Better a Batelco than a France Telecom

Batelco’s chief executive, Tony Hart, insists the company is ready for competition at home and well equipped to continue its overseas expansion.

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By  David Ingham Published  January 9, 2003

|~||~||~|Batelco, Bahrain’s telecomms monopoly, insists that it will be ‘fighting fit’ when competitors enter the country’s telecommunications market. CEO, Tony Hart, says that deregulation is a good thing and reveals that management consultant, AT Kearney, has been brought in to help the company make the move from state monopoly to customer-focused dynamo.

“We welcome competition,” says Hart. “It will be good for the customer, good for the market and good for Batelco; and it will reinforce Bahrain’s forward thinking image throughout the Gulf region and beyond.”

Hart vows to shed old thinking and become a more customer focused company. “We are changing so that we can serve our customers better. This company will shake off its old monopoly values and transform itself into a company orientated towards pleasing customers and earning their loyalty. There will be some pain for us, but I sense a real appetite for change in our workforce,” he says.

Pain? Appetite for change? These are not the type of words that you normally hear from a state incumbent, but Hart goes even further, hinting that job losses may even be part of the restructuring exercise.

“That’s not the object of the exercise, but a drop in headcount is inevitable – and I think our employees accept that,” Hart says. “It is a fact of life that monopoly phone operators the world over have been forced to slim down to become competitive. Batelco has a duty to its customers, shareholders and employees – and refusing to face economic facts will do no favours for anyone in the long run. In the future, job security will be related to our ability to retain customers.”

Batelco is not a complete stranger to the concept of competition. It has expanded outside its home turf into areas where competition does exist and has managed to survive. To date, it has Atheer in Saudi Arabia, an ISP joint venture with Jeraisy, and holds stakes in companies in Jordan, Kuwait and Egypt.

Rather than slowing down its overseas expansion drive, the chief executive insists that the company is still very much focused on developing its business outside its home market. “Batelco has a competitive edge that no other player in the region can offer – our relationship with global network operator Cable & Wireless,” says Hart.

“That makes Batelco the only provider in the Gulf that can offer truly global reach and knowhow to big-business customers.”
In November, the company unveiled plans to team up with Omantel in the Sultanate of Oman and hot off the press is the announcement of a move into Iran.

At home, however, there are concerns. With Bahrain’s telecomms market about to liberalise, Hart says that rules governing competition must allow both competitors and Batelco to prosper. Too many companies, he says, will kill the market for everyone.

“Competition here should be sustainable. A ‘fight to the death’ because of too many competitors in a small market, or by one-sided regulation, would be bad for the Kingdom,” he says.

“This has been the sad experience in countries where regulatory lessons have been learned the hard way. But we are confident the Bahrain government will work with us, and our competitors, in the best interests of the Kingdom.”

Operators like Batelco are at a stage in their development where they have to make some difficult choices about technology. 3G, for example, is seen as the next big thing in wireless technology, but it is expensive to deploy and it isn’t yet clear whether there is a big enough market for it to make rollout worthwhile. Batelco hasn’t said an outright no to 3G, but has decided to focus its investment for now on so-called ‘wireless hotspots’, which allow notebook or handheld users to surf the internet wirelessly at high speed.

“…We have plans that could give Bahrain better than 3G wireless services before 3G even gets here,” the chief executive brags. “We are planning a rollout of wi-fi hotspots that will enable people to get fast wireless access to the Internet while sitting in shopping malls, hotel lobbies or coffee shops. We have the potential to deliver download speeds to handheld devices and laptop computers at up to five times faster than 3G’s best promise. This is not just talk – we have a wi-fi trial running now at Bahrain International Airport and we are about to expand the trial into some hotels and a shopping mall.”
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The company has also made fixed broadband internet access possible by upgrading its copper network to support DSL. This, Hart says, allows DSL users to watch streaming videos, surf the internet at high speed and make phone calls using a single line.

“We can do that because of the millions of dinars we have invested in our copper network. It is so unusually good that the quality of picture we can put on TV screens, using our phonelines, is staggeringly high,” he claims. “We can make Bahrain the envy of the world because we can take that kind of 21st century service to 93% of households in the Kingdom. I am confident no other country in the world can claim that.”

Returning to his earlier point that Bahrain can learn from the errors of others, Hart makes a dig at his home country, which he says stifled the rollout of broadband internet.

“I hope our government will not follow the example of the UK government, which prevented British Telecom from providing entertainment on its telephone network about 10 years ago,” he says. “BT wanted to provide the UK with an optic-fibre network, but ditched its plans when the government blocked BT’s intention to pump entertainment into the home. The UK could have grown the most advanced ‘nervous system’ on the planet. But negative regulation killed the vision.”

When the conversation turns to Batelco and its big profits, Hart says he is, “happy” to defend the big profits made in the third quarter ending in September. “It is in the Kingdom’s interests for Batelco to be financially sound. That’s how Bahrain is able to afford such a high quality telecomms capability that attracts enterprise to this island. Believe me, the Kingdom is much better off with ‘a Batelco’ than France is with its debt-ridden France Telecom, or Germany with its sickly Deutsche Telekom and Mobilcom, or the US with its battered WorldCom. Any analyst will tell you that Batelco is one of the very few bright lights in a gloomy global telecomms industry,” he argues.

To further support his argument, he says the company keeps on slashing prices. “This month [November], we announced our eighth cut in international call rates in just six years,” he says. “In September we chopped down prices for business customers who need data and web site services, and we cut back prices for some Internet users. Those cuts followed mobile phone reductions of up to 40% on rentals and 26% on calls at the start of 2002. I can’t think of any other monopoly operator anywhere in the world that can claim that kind of price-cutting record.”||**||

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