Industry Spotlight: Arelion CEO Daniel Kurgan Looks Ahead

Following its separation from Telia three years ago, Arelion has forged an independent path in the wholesale networking space.  They have worked to streamline their internal operations while expanding into new markets like Mexico.  With us today to talk about the company’s plans and industry outlook is the company’s new CEO, Daniel Kurgan.  Prior to Arelion, Daniel was CEO of the international wholesale carrier BICS for some 14 years.  He joined Arelion as an independent board member in 2021 and was appointed CEO in October 2023.

TR: What drew you to Arelion? What opportunity did you see?

DK: This is an industry I understand well and am passionate about. I found it extremely interesting that Arelion is still new as a company because it was only recently separated from Telia, giving Arelion the chance to define itself in the context of today’s technological requirements.  For the first two years after divesting, we focused on completing the operational separation.  There were not enough resources available to streamline operations and execute a strong digital roadmap.  So, beyond the fact that Arelion’s network is truly global, and we are a world leader in connectivity, we also have the opportunity to build a strong company vision from the ground up in a business where scale matters.  That’s an exciting challenge.  There are good growth catalysts and positive tailwinds for our data business, such as AI, cloud migrations, 5G, IoT, and many other trends.  Also, while we have wholesale DNA, we’re seeing huge opportunity in the enterprise market.

TR: In what ways do you see potential growth in the enterprise market?

DK:  We made initial efforts over the last two years to expand our presence in the enterprise market. But we were not able to kick into full gear due to many of our resources being focused on the separation from Telia.  In terms of enterprise expansion, our growth strategy does not include product diversification.  We’re continuously seeing growth in the wholesale market and plan to grow with our wholesale customers as always.  But enterprises are increasingly deploying networks and exhibiting wholesale purchase behaviors.  Our services have become more valuable to these enterprises, so we’re making the necessary adjustments to our go-to-market strategy to target those large enterprises. 

TR: What type of adjustments are you making?

DK:  When you have wholesale DNA, you need to adjust your enterprise market strategy from a commercial, processing, and contractual standpoint.  Many of our U.S. business goes through agents, so we are beefing up our indirect sales and channel capabilities.  We recently onboarded a seasoned manager for the indirect channel and a new director for enterprise sales in the U.S.  We also see two different markets on both sides of the Atlantic.  Large enterprise markets are more mature in the U.S. and provide us with significant opportunities moving forward.  We’re also growing in the European market, but the U.S. is a few years ahead.  Europe is more fragmented, making market opportunities country-specific.  As a result, we’re working hard to enhance global brand equity.

 

TR: Where are you investing your resources in 2024?

DK:  As mentioned, sales and marketing capabilities for the enterprise market are major focuses, including indirect channels.  Network expansion continues to be important, but that’s business as usual.  In 2024, we will announce new PoPs and network expansions into strategic locations. We have invested extensively in Mexico, for instance, which is a promising market for us.  While we’ll continue investing in Mexico and Asia, we will remain a northern hemisphere business.  We have no current plans for expansion in South America or Africa.  Of course, we will also invest in our digital operations by enhancing automation and increasing our digital interactions with customers.  In the wholesale market, many customers and suppliers have not fully embraced digitalization through APIs and related technologies.  We have an API catalog, but we don’t see many customers using it.  We envision empowering our customers with more self-service and self-troubleshooting capabilities.

TR: Artificial intelligence is on everyone’s minds this year and has started shifting infrastructure investments throughout the sector.  How do you view it, both in terms of the ecosystem and internally at Arelion?

DK:  AI is good for us because more AI data processing typically translates to traffic growth, even if it doesn’t spill over into the WAN initially.  In terms of internal use cases for AI, we’re working to utilize it in the future beyond some specialized marketing and customer service uses cases.  While we’re still working on our internal AI strategy, it seems many of our peers are in the same boat when I speak to other carriers.

TR: How long do you think it will be before AI becomes more prevalent within Arelion’s space?

DK:  AI should become increasingly prevalent for customer interaction and customer care use cases in our space in the coming years. It will be even more useful on the technological side for network automation and solution enhancement.  These are conversations that we’re having now as AI develops, but we’re primarily focused on our enterprise go-to-market strategy this year.

TR: What other trends do you see impacting the global network marketplace over the next few years?

DK:  Arelion isn’t in the submarine cable business, but a lot of traffic is carried over subsea cable capacity.  The wholesale market has been completely shaken up as hyperscalers enter the subsea cable market and cables evolve to have 16 or 24 fiber pairs.  Building a submarine cable business case on a big piece of wholesale was easily doable 10 years ago.  That doesn’t fly anymore.  Amid submarine cable expansions and hyperscalers’ fiber deployments, we’re focused on where they’re going to build their immense data centers and where they’ll invest in fiber.  And are they going to share?  Those unknowns are going to impact the market in a big way.

TR: How does Arelion view M&A? Is there a potential for inorganic growth, or are you focused on organic expansion right now?

DK: Never say never, but we don’t have M&A plans today.  We spent the last two years completing the operational separation.  Now we’re focused on our organic agenda: scaling further and capturing our fair share of the growth in our core markets.

TR: What do you think of consolidation in the European fiber infrastructure market more broadly?

DK:  The Colt-Lumen consolidation triggered many conversations about consolidating the long-haul market.  But this is difficult because many larger operators are owned by financial investors, with some of them thinking short-term and some thinking long-term.  Many investments in those companies were made at a time when interest rates were low and multiples were high.  Since then, telecom has faced plenty of challenges, including energy pricing, inflation, geopolitical tensions, and rising interest rates. The valuations have gone down, driving them to review their business plans.  They understand consolidation must happen to create value.  It is still uncertain how that will all play out.

TR: How do you feel about Arelion’s position in the market right now?  What’s the biggest challenge ahead?

DK:  We’re well-aligned with the market’s needs in terms of service delivery capabilities and we have a high-performing sales force.  Building strong brand equity is our biggest challenge but will also accelerate our growth once we fulfill that goal.  Our support technicians are doing an excellent job making our customers happy.  We have an NPS of 72; it’s difficult to achieve that let alone do better than that.  Now, we just need to spread the word of our value among prospective wholesale and enterprise customers across the globe.

TR: Thank you for talking with Telecom Ramblings!

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Categories: Industry Spotlight · Internet Backbones