In a major consumer survey, ATKearney shows that the use of digital offers across Ukraine does not lag behind the US and Europe at all – Ukraine is even among the top countries investigated.
“In distinction to many countries in Europe, Ukrainians appreciate quality although their ability to pay is hampered by the ongoing crisis,” the ATKearney analysts found.
Based on last year’s study “The future of telecom operators in Europe” where A.T. Kearney has aggregated the views of 60 CXOs in the industry, a consumer survey was set up in Ukraine, 19 other European countries and the US to test some of the hypotheses where the industry is heading and dig deeper into the digital habits of consumers.
The survey included more than 15,000 customers – from the Nordics (Norway, Sweden & Denmark) to the Mediterranean (Spain, Italy & Turkey), from the West (UK, France, Belgium & the Netherlands) to the East (Russia & Ukraine).
Here are some of the main findings of the report:
- The digital usage in Ukraine is surprisingly comparable to the leading countries in Europe and the USA, including California – the home of Apple, Google and Co. But how Ukrainians use their phones is quite different to the USA. They seem to be more focused on saving money by using apps for calls (70% vs. 46% were using apps in the last three months) and buying physical goods like electronics, books and clothes online (51% vs. 35% were buying online via the mobile phone in the last three months). On the other side Americans are spending more time on the Internet (36% vs. 25% of total usage of the smartphone) and use more digital purchasing options (53% vs. 49% were downloading digital content (music, games, videos, …) in the last three months.
- Looking at the consumer spend A.T. Kearney finds that Ukrainian consumers spend significantly less than the European average (about 50%) and their peers in the USA (about 65%). However, the picture would be different when the Hryvnia downfall would not have happened or one would consider the actual income of Ukrainian citizen – after considering the purchasing power parity Ukrainian consumers would jump to the top of the list – compared to their income they spend second most for digital and physical commerce via the mobile phone in Europe.
- A focus on consumers’ buying factors yields important opportunities and needs for action. Price and network quality dominate the factors for how consumers select their operators, although price leads in Europe on average and network leads in the United States & Ukraine by a distance. With respect to network quality consumers rate reliability highest (57%) – with a large distance to speed (20%) and coverage (17%). Actually, in Europe there are only two countries in which consumers also prefer network quality over price (Serbia & Russia) while the highest attention to cheap offerings can be found in Belgium, Denmark and Norway. “Surprisingly, this exactly maps our observations with respect to the digital usage that seems also low if price dominates the market communications for years as it is the case in some of the markets above,” write the ATKearney analysts.
- While very active in the digital world already, Ukrainian consumers appreciate quality much more than their peers in Europe. This may be driven in part by the fact that Ukraine had no country-wide 3G networks until summer 2015. Ukrainian consumers like premium handsets, operator shops, high-quality customer services – and they are top in their interest buying apps and Pay TV in the future. Furthermore, they are rating the quality of the network as more important than the price – which is absolutely key since we see that consumers that are seeing operators as “their navigators in the digital world” are willing to pay about 70% more for their broadband access and 23% more for digital services” says Soeren Grabowski, author of the study and head of A.T. Kearney’s Communications, Media & Technology Practice in Kyiv.
- Ukrainian consumers are trusting their operators much more than consumers in Europe or the USA. If they would buy Pay TV, they would mostly go to an operator, they are quite open to buy bundles of SIM cards and handsets from an operators while they can even imagine to buy apps from an operator app store – a market traditionally dominated in other countries by the global offerings – like Apple’s iTunes
Operators have quickly to act to further broaden and strengthen their digital offering beyond connectivity – and pay attention that Ukraine is staying a healthy market for operators. Unfortunately, many European markets have going down the road of endless price wars. These do not only harm the market itself and the resulting profitability – but also destroy opportunities in the digital world since consumers just see them as pure access providers that should only offer the cheapest bargain available – while they go directly to the OTT players for the interesting stuff.
Good examples to do it differently are for instance Swisscom, Telia in Sweden, Telekom Austria and Orange in France. They all achieved in their market that they are the clear leader in quality in the consumers’ eyes.
Opportunities for operators
“Ukrainian operators have a unique opportunity – they have consumers with digital demand, a good level of the needed trust in their capabilities and an environment that is not at all as mature as the Europe or the USA. Although some internet players exist and digital start-up are entering the market occasionally – operators can create, capture and retain digital opportunities due to their financial stability and reach – if they master to get more entrepreneurial and digital at the same moment. They can play a major role in the Ukrainian economy and a positive case example compared to so many industries that are struggling,” says Soeren Grabowski
Ukrainian operators must provide attractive Premium content to their consumers (also locally produced premium content), financial services, connecting cars/homes and help them finding the right apps (potentially on an own app store) with local context. A different set-up of their sales channels working closely together with online / app based sales is required by the customers. In addition a lot of Ukrainian customers want better processes and self-help compared with offers where the operator customer service covers the entire digital space and not only connectivity and handsets.
“If operators fail to convince consumers about their digital offering? Operators will fall back to pure access providers. Price competition will start to dominate for the years to come, operators will not have the needed money to invest in the infrastructure and we might see massive shift of customers to what are today’s challengers. In addition, the digital demand of Ukrainians will find its way – either with Ukrainian companies or OTT players from abroad – it is digital or bust!” concludes Soeren Grabowski.
