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Archive for the Opinion Category
25 11 2013
Unlike market leaders WeDo and Subex, analysing Israeli RA vendor cVidya always causes me headaches. For example, they tell their customers they are headquartered in the USA, but they submit their figures to a Deloitte ranking for fast-growing companies headquartered in Israel. But cVidya are backed by venture capital, which means they are under no obligation to tell the public anything about their results, never mind telling the truth. So over the years, I have relied upon piecing together scraps of data from here and there, not least from the numbers reported by cVidya to Deloitte’s Israeli Fast 50. cVidya once again features in the Fast 50 for 2013, being ranked 29th fastest growing firm in Israel. This was achieved by delivering 175% revenue growth between 2008 and 2012. And from that, I estimate they probably suffered a 20% fall in sales between 2011 and 2012, with revenues dropping from around USD52mn to around USD42mn.
Archimedes said: “give me a place to stand on, and I will move the Earth.” He was discussing the principle of leverage, which seems oddly appropriate. To calculate cVidya’s revenues from the Israeli Fast 50 numbers requires two fixed points, for security. Then we can plot the curve of cVidya’s growth over time. After following cVidya for ten years, I finally have two fixed points suited to the task.
The crucial first point is found way back in 2004. We know, with a very high degree of certainty, that cVidya’s 2004 revenues were just less than USD63k. How do we know this? Because in 2008, cVidya received a ‘special mention’ from Deloitte, despite failing to qualify for their Fast 50 Index. At the time, cVidya was very proud of this, and issued a press release. Why did they fail to qualify? It had nothing to do with arguments about where their headquarters were. The growth of a Fast 50 business is always measured over a 5-year span. cVidya’s 2004 revenues fell below the USD63k threshold to be included in the Fast 50 ranking.
Step forward to 2009, when we can be confident that cVidya’s revenues were around USD20mn. The backers of cVidya and ECtel negotiated their merger, there was good evidence that the two firms had roughly equal revenues, and ECtel’s revenues were in the public domain by virtue of their stock market listing.
It is important to emphasize that cVidya has never publicly admitted to falling revenues. They have, in contrast, often stated they were growing. So if the 2009 revenues were higher than the 2008 revenues, and the 2012 revenues are 175% higher than the 2008 revenues, we know that 20*(1+1.75) = USD55mn would be the high end of the range of possible 2012 revenues. But this would assume negligible growth between 2008 and 2009. This is unlikely. At the time, cVidya frequently reported new sales and were very upbeat about their growth. So the more that cVidya grew between 2008 and 2009, the lower their 2012 figure would be. I came up with the following growth estimates, based on the Fast 50 numbers and by setting the 2004 revenues and 2009 revenues to USD63k and USD20mn respectively.
Numbers below the red line are for the post-merger cVidya, incorporating ECtel. Numbers above the red line are estimates of growth between USD63k in 2004 and USD20mn in 2009. From 2009, all revenue estimates are consistent with the 5-year growth figure reported in the Fast 50.
There is some guesswork here, but the numbers make sense. Crucially, it would be very hard to engineer a model to fit Deloitte’s Fast 50 numbers, without showing cVidya had a downturn somewhere. In the past, cVidya have talked big about their growth. This year, they were quiet about growth. Hence, I make the rational assumption that the start-up did grow impressively during its early years, but it plateaued following the merger with ECtel. If the model is wrong, there are only two ways to find out: wait for the figures in next year’s Fast 50, or wait for cVidya to be more transparent about their financial performance. I know which I think will come first.
Etisalat is a behemoth in the world of telecom. With operations across 18 countries and total revenue well over 8 billion USD, it is easy to see why Forbes named Etisalat the most powerful company in the UAE in 2012. But in the midst of grandiosity, we see a humbling simplicity. Etisalat literally means “Communications” in arabic. This to me is not coincidence, but an insight into the razor-sharp focus of the organization. I recently had the privilege to see this focus at work in their Revenue Assurance & Fraud Management divisions as well.
I was invited as a panelist for the Group RAFM Forum for Etisalat. Our hosts brought us into beautiful Sri Lanka from the 29th till the 31st of October – and what an event it was! In the broad, wide world of Revenue Assurance, I would call myself a “technician”, i.e. I’m interested in the nuts and bolts. Just like a building built on shaky foundations, unless people understand the grass root activities involved in RA, the management level reporting would simply collapse under scrutiny or pressure. I’m also a fan of RAFM departments who assure 30% of the key revenue chain with 100% certainty, as opposed to departments that attempt to cover 100% of the revenue chain with 30% certainty. It was so refreshing to see that the Etisalat RAFM team shared these beliefs, not just in principle but in actual operations.
Onwards to Sri Lanka! The theme of the event was “Bridging the Gap”. The first step to addressing any issue is to acknowledge the existence of the issue. I find that the most successful RAFM departments are the ones who have the courage to acknowledge their “gaps”. When operators speak plainly and openly, vendors and partners feel encouraged to strive to find solutions to specific problems; as opposed to throwing resources, software and the kitchen sink at the telco and hoping that the issue gets addressed. In my opinion, the Etisalat RAFM forum was able to strike the right chords and create a productive environment for all involved.
With that prologue, I found the theme very pragmatic. The Group RAFM team (presided by Francis Fernandes and Amit Agrawal) wanted the various Opcos that constitute the Etisalat RAFM function to collectively “raise the bar”, as it were, in terms of synergistic collaboration. Now, while I have heard a lot of talk regarding effective and efficient group reporting I have to be painfully honest and outline three things which lead to slow or non-adoption of group guidelines:
a) Lack of relevance – Not all companies in a group follow the same reporting methodology across all lines of business.
b) Lack of consistency – Companies publish group KPIs based on their “interpretation” of the KPI. This is largely due to the absence of standardized Published Manuals and Standard Operating Procedures being in place.
c) Lack of transparency – There is a hesitation in posting information to a global over-seer, when the purpose and the consequences of such information is not clear.
I have to say that Francis and Amit have done a good job of laying the foundation to overcoming these 3 issues. To start off with, the group ideology is not forced onto the opcos, but is rather being co-developed with the active participation of leading minds from the various opcos. Amit is a seasoned RAFM veteran who has never shied away from rolling up his sleeves and getting his hands dirty. Therefore, it is no surprise to see a bottom-up approach being developed by his team. The working sheet has been disseminated to the various group companies, along with the underlying formulae and validation mechanisms. There was active participation and debate from various opcos who had studied and analyzed the various tools in trying to reach a group consensus. It was an enriching experience to hear from domain stalwarts like Ashish from Mobily, Taimur from PTCL and Ramadan from Atlantique Telecom both during and after the session. During the discussion itself it was evident that the local entities have a significant say in shaping the overall group RAFM Strategy and evolution. It convinced me that it is the support and knowledge of local entities which would ultimately drive the success of the group initiative.
Secondly, the Etisalat team has developed a series of “manuals” for prepaid, postpaid, interconnect, voucher and so on. These manuals talk in detail of leakages, the points of investigation, source systems etc. The manuals were sent to all the companies as well, for their feedback and criticism. Of all the actions that Etisalat has taken for maturing their RAFM practice, I found this the best. A junior analyst in Etisalat now no longer needs to depend on ad-hoc experts or “industry certifications” (dubious at best). He/She has access to a well-structured document which outlines their work universe and the associated information they need to do their job. While clearly development of manuals was an important first step in the right direction, the very active contribution and discourse by various experts like Kusum of Etisalat Sri Lanka, Mohammed Gamal of Etisalat UAE and Alfred of Etisalat Afghanistan,would see Etisalat standing to gain even more from the evolution of these base manuals.
Lastly, Amit spoke of the structured link between group assistance and reported figures. This is very re-assuring to me as a local entity. The group is in essence telling me that in the absence of any scope coverage growth (either in breadth or in depth), the group will come in with assistance on how enhance my performance. This highlights the subtle shift from reprimanding non-performance to actually partnering with the local entity to drive positive value. This help would come in the form of on-request consulting with the group partners, performance assessments, training and learning from the Etisalat academy etc. This approach of group-wide enablement is an intelligent approach in fostering positive team-work and overall maturity growth.
All in all, the best advice comes from those who have put in countless hours in the trenches. Bruce Lee said it best when he said:
“I fear not the man who has practiced 10,000 kicks once, but I fear the man who has practiced one kick 10,000 times”
The wealth of operational and technical knowledge which filled the beach-side venue in Colombo was incredible. I don’t remember a single presentation which didn’t present a valuable insight or a new way to look at an old problem. With leaders like Francis and Amit collaborating with RAFM experts, and ably supported by their agile and nimble team of Raghuram Meda, Asem Abughazaleh and Suraj Kadbe , one can’t help but wait with anticipation for the outcome.