Capital Gains

Warid Telecom International is a privately held telecoms company backed by the Abu Dhabi Group, and led by Sheikh Nahayan Mabarak Al Nahayan, member of the Royal Family of Abu Dhabi, minister for higher education and chancellor of the Higher Colleges of Technology and University of Al Ain. CommsMEA speaks to Marwan Zawaydeh, group chief technology officer of the usually media-shy Warid Telecom, about the company's investments, aspirations and support received by being owned by the ruling family of Abu Dhabi.

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By  Published  November 30, 2006

Warid Telecom's name first came to public notice in May 2004 when it was confirmed as the winner of one of two new GSM licences offered in Pakistan. The operator pledged to pay US$291 million as a licence fee, and in May of the following year launched commercially as Pakistan’s sixth mobile services provider.

Since that time, Warid has gone on to develop an alternative fixed line and broadband business in Pakistan, has been awarded a GSM licence in Bangladesh, and has more recently seized greenfield mobile telecoms investments in Congo Brazzaville and Uganda. And while the Middle East region has spawned a new generation of high-profile operators that grab headlines across multiple continents, Warid appears a much more private player, content with making significant progress away from the limelight.

The Abu Dhabi Group, of which Warid Telecom International is a subsidiary, is a formidable organisation, as one might expect given its ownership. Led by Sheikh Nahayan Mabarak Al Nahayan, member of the Royal Family of Abu Dhabi, minister for higher education and chancellor of the Higher Colleges of Technology and University of Al Ain, and backed by other members of the royal family and individuals of considerable means, the Group is one of the largest in the Middle East. Its activities span several industries ranging from oil and gas exploration, hospitality services, banking, property development and the automotive industry, amongst others.

It is this wide-ranging portfolio of activities that led the Group to also include communications as one of its targeted industries, and Warid Telecom's geography of investment has often followed where the Abu Group has already established relationships in one guise or another.

“We decided that Pakistan was a good opportunity seeing as the Abu Dhabi Group already had banking experience there,” explains Marwan Zawaydeh, group chief technology officer, board executive committee member and board director, who emphasises that if it was not for the vision and drive of Sheikh Nahayan, the ventures and positions Warid has found itself in would not have been possible. “Pakistan has a population of 150 million and in May 2005 we came in as the sixth operator. [At the end of October] we are now number three with 5.8 million subscribers, and we are adding between 450,000 and 500,000 active subscribers every month,” Zawaydeh reveals.

Warid Telecom attributes much of its success to the fact that it has never oversold its product, preferring to allow subscribers to set the demand for services rather than the operator hyping up the situation. The operator launched with 28 cities in Pakistan already covered and given that it had originally forecast a slower take-up rate than what actually ensued, the operator found itself in the enviable position of having to upgrade the capacity of the network to 3.5 million, up from 1.5 million in the second month of commercial operation.

The addition of 5.8 million subscribers in less than two years is a significant achievement, and represents a market share of around 17%, and Zawaydeh is confident that a further improvement in market share is achievable. Warid Telecom is already leading the field in the number of contract subscribers, counting more than 500,000, who are attracted by the operator's modern technology, which saw it offer per second billing from launch.

“CAPEX to date has been in the region of US$800 million,” Zawaydeh comments, with the radio and core networks having been provided by Ericsson and Huawei Technologies. “We are trialling EDGE and are developing a Next Generation Network already. By March 2007 this phase of the network build out should be completed, offering capacity for 15 million in the core network and 10 million in the radio,” he adds.

Warid awarded Ericsson the first managed services contract in Pakistan, which to date remains the single largest managed services contract in the country. “So we are running Warid’s network nationwide with everything field support maintenance, all the way to front office, back office support, and of course we running this for more than 5 million subscribers now,” explains Zibber Mohiuddin, Ericsson's country manager for Pakistan.

Mohiuddin recalls the drastic positive impact the entry of competition has had on Pakistan's mobile market. In 2001, Pakistan counted a total of 400,000 subscribers, 11 years after the introduction of mobile communications in the country. A combination of factors led to this apathetic growth, one such factor being the absence of the calling party pays (CPP) tariff regime up until 2001.

In the new millennium, the government ushered in CPP and decided to award a fourth mobile licence, which was effectively the second GSM operator. With the addition of a second GSM operator, Ufone, which was government-backed, in 2002, Pakistan's mobile industry was finally given the impetus for growth, and has never looked back since. In the three months following Ufone's market entry, more mobile subscribers were added in Pakistan than in the previous 11 years to the end of 2001.

“Such was the demand for a line between 2002 and 2004, in order to receive a prepaid account, you could actually go on the parallel market and purchase it by paying a premium of sometimes up to three times the listed cost,” recalls Zibber Mohiuddin, Ericsson's country manager for Pakistan.

The launch of Telenor and Warid Telecom as fifth and sixth operators respectively has only stimulated the market further and Zawaydeh believes there remains significant scope for further growth in the market.

Abu Dhabi Group’s investment in Pakistan's communications sector is not restricted just to its GSM operations with Warid Telecom. In September last year another Warid Telecom International company, Wateen Telecom, launched a fixed network aimed at providing network capacity and services to a range of carriers, businesses and consumers. Products and services include voice and enhanced voice services, calling accounts and calling cards, international gateway services, broadband, a fibre optic network, VSAT services; as well as managed services solutions and TV and multimedia.

“Wateen Telecom's fibre optic network extends to 68 cities and runs to 5,500kms,” describes Zawaydeh in his capacity as group CTO. “By February 2007 we expect to have completed the rollout of the network, which supports TDM as well as IP/MPLS.” It is with respect to this project that Wateen Telecom received international recognition as one of the first providers in the world to award a nationwide WiMAX contract.

Motorola was selected as Wateen Telecom's primary supplier to plan, design and deploy the nationwide wireless broadband voice and data network in Pakistan, providing the access network, subscriber units, and IP Multimedia Subsystem (IMS) core and services.

Wateen Telecom is already established as one of the leading “carrier's carrier” in Pakistan by virtue of its long haul optical fibre, metro optical fibre rings and FTTx, wireless broadband network, data centres and tele-housing facilities, and Motorola's WiMAX access network and subscriber units will enable the provider to offer broadband data services covering residential internet access, corporate IP virtual private network and public hotspots.

Integration with Motorola's IMS solution will enable Wateen Telecom to offer consumers voice services using VoIP including enhanced residential voice features such as caller ID, voice mail and call forwarding. Differentiated services such as prepaid and simple web-based subscriber account management are also included. For business customers, Wateen Telecom will offer a hosted VoIP solution with traditional business PBX and IP Centrex voice services such as conferencing, integrated with services that include find me/follow me and PC desktop integration.

“The WiMAX network is based on the 802.16d standard with migration to 16e in the third quarter of 2007,” comments Zawaydeh. “We are expecting a soft launch of the network in the November/December timeframe, and commercial launch in 1Q07.”

Warid Telecom International has also made inroads into Bangladesh where in December 2005 the company was awarded the concession to become the country's sixth mobile operator. Zawaydeh expects the operator to launch commercially in the first quarter of next year, with the network extended to 61 districts in the country and capacity for 5 million subscribers in the core and 3.5 million in the radio access.

Much like Pakistan, Zawaydeh believes Bangladesh’s large population is a significant opportunity, and as is the case in Pakistan, existing relationships established by Abu Dhabi Group within Bangladesh's banking sector have helped Warid Telecom make inroads into the telecoms market. The licence in Bangladesh has a 15-year lifespan, and Warid Telecom is rolling out its own fibre optic network, so that it does not have to rely on any third-party carrier.

“We paid a fixed fee of US$50 million for the licence and were awarded 1800MHz spectrum, and again I need to stress that much of this has been possible because of the vision and commitment of the chairman,” Zawaydeh comments.

Warid Telecom International defines its geography of interest as the Middle East, South East Asia and Africa, and having already begun to establish a foothold in Asia, the company is scouring for opportunities in Africa. A distinguishing facet of Warid Telecom's investment strategy is its targeting of greenfield operations to which it believes it can add significant value.

“Our preference is to acquire new licences,” confirms Zawaydeh. “It allows us to go about doing business in our own way, and it also guarantees service,” Zawaydeh says. Warid Telecom has so far picked up two operating licences on the continent of Africa - acquiring a concession in Congo Brazzaville and another in the East African country of Uganda. “There's huge potential in Africa,” Zawaydeh states.

Warid Telecom continues to seek investment opportunities, and given the high premiums being paid for going concerns in the Middle East and Africa region, its preference to invest in start-ups may prove especially prudent over time. The company forecasts a subscriber base of 50 million across all its telecoms investments by 2010, a target Zawaydeh believes is indeed attainable. “I honestly believe the addition of 10 million subscribers year on year in Pakistan and Bangladesh is attainable,” says Zawaydeh. “I believe the main reason for our success is our focus on quality, simplicity, innovation, friendliness and transparency.”

“ The WiMAX network is based on the 802.16d standard with migration to 16e set to take place in the third quarter of 2007. We expect a soft launch of the network in the Nov./Dec. timeframe and commercial launch in 1Q07”

“Our preference is to acquire new licences. It allows us to go about doing business in our own way, and it also guarantees service”

“I believe the main reason for our success is our focus on quality, simplicity, innovation, friendliness and transparency”

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