The Latvian company Tet is well known in the Ukrainian IT market. We have repeatedly written about the fruitful and mutually beneficial cooperation between our Baltic colleagues and Ukrainian IT specialists.
And here is another visit to Ukraine by the company’s top managers.
Despite their busy business trip schedule, Tet CEO Uldis Tatarchuk and Data Center Business Development Director Maris Sperga found time and kindly agreed to give an exclusive interview to the readers of HiTech Expert.
Maris and I have known each other for many years, so our conversation was sincere and open. Mr. Tatarchuk was running a little late, so we decided not to waste precious time. So…
– I am still the Director of Data Center Development at Tet (Latvia), Maris Sperga,” my interlocutor said, smiling.
Tet Cloud and three data centers
– What is the purpose of your visit to Ukraine?
First, we want to meet with our customers to discuss measures for their further support, to find out what difficulties they have, what challenges they face. Second, we have new projects we are working on. And thirdly, we are trying to help Ukrainians in every way possible, we have brought humanitarian aid. Let me remind you that when the war broke out, we immediately bought back all the drones that were in our stores, which is about four hundred, and sent them to Ukraine. We also sent night vision devices and other things.
Maris recalls her hardest and longest day at work – she worked continuously for over a day – 25 hours!
So, at 5-38 am I was raised and worked for more than a day in one breath. There was a lot of work on migration, the guys worked and studied at the same time. What surprised me was that the guys worked very hard, for 14 hours at a time. They were preparing the capacity for redundancy, making backups. They did everything they could. There were also new solutions. We called it the Frankenstein project. We collected old servers, rearranged cards and disks. We learned a lot-the situation forced us to.
Then we provided our resources for 3-6 months free of charge to almost all Ukrainian colleagues who approached us, did not lose old clients and gained new ones, despite such a difficult time. At the same time, we were learning to live and work in an extreme situation.
For example, while we had Tet Cloud in one data center, now it lives in three data centers (two at a distance of 15 km in Latvia and one in Copenhagen, Denmark). We traditionally pay special attention to the reliable storage of our data, and our customers require geographic redundancy. We learned to do this very quickly.
At the same time, we are thinking about new products to move forward. As for data centers, we have new TV projects. We are creating a new platform. We have already created the “Latvian Netflix” – Tet+, a kind of personal TV for everyone, taking into account personal preferences. People themselves form the television product they want to watch.
Although this year was certainly difficult, the results will be good,” Mr. Sperga is confident. – “Yes, we lost some of our business. For example, we shut down the entire Russian business for three weeks. It was a difficult decision for the management, as it was a good source of revenue for our company, but we refused to do so, and we shut it down in March, even though our parliament officially decided to recognize Russia as a terrorist country only in May.
The freed-up servers were immediately used for backups of Ukrainian companies.
Maris believes that they will continue to use the data center in Copenhagen, as Ukrainian customers want to store their data “far away.” “We have built the sixth data center and are already thinking about building the seventh, we are planning,” Maris says.
If you look at our company’s turnover by data centers, 30% is Latvian business, and of this 30%, our market share in Latvia is 42%. Exports account for 70%, with 60% of them going to Ukraine. These are big numbers, but we are working to increase them. We are working and developing.
Green business
– What are the main trends in your development?
We have a lot of challenges from the European Union, which requires businesses to go green as much as possible. So the main trend now is the EU’s regulation of green business. The fact is that by 2030, all data centers in the European Union must be green. We need to think about the climate and the environment to minimize damage to nature and society. Since November, the company has been switching to green synthetic fuel, which will be purchased in Finland.
The company started selling solar panels to legal entities and individuals. Tet pays serious attention to renewable energy. It is very interested because it is a promising business area in general.
Another area is how to invest in data centers more efficiently. How effective is the POE ratio.We need to pay special attention to this because electricity in Europe is very expensive. While 1 megawatt/hour used to cost 40 euros, last year there were peaks when this value jumped to 500-600-700 euros.Therefore, many people were forced to switch to solar energy. Maris was one of them.
As for the data center business, electricity accounts for more than half of the cost.
We are also trying to invest successfully in this area.
Today, special attention is paid to carbon-free production. However, the main trend is still green. People are looking for greener partners, not cheaper ones.
Data centers have three main tasks. The first is to get energy or to produce it “smartly” ourselves, which is ideal. The second is to spend it wisely. It is reasonable to recycle it. For example, our seventh data center (near Riga) will use the heat generated by its operation wisely, cooperating with utility companies that will heat people’s homes.
Now the ideology of the ecosystem as a whole is changing. Previously, data centers were built with optics and electricity, but now they are paying attention to the use of related resources. A new type of ecosystem is being born. By 2030, all data centers should become “green” because data centers have become a kind of 21st century “factories” that consume a lot of electricity. For example, Amsterdam and London consume up to 8% of the city’s electricity. This is quite serious. Data centers are very large consumers of electricity. They need to be made greener today.In the electricity market, Tet’s share is about 10%, mostly for ordinary consumers. Tet has started selling solar panels for both legal entities and individuals. We are considering the possibility of our own production.
Maris Sperga has good news for Ukrainian customers: the server fleet on the Tet Cloud platform has been updated, new servers are now in use, and some of the old ones have been transferred to universities in Riga. “Here, guys, train, learn IT!” We don’t throw anything away, we make the most of it.
Overall, electricity consumption is going green.
Maris explains clearly on his smartphone, showing the level of household electricity consumption in real time. He promptly installed solar panels at his home, and this year he has already generated 5600 kWh. The house consumes an average of 300-320 kWh, which goes into the “common pot,” the public grid, where the missing electricity can be extracted if necessary, with only a delivery fee. The service life of the panels is 20 years, and they will pay off in 6-7 years. “I calculated that they produce about 7000 kWh per year,” says Maris. – “However, the government controls consumption and prevents resale and speculation by zeroing out unused energy in March if the quota is not fully used. The principle is: “Take as much as you need, but no more than that.”
Europe is now concerned not so much with energy sales as with ensuring that households meet their real electricity needs. In addition, there is a system of subsidies (up to 30-35% of the cost).
Maris cites the example of her friends, who last year cost only 40 euros per month to heat a large house with solar energy.
“This area is developing quite well here,” says my interlocutor.
Tet has also started thinking about the serious use of solar energy for data centers.
Artificial intelligence and object storage
– Now, everyone who is not lazy is rushing to master artificial intelligence. How are you doing with AI?
– The company emphasizes the use of artificial intelligence primarily in the field of television, considering this business segment to be a priority and the most profitable. Mostly, it involves a fairly thorough analytical monitoring of the audience and programs watched by users, and then these results sell like hot cakes to advertisers. This allows them to work for the future with long-term and reliable forecasts.
To do this, the data is pumped into a so-called “data lake,” after which it is the turn of the company’s engineers to develop the necessary algorithms for computing.
Another new feature is object storage, which is characterized by extreme flexibility. Thus, the customer decides which data center to use. If earlier there were only resources in the cloud, now we have connected DRS (Disaster Recovery site) with the ability to make remote copies.
For example, you have resources in the cloud, you can remotely make copies for a data center in Copenhagen. The customer determines where his virtual machine should live. At the same time, all pricing and billing is done automatically, without human intervention. You can order additional resources for a certain period of time or, on the contrary, refuse to use them excessively, paying only for the actual costs incurred.
There is a shift from private clouds to hybrid clouds. While maintaining the flexibility of their use, the ability to change, adapting to the needs of customers. Customer confidence in clouds is growing. Almost no one asks the question: “Isn’t it dangerous to store data in the cloud?” The main issue now is pricing.
– We have to admit that the profits of the major players in the global market are now falling, even to the point of negative growth. This is primarily due to the US’s tough pressure with China and the fact that Europe has begun to protect its data, the data of EU citizens. This policy is called “sovereign clouds”. In other words, if you are an EU citizen, you have to keep your data in your country or in EU countries, not somewhere “out there” in an unknown place. This leads to the development of local players. Thus, the ideology is changing. And, of course, Ukraine’s war with Russia has influenced the current situation, giving rise to new trends. And the growth of Google, AWS, Azure has stalled sharply (only 10-12%), although previously it was at least 40%.
The ideology of this area is changing with the advent of AI, 5G, and the Internet of Things. Now, the issue of speed, minimizing latency, and milliseconds are on the agenda: we need to be closer to end devices. And small players are closer to them. Although the big boys are making some efforts. Microsoft is already trying to close some issues in Finland. But niche players are still entering the scene, and the Big Four (85% of the global market) are giving them a piece of the pie.
Our competitive advantage is customization, personalization and the fullest possible satisfaction of the needs of customers who do not need 1,000 products and a huge portfolio of big players. They need 10-15, and our niche is important here, because we are developing this area and do not spray ourselves on everyone, and the customer pays only for what he really needs. That’s why our solutions are cheaper and attract customers. Of the big players, VMware has now begun to closely study the needs of retailers and take them into account in its work.
Meanwhile, Tet, for example, has developed templates for creating online stores in just 9 minutes (!). Retailers were very interested in our offer. This is a turnkey solution, everything is done automatically by the platform, and the customer only has to upload their goods and fill it. We already have standard templates for small businesses, such as selling honey. You have to be flexible, otherwise you won’t survive. Here we have a very vivid example – your Diia. You do in 6 weeks what it takes six months in Europe!
We need to understand what is needed and do it quickly. That’s our advantage, and then there’s containerization. The era of sliders, virtual machines, data “containers”, ready-made blocks that are assembled automatically into a ready-made solution is going away. Our programs create everything without the customer’s participation, and if the business grows, the scaling is done automatically, using software remotely.
In principle, this is how we do business.
Smart lighting
Uldis Tatarchuk (by the way, a very “Volyn” surname, isn’t it?), Chairman of the Board of Tet.
I can’t help but ask about the company’s “hot” project – smart lighting for Riga streets.
– We built three streets in Riga, about 500 meters long each, as part of a pilot project to see how it works.
In short, the system works like this: for example, a car is driving along and two lights flash in front and one behind. The system recognizes even a single cyclist. In this case, a system of video analysis, detectors, and infrared sensors is activated, and it turns on and off the electricity along the route.
We have actually shown that in the fall of Riga, 77% of electricity was saved in three months compared to the same period of the previous year.
This is seen as a new area of promising business, including one with an export component. Smart cities. The project is developing. For example, we are already adding sensors that measure air quality and carbon dioxide content. This is in the port area. We are adding sensors that measure sound volume and noise in the city. How it is affected by vehicles, concerts. If you place the sensors wisely and accumulate a sufficient database, you can then analyze them, based on which you can make appropriate recommendations to the city authorities.
We act as an integrator, using various sensors, but the software was developed by our partner. Why did we take on this project? Because we have experience in taking 9 technologies and teaching them to work together. We use our many years of experience in data transmission in combination with new technologies, such as GPON, fiber optics, radio links, mobile communications (4G, 5G). This can be compared to an orchestra that needs to be skillfully managed. For everything to work well, data must be collected, stored in a safe place, and who has access and knows what is happening in the city.
Access to the data center
Speaking of access, I was shocked to learn that only 18 employees of the company have access to the data center. I was even more shocked when my interlocutors admitted that they themselves did not have access to the data center.
“As the company’s CEO,” says Uldis, “I don’t have access to places I don’t need to. We are very strict with this. We have a special room for clients where they can go when they arrive, but they can’t go into the data center itself. They can use a video link, look at their equipment, work with it from this room, but they can do the same from Kyiv or anywhere else in the world. However, there is equipment that can only be accessed physically.”
About the company in general. Our company is historically similar to Ukrtelecom, but not at all similar in terms of performance. We sell electricity, we have our own media part, we produce three TV channels ourselves, we make movies and TV series. We made one of the series with a studio from Ukraine. We are developing various new ideas. For example, a Software-as-a-Service solution. We can provide video distribution services all over the world. We see our future in this, because to grow and develop, you need to have competencies, technologies and experience with technologies. For example, all of Fashion TV is powered by our technology.
We see the Ukrainian market as very promising, the same can be said for Europe, but we also had interest from Australia, where they liked our Video Content Distribution solution. The only problem is different time zones.
Helping Ukraine
– What is your assessment of the company’s position in the Ukrainian market?
Unfortunately, it is difficult to determine the company’s place in the Ukrainian market (three years ago Tet was No. 4 in our market – A.L.), but no research is being conducted now because your country has other priorities. We are helping as much as we can, we provided cloud solutions, gave a 100% discount to our customers when the war started. This offer is still in effect – on our website www.tetcloud.com you can sign up for a 3-month free trial access to the virtual resources of the Tet Cloud platform for companies registered and operating in Ukraine.
We see how important it is for Ukraine that the economy also works, that something is produced, that something is done, and that companies can continue to exist. We also see that in some places there is even development! It took a little over 9 months, and now we see that our clients are back and able to work, pay bills and continue their business, which we are very happy about. For us, business in Ukraine is not about big profits in a very short time, we see potential in the future. Great development. We believe that you will win.
– By the way, do you use the developments of our IT specialists in your business?
– At the moment, no, but we provide all possible assistance in the employment of Ukrainian refugees, recommending employment agencies and housing search. As far as I know, we had a lot of Ukrainian construction teams working for our construction subsidiary, and we are building a €50 million project, including in Germany. But on February 25, they all went home. So we hope that one day this system will be restored, because one of the aspects of the war that affects the whole of Europe is a huge shortage of workers, especially in construction, IT, and other industries.
Action and other projects
– Perhaps you are interested in something in Ukraine?
– We are interested in Diia. (We are also looking at such a solution as Kyiv Digital). We see that it is very well made, with a great perspective. It has very good functionality. We are thinking about how to take the experience from Ukraine that you have. By the way, it would be very promising to exchange experience in the field of cybersecurity, in which we have also achieved some success. We have practical experience in protecting, for example, the parliament. How could we share this experience and develop mutually beneficial projects in this area? We have already invited our Ukrainian partners to participate in European projects.
There is a program called Horizon Europe, for example, in which Ukraine could also participate. We are interested in developing solutions together with other European countries, including Ukraine today, to develop solutions that protect networks. We have experience in building optical networks and connecting customers. Somewhere we see useful experience from our Ukrainian partners.
Uldis shows off the software that allows him to see all his electricity costs. “I can see how much I spend every day, I can see the meter parameters, I can see the current prices, I can see all my services. I see electricity, video content, I see my TV package that I buy, I can make adjustments remotely. If I am on vacation, I can suspend the service for a while. You can see all the bills, contact the support service if there is any technical problem,” explains my interlocutor.
We are interested in voice to text and text to voice projects. This year, we will have a team of specialists who will deal with specific tasks of finding solutions that best suit our business. We will use this for ourselves and effectively sell it to our customers. We are a very large consumer of data center services for ourselves. We have big data, we have a “data lake”, we analyze and forecast, we look at what video content is most popular in Latvia and what we can offer to our customers. To remind them of something, to offer them something. We have something to recommend.
Automation does everything. Five years ago, we employed almost three thousand people, and now we do the same and more, but using smarter, fewer people. We use automation and machine learning to the maximum extent possible, and we put logistics into a smartphone, where everything is in the palm of the client’s hand. It is fashionable to talk about digital transformation now. But in reality, this is not a technological process, but a process of business change. For example, when buying a TV in our e-shop, our employees do not touch anything with their hands. Feedback is very important, we constantly keep the customer informed, thereby gaining their trust.
In the future, the company will be an integrator that will perform the part of the overall integration in which we have more competence.
Videosher and the prison
– We see a lot of promise in Software-as-a-Service right now. For example, this is Videosher, our new development.
Relations with the state? We operate entirely as a private company with a shareholder, the state, which has its own share. We often argue and discuss with the state, but we have the Confederation of Employers for this purpose and we have our own voice there, so we go to talk not as Tet, but as a business community. For example, we say that our labor taxes are not competitive. We propose that something needs to be changed so that we are more capable of developing the country’s economy, because everything is based on the country’s economy: education, healthcare, science, etc., because the taxes we have are not competitive. and they are like fuel, fuel for the entire state system, for the entire society.
Every time politicians think about how to redistribute the country’s budget (8 billion euros), we say that we need to think about how to grow so that we can pay 10 billion. Or 12, or 14 billion. How to become competitive in the global market. How we can be active in Ukraine, Lithuania, and Germany. We are attracted to the Ukrainian market because it is large.
Uldis believes that products like Videosher are competitive and can be used in countries all over the world. We are seriously thinking about the construction business.
– We are currently building a prison in Latvia…. It’s a build and design contract. We develop the project ourselves, coordinate it with the Ministry of Justice and correctional specialists. We are responsible for the entire project, from design to the last key and cell bars.
– Then it’s quite possible to talk about the Tet business empire?
– No, we are just a group of companies that work well together. Of course, there is some synergy, but we have more synergy, for example, with the media business than with construction.
Prospects
“On this trip, we will be not only in Kyiv, but we are going further, to Lviv and Chernivtsi. We also want to include Sevastopol, but later,” Uldis smiles.
– Cybersecurity. We fight and learn every day. For example, we provide cybersecurity for the Latvian parliament. We knew that on the day when the parliament voted to recognize Russia as a terrorist state, “bad people” would attack. Attacks happen every day. We are the critical infrastructure of the state and are responsible for all networks in general.
There are things we should learn from you, especially in practical terms.
Today, for the first time in our lives, we had the experience of an air raid alert. And we thought about developing a similar alert system like yours in Latvia. Just in case.
You need to adapt your experience to the situation in Latvia.
We see that the Ukrainian economy not only exists, but also makes interesting projects. We see great potential, but to understand and decide how best to work, it was important for us to come here ourselves. Not to send someone to come and see. It was important for us to come here ourselves. At the level of management, we came to talk to people, to see how our clients see it, how the state sees it, how municipal authorities see it, how the Ministry of Digital Transformation sees it.
For example, the war became a catalyst for the use of cloud technologies. The cloud services market in Ukraine has grown by 50%. Therefore, the business of Tet has real growth prospects in our country.
