The operator business model is changing in the new era of web-based social networking and new media communications. What are the hot topics in telecommunications today? What are the most significant challenges the industry faces globally?
The hot topic right now is return on investment (ROI). Investment decisions are becoming very challenging for leaders to make. With the increase in competition and with the acceleration in the turnout of technologies, the decision to invest has become very difficult. There is increased uncertainty. Nevertheless, we as a company are committed to investing in our country. That decision is not as difficult for us as it is for others. At a local level, we are committed to investing; therefore the decision to invest is much easier for us, as the incumbent national company.
2011 has been a very dramatic year for the global economy. It has been a year of major changes in the Middle East and North Africa region. How was 2011 for Omantel?
2011 was a very successful year for us. We have been leading the cell phone market (which is the most competitive part of our business) with very significant numbers, considering that we have been competing for seven years. It has been positive in terms of the number of subscribers as well as the revenues. It has also been significant for our fixed broadband, since we launched new broadband packages at the beginning of the year we have increased the number of subscribers in the broadband area. It has also been positive for our fixed line telephony business which has been declining worldwide. In 2011, we were able to both stop and reverse that trend and managed to grow in terms of the number of subscribers.
All in all 2011 has been a challenging year at a market level, but we were the winner in our market in 2011. The matters relating to the region have given us an opportunity to address the issues and come up with a number of initiatives that are focusing on HR (human resources) related issues. Having resolved those issues, we have improved our performance. Our workforce is more content and is able to produce more. The success of our company in 2011 is a reflection of how happy our staff is.
In which area do you anticipate major growth?
Broadband. Currently, we have six international submarine cables landing in Oman and we are negotiating three more. This puts Oman on the international map in terms of becoming one of the most connected countries in the area. This particular initiative is unique because it gives Oman a diversity that is not open to many. For instance, Europe Persia Express Gateway “EPEG” cable gives us diversity in terms of direction – going northeast and then turning west. It is an advantage because it is mostly on-land. It goes through the Gulf into Iran and then through the CIS (Commonwealth of Independent States) into Russia and into Europe through Poland and then lands in Frankfurt. This means that by and large, this cable is mostly on-land. Each of the four consortium members (Omantel, TIC of Iran, Rostelcom of Russia and Cable & Wireless of UK) is responsible for the land where it operates. For example, Omantel is responsible for the redundancy and the connectivity of the cable in Oman. That means that the cable will be mostly protected by redundancy as it is on land. It can also be repaired easily because it is on land. This type of technology also has a lower latency compared to the submarine cable. In the future, a lot of systems, particularly virtual private networks applications like SAP running on VPN will be sensitive to latency. They would prefer this kind of connection. This makes Oman diverse in terms of direction, availability and quality and better speeds. The four consortium members will be able to sell this cable capacity to the world.
You were one of the first operators in the region to implement fiber to home (FTTH) services. What progress have you made so far?
Omantel is committed to providing broadband connectivity to premises and homes in Oman. Omantel started providing the FTTH service in new development projects like the Wave and Muscat Hills. These have been operational for over a year, in addition to the Knowledge Oasis Muscat which is the country’s IT industry hub. However, recently the Government came in with a sewage system project, where the sewage company will connect all residential/ commercial units in Muscat with fiber and this will be used by the operators.
Omantel has recently been recognized as the Leading Company in Oman for the sixth consecutive year for its continued outstanding business performance, as well as the ‘Best Performing Listed Company on the Muscat Security Market’ by the Oman Economic Review. Could you please comment on these awards and the latest developments at Omantel?
We are very proud of this achievement in a year that has proven to be very challenging for telecom companies worldwide. We have been able to build on the investments we have made over the past two years and take the company to new heights, which have confirmed our position as a leader in the Muscat Stock Exchange and beyond. A recent report on East Europe, Middle East, and Africa (EEMEA) of telecom companies’ average stock performance tracked by JP Morgan places us as the best performing share in later half of year 2011.
The telecoms market in Oman has been liberalized and today, your competitors are very aggressive in terms of marketing and offering attractive tariffs and packages to new clients. How do you stay ahead of the game?
The situation in Oman is different in a number of ways. One is that when competition started in Oman, there was a lot of untapped demand still out there. Our subsidiary “Oman Mobile” and our competitors were able to capture the market that was still not connected. Together we were able to get the penetration rate well beyond 100%. It is 4.7 million now according to the recent published figures by TRA. Together we have been able to grow into the un-penetrated market and reach these levels.
Of course, there were a number of privileges that were given to our competitor, like national roaming and number portability, which has given subscribers the freedom to choose between the two operators. You are allowed to take your number with you. Even with that, Omantel was able to stay ahead of the market through its subsidiary. While staying in the lead, we of course shared the market, however since mid-2010 we were able to reverse the trend and gain back market share into our network.
How did you manage to get that market share?
That is a very interesting question. We managed to get the market share by increasing the investments to improve the quality of our network and by offering innovative products to our subscribers based on unlimited use or unlimited per call use. This created segments where the price may not matter as much, but the prediction of how much the bill matters a lot to them. So we came up with a number of unlimited products, including ‘stop the clock’ and unlimited calls including fixed lines and internet for a fixed amount. So a fixed bill as well as a ‘stop the clock’ mechanism has brought in new, innovative offerings to the market. However, the quality of the network and the investment and expansion of the network has improved user experience, so they choose us.
According to the Minister of Transport & Communications, the possibility of the entrance of a third operator in the market is being considered. What impact would that have on the market?
We have done well when competing, so we are not so worried about increased competition. I think any regulatory measure should consider the investments that we are making and are planning to make, and how decisions will affect this. Globally, the issue regarding investment is the toughest issue that CEOs are currently facing. The lower average return per user and increased competition is making people hesitant when it comes to investing. If this regulation includes a license with an obligation to roll out, then somebody else will invest, and that will have implications on investment decisions for both incumbents and competitors. We will take measures in accordance with that. If it is an infrastructure license, then we will have to deal with our investment decisions based on where this license is going to be. However, we welcome any regulatory measure that is calculated and seen to benefit the sector and accordingly the country.
How is Omantel preparing for 4G technology?
Right now, we are in the process of procuring 4G. In fact there are some misunderstandings. A lot of people think it is like moving to another voice device like we moved from 2G to 3G. Right now we and our competitor are licensed to deploy LTE (long-term evolution) but it does not have voice. It is so far a fixed broadband service only. We are working with the regulator to allow mobility and we are confident that the regulator is open-minded in this regard. We are in the process of completing the procurement phase and we are preparing our infrastructure to deploy LTE as soon as the procurement process is over.
In 2011 Omantel went through a major transformation in the way it operates, bringing its businesses closer together. In October 2011, the Board of Directors approved the legal merger of Oman Mobile with Omantel. What benefits do you anticipate from this strategic restructuring?
As of January 1st, both companies have become legally one company. However, the process has taken around three years. We have taken a number of steps since 2008 to unify the operating model so we have one team running both companies and a unified operating model (one CEO and one management team). We have taken the time to merge all the operations. The last step is the final legal unification of the two companies and from 1st of January 2012 Omantel & Oman Mobile have legally become one entity. This has enabled us to stop spending on all the work related to legal existence of Oman Mobile, and this of course will mean some efficiency savings and cost savings (although those have already been achieved over the past 3 years). It will also be easier for our stakeholders (investors, suppliers, subscribers and staff) to deal with one unified entity as opposed to two separate ones).
At the ‘Best Brands’ survey conducted by Oman Daily Observer, Omantel was No 1 brand in the Telecom category and No 2 among the overall 180 Greatest Brands in Oman. What are the main values that you would like to have associated to the brand of Omantel?
For us, I think our brand wins for what it stands for. We have won the best telecoms brand award because we stand for a number of values in the telecom field. Our brand equity and value have been improved by consolidating our CSR (Corporate Social Responsibility) activities under one brand. We have also consolidated the CSR activities of too many small, thinly spread activities. We believe that this means that the projects can reach people in a more direct way. This has improved the standing of the Omantel brand in society. This is of course in addition to the value proposition that we give to our customers in terms of the telecoms services we provide to them. I think the CSR has complemented our telecoms services and the value that our brand gives.
What major activities do you focus on in terms of CSR?
We are now working on projects that touch the people directly. For example we have the Ramadan season. We have gone from sponsoring events to social projects where we touch the people directly. We have been very selective with events – only those that are at a national level and those which bring value to the community and the economy. We only focus on events in those two categories. We focus on sports as it touches the young people, which is most of Oman. We also focus on education and the needy segments that exist in every society, which we do through our Ramadan efforts. We have also managed our direct contribution to the society differently – for example, in our Ramadan effort which is a month of giving, we involve our staff. CSR is not a checks being handed out – it is more about getting our staff and other stakeholders involved. We have also worked with our partners to make all the contents of the food packages made in Oman. The packages go across all the regions of Oman.
We used to spend money on sponsoring many different events, but they evaporated at the end of the day. But over the last two years we have focused on bigger events and by adding more value to society and the economy and more high-value events as well as more direct social projects. I think this has made a big change and is a reflection on the brand equity.
During the events that took place in Oman in March 2011, one of the first measures H.M. Sultan Qaboos announced was the creation of 50,000 jobs for Omanis. Following that decision, Omantel employed 200 new people over the past few months. What challenges do you face with the human resources today?
It was the first time in our history that we took on 200 people in one go. We had to devise a special ‘on-boarding’ program to get the new recruits on board. This program ran for three months and we took them through an orientation process which included training, soft skills, an introduction to the company, our mission in society, what we do, our values and introduction to the various units in the company. I meet with these people every quarter since they joined. We see them as very welcome new blood in the company that is going to introduce a new change. We think they are going to boost the transformation process that we are going through, from a 41-year-old incumbent into a young and agile company.
They are a welcome addition to the company. We took extra care when introducing them to our company and also extra attention to the value that they can add and the views they can bring during the first year of their tenure with us. I have met with them three times and I am going to meet them twice more.
In order to make the private sector more attractive to unemployed Omanis, the government decided to shorten the working hours and improve the working conditions in the private sector. How did the new Labor Law impact your business performance?
Being an operational business that works around the clock, a lot of these issues have actually been mitigated through our HR policy. We have had to live through similar conditions because of the nature of our business. We have specific systems for compensation if you are doing a hazardous job and compensation for on-duty hours and a tough front-end job. We also have a schedule for people to work weekends. A lot of the measures that came out were already accommodated by our policy. The new measures have also been studied and their impact is being revised in the new edition of our HR policy. We believe that our policy is agile enough to get all those implemented with a minimal impact on the business. I know that if other sectors do not have these kinds of schemes, it will be a bit more challenging for them.
On a more personal level, you have a PhD in Computer Science and Artificial Intelligence from the University of Sussex. As the CEO of the leading telecommunication company in the country, how would you describe your business philosophy and leadership style? In your opinion, what makes a good business leader today?
I think delegating and engaging with staff. I try to engage with people. I know they would recognize my style as delegation and empowerment, but I think I engage with people a lot as well. I am very proud when people recognize that the CEO is focusing on strategizing when delegating. Delegation alone does not work – you need measurable objectives and you need to continue engaging with people when it comes to achieving those objectives.
How would you evaluate the current business environment in Oman? What advice would you give to a potential foreign investor?
The economic potential in Oman has not been completely unleashed yet when it comes to international investors. I think that by investing in mega projects and upstream infrastructure projects this has prepared the ground for many investors to come and benefit from a well-developed infrastructure and already operational upstream projects like the aluminum smelter, the steel smelter, and the petrochemical industry with two refineries. The Government has laid the foundations for a thriving economy and it is time for international investors to come and capitalize on that and contribute to our economic growth and the prosperity of our people through job and wealth creation.
This is the right time to come to Oman. It has always been great to come to Oman but this has to be the best time.
What message would you like to convey to our American readers about Oman in times of major changes in the region?
Oman is a country that has been through a very systematic change process in terms of a gradual move towards democratic processes. This has been accelerated in some areas as a result of the events, but as an Omani I believe it was coming anyway. This is a well-organized country that was able to respond quickly and accurately to the needs of its people and was able to move towards creating institutions. For example we have more regulatory framework now as we have created a whole new authority for consumer protection. We have empowered a number of regulatory organizations in the country. This is an environment which an international investor can trust. You have just read the figures – we have a surplus which is great news.
The Arab Spring was a test for the different systems in the region and every country reacted in its own way. When the test came to Oman, our system proved to be agile enough to respond quickly and make an effective change. The developments that took place in March 2011 put in evidence the fact that our system is based on solid foundations and that we are blessed to have a visionary leader with very effective solutions. As a result, the country has come out even stronger and the economic progress continues to move on.