Wom’s building overlooks a busy highway in a mid-tier office district in the city’s north and sports a fifth-floor conference room decked out in the company’s signature purple hue. Bannister, dressed in a tight white t-shirt that showed off his tattoos, said Wom — and its employees, whom he calls “Wommers” — is well on the path to shaking up Colombia’s mobile market.

“Yeah, it’s taken longer here than in my other countries,” he said. “But we, as Wommers, are committed to create a success and to change the rules of Colombian telecom.”

Bannister has the support of deep-pocketed owners to do just that, with Bjorgolfsson’s Novator Partners LLP pledging $1 billion to build out the business over the next five years. There’s room for growth, with millions of people still lacking broadband mobile coverage.

All of this has put Wom on a “collision course” with the market leader, America Movil’s Claro, especially in rural areas where the incumbent spent heavily on infrastructure, said Wally Swain, a Bogota-based Latin America telecommunications analyst at Omdia, a research company.

Claro’s principal point of contention is that Wom shouldn’t have qualified as a startup, which makes it eligible for discounted rates and other benefits meant to increase competition. Novator established a toehold in the country last year by buying a majority stake in Avantel, a minor player that controls about 2% of Colombia’s market.

For now, it continues to operate separately from Wom, which rejects the claim that the Avantel stake means it isn’t a new entrant.

These issues form the basis of “a long-standing complaint by Claro,” Swain said. “They built the widest coverage in Colombia and everybody else is getting a free ride.”

Claro, which has 32 million customers in the country, has been involved in the bulk of 17 lawsuits brought against Wom, which, among other things, have challenged the company’s legal status.

Last year, Colombia accounted for roughly one-third of America Movil’s $2.2 billion of net income, according to data compiled by Bloomberg.

“The Colombian mobile market is dynamic and highly competitive,” America Movil said in a statement responding to questions. Asked about Wom’s entry to Colombia during a Feb. 10 conference call, CEO Daniel Hajj said, “we’re prepared to compete, as we compete in other places with new competitors.”

Telefonica, which runs the second-place Movistar brand, called on Wom to follow the rules of the game but said it welcomed the competition. Millicom International Cellular SA, which runs the third-largest provider, didn’t respond to messages seeking comment.

Wom’s official launch event back in November was classic Bannister.

Heavy-metal music blared and pyrotechnics exploded above the stage. Giant balloons in the shape of crying babies floated overhead, representing the incumbent brands.

Escorted to the stage that evening by employees dressed as grim reapers, Bannister donned a straight jacket and mask, a la Hannibal Lecter. The message, at least from Wom’s perspective, was clear: It had come to eat competitors.

“They’ve abused Colombia, and we’re going to change that,” Bannister yelled after ripping off the costume.

While they’re run separately, Wom’s operations in Colombia and Chile share elements of the strategy that’s allowed Novator to disrupt other telecom markets. Namely, showy marketing tactics and cut-rate prices in places where service is expensive and competition is limited.

This isn’t that novel an approach, of course. Smaller operators for years have employed edgy advertising to win market share even in the most developed countries. T-Mobile US Inc. gained a name for itself with outlandish publicity strategies under its leather jacket-wearing former CEO John Legere.

Bannister is of the same vein — with a little of Richard Branson and his thirst for adventure mixed in: He talked about an upcoming hang gliding trip and has biked across South America.

Fit, energetic and sporting a swoop of a gray mustache revealed only when he drops his mask to take a sip of water, Bannister came to Latin America somewhat reluctantly. He intended his last overseas jaunt to be Myanmar, where he bought a bamboo farm with the idea of exporting the harvest to Sweden to build bicycle frames from his houseboat.

Then Bjorgolfsson called with an idea to open a company in Chile. Despite his limited Spanish and little experience in the country, Bannister was convinced after a visit. On the flight home, he sketched out a business plan.

Wom entered in 2015 by buying Nextel’s operations. It grew to 4.9 million customers as of June from the roughly 200,000 customers it inherited, according to government data. Investors have cheered on the company’s wins, sending benchmark bonds from the Chilean unit up 46% last year, the best performer among emerging-market corporate debt after distressed notes from the mobile operator Digicel.

With that track record of success, Wom poses a “clear risk” for incumbents in Colombia, said Arturo Langa, a Mexico City-based analyst for Itau BBA who covers America Movil.

However, with its vast rural areas where Claro is firmly entrenched, the country may prove more similar to Mexico than Chile. In its home country, America Movil has been able to keep its dominant position despite pushes from new players, like AT&T Inc.

For now, as Bannister travels the country opening new offices, he’s seeing that the company’s theatrics are at least gaining it notoriety. A cabby on the Caribbean island of San Andres, 750 miles north of Bogota, recently recognized him from a video of the November launch event, he said.

“The rationale piece is good service at a low price. Then you have the emotional piece, which is about engaging with the population,” Bannister said. “And that’s where the brand comes in.”

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