Context Matters

TelecommunicationS : Sailing Stormy Seas with Christopher Laska Telenor: Sailing Stormy Seas

Christopher Laska, CEO of Zrt., has a truly international background, having worked in London, Pakistan, Serbia and in addition to Hungary and . This experience in multicultural organizations is one of his fortés.

In a sense, he is just following his own family’s traditions of moving about a lot. His father, an interior designer, left Hungary in 1956 to live in London. But he kept on moving. At one point, he was a goal- keeper for the Fulham soccer team. His mother, a Norwegian, was a teacher. In the end, the family moved to Ekeberg near Oslo.

Soccer was an important theme in Christopher’s childhood too, and he even flirted with playing professionally. In the end, though, he chose a business career. With a degree from Bradford and a postgraduate degree in marketing communication, he worked at the Norwegian Embassy in the UK for two years, then was recruited by Telenor in 1998 as Director for the CEE region.

He first entered the ranks of the Hungarian daughter company soon after it was bought by Telenor and became Director of

Christopher Laska, CEO of Telenor Hungary Zrt.

Context Matters » March 2013 » Pg 02 Market Development. His successes prompted the firm to send him to head operations in Pakistan, then Serbia and Montenegro. He then returned to Hungary and has been at the helm of the Hungarian firm since the beginning of 2011.

He takes an interest in how businesses can better participate in the life of their employees, their towns and society in general. He has painted playground toys, sponsored anti-corruption- themed events and clamoured for more transparency to make competition fairer.

Telenor’s award-winning HQ His wife, a Hungarian, is studying psychology, focusing on how expat-life affects children. The Laskas have two small boys and enjoy spending their summers at Lake Balaton.

ABOUT TELENOR

Norwegian Telenor entered Hungary in 1994 by investing into the country’s first GSM network, Pannon GSM. It gained majority in the firm in 2002, by then Pannon GSM had been established for almost a decade, and had a strong network and client base second only to T-Mobile’s, then called Westel. Vodafone was the last to join the market, but swiftly established itself as a strong competitor. (For an overview of the market today, see our Battle for the internet box on page 9).

Pannon GSM was rebranded in 2006 as Pannon, when 3G was introduced, and became Telenor four years later. Today, when almost every third Hungarian is a Telenor-subscriber, it is one of Hungary’s most recognized brands. Djuice, a sub-brand established in 2003, is especially well-known among young people.

In its last reported financial year, 2011, Telenor had revenues of 160 billion forints, and an after-tax profit of 25 billion, making it one of the largest companies in Hungary. It has more than a thousand employees.

The company faces many challenges. Foremost among these has been how to keep revenues up and market share intact in the saturated Hungarian market in a time of crisis when technological and market changes are pushing the firm to make its services cheaper and the local recession is weakening consumer spending power.

The crisis has also led to the government placing a higher tax burden on telecommunication companies, which it considers extra profitable. It has introduced a special tax on the sector as well as additional taxes on sms activity. This has caused the European Commission to launch infringement proceedings against Hungary, since it considers the special tax to be against EU law.

Meanwhile, the bidding process for frequency licenses has also presented difficulties for the market: the government has decided to set up a state-owned competitor to the current three market players, and awarded it a large block of frequency which could give it an unfair advantage. This has been successfully contested in court by the telcos, but the question of when and how the state could enter the business is still up in the air.

Context Matters » March 2013 » Pg 03 Amrop: What are the major trends in the international mobile market? How does Hungary differ?

Christopher Laska: There are now more than 6.6 billion mobile subscribers in the world, with device sales rising every year. Smartphones are showing the strongest growth: almost a third of mobile phones belong to this category.

Mobile broadband services are also increasingly significant in the global market. There are now more than 1.3 billion mobile web subscribers worldwide.

In some countries, many mobile internet users no longer need a desktop internet connection at all. Experts predict further growth: the number of mobile internet subscriptions is set to reach 2.6 billion by 2015. Usage patterns will also change, with more than 85% of data traffic to be generated by video downloads and mobile internet use.

I think the mobile So I think the mobile market still has a lot of untapped potential market still has a lot and it has many technological surprises in store for us. of untapped potential In Hungary, the number of mobile internet subscriptions has been on the rise and now surpasses 2 million. Smartphones have also and it has many been adopted very fast: more than 1 million Hungarians use one. technological surprises Smartphones now account for two-thirds of Telenor’s new handset sales. Our research also indicates that every other customer in store for us without a smartphone plans to purchase one in the future.

For us, 2012 was a year of notable achievements: we continued the modernization of our nationwide Hipernet network and increased our mobile internet customer base (from 478 100 to 680 200). Our data traffic grew by 54%.

Mobile internet growth, network modernization and the rising adoption of smartphones reinforce each other, inducing a continuous increase in demand. When content is added to this equation, real value is created for mobile internet users.

Amrop: How is the development of 4G technology moving on, where does Telenor stand in this and what are specific issues for Hungary?

Christopher Laska: Our customers want high-quality, high-speed mobile internet service everywhere in Hungary; they do not know or care what the technology behind it is.

Hungarians understand and like the concept of mobile internet, which we refer to as Hipernet. They are very active and keep using their handsets and sticks more extensively. In fact, subscribers have doubled the amount of data traffic that is conducted over our network.

Context Matters » March 2013 » Pg 04 Globally, mobile music services are growing dynamically and we expect a large rise in demand as potentially several tens of thousands of customers adopt it in Hungary. We consider it equally important to introduce mobile applications. Telenor’s first Telenor thinks smartphones such as Google’s Nexus will change content, too applications were Amrop: One very important theme in mobile telecommunications based on user votes is content. How will Telenor in Hungary approach this in the future? Will you develop Telenor’s own content? How can you collected in an idea distinguish Telenor from competitors in this area? contest and they are Christopher Laska: Telenor is committed to encouraging mobile already available on internet use that requires fast and easy access to content of an Android Market and on adequate quality and quantity. our website. This is why we joined forces with several Hungarian internet content providers (general, sports and tabloid media) to create a user-friendly landing page when launching our “Klikk” service. As a result of this partnership, people new to Klikk can more easily find interesting news and information.

In 2012, we launched a new service in Hungary responding to an untapped need for online content services and promoting legal digital music consumption. In partnership with Deezer, this enables subscribers to access more than 20 million high quality music titles over the internet.

Globally, mobile music services are growing dynamically and we expect a large rise in demand as potentially several tens of thousands of customers adopt it in Hungary.

We consider it equally important to introduce mobile applications. Telenor’s first applications were based on user votes collected in an idea contest and they are already available on Android Market and on our website. To make users aware of the versatility of mobile content, we organize Telenor Smartphone Academy events featuring journalists, bloggers and other opinion leaders.

Context Matters » March 2013 » Pg 05 Amrop: How would you judge djuice’s success in Hungary? We would like to What are your plans for this “brand” in the future? differentiate ourselves Christopher Laska: Djuice has achieved a sevenfold increase in through our people: popularity with young people, and it has become a lifestyle brand we hire and retain the with an expanded handset portfolio and a restructured distribution best talent and create network. an environment that In April 2011, we integrated djuice into the commercial division of Telenor to improve the company’s cost effectiveness and better fosters creativity and leverage the synergies among our brands. Since then, djuice a positive attitude. products have been available over the entire Telenor sales network. This ‘winning mindset’ Djuice continues to organize and sponsor community and funding programs and other initiatives giving young people an opportunity is what will drive our to show themselves to the world. This focus on talent and the success in the future. stage fever of young people has created a growing community around the brand both in the physical and in the virtual world.

Amrop: Market developments: You are not a stranger to Telenor Hungary, having worked here ten years ago. Since that time, how have the company and the market changed?

Christopher Laska: The mobile market has undergone major changes since I first worked in Hungary. There are now about 11.47 million mobile subscribers of which Telenor has about 3.56 million. This number was only about 1 million in the early 2000s.

And the mobile internet market keeps growing: subscriptions may outnumber fixed line connections in the near future and smartphones are revolutionizing our everyday lives.

Amrop: How do you judge the competitive situation here in Hungary on the mobile market? It is always difficult to be number two, how would your strategy differ from that of your competitors?

Christopher Laska: We have always had to meet our business objectives in a competitive environment. We would like to differentiate ourselves through our people: we hire and retain the best talent and create an environment that fosters creativity and a positive attitude. This ‘winning mindset’ is what will drive our success in the future.

Also, our constant drive for innovation increases company resilience and ensures that Telenor will remain a significant player in the market.

Amrop: Where do you and Telenor come down on the age-old question of striking a balance between high quality and high value- added services and the need to make profits? How is this debate formulated within the company and among the managers?

Context Matters » March 2013 » Pg 06 Christopher Laska: You cannot compromise on quality. When planning for a profitable operation, our starting point is that you need excellent quality services to stay in the market. Everything from our handset portfolio to additional services is determined by customer needs. This is the starting point for developing our business policy.

Amrop: How do the special taxes for telecom companies in Hungary and the current overall business climate influence your operations and the way of thinking about the future of Telenor You cannot in Hungary? compromise on quality. Christopher Laska: Telenor in principle fully supports the When planning for government’s efforts to put Hungary back on track for growth. As a good corporate citizen, we expect to contribute to our profitable operation, community’s welfare through fair taxes and we made significant our starting point contributions even before the introduction of the crisis tax and other sectoral taxes. is that you need The telecom tax is an additional heavy burden on the industry and excellent quality is seen by investors as a disincentive and an unpredictability factor. services to stay in the I would say that this lack of predictability is the most serious and market. dangerous factor, because it has a long-term effect. We are good at adapting to hardships, “sailing the stormy seas” and so far we have managed to overcome the difficulties.

But we need to know what to expect in order to plan and calculate our moves. If the taxation and the legal environments remain unpredictable in addition to the volatility of the market, we will be forced to change our innovation strategy. That would have a negative effect on our customers, our partner companies, and on the Hungarian economy in general.

However, we are fully dedicated to growth in Hungary and will work with all of our might to help the country achieve this.

Amrop: Your head office here in Hungary is advertised as “one of Hungary’s most state-of-the-art and most environmentally friendly corporate headquarters.” How important is this issue for your company, especially in a situation where competition is getting fiercer and margins might be declining?

Christopher Laska: Being a responsible enterprise, Telenor is committed to the protection of the environment, which is key to sustainability. This is demonstrated by the Telenor House in Törökbálint, which is one of the most state-of-the-art and environmentally friendly corporate headquarters in Hungary.

The building has been awarded a Construction Industry Award and a Fiabci Award. Throughout the design and construction process, we wanted to minimize its impact on the local ecosystem. As a

Context Matters » March 2013 » Pg 07 Being a leader means more to me than making strategic decisions, delegating tasks and solving problems. You have to be inspiring. You need to have high ambitions and high standards. This is the basis for Telenor’s headquarters in Törökbálint uses geothermic heating and natural good leadership. ventillation for making working conditions good for workers - and the office less of a burden on the environment and natural resources

result, the Telenor House saves enough electricity to power 500 households for a year. CO2 emissions are similarly reduced.

In line with our CSR goals, we also want to make our customers aware of the benefits of an environmentally conscious lifestyle. Our customers can opt for an electronic invoice instead of a paper-based one, which saves a significant amount of time, power and fuel.

For us, sustainability also includes transparency and the fight against corruption. Only through highly responsible and ethical corporate conduct can we achieve our goals. At Telenor Hungary and its Norwegian mother company these values are now considered traditional. Corruption creates an insecure business environment and unfair competition which hinders companies in concentrating on quality.

Fortunately several companies have realized that they can only be successful in the long run if they are ethical. We have joined forces with Transparency International Hungary to support and acknowledge the efforts of these companies.

Amrop: As a leader, what is your approach to motivating your colleagues?

Christopher Laska: Being a leader means more to me than making strategic decisions, delegating tasks and solving problems. You have to be inspiring. You need to have high ambitions and high standards. This is the basis for good leadership.

Of course, you need to be a good communicator who can explain his goals to colleagues and you need to keep your eyes open to understand the market and colleagues’ needs.

Context Matters » March 2013 » Pg 08 Amrop: The Telenor company you were managing in Montenegro The battle for the internet before you came here is considerably smaller than Telenor

By the end of 2012, the average data traffic for Hungary. How have you experienced the transition of moving from each mobile internet subscriber passed 1 GB a smaller company to a significantly larger one, and one that is per month in Hungary. Telenor had the largest much more in the headquarters’ headlights? share, almost half of all of this data passed through its network. Christopher Laska: Yes, the Telenor company in Montenegro In this, T-Mobile, the mobile arm of incumbent is smaller than Telenor Hungary, but I worked in several large Magyar Telekom, takes second place to the organizations, including Telenor Hungary, before my current post. I Norwegian firm’s Hungarian operation. was not shocked by the company’s size. Vodafone, the third market player, took a fourth of all mobile internet data traffic. At Telenor, all operating companies are in the focus of attention and the T-Mobile has invested heavily into developing Board doesn’t differentiate between companies based on their size. its fourth generation LTE network to get an edge over Telenor, and has also contracted with Apple Amrop: What personal challenges have you faced and what has to gain trading rights of its i-devices – usually been smoother than you thought it would be? bought by avid mobile data consumers. Meanwhile Telenor has won the bid for an exclusive license to sell the Android rival of the Christopher Laska: It is a personal challenge for me to make Telenor iPhone, Nexus 4. Hungary a successful business in a fiercely competitive market amidst an economic crisis. This is an ambitious goal, but I like challenges. This job, however, is made easier by my colleagues and family.

Hungarian colleagues are real partners at work, I can rely on them and we trust each other. Outside work, it is important for any company executive to have a strong family background. My wife is my greatest supporter.

Amrop: What are the most important factors from your youth that have shaped who you are today?

Christopher Laska: I consider my adaptability a great asset. I was brought up in a Norwegian-Hungarian family. I studied in England and I worked in the United States, Pakistan, Serbia and Montenegro.

This mix of cultures and my contact with people, colleagues and friends of different mentalities and mindsets enables me to address conflicts arising out of cultural differences and make the most of an international network of relationships.

This interview was conducted by David Young and Richard Kohlmann, Managing Partners of Amrop Kohlmann & Young.

Amrop Kohlmann & Young

A: 1022 Budapest,Eszter utca 6/b T: +36 1 391 0950 E: [email protected] W: www.amrop.hu

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