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3.2.
Main Risks and Mitigation Strategies
Intensified competition in the
industry
The telecommunications industry is
characterised by rapid technologi-
cal changes. Our commercial success
depends on providing services at
competitive prices as well as differ-
entiating our product offerings. Lack
of agility to respond to changing mar-
ket conditions and competitive pres-
sure may affect our market share and
revenue streams, as well as profits.
The industry is in pursue of constant
business evolution, where commer-
cial and operational excellence, as
well as innovation and technologies,
are becoming much more critical.
Declining financial performance
and inability to maintain efficien-
cies
A reduction in industry tariffs, high
levels of imposed regulation and in-
creased
competition
are
impact-
ing
revenue
growth
significantly.
Our diversified revenue streams and
resilient business model are producing
some fruitful returns, but as the market
environment is highly competitive and
dynamic, we need to invest capital to
build capacity, maintain and grow mar-
ket share and position for future growth.
Our continuos expansionary upgrades
and maintenance of infrastructure and
network premises demand high levels of
investments which impact our reported
results.
Adverse regulatory changes
or non-compliance with laws
and regulations
VIVACOM is the incumbent operator
on the Bulgarian telecommunications
market and its position carries re-
sponsibilities not applicable to other
market players. Our business must
comply with an extensive range of
laws and regulations.Increased regu-
latory or legal changes/requirements
may negatively impact our business
model, and affect revenues and prof-
its.
- Implementing a digital strate-
gy with broader service offerings.
- Driving critical mass in our oper-
ations and leveraging on our ex-
tensive footprint in the country.
- Improving launch process of new
products - reduce development time,
implementation in trade channels
and sales efficiency. Build on suc-
cessful experiences and launching
commercial initiatives in data, digital
and customer value management.
- Ensuring we have the appropri-
ate skills to deliver the right prod-
ucts and services at the right price.
- Maintaining the best value-for-mon-
ey position on the market with offers
that target undeserved segments.
- We nurture our traditional rev-
enue streams and identify and
develop new revenue streams.
- We are actively exploiting our inte-
grated nationwide mobile and fixed-
line network which gives us a strong
competitive advantage as we are
able to offer full spectrum of bun-
dled services on a nationwide basis.
- We are selling non-core assets
- mainly non-operational build-
ings and dismantled copper cables.
- We are focussing on effective pro-
curement procedures and open com-
munication with key vendors which
enables us to maintain tight cost con-
trol and retain competitive financial
performance
- Open dialogue and established col-
laborationwith regulatory authorities
- Systems in place to monitor and
track new legislation and regulations
as well as changes to current legisla-
tion and regulations.
- Compliance framework developed
and rolled out to the operational level
- Chief Regulatory Adviser to the
Managing Board in place to oversee
compliance within regulatory and
statutory laws.
- Bridging the digital divide through
innovative offerings including e-com-
merce services, automation, self-ser-
vice capabilities and omni-channel.
- Creating greater efficiencies
that would allow us to remain
both competitive and profitable.
- Increasing focus on the end-custom-
er experience to provide competitive
advantage and improve customer en-
gagement and loyalty.
- Growth in data revenue and new rev-
enue streams from digital businesses
-
Driving
cost
efficiencies
in
existing
core
business
and
through
transformation
projects
-
Refinement
of
capi-
tal
allocation
principles
- Leverage our contemporary infra-
structure by offering innovative prod-
ucts and services
- Strengthening and increasing capac-
ity to manage regulatory changes and
key stakeholders.
- Increasing internal audits for com-
pliance
- Obtaining third-party assurance on
processes, systems and policies.
- Increasing training of senior man-
agement and executives on regulato-
ry compliance.
Threats to integrity and
availability of networks and
systems
We depend on the uninterrupted
operation of our networks to pro-
vide our services. From time to time,
customers experience data quality is-
sues because of network constraints.
Lack of timeous, effective and effi-
cient capital investments to cater for
greater subscriber numbers and traf-
fic could lead to a loss of customers,
and in turn a loss in revenue and a
reduction in our profit.
Compromised information
security
Lack of an effective information secu-
rity programme may compromise our
information as a result of an increase
in cyber-attacks. This could lead to
reputational damage and the loss of
customers, and in turn impacting rev-
enue and margins.
Inadequate stakeholder man-
agement
Stakeholders are increasingly de-
manding more transparency, devel-
opment that stays true to core princi-
ples and values, more information on
the business practices of the Compa-
ny and its cooperation with suppliers,
the reporting of nonfinancial indica-
tors and the upholding of public com-
mitments.
Key stakeholders such as govern-
ment, investors and staff may feel
they are not sufficiently engaged and
informed about our governance and
operational challenges.
- Strong technical expertise re-
tained in the Company and sustain-
able integrated business model.
- Upgrading our mobile network
to SRAN technology with deploy-
ment of LTE enables us to im-
prove the experience of our cus-
tomers with offering them high
quality and reliable services.
- By installing energy-efficient solu-
tions such as hybrid power, we
ensure higher availability of our
networks and reduce our diesel
costs and negative environmental
effects. This also reduces our re-
liance on national grid electricity.
- With our backup and recovery sys-
tems we are able to secure steady
network performance and high avail-
ability of services
- Establishing of Corporate Informa-
tion Protection function on organisa-
tional level
- Implementing an information secu-
rity governance framework.
- Increasing focus on reduction of cy-
ber security risks.
- Embedding information security re-
quirements into key processes.
- Raising awareness with staff and
vendors.
- Segmenting key stakeholders into
groups in order to focus on their ma-
terial concerns through structured en-
gagements, understand their impact
on reputation and improve our report-
ing on stakeholder management.
- Open communication with stakehold-
ers, including regular reporting on fi-
nancial, environmental and sustainabil-
ity issues and key mitigation activities
- Ensure balanced and equally trans-
parent dialogue with different stake-
holder groups in evaluating the impor-
tance of the various topics from the
viewpoint of each stakeholder group.
This enable us to have a two-sided
evaluation of topic materiality in trying
to keep different groups well informed
and incorporate their point of views.
- Careful capital investment in key
markets to maintain leading market
share position.
- Further increase in the coverage
and capacity of our LTE services to
enhance our mobile broadband of-
fering.
- Network and infrastructure sharing.
- Security of information policies and
procedures give comfort to stake-
holders and enhance our reputation.
- Improved information security plac-
es VIVACOM as a preferred service
provider for securityconscious inves-
tors, business partners and custom-
ers.
- Intensify the information exchange
with stakeholders, increase transpar-
ency in the communication - especial-
ly with government, regulators and
the media.
- Continuos optimization of our busi-
ness processes and governance pro-
cedures through the whole value
chain.
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3. GOVERNANCE AND
COMPLIANCE
ANNUALREPORT
2018
INTEGRATED
42
43