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SGP CABELEQ and the power of partnerships

Article - June 25, 2012
It is time to take advantage of public-sector synergies boosting competitiveness, increasing flexibility and reducing imports through local subcontracting
AZIZA BOUKAOULA, PRESIDENT OF SGP CABELEQ

Major multinational organizations – particularly those whose growth has been achieved through strategic acquisitions and purchases – strive to ensure that each new addition ideally adds value to the rest of the group, so that ultimately the parent company remains greater than the sum of its parts. Dynamic teamwork, streamlined interactions and productive synergies underpin the proliferation of some of the world’s largest conglomerates.

However, the desire to attain strength through synergies does not solely lie within the domain of the private sector, as securing efficiency and optimum results through teamwork also permeates the holding entities in charge of Algeria’s public institutions.
One such proponent of interrelating collaborations is the state-owned group SGP CABELEQ. As the overall owner of electrical components market leaders such as Electro-Industries and ENPEC, CABELEQ is a key participant in some of the most strategic areas within Algerian industry. ENPEC specializes in batteries for the automobile industry, while Electro-Industries produces electric motors, alternators, transformers and generators. In addition, CABELEQ also controls businesses in related sectors, such as the provision of electrification services through its subsidiaries REELEC and ALRELEC.

A united group

As a conglomerate whose components complement and feed one another, CABELEQ is therefore able to develop productive alliances among its different divisions, and thereby enhance business opportunities for each unit.

Aziza Boukaoula, President of CABELEQ, says, “We are all in contact: we have companies producing, others installing, and others in charge of maintenance, so we can participate in tenders by bringing together a number of our firms. We can get REELEC to produce and install generating equipment, working in collaboration with Electro-Industries and SORELEC. These companies have years of experience working closely together.”

Combining efforts is also essential to other divisions of CABELEQ, including INATEL and RETELEM. Operating in the vital information and communication technology (ICT) sector, these companies provide crucial telecom services ranging from the manufacture and installation of switchboards and telecom exchange systems, to the development of telecom and IT networks, as well as electronic surveillance systems. The advantages of collaboration have been evidenced by the resulting further synergies with other branches of the parent group, such as SITEL and INFRATELE, which provide nationwide and urban telephone networks.

Leaders in collaboration

In the Algerian industrial sector, the strategy of subcontracting and cooperation is encouraged by the government and exists even between different state-owned enterprises (referred to in Algeria as SGPs). For example, Sonelgaz has officially approved Electro-Industries’ power transformers (and have also expressed an interest in investing in the manufacturer), while white-goods manufacturer INDELEC uses CABELEQ cables in all its projects.

“ENPEC is already the leader in the automobile battery sector, but we are not able to supply the whole algerian market, which is why we have begun to look for a partnership.”

AZIZA BOUKAOULA,
President of SGP CABELEQ
Despite these arrangements, and the group’s market-leading positions in many sectors, it is keen to attract foreign partners. Interested parties will be pleased to note that the procedure for forming partnerships has been simplified: SGPs can now enter directly into contact with potential partners without a tender, and have the full freedom to negotiate, before sending the project off for final approval.

“ENPEC is already the leader in the automobile battery sector, but we are not able to supply the whole market for the automobile industry,” says Mrs. Boukaoula. “There are 1.5 million cars manufactured in Algeria annually, and 250,000 imported, so there is additional market share to aim for – which is why we have begun to look for a partnership in order to be able to supply 100% of the market, using ENPEC products.”

International standards

Algerian companies are committed to delivering quality, a fact acknowledged by both corporate customers and private individuals. While a free market brings competition, Algerian buyers, having been tempted by the lower prices of foreign goods, have returned to the quality offered by their native brands.

ENPEC batteries, for example, are often sold out – though the company itself makes no effort to promote sales through advertising: customer satisfaction and word of mouth is enough to maintain the company’s reputation and ensure high demand. Its products meet the highest international standards, allowing them to compete in export markets and ENPEC already exports its batteries to Libya.

ENPEC eyes solar potential

One new market the company has its eye on is the renewable energy sector and it is looking for international partners to join it in the new venture.

 “We want to move into the solar battery sector,” says Mrs Boukaoula. “ENPEC has already made a start, as vehicle batteries and solar batteries share a similar configuration, but with a few changes and tweaks. We have entered an agreement with the University of Setif to carry out research and develop our solar energies further.”

Foreign experience

Striking new collaborations with international partners would not be new to CABELEQ. The group already has many years of experience working with foreign companies, and has been part of SITEL since the 1990s – one of the first major partnerships formed outside of the oil and gas sector in Algeria.

SITEL was established in 1990 as a financial and technical joint venture with the Swedish telecom firm Ericsson, which owns 35% of the company, for the manufacture and installation of new telephone exchanges for Algerie-Telecom, the national public telephone company.

As a result of its work, the landline network has increased to more than 3 million lines. The group aims to modernize and adopt new technologies, such as optical fiber, in order to recapture the domestic market, which has largely been overtaken by competition from imported products.

The company also exports its know-how and acts as an engineering consultant in Africa, Middle East and China for the Ericsson group. It has maintained a leading position – almost a monopoly – in Algeria.

SITEL’s CEO Amin Baghli advises potential investors to look at Ericsson’s example and says, “If you really commit yourself, you will succeed in Algeria; don’t think only pure business, but come also to generate employment – that has been Ericsson’s philosophy and that is why have they have succeeded so well.”

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