(Authors: Amir Shah, Lurina Mairita, Sami Räntämäki, Anna Arkun, Hani Mebar)

Elisa Oyj is one of the Finnish market leaders in data communication and digital services, being included in telecommunications industry, due to its legacy. Together with telecommunications operators Telia and DNA, they cover almost entire Finnish mobile subscription market. Elisa is serving over 2.8 million customers in Finland, Estonia and internationally, while offering a range of products and services to the Finnish and international markets.

During Elisa’s over a century long history, it has seen many changes to its business. For the last five years, Elisa’s signature is 5G services, and the venture started in 2018, being the first operator to transfer into 5G era. Current mission is “A sustainable future through digitalisation,” defining strategy as:

” We (…Elisa) innovate digital services to customers in own telecom footprint area and internationally with network ownership independent services. We engage people in building excellence.”   (Annual Report 2021)

In this final report, our group chose to approach Elisa’s strategy from perspectives of B2C, B2B and international digital services. Also, we briefly introduce the Finnish telecommunications industry, to present Elisa’s business environment and its main competitors.

Elisa and the telecommunications industry in Finland, 2018-2022

By the total market revenue (fixed-line, mobile and TV and radio operations), Elisa holds the largest market share ~35%, closely followed by Telia Finland, and the third key player is DNA, ~20% of the Finnish telecommunications market.

Throughout 2018-2022, around 1/3 of telecommunications industry revenues come from mobile network operations, while share of fixed network operations decrease.

The highest investment rate among all telecommunication operations, in 2019, was towards fixed-line networks, reaching 23% of the annual revenue in 2019. Based on Elisa’s strategy review 2018-2022, they deviate from the trend, by focusing on acquisitions and growth.

There are less and less telephone calls made in Finland, the trend of 21st century. It’s a sign of the times, phonecalls – traditional telecommunications service, have lost its prominence in the industry.

Nearly all, 96% of Finnish households, had broadband internet by 2020-2021. In practical terms, every household is a customer.

As of 2020, there were approximately 7.36 million monthly phone plans with unlimited data transfer in Finland. The other option, phone plans with limited data transfer, amounted to 1.27 million. This illustrates the trend, increase of unlimited monthly data plans, notably from 2018 to 2020, reducing the other types of plans.  Just to put in perspective, Finland has about 5M inhabitants.

The FInnish market is characterized by unlimited data plans, all the major mobile operators (Elisa, DNA, and Telia) only sell unlimited data plans. The differentiation is in maximum speeds, instead of limiting data usage.

In terms of monthly data consumption per capita Finns clearly rank first among the Nordic countries and worldwide.

Elisa’s strategy 2018-2022

Elisa established its competitive advantage in sustainability, efficiency of operations and innovations. Elisa is a carbon neutral company since 2020 and have set ambitious Science Based climate targets for the years ahead. In contrast, the main competitors of the Finnish market, have set their carbon neutrality goals to yr 2030. That means Elisa is a decade in advance of its competitors, already a carbon neutral business.

Elisa has maintained its leading position during 2018-2022 as the provider for both fixed and mobile internet services. The leading market position facilitates implementation of one of Elisa’s strategic focus area – increase mobile and fixed services revenue. Telecommunication services for Consumer and Corporate customers bring the bulk of Elisa’s revenues.

Also, the wide customer base allows implementation of another strategic focus area – improve efficiency and quality. To present it as a practical sample, Elisa connects all the possible data from about 5 million active devices in the network and get a thousand transactions per second. Every call is analysed, and 75% of all incidents are handled as predicted maintenance, before they arise.

Elisa focuses increasingly on new digital services, where growth rate is higher than in telco services (diversification strategic planing). Thus, the strategy of growth, namely, grow digital service businesses. Growth stage requires investments, for R&D, scaling up, acquisitions etc. Fast-growing digital services account for over 20% of the Elisa’s revenues. Elisa has reshaped itself during the recent years, away from standard telecommunications, towards IT services that contribute to 35% of the revenues.

Even if Elisa in its investors’ webpage claims to have “almost unique” pricing model, our group’s opinion is that the uniqueness is in its historic legacy, the competitors within the last five years have caught up, and offer the same, unlimited data and 5G technology.

Moreoverly, Elisa provides services for communication and entertainment, and tools for improving operating methods and productivity of organisations. The company is also selling automation process based on machine learning to industrial manufacturers. The fixed and mobile subscriptions and broadband subscriptions are sold under Elisa and Elisa Saunalahti brands but there are also cable-tv-subscriptions. Elisa\’s new digital services are among others Elisa Saunalahti, Elisa Videra, Elisa Santa Monica, Elisa Polystar and Elisa IndustrIQ. Elisa Kirja concentrates on ebooks.

Elisa Viihde is producing Finnish drama that are first shown to Elisa Viihde customers or on Viaplay after which they are distributed to Finnish or foreign television channels.

In anutshell, Elisa’s strategic focus has remained the same throughout 2018-2022. Annual Report 2021, reviews Elisa’s business as “We offer our customers faster connections, new content and digital services internationally.”

1         Elisa and the Consumer

Elisa’s B2C roots go back all the way to the 19th century when Helsingin Telefooniyhdistys was founded. (even though most big telecompanies in Finland seem to view this as their history according to their web pages e.g. DNA, Elisa). Different company acquisitions and mergers have happened during the years and in 2000 the company name was changed from Helsingin Puhelin Oyj to Elisa Communications Oyj. In 2003 they changed it to Elisa Oyj.

Since the beginning of the 20th century Elisa’s strategy has been to innovate and develop their products and to focus on customer experience. One part of the B2C strategy was to distribute and create appealing new content via their VOD (Video on Demand) and streaming service known as Elisa Viihde in 2014. Additionally, they added inorganic growth strategy within their digital content service by aggressively buying Finnish feature films.

Another recent customer experience announcement came just in May 2022 when it was confirmed that Elisa will be the exclusive operator for (Elisa, 2022).  Elisa’s strategy to be first in Finland to get the devices is another example of applying their visionary strategy archetype in the customer segment.

Customer experience is increasingly important in succeeding as a business. It consists of several factors that can affect the business while the competition gets tougher. Digitalization has changed how customers behave and is in that way interlinked with the customer experience. The strategic decision to nurture existing clients is smart, since acquiring new customers is significantly more expensive than nurturing existing ones. Elisa has also focused on sustainability and have been ranked as the “most sustainable in Finland” by the Sustainable Brand Index.

2         Elisa’s corporate customer strategy

Quick Intro and recent numbers of Elisa’s corporate customer strategy is part of their overall core strategy which is to

• Increase Mobile and fixed revenues
• Grow Digital services Business
• Improve efficiency and Quality.

The Corporate customer scope operates in two markets: The Corporate Telecom services and the IT Services.  They build value on data growth through Devices, Interconnection, Visitor Roaming, and telecom services.  Between 2016 and 2021 Corporate Business has shown significant growth in revenue from €465M to €757M.  Within their IT for corporate business they have the following services which have contributed steadily increasingly to the their corporate revenue: IT continuous services and Support, Cloud Services, Professional, Services, Digitalisation solutions, and Hardware and Software Licenses.

Part of this business unit included their recent addition from 2018 for large industrial companies that involves Integrate IT and Communications services. Here is a snapshot of a customer case they have published which total service offering they provided.

This has placed them well ahead of their competitors in this newly created market.  According to their own report they are the clear leader:

 

2.1        Analysis of Elisa’s corporate strategy

We will utilize BCG’s Strategy Palette to categorize what we think is the strategy at work and use analysis to help support that what the performance vs its strategic trade-offs/Choices.

At its core, Elisa seems to be in a combination area of Adaptive and Classical Strategy Archetype (Reeves, Martin; Love, Claire; Tillmans, Phillipp, 201). In more detail, as Elisa is already a very established and large player in the Telecoms industry in Europe, they cannot change their environment so they will position themselves optimally within it since they have the size, and can differentiate themselves as well as their capabilities versus the competition.

But for Elisa this isn’t enough as their competitors are also growing through their own strategic endeavours – mainly DNA – in the Nordics, and so Elisa also added a visionary strategy Archetype by creating new environments thus currently lead. This is clearly represented in their corporate business solutions for large industrial companies – factories in Nordics – as well as being one of the first to Digitalisation, and Cloud computing.

This ambidexterity that Elisa has shown in combining various strategies within their functions has allowed them to deliver financial as well as industry-leading growth as can be seen in their revenue reports since 2011 (Statista, 2022).  Especially clear is that you can see that growth accelerated from 2017 when the new strategy had its first year of implementation – the first being cloud service and digitalisation.

In terms of trade-offs, there is not much other than the strategy has led to a continued drop in prepaid subscriptions services but there is no indication that this affected the company negatively.

Elisa has also used outsourcing as a tool to reduce costs in fields where in-house production is not necessarily needed. Among other, Elisa has outsourced part of its order handling and invoicing to the Finnish recruitment service Henkilöstövuokraus Barona and maintenance and development of IT applications related internal operations to Indian Tata Consultancy Services (TCS) and American Amdocs. More recently, the Nordic tech company Eniro acquired Elisa’s corporate clients’ outsourced customer service ad corporate switchboard businesses.

3         International Digital Services

Elisa’s in 2021 announced a new vision (Annual report 2021) to be “the global benchmark for generating value in communication and digital services”. It is built on the shoulders of focused development and internationalisation of digital services, by implementing a growth focused strategy. Acquisitions are strong part of Elisa’s growth, enhancing product and service offering, as well as bringing already established client base.

We present below Elisa’s main flagships in international digital services and review their strategy application, all in B2B context. Financial results are challenging to obtain and interpret due to various levels of integration into Elisa Corporation (in scale from a sub-brand to independent registered company). Volatility of environment, such as restructuring and other developments, challenge financial data access as well. But overall, international Digital services strategy seems highly active, entrepreneurial, and focused, always keeping business environment on radar.

 

3.1        Elisa Videra

Elisa Videra is about visual communication, specialized in virtual collaboration (video conferencing, enterprise voice and digital signage services worldwide). Business model is partnerships with industry leading technology vendors including Microsoft, Pexip, Zoom and Cisco. Other major business dependency is prompt customer service,  24/7 support and [i][ii]+100 countries delivery, multiple languages. However, Videra keeps it all together, and presents its growth being rooted in the start-up spirit. Videra brand is positioned as “stands for quality and security”, justified by ISO certificates, especially calling out on certified standard in Security as competitive advantage in global market of Video Conferencing business.

Videra became part of Elisa Corporation in 2010, as a result of acquisition. Strategy development is surprisingly challenging to follow, possibly due to rebranding of Elisa webpages that erases part of history, or, possibly, due to IT consultancy business specifics. Going through Annual reports, in year 2018 Elisa Videra is mentioned as “continued to strongly develop”, can be understood as additional investments, or presence of competition, more matured market, etc. In 2019, expansion to Asia, in 2021 expansion to America.

Overall, Videra’s webpage is sales oriented, with fragmented presentation that plays well on current topics while their coherent history is difficult to trace. But then again, could also be a management’s  chosen communication style, fully into agility, less fitting Finnish-style of grounded and thorough communication.

In our opinion, Videra applies shaping strategy approach, engaging with partners, orchestrating and evolving. Measure of success is ecosystem growth, and profitability. The key trap for shaping strategy, as per BCG, is overmanaged ecosystem. In Videra’s case, that does not seem to be a threat, as their business model capitalizes on agility and entrepreneurial spirit. The threat is in financials, Elisa Videra reports decreasing revenues and losses 2-3M € year on year, within the scope of our assignment, 2018 onwards (Kauppalehti, 2022). It is challenging to see whether are those results linked long term investments (expansion-related) that will pay off later, or a sign of diminishing viability in industry.

3.2        Elisa Polystar

Elisa Polystar demonstrates visionary strategy and provides a  world-class telco software for mobile operators. It’s business positioning is authentic: “With our background as an international business of Finland’s largest CSP, Elisa Polystar’s solutions are tested in live networks, and with the unique needs of operators in mind: by an operator, for operators” (Elisa Polystar, 2022). To trace origins, business idea came from Elisa’s own experience circa 10 years ago, when automated service monitoring was not available for network operators, and Elisa decided to develop one for own use. Few years later, in 2019, Elisa acquired Swedish based Polystar OSIX AB group (Arvopaperi, 2019), analytics and probing company, aiming to speed up international growth and  strengthen customer experience focus in the automation solutions.

To summarize on origins of Elisa Polystar, roots are in the learning and growth within organization, improving internal business processes. Then scaling up for wider markets and enhancing capabilities and acquiring more customers with acquisitions, especially noting the Polystar acquisition. Story continues with further frowth, in Q1 2022 acquired FRINX, a Slovak telecom network automation software supplier, to enhance offerings. Financial results of Elisa Polystar are challenging to obtain, as business is developing and restructuring, now being an independent subsidiary headquartered in Sweden.  Financials are reported in overall Elisa figures.

3.3        Elisa IndustrIQ

Elisa IndustrIQ is the newest addition to Elisa, strategic creation to capitalize  on market need for intelligent manufacturing. All started as Elisa’s sub-brand (back then, Elisa Smart Factory) in 2016, driven by Elisa’s own experience of improving internal business processes, and commercializing lessons learned from Elisa’s telecom heritage. Sales pitch is convincing: “We’ve been there, and now we’re building the solutions we wish we had. We’ve felt the pain of not having real-time production visibility. We’ve felt the stress of wondering which network components would fail next, and we’ve felt frustrated of having to manage continuous ad-hoc crisis without the ability to predict or prevent them. And that’s why we’ve built the advanced analytics capabilities and solutions we wish we had.”

The business opportunity for Elisa came along as manufacturing industry is moving into new era, digitalization (IIoT, Industrial Internet of Things), as well as manufacturers are interested to monetize their data (ability to earn revenue from digitalising products and services, enabling to create new services or start new business models). Market for smart manufacturing grew very fast during COVID times, and Elisa acquired several companies globally in 2021 to complement its existing skills and customer base, to join forces in becoming IndustrIQ.

IndustrIQ is not among the heavy weights of smart manufacturing, but strategically adapts and shapes to market opportunities across multiple industries. For instance, acquisition of the German-based camLine Group, already a leading software solution provider for the high-tech and semiconductor industries; as well as expanding capacity on improving manufacturers’ environmental, health, safety and quality (EHSQ) performance by acquisition of the Belgium-based Tenforce.

Smart manufacturing market (Marketsandmarkets, report SE6677, 2022) globally is estimated to grow 18.5 % in next 5 years, 2022–2027, which means lucrative opportunities for market players. Highest potential for smart manufacturing is in Automotive industry, estimated 30 % growth, due to changing consumer preferences and the inefficiency of traditional processes. And Elisa IndustrIQ strategically is prepared (Elisa IndustrIQ, 2022), it has already aimed at automotive sector, with Predictive Quality Analytics, testing electronic battery cell production and proving yield increase for electro vehicles, as appears, pitching to Tesla or wider electromobility markets.

Elisa IndustrIQ, in our opinion, was learning itself when there was environment for visionary strategists in smart manufacturing. Now, it applies adaptive-shaping strategy approach by scaling up, engaging and evolving. Measures of success are ecosystem growth and profitability, and new product vitality index. We based  our opinion on indicators of strategic approach – smart manufacturing in a young industry, characterized by high technological change, existing fragmentation and absence of dominant platform. Shaping strategy is observable in Elisa’s minor shareholding acquisitions to promote it’s one platform. Financial results were challenging to compile for analysis, due to fast developments and worldwide acquisitions. Overall,  growth strategy by acquisitions, enhancing service offering and expanding existing customer base, and prepared for quick response to opportunities emerging in markets.

 

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Arvopaperi, 2019. Supplement to Elisa’s stock exchange release published on 10 June 2019 at 10:45 AM (EET): Elisa acquires Polystar OSIX AB group, s.l.: Arvopaperi.

Elisa Corporation, 2021. Annual Report, Elisa Corporation.

Elisa Corporation, 2020. Annual Report, Elisa Corporation.

Elisa Corporation, 2019. Annual Report, Elisa Corporation.

Elisa Corporation, 2018. Annual Report, Elisa Corporation.

Elisa IndustrIQ, 2022. Could Predictive Quality Analytics Help Tesla Drop the Cost of Battery Packs to $ 100 Per Kwh? Customer Case study

Elisa Environmental sustainability, 2022. https://elisa.com/corporate/sustainability/environmental-r sponsibility/

Elisa, 2022. https://elisa.fi/yhtiotieto/tietoa-elisasta/missiomme-ja-arvomme/

Elisa Polystar, 2022. Missiomme ja arvomme https://www.elisapolystar.com/company/

Kauppalehti, 2022. Taloustiedot: Elisa Videra Oy

Marketsandmarkets, report SE6677, 2022. Smart Manufacturing Market with COVID-19 Impact by Information Technology, Enabling Technology, Industry (Process and Discrete) and Geography (North America, Europe, Asia Pacific, Rest of World) – Global Forecast to 2027, s.l.: Markets and Markets Research Private Ltd..

Nordisk Film & TV Fond, 2018. Finnish Elisa Viihde’s Head of Content on her drama strategy https://nordiskfilmogtvfond.com/news/interview/finnish-elisa-viihdes-head-of-content-on-her-drama-strategy

Reeves, Martin; Love, Claire; Tillmans, Phillipp, 2012. Your Strategy Needs Strategy.

Shirute, 2022. CXPA Finland: Elisa panostaa eniten asiakastyöhönsä https://www.shirute.com/tiedotteet/elisa-panostaa-eniten-asiakastyohonsa/

Statista, 2022. https://www.statista.com/statistics/730597/annual-revenue-of-elisa/

Elisa, 2022, https://elisa.com/corporate/news-room/press-releases/nothing-announces-key-sales-partnerships–for-phone-(1)-%E2%80%93-elisa-the-exclusive-operator-in-finland/49147505780134/

Android Central; Hicks, Michael L.; ‘Nothing phone (1): Everything we know so far’; https://www.androidcentral.com/phones/nothing-phone-1

 

 

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