Greece as a paradigm of digital transformation

Deutsche Telekom CEO talks to Kathimerini about country’s progress and prospects, and OTE Telecom

Greece as a paradigm of digital transformation

Greece has “achieved positive developments” in its digital transformation, the chief executive of Deutsche Telekom, Timotheus Hoettges, tells Kathimerini in an interview, talking about the investment plans of Greek telecoms firm OTE’s German parent company and the challenges of artificial intelligence.

Hoettges, who met recently with Greek Prime Minister Kyriakos Mitsotakis, praises the rapidity of Greece’s progress in matters of digital governance, saying that it is “time for societies to move quickly” and “Greece is faster than Germany.”

“I have to say as an outside observer, as an expert in the field of digital technology, and as someone who travels around the world… that I am very impressed by how seriously, step by step, Greece is on a great track,” he adds.

Hoettges is not as optimistic about Europe’s performance, however, saying it has already lost the battle of the internet and cloud computing, and is already lagging in artificial intelligence. “We’re not seeing the opportunities. All we’re trying to do is regulate,” he says.

Why are you visiting Greece? How important is it for the company?

Greece is at the core of our strategy. It has the same DNA as the parent company. It has strong fixed and mobile lines, and strong digitalization in both consumer and business. It is a business model that works. Since the financial market crisis, it has achieved positive developments in this area. Political stability, discipline of budgets, and modernization of society in terms of digitalization are leading us to invest in the upward trend. In Greece we see great investment opportunities. This is good for citizens, for consumers, for the government and for Deutsche Telekom.

How have Greece and OTE evolved since your last visit in 2008?

OTE was facing problems because of its financial situation, it had a stressed balance sheet and high debts. It was not highly regarded by its customers, and was distracted from management and unions. Over the years, it managed to achieve a customer-centric approach. Contributing to this success were its relevance to the government, digitization efforts, B2B success, and content strategy. It has high scores in Net Promoter and from customer feedback. It also has a very solid management with Michael Tsamaz and his team. This is important for a long-term strategy.

Is OTE an international company or a Greek company?

My philosophy is to be as local as possible and at the same time create the necessary synergies to promote the business model. Greeks should feel responsible for Greece. Cosmote must be deeply embedded here, around the customer. Our biggest advantage over Facebook and all these American platforms is that we are part of this society. We invest here. We live here. We have daily contact with people. On the other hand, the world is moving on and the dominance of global businesses is accelerating. Cloud platforms scale around the world. We should be able scale too, globally. The bigger we are, the better the benefits we can contribute to the business, whether it’s better network investments, competitive pricing, or even a little more profitability for the company. These platform economies that we’re seeing are something that we need to adopt in the group as well. That doesn’t mean that everything will only grow in one country, like Germany. We have hired 800 people in Greece who are working on software for the group. Greece is becoming a very important hub for the development of our products.

Timotheus Hoettges signs a sticker that says ‘Tim was here,’ on the inside of a cable distribution box belonging to local telecoms operator Cosmote, during his recent visit to Greece.

You had a meeting with the minister of digital government, Kyriakos Pierrakakis. How was the experience?

Absolutely impressive. And with a clear societal connotation. It’s time for societies to move quickly. And I can tell you that Greece is faster than Germany. It is making great progress on many issues. Take the example of electronic identity, prescriptions, customer relationship management, and even connectivity pieces where Greece has made a big step forward. I think it is a winning track due to the clear governance that Greece has. I know you are still trying in many areas, but I think that, compared to other European nations where we operate, it is quite impressive what Greece has achieved, and it is driven by people. People are always the driving force. So I have to say, as an outside observer, as an expert in the field of digital technology, and as someone who travels around the world – and I will even bring this to Germany and take this as a positive example – that I am very impressed by how seriously, step by step, Greece is on a great track. I think this is really a new development, which I had not seen in 2008.

What kind of investments are you planning in Greece?

Deutsche Telekom has the best network, according to drive tests and customers feedback, in terms of connectivity. We invested in 4G, but now we are heading and leading on 5G. We want to cover the network with 5G, to connect cities as well as rural areas. If there is a safety network, we want to be part of it. 5G offers great opportunities that we haven’t foreseen yet. Next come fiber optics. We had an investment plan for 1.5 million households, which we decided to double in the next few years. Connectivity to households and businesses via fiber optics with unlimited gigabit speeds is helping the industry significantly. Think about the metaverse. On the other side, we live in an era where people are expecting ubiquitous data access. We are investing in the digitization of the network infrastructure, in data connectivity in many areas, in building a software layer. We will cloudify our business. Then, there is the front-end system, Magenta View, Cosmote View here. With that, wherever the customer is, we can serve them according to their interests, their contact points. This may be possible only if the systems can support it. So we are investing in this omnichannel approach. Our strategy is very simple: Digitize everything so that we can become faster, better in service. Data intelligence and artificial intelligence are enablers for that. Then we can deliver a supported human-centric service. This is the idea. We will never abandon our people. Even 10 years from now, I promise you, we will have stores, in a different way, with intelligent systems to achieve connectivity for our customers.

So, five years from now, what should companies or private customers expect, in practical terms? What is going to improve in service, connectivity, speed?

Since 2014 our customers have increased their data consumption by 13 times. By 2030, we expect them to increase it by 27 times. So we will see exponential growth in digital service consumption in every aspect. Therefore, we must first provide all the pipes that give customers access to every service whenever they need it, wherever they are. This is the basic principle. The second is that our service must be easy to use. FinTechs like Revolut should have easy access to our systems, customer data and customer base. Services like GOStudent should be easily adaptable to the consumer and be an advantage for the Cosmote customer. On the B2B side, I see two major steps. The first is that all Microsoft Teams services should be integrated into connectivity, easy to use, independently from mobile and fixed line. In addition, we should have unified communications services, not just for video conferencing, but also for working collaboratively in a digital environment, for sharing documents in a secure environment. Security by design is another element. Everything we do in the digital world should be completely secure. People are worried about their privacy, about data theft. And rightly so. It’s our duty to create a trusted network. For me, digitization is the biggest driver of wealth economies in our Western society. And we must be the enabler for that.

You are a big company with a lot of history. You have to deal with a lot of regulations. Do you sometimes worry about disruptors like Elon Musk’s Starlink?

First of all, I’m very concerned about the European landscape and European regulation. After the privatization of the big telecom companies 30 years ago, we still apply the same principles. But the world has changed. For me, Facebook or WhatsApp are communication services, but according to regulatory law, they are not. We need to redefine the regulatory environment. Secondly, I am concerned about the innovative capacity of the Western European environment in this regulatory framework. Twenty-seven percent of all our innovation comes from European universities, but we do not create GDP from that. Only 17% of GDP comes from there. And when it comes to unicorns and building new businesses, it is only 8%. That’s not the case in America, or in China. The European framework has a structure that doesn’t promote innovation at the speed that the global economy does.

Is it a matter of structure or culture?

It’s both. But, first change the structure, and then people will innovate. We have less of a risk culture, with too many regulations, but that will disappear over time. The digital economy is growing rapidly and Europe has already missed the first half of the wave of consuming the internet, like Amazon, Google and Facebook. The second wave is the cloud. We have lost that battle as well. Ninety-two percent of all data in the Western world is stored in American cloud services. The next wave is artificial intelligence, because the cloud needs algorithms to manage all these volumes of data. But even there, we’re already behind. We’re not seeing the opportunities. All we’re trying to do is regulate. We are creating an overly regulatory environment for our entire digital economy. And also, I think we’re a little bit afraid of new technologies, rather than embracing them.

Even though there are a lot of risks and moral dilemmas that come with AI?

First, I am a big fan of regulating social media platforms. What we read and what is being organized on social media these days is unacceptable. I encourage European regulatory action on this issue. We cannot keep breaking our European ethical rules. I also think that social media is leading to a society of “me” instead of “us.” We need to do something to create cohesion in societies as well. At Cosmote we need to show how relevant we are in this area. This will be achieved with connectivity. Without it, we cannot organize ourselves, nor can we express ourselves in social networks. Our investments are long-term, for the next 15 to 20 years. So it is very important that our brand, our positioning, is something that matters to people, that has a social purpose. Consumers should know that we are not here to make quick money or to optimize our capital returns. We need to build sustainability into our business model. Therefore, we need to engage on social issues such as fake news, social harassment, abuse of rights. And I think we also have to fight for the digital dominance of our societies either in Greece or in Europe. Because if we are dominated only by American platforms, our culture will be dominated. I am a true European and Deutsche Telekom is the leading European telecom operator, so our cause fits with this ideology. And I’m not going to go to Africa, Asia, China. We are going to stay here, this is the place where we want to win.

There’s a lot of talk about this new cold war between China and the West. People believe that there will be two main AI platforms. Do you see Europe squeezed somewhere between them?

There is a digital iron curtain and it is being built as we speak. China has a fence web. It has its own satellite system, BeiDou, its own operating store, Harmony. There are developments being made for 6G, independent of the GSM standardization body, and it has its own CCI architecture for chipsets. Two technological hemispheres are being developed. At Deutsche Telekom we are committed to the Western hemisphere. There will be a new development of supply chains, for which independence is required – we have seen what is happening with chipsets today. But there will also be disadvantages from this decoupling. Because I believe that commercial activity, close cooperation between people, is what can guarantee peace in societies.

How do you see the world in the post-Covid era? Business travel is fading out, people are working from home. Will that change?

No. Society has changed. We have become familiar with digitalization and the easiness of it. Nevertheless, we should learn from the negative aspects as well. Productivity is suffering, people are working longer with less output. The second issue is the consistency of a brand. Deutsche Telekom is a very strong brand. We have increased its value by 18%. It reached 60 billion euros in the Global World Index. The brand is always driven by people. If we work from home, there is a lack of creativity. I miss the new disruptive, transformational ideas that came more easily around a table. Human existence is about a collective and we can’t create a virtual collective. Even in the fully digital metaverse in 10, 20 years, we will need personal interaction. It’s in our genes. Now, in this new age, we need to find the right balance again. It will be more digitized, but less than during the pandemic.

Let me ask you a personal question. Why do you still live in Bonn and not elsewhere?

First, I really like Bonn as a capital. It is down-to-earth, humble and has an intellectual, strong society because of the university. Secondly, and importantly, my wife is a doctor and has her practice there. And, thirdly, I travel all over the world, so a place of rest that isn’t overloaded with urban adventures is good for keeping a balance in life.

Deutsche Telekom CEO Timotheus Hoettges (right) talks with Kathimerini’s Alexis Papachelas.

What’s your reality check mechanism? You’re at the head of a huge organization. I suppose it’s easy to get lost in the layers. How do you keep in touch with what is happening on the ground?

You’d better ask my people if I’m still in touch with the ground. I hope so. The first thing to do is to be curious about the details. Curiosity is probably the most important attitude. Understand how business works. Secondly, remain humble in the face of all the opportunities that are given and do not waste time at conferences and presentations. Try to understand what is going on in the business. Thirdly, demystify your CEO. Try to be part of the team, to discuss, to accept other opinions, even if you do not embrace them. Always have the Greek mentality of thesis, antithesis and synthesis. Lastly, any leader cannot just delegate. He must be good in one area and work on the ground. I am an AI expert and I am ahead of all the policy and regulatory work in my company, and of all strategic developments. I have now been on the board for 16 years and eight years as CEO. I am constantly making visits on the ground, because it is always good to show everyone that I care. Now I’m going to start a campaign. For the nerds. I believe that the next generation of telecom companies needs a kind of renaissance of the engineers and software experts. They need to get into management in leading roles.

In the past, a company like yours only provided the infrastructure. Now you are also a content provider, does that mean your work is more political and you have more of a social responsibility?

Business is not all about business. It is also about contribution to society. Customers demand it all the more. We have a CO2 emissions target, a position in relation to social acceptance and hate speech online. These are new elements for which there is a growing demand that translates into political behavior. Society is so transparent, greenwashing won’t cut it. People don’t want to hear what we’re going to do in the next 10 years, but what we’re doing today, they want to know how socially responsible every business is. There is no margin for error here. In our case, it’s about data. We have to protect our consumers’ data. Also, in terms of ESG, people don’t want to have companies that are just profitable, they want them to give something back to society. We try to do that, not just with social projects. You have to be present when a crisis happens, such as natural disasters, refugees etc. The good thing about Deutsche Telekom is that, because of its history, it has a public service mentality. We’ve come a long way, but that DNA is still there, we have a culture of helping and that helps a lot in the societal aspect. Nevertheless, our industry is under a lot of pressure, we have to meet the capital markets expectations on high investment. We invested 19 billion in infrastructure this year. And I can tell you that their amortization is years away and therefore we have to balance the economics and the culture equally.

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