Racing ahead

With competition entering the market in 2003, the Omani government has taken the decision to privatise monopoly operator, Omantel

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By  Greg Wilson Published  May 5, 2002

I|~||~||~|Oman has been toying with the ideas of liberalisation and privatisation within its telecoms sector for some time. Earlier plans to privatise the state owned monopoly service provider, Omantel, were shelved, due primarily to the economic maelstrom that engulfed the global telecoms market. However, with Oman’s World Trade Organisation (WTO) membership bringing competition into the telecoms sector as early as next year, the Sultanate can no long afford to wait for the investment market to improve.

Consequently, last month the Telecoms Act was issued by Royal Decree, calling for the rapid formation of an independent regulatory body to manage the transition to a liberalised market and the ensuing competition. “The first act will be the privatisation of Omantel,” says His Excellency Mohammed Ali Al Wohaibi, executive president of Omantel. “Omantel will be privatised by selling 49% to investors. The government will still keep 51%,” he adds.

Under the terms of the privatisation law, 40% of the telecoms provider will be sold to strategic investors, while another 9% will be made available to local pension funds and investment companies.

“Privatisation will bring with it know-how for management, technology, efficiency and productivity of staff and resource utilisation for Omantel… the privatisation and liberalisation will bring the Sultanate new challenges and opportunities, which we are looking forward to,” comments Al Wohaibi.

The region’s experience with bringing in international investors has by and large been a positive one. For example, Batelco has leveraged the technology and marketing expertise of its partner Cable & Wireless to great effect, effectively tying up its own home market ahead of the introduction of competition.

Bahrain’s monopoly service provider has expanded its business interests beyond its borders with investments in five Internet service providers (ISPs.)
The partial privatisation of Jordan Telecom (JTC) with an investment from France Telecom has helped to spur growth in the country’s telecoms market and create one of the region’s most competitive markets. Since JTC’s privatisation, the country has seen fierce competition in its mobile market, resulting in higher levels of service and lower charges offered by GSM service providers.

According to Jawad Abbassi, president, Arab Advisors Group, the Omani market has a lot to offer investors. At year-end 2001, there was only 9% fixed line penetration, and this was expected to increase only marginally during 2002. “This indicates the massive potential for fixed lines,” states a report by the Arab Advisors.

Furthermore, Oman boasts a growing GSM market — Omantel estimates that there will be 540,000 GSM users by the end of this year — an Internet subscriber rate that has more than doubled in less than a year and a healthy GDP per capita.

“Oman may be a small market… but it’s not the size it is the profitability of the market. Sometimes the smaller markets are very good for international operators… In a smaller market it’s much easier have a de-facto monopoly,” explains Abbassi.

For the Omani government to attract the best possible strategic investors and obtain the best possible price for its monopoly service provider, the openness of the tendering process is going to be key. Both the privatisation of state telecos and the subsequent liberalisation of Moroccoian and Jordanian telecom markets illustrate the need for openness.

“The [success of] Jordan and Morocco has been mostly because of the policies of the government and the regulatory structure that was put in place,” says Mohsen Malaki senior telecoms analyst, Central & Eastern Europe, Middle East & Africa IDC.

||**||II|~||~||~|“If Oman adopts a similar liberal view there is a possibility that they could attract interest from international investors. Also, Oman is going to attract attention because it has got a fairly high GDP per capita compared to the rest of the region and the other GCC countries are not doing this,” he adds.

Merrill Lynch has already been called in by the Minister of Finance — effectively the current owners of Omantel — to advise on the privatisation process.

“We expect to start tendering very soon… the process will be managed by the Oman Tender Board (OTB), which will set the terms & conditions for bids,” says Al Wohaibi.
Omantel’s executive officer also points to the bidding process that surrounded the recent privatisation of the airport as evidence of OTB’s ability to manage a fair and transparent bid.

“We expect the process of privatising Omantel to be as transparent and as fair as previous tenders. We have learned a lot through [the tendering of the airport]. That process went without any complaints,” comments Al Wohaibi.

With the other GCC markets closed for the foreseeable future, Oman could also be appealing as potential gateway into the region. “Being present in Oman would give some local market knowledge, which will be particularly [valuable] as other GCC countries, like Saudi opens up,” comments Malaki.

Although work has begun to form a regulatory framework for market liberalisation and privatisation of Omantel, the operator has already started preparing for competition. The executive team of Omantel is accelerating the process of change put in place over the previous 12 months, in an attempt overhaul the internal processes of the organisation, increase efficiency, reduce operating costs and create a customer-centric service provider.
However, to fulfil Omantel’s vision of becoming the ‘most popular incumbent operator’ and retain its customers it is going to require considerable effort. “Compared with Batelco, Qtel and Etisalat they [Omantel] don’t measure up… they are pretty much like Saudi Telecom or Jordan Telecom before privatisation… they are an average PTT, slow, bureaucratic and not very nimble,” says Jawad Abbassi.

Adds Malaki, “Omantel has not had the reputation of being at the forefront of its technologies in the same way that Etisalat or Batelco has.”

Arguably, the biggest challenge facing Omantel is migrating the organisation’s 2000 plus employees away from an overwhelming government mindset. Key to changing employees’ attitude is convincing them of the importance of customer service. “The company has been a government entity for 28 years. There is a lot going on to actually move it from a government run culture to a business culture. This involves taking care of customers and introducing better services,” explains Al Wohaib

All customer agents within Omantel have already attended courses on customer services and management at the monopoly service provider’s training institute. To further enhance its own educational services, Omantel has also struck an alliance with New Horizons to equip its staff with basic skills in Word, PowerPoint and Excel. The mostly customer-facing personnel attending the courses are taught how to make presentations, write formal letters and design projects.

“The main challenge is to educate the staff, to be more responsive and customer-centric,” says Al Wohaibi.

“We are actually training people that have been dealing with customers for a long time, but they have not been trained. We have found that there are tremendous differences already in the way that they used to [approach] customers before taking the course and after going on the course,” explains Al Wohaibi.

||**||III|~||~||~|However, changing the grassroots bureaucratic mindset of a 28-year-old government entity isn’t going to be easy. Even with an ambitious management team leading Omantel there is going to be considerable resistance to change.

“We have seen it with Telecom Egypt and Jordan Telecom,” says Abbassi. “Change takes a lot of time to trickle down and there will always be a lot of resistance. Sometimes there is legitimate resistance to change and sometimes there is not… When new management comes in and they want to benchmark a person’s or a department’s performance, people that are not used to doing it will invite friction with the management,” comments Abbassi.

Omantel has also been restructuring its organisation to become more customer focused. This has involved the appointment of corporate account handlers and product managers for its separate services — mobile, Internet and fixed line.

“Previously, these used to be managed as one service, but we are now looking at things differently. Each service has an owner, even after implementation. They will market the service, they will look after it, talk to customers and command upgrades or expansion to services when [they are] needed,” explains Al Wohaibi.

In an effort to increase its geographical reach and get closer to its customers Omantel has created a market research capability and also extended its network of service centres outside of Muscat for the first time.

The monopoly service provider has overhauled its accounting practices, in an effort to rein in cost control and provide a greater level of accountability. As part of this move service level agreements (SLAs) have been set up between each business unit “to help us understand how much these services are costing us, how much support costs us and how much to charge the customer,” says Al Wohaibi. “We are looking to streamline our processes and become more cost effective.”

Omantel has also been working to engineer its business processes to rapidly respond to the needs of the customer. Supporting the business management work, the service provider is also poised to go live with its Customer Care, Billing and Mediation System (CCBMS).

The solution, which has been delivered by local company Unitel based on software from Lucent and hosted on HP hardware, will play a vital roll in Omantel’s customer care offensive. “We are introducing a new billing system that will be online and people will be able to view bills through the Internet and maybe at a later stage pay their bills [online,]” says Al Wohaibi.

The information captured through the billing application will provide a 360 degree view of the customer. Previously, the operator had separate billing applications for each business unit, which resulted in an inconsistent view of the customer. However, with the new system it will be possible to build a holistic view of the customeracross business units. “That will enable us to collect some statistics on our customers and provide a better service,” says Al Wohaibi.

||**||IV|~||~||~|The data from the billing application will form the core customer profile for Omantel’s forthcoming decision support strategy. The operator has just finished the tendering process for its data warehousing project and is expected to officially appoint vendors in the coming weeks.

Alongside work to restructure the organisation there has also been significant network infrastructure work conducted over the last 18 months. Omantel signed a US$ 5.2 million deal with Motorola’s Global Telecom Solutions, which will see the extension of cellular services to the Batinah Coast area.

The operator also signed a US$ 19.8 million with Siemens to extend the mobile network to the Dakhiliya, Dhahirah and Sharqiya regions. With SMS services taking off in a big way, the introduction of GPRS is expected sometime this year and 3G services are expected by sometime in 2004.

During 2001, Omantel also increased its backbone bandwidth capacity. As this magazine goes to press the operator was due to soft launch its ADSL services, which will be available by the end of summer. “The infrastructure is almost finished… we are going to soft launch the services in the first week of May and then deliver full services three months after that,” says Al Wohaibi.

The vast expansion of data services is also top a priority for Omantel. The operator is currently using a solution from Sun Microsystems to power its current range of data services, including access, hosting and e-mail. However, the operator is also tendering to vastly increase its computing muscle behind its data services with an upgrade to its data centre. Although the exact services to be offered from the data centre have yet to be finalised it is likely that they will include various security, payment gateway, hosting, video conferencing, e-commerce and application services.

“We’re looking to deliver full solutions in the data market,” says Al Wohaibi. “We are moving from just renting leased lines to our corporate customers, to providing data solutions.”

Omantel is already targeting the emerging e-government sector within the Sultanate as a key customer base.

“We could offer these services to the different ministries as they move towards e-government. Many don’t have the expertise to manage Internet solutions,” adds Al Wohaibi.

Whether Omantel can compete effectively as a regional data player remains to be seen. For the next 12 months at least the operator’s challenges remain on the home front, as it attempts to shore-up its own local customer base, build its chain of partners to deliver content and data services and complete belated infrastructure that will enable it to enhance its customer services.||**||

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