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By Douglas Busvine
BERLIN, Feb 13 (Reuters) - For an event meant to showcase
the power of telecoms, cancelling this year's Mobile World
Congress in Barcelona without a back-up plan has perplexed many
in the trillion-dollar sector.
Wednesday's decision to call off the telecoms industry's
biggest annual gathering over fears of coronavirus, which has
yet to reach mainland Spain, has left a hole in marketing
budgets and dealt a $500 million blow to the local economy.
It has also raised questions about whether the four-day
event, which drew 110,000 visitors last year, has become too big
for its own good, while missing an opportunity to use the very
communications technology that it is meant to highlight.
Sony and Nokia said after pulling out of
the event that they would hold product launches online instead,
while South Korea's Samsung Electronics showcased a
new folding phone at separate event in San Francisco last week.
The crisis began eight days ago when South Korea's LG
Electronics became the first company to scratch,
triggering a spate of cancellations.
"The whole idea, that we've got to get tens of thousands of
people together to meet, goes out of the window," Mike
Rosenberg, an associate professor at the IESE business school in
Barcelona, said of the decision to cancel February's event.
Rosenberg, who specialises in crisis strategy and scenario
planning, said that with China still battling the worst of the
coronavirus outbreak, the GSMA's next big conference in Shanghai
this summer could also be at risk.
The Chinese province at the epicentre of the coronavirus
outbreak reported a record rise in deaths and thousands more
cases on Thursday under a new diagnostic method, raising fresh
questions about the scale of the crisis.
Spain has so far only reported two coronavirus cases - one
in the Canary Islands off northwest Africa and a second on the
Mediterranean island of Mallorca.
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While major exhibitors can bear the cost, hundreds of
smaller companies for whom MWC is the big event on their
marketing agenda may think twice about returning, analysts said.
"Now they face the challenge of having to figure out what
the best way to salvage something," Ben Wood, chief of research
at consultants CCS Insight, said.
In a show of unity, the GSMA's leadership held a joint news
conference with local leaders on Thursday, vowing to work to
stage next year's edition of the event, which has been held in
Barcelona since 2006.
But Director General Mats Granryd faced tough questioning
from reporters after conceding that insurance that the GSMA
takes out on behalf of exhibitors does not cover an event like
the coronavirus outbreak.
"Clearly there is no way you can insure yourself out of a
force majeure situation," Granryd said.
Ramon Fernandez, CFO of French operator Orange,
said cancellation was "going to cost us a bit of money, just
like it's going to cost a bit of money to all those who had
planned to go.
"We'll find a way to continue the dialogue," he added. "A
number of those who had planned to go have written us to say:
'Let's meet up in Paris since we won't be able to see each other
in Barcelona.' Agendas are filling up at lightning speed."
Communicating its decision also tested the GSMA's public
relations machine. Even as cancellations snowballed and talk
circulated on Wednesday that a decision to cancel was imminent,
the GSMA was still sending out media invitations.
The final blow came when the European telecoms firms that
form its core membership pulled out as a bloc, forcing the GSMA
to bow to the inevitable.
Granryd told staff in an email he was "deeply saddened".
"The team working through this crisis have been fact-based,
took appropriate measures and communicated both externally and
internally in real time."
(Additional reporting by Jordi Rubio and May Ponzo in
Barcelona, Isla Binnie in Madrid and Mathieu Rosemain in Paris;
Editing by Alexander Smith)
