Teligent

1. Teligent Best in France Case Study January 2005 By: David Chouinard, Wei-Jyun Hoang, & Eric Vambert

2. Agenda • Company Overview • Global Operations • Doing Business in France • Essential Advice

3. Company Overview • Teligent is an international telecoms company based in Nynäshamn (Stockholm), Sweden. • Offers network service providers (B2B) application based solutions to increase revenue and end-customer usage. • Clients include BT, Cingular Wireless, Telefónica, Telia and operators within the Vodafone Group. • Founded in Sweden in 1990, the company is listed in Stockholm • €50 million in annual sales with a goal to achieve 10x higher sales by 2010.

4. Company Overview • Telecom network service providers: • Have heavily invested on infrastructure • Experience a big churn • Have some spare capacity • Teligent helps them improve: • The revenue per user • The fidelity of users • The quality of service • By providing tools that: • Use the spare capacity for adding value services • Improve control of network and invoicing

5. Company Overview • Teligent offers innovative solutions such as: • Voice mail • Messaging solutions (e.g.voice/fax messaging, unified messaging) • Mobile data solutions (SMS and MMS) • Intelligent network solutions (e.g. Service Management) • Service access management • Pre-paid call management • Virtual private networking • Next generation networks (including application interfaces and switching)

6. Company Overview • Innovative applications developed from scalable proprietary platform (Teligent P90/E middleware)

7. Company Overview Clients include:

8. Company Overview

9. Company Overview Key figures and breakdown of Sales

10. Company Overview • Diverse range of competitors, although no distinct group of peer competitors • Large global suppliers of telecom equipment • Global value added specialists • Local or regional niche suppliers • Local or global system integrators • Not unusal for a company to be both a competitor and a potentially valuable partner, such as Nokia, Ericsson and Lucent

11. Global Operations 2003, Breakthrough orders in Africa, the Middle East and in the West Indies, 44% of orders from outside Europe 2004 2002, Implemented globalisation strategy to expand to continents outside Europe and North America 1997, subsidiaries established in France, Germany and Spain 2000 1995, first int’l order received from Britian (IPM) 1994, decision taken to enter international markets 1995 1991, first order received from Swedish organisation 1990, Company Founded 1990

12. Global Operations • Teligent’s overall operational goal is to become a leading global supplier of advanced value added services for telecom networks • Expansion on the basis of establishing new indirect sales channels and geographic expansion • Teligent is represented in Brazil, England, France, Germany, Morocco, Singapore, Spain, Sweden, UAE, and the USA.

13. Doing Business in France • France is around the fifth largest economy in the world with an annual GDP of about 1.9 trillion (1/5 of the US) • 2nd largest economy in Europe • Population of 60 million with a high disposable income of USD 29,000 per capita • Ensuring foreign direct investment is of high priority for the French government to ensure growth and jobs

14. Doing Business in France • Many foreign investors are attracted by: • Financial incentives • Skilled and productive labour force • Central location in Europe • Quality of life • Free movement of people, services, capital and goods • However, investors continue to be concerned about: • Government economic regulation and taxation • High social costs • Complex labour environment • Employee rights and benefits can make exit costs high for investors seeking to leave France

15. Doing Business in France • Teligent came to France to be near potential customers and ‘conquer the French market’ • Other key benefits include: • Highly skilled labor, strong concentration of engineers • Able to ensure high product quality and innovation • High productivity (e.g. revenue & profit per French employee) • Location benefits, such as transport, time zone, and quality of life for employees • Market Potential (i.e. growth potential, customer demands for cultural adaptation of product(s), launch platform for other European countries) • Less taxes than Sweden and cheaper than the UK • Paris offered an ideal central location with a large population and good industry links

16. Doing Business in France • However, Teligent has had to adapt its strategy in response to several challenges posed by the French market • Economic downturn in 2000 • Cancelled contract with France Telecom • Difficult for small companies such as Teligent to do business with the small number of large service providers • Companies such as France Telecom demand reliability from more well-known, established companies such as Ericsson and Alcatel • France still considered a long-term growth potential • North America and outside of Europe offer the best growth prospects though

17. Doing Business in France • Other constraints mentioned include: • Cumbersome French bureaucracy • Relatively unfriendly business/enterprise environment • Auditing laws • Labor laws • Intense pressure to reduce prices and high competition • Key costs cited for locating operations in France: • Employee compensation • Potential exiting costs (employee severance packages) • Corporate tax

18. Doing Business in France • Teligent has successfully adapted its business model and plans to remain in France • French operations are used as the platform to reach other Francophone countries such as those in Africa, including: • Morocco • Ivory Coast • Niger • Togo • Tunisia • Teligent has avoided establishing a local office in Africa, which would be difficult as there are no obvious hubs (highly differentiated markets in Africa with large economic and political differences between countries) • Nonetheless, the company tries not to be too French in order to avoid perception as the ‘old colonial power’

19. Doing Business in France • Teligent enjoyed initial success in Morocco through an agreement with Maroc Telecom • Followed up this success with a deal from Atlantique Telecom, one of West Africa’s largest carriers; based in the Cote d’Ivoire • Involved installations in four markets: • Burkina Faso • Gabon • Niger • Togo • Further growth predicted for Africa • Support office for North Africa established in Morocco to help French subsidiary in this region • Africa accounted for 15% of Total Sales in 2003 (only 10 employees in Teligent’s French operations)

20. Doing Business in France • Being a small company has also enhanced the company’s ability to adapt in France relative to large companies • Closer relationship with employees • Employees are more willing to work long hours than those in large companies • No Union involvement, flat matrix organization structure • Strong commitment and loyalty from employees • Can provide special rewards to employees that are more meaningful and cost effective

21. Doing Business in France • Recruitment: • Ads in Figaro for engineers • APEC • Head hunters for salespersons • Diverse workforce composed of French and international employees • Compensation • Fix for engineers • Percentage of sales for salespersons • Appraisal • Twice a year but flexible since only ten employees • Problems highlighted quickly • Needs for training identified easily • Expectations are known by all employees

22. Essential Advice • France is a large, important market and can be profitable • Being French is the best way to do business in France • Think globally but act locally and adapt to customs • Hire French staff and legal support • Hire French sales people and propose business in a French way • French knowledge and language can be profitable for reaching markets outside of France

23. We Thank • Mr. Hällerstam: Managing Director Teligent France and Africa per.hallerstam@teligent.se • Mr. Melin: Project Manager guillaume.melin@teligent.se Teligent SAS 14 Boulevard Montmatre 75009 Paris Tel: +33 (0) 1 48 00 18 18 Fax: +33 (0) 1 48 00 18 19

24. Our Team

25. Bibliography • Teligent Annual Report 2003 • Teligent Quarterly Report, September 2004 • United States Department of Commerce, ‘Doing Business in France’, http://www.buyusa.gov/france/en/111.html