ArmInfo.As one of the largest telecommunications operators in Armenia, Beeline has been guided by the principles of corporate social responsibility (CSR) for several years now. The company's Chief Executive Officer Andrey Pyatakhin in an interview with ArmInfo correspondent talked about the results Beeline's team managed to register in CSR, and challenges the telecommunications industry faces in the Internet age and the rapid development of digital technologies.
Mr Pyatakhin, there are now many different points of view on what corporate social responsibility (CSR) is. What definition would you give to CSR in terms of the activities and specifics of your company? What is the basis of the Beeline CSR policy in Armenia?
In fact, approaches to CSR may be different. The most direct approach is when a company pays salaries to its employees, pays taxes, providing the state with cash that is spent on roads, education, health, etc. But from the point of view of our company, I think that this is not enough. In addition to the fact that we are doing mandatory things, the company's activities should be useful to society. And this benefit may vary, depending on the type of enterprise, on the needs of the country, society, etc..
We have been experimenting for a long time, trying to find the niche in which we can be as useful as possible. Since our budget is not unlimited. Digital education and the development of the startup ecosystem, on which we have focused on since last year, became those areas, in which we decided to invest our efforts, time and money.
Why? First of all, it is connected with the youth, in whom the future of our country lies. And secondly, everything related to startups gives people the opportunity to learn how to develop products that will help create jobs and contribute to bringing Armenia to the international level. That is why the Beeline Startup Incubator project was initiated. But this does not mean that we abandoned other initiatives. If there is a good project that can be implemented in partnership with a company that has a good reputation and conducts transparent business, we also consider it. But our main forces are concentrated on digital education.
Have the expectations been justified after the first year of the project launch?
Initially, I would like to emphasize that Beeline Startup Incubator is not a commercial event for us. That is, if in most cases an incubator is the place where money is earned, which is a normal process, for us it is not a business, but pure social responsibility. The project does not envisage gaining income. We want to train these people, to help them in finding investors. That is why, in my opinion, we are interesting for this ecosystem, which is growing, in parallel with which its requirements will change.
At the moment, Beeline Startup Incubator is going through a stage that we call ''sowing''. So, in the first sowing 10 teams were chosen, 8 of which reached the final. Some of them received an investment, others develop further. The second sowing will be completed soon. In the middle of February, we will present to the investors the existing developments, and we will continue to recruit new teams. The main thing here is that we also learn from the experience of previous sowings, rounds. We understand which ideas are more interesting, what should be changed in the program, which experts should be involved and try to do it together with other partners in the Armenian market, such as Microsoft, TUMO, etc. And I think that we will continue to work and evolve in this direction. It does not matter how the project is evaluated by the company, the most important thing is that it has demand, people want to apply to us, they want to develop.
I should note that last year I was very happy when I saw our Beeline Incubator on the map of the start-ups ecosystem of Armenia. This means that, first, we are doing the right thing, and secondly, we are going the right way. That is, we are part of a system that works and develops. And most importantly - we do not compete with other incubators or other parts of this ecosystem, but supplement it. This system is developing, and we develop along with it. Therefore, in 2019 we plan to further promote this project.
As part of Beeline Startup Incubator, you deal directly with young people. How do you consider the development vector of startups in Armenia, what, in your opinion, are the main gaps?
I can say one thing: all the people with whom I spoke in the framework of the project are undoubtedly talented and very creative guys. There is only one gap-lack of proper learning. Since in order for any startup to grow, find an investor, create its product, skills are needed that are not taught in institutes or schools. In particular, how to effectively address potential investors, preserve their intellectual property in such a rapidly developing IT sector, how to assess competitors, etc. For this very reason this ecosystem that is being created in Armenia is very important. The stronger it will be, the more young people will be able to get the necessary skills. Armenia’s startup ecosystem, of which Beeline is a part, is one of the best in the post-Soviet space today, and we are very proud of this fact.
It should be noted that Armenian IT companies mainly serve the markets of other countries, in particular America, France, Russia, etc. On the one hand, this is good, as it provides the opportunity to learn something new. But on the other hand, the problem is that there are very few Armenian customers. And there is a high probability that those guys who study today, will receive invitations tomorrow and leave the country. In this regard, establishment of large IT companies working on real IT products is a task that the government must assign. So far, there are very few of such companies. Certainly, some of such IT companies may develop on the basis of those startups that we are helping today within Beeline Startup Incubator. I know that such directions are voiced by the government, now it would be good for them to be realized. This would help telecommunications, youth, and our startup system.
What is the reason, in your opinion, that the Armenian IT sector services mainly the markets of other countries?
First and foremost, the size of the economy and besides, digitalization is not quite at that level, in order to utilize this large number of smart and young guys, to create so-called big products. Of course, IT is developing in Armenia. But it is necessary to move faster in this direction in order to be competitive, to contribute to the economic development of the country and the growth of young people. Most importantly, the potential that can be used exists, and not all countries can boast of having it.
And nevertheless, considering Beeline as, first of all, a telecommunication company, I would like to know how do you evaluate the overall results of the company's activities for 2018? What development trends of the Armenian telecommunications sector can you highlight today?
In general, I can say that we have fulfilled the tasks that the shareholders have assigned to us. In particular, this is an increase in the customer base, both in terms of mobile communications and Internet services. In the third quarter of 2018, the number of Beeline subscribers compared to the second quarter increased by 4.4% to 974 thousand people, while the number of mobile Internet users increased by 14% over the year. There were tasks related to indicators of profitability, which have also been met. The whole company worked well for the implementation of the set tasks.
But what is happening with the telecommunication market all over the world today? Not only in Armenia. We lose revenue. Because such companies as Facebook, WhatsAp, Skype, Viber "eat our lunch." This is a global trend. And in a similar situation as a telecommunications operator, we must look at the effectiveness of our costs. And this issue today is extremely important. Therefore, today systems are being introduced that allow automating processes that lead to cost reduction and more favorable prices for subscribers. For example, last year we were able to make calls to the Beeline network in Russia almost free of charge.
In general, if before the Internet was important, now it has become extremely important. In particular, the “Velvet Revolution” was made thanks to the Internet, social networks. Another example- a network fault occurred recently, due to which some customers were left without communication. All incoming calls, complaints related exclusively to the Internet shutdown. This once again proves that the importance of voice services today yields to data transmission services.
In overall, today telecommunication-operators compete on the issue of Internet. The number of smartphone users is growing. If 3 years ago, the indicator of using smartphones in Armenia was very low among the CIS countries, today we occupy top positions. Accordingly, the level of use of the Internet is growing, which leads to a reduction in revenue from voice services. But, it is noteworthy that in that year we were able to block the decline in voice revenues with the growth of income from Internet services. People today are more than willing to pay for the Internet. Therefore, a lot of money is invested in the construction of LTE networks of the 4th generation. In parallel with this, the Beeline fixed network is being upgraded throughout the Republic.
What does Beeline plan this year in telecommunications?
In this regard, we observe the needs of the market. For example, given that today people need smartphones that are not durable, we, as a large group with about 220 million subscribers, can negotiate with suppliers about lower prices for smartphones. In particular, we can negotiate with Armenian banks for lower tariffs for the purchase of smartphones by installments, taking into account the credit load of citizens. As for new super products, we see that the importance of the phone for people is increasing more and more, in particular, there is a need to expand its functions. Therefore, last year we launched the BeeMoney application, which allows the client to pay for numerous services by telephone. We plan to continue to develop this product.
At the same time, we will expand the mobile Internet network considering network overload in certain areas. Our task is to provide more Internet to an increasing number of subscribers, while offering more favorable rates.
And one more important point - last year we restarted the BeeTV mobile application, which is in high demand in Armenia. In particular, the application has already been downloaded about 160 thousand times. We are the leaders of mobile television in Armenia. And in this regard, it should be noted that this product is the best in comparison with similar applications running in Russia and Georgia.
Considering the speed with which the Internet is developing and its relevance, can it be assumed that the decline in revenues from the telecom will be continuous?
The past year for the Armenian market was illustrative in the sense that we were able to compensate, as I have already said, the decline in voice revenues with the income from the Internet. This is a very good sign which allow us to assume that the market will develop, and telecommunications companies will be able to earn money on the Internet. As the number of people willing to pay for the Internet grows. But in general, TC, of course, is experiencing a very big competition with over-the-top services. Therefore, today, most telecom operators are trying to find something new in terms of generating income.
In particular, in my opinion, in Armenia there is a great potential in the mobile financial service, which is not implemented. Beeline, for its part, took the first steps in this direction by launching the BeeMoney application. In other words, let the phone become a wallet. But, so far this is difficult to achieve due to the restrictions in the RA legislation, which, by the way, is stricter than that of its neighbors. Besides, there are certain limitations in client behavior. After all, it is not a secret that the level of using credit cards in Armenia is extremely low. As a rule, people withdraw money from an ATM, only then they pay in cash. And phone can help to develop this culture of non-cash payments. Why to keep a card if you have a phone? In other words, this is what can give us an additional source of income, and provide people with a service that will make life easier. But the primary source of hope for TC operators, it seems to me, is the Internet. Therefore, we will continue to work in this direction.
And most importantly, acceleration of economic growth is extremely significant for any industry in our country, especially for telecommunications. Since this will lead to the emergence of new enterprises, new industries, which will need Internet technology. Personally, I believe in the growth of the Armenian economy, which will help grow the telecommunications market. And if some of such factors coincide, we will have a future.