The Right Call

As the head of UAE telecoms monopoly, Etisalat, and satellite mobile operator, Thuraya, Mohammed Omran has had a lot on his plate recently. But as Anil Bhoyrul found out, he is upbeat about both providers’ wide-reaching plans for international expansion.

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By  Richard Agnew Published  September 27, 2004

|~|omran1.gif|~||~|Two days into the war in Iraq, Mohammed Omran’s worst nightmare appeared to have come true. The head of the UAE’s privately owned satellite business, Thuraya, had invested close to US$1 billion in the development of voice, mobile and data communications services for more than 50 countries. Its mobile handsets had become the tool of choice for the hundreds of international journalists covering the conflict, bringing unprecedented publicity for Omran’s company. Then on April 4th, U.S. military commanders ordered a complete ban on the phones, claiming that they might compromise the position of allied forces. Suddenly, the entire credibility of his company’s flagship product was in question, the world’s most powerful leaders were against him and a huge amount of cash was about to disappear down a black hole. “That was a tough time, but I like a challenge,” says Omran. He certainly does, and better still, he knows how to rise to a challenge. The same year as the war in Iraq, Thuraya posted net profits of US$38 million, while revenues nearly doubled to US$160 million. And its not just here that Omran is delivering success. As acting president and chief executive officer of UAE telecoms giant Etisalat, he has also just presided over the winning US$3.457 billion bid for the second GSM license in Saudi Arabia. Like his satellite phones, the numbers are big, and the risks are bigger. “Everybody is wondering whether we can make a profit in Saudi. The answer is very simple. Think about it — why do you think we put all that money into the bid in the first place? It will be a very good market. The business plan we have suggests we will reach break even in the next three to four years, and I have no reason to doubt that,” says Omran. The Saudi initiative will test Etisalat to the limit but the rewards could be huge. The current level of GSM penetration in the Kingdom is just 35%, leaving a huge untapped market. The world’s biggest oil exporter has a population of around 24 million, including six million expatriate workers, as well as a rapidly expanding telecoms industry. The price may be high but the rewards could be even higher. Once Saudi Arabia’s King Fahd approves the licence, which is a formality, the company will float 20% of its equity. Another initial public offering will take place within two years of operation. Etisalat holds a 35%stake in the new firm while Saudi investors hold the rest. “Some people are wondering about the price we paid [but] good things cost money,” says Omran. “The fact is that in Saudi Arabia right now, there is huge room for expansion. They have around 30 mobile lines per hundred inhabitants. In the UAE, as a comparison, we have 80 lines per hundred inhabitants. That’s a big market and a huge amount of work is needed to serve it. We have a very aggressive roll out plan to start covering the main cities in the Kingdom within six months. We’re looking to have seven million customers in five years,” he adds. Not everyone shares the good feeling. Given that Etisalat is a state owned monopoly, some analysts question whether it is best placed to develop a new market in a competitive way. It may have created a winning business in the UAE, but its experience of competition, and the necessity that competition brings to drive down prices, is limited. Omran, however, is not concerned. “You have to look at our record. What we have created in the UAE is an excellent company. I would say it is one of the best in the world. And it is wrong to say that we fear competition. In the UAE we have new laws coming in so the market will be opened up and we expect to have another mobile licence. I’m not sure when this will happen — maybe next year. We will see, because right now the government is working on the laws,” he adds. It isn’t just Etisalat that is occupying Omran’s mind though. After the hiccups at the start of the Iraq war last year, satellite company, Thuraya, is on a roll. The bad publicity when U.S commanders ordered a ban on its handsets effectively helped draw world-wide attention to the company, and the overall result has been hugely positive. Thuraya’s satellite footprint now covers some 99 countries in the Middle East, Europe, Africa and South Asia. The phones are now being rolled out as national projects in several African countries. Growing demand has also prompted the operator to predict that it will reach sales of 300,000 by the end of 2004. “This is one of the first satellite telecoms companies worldwide to achieve profitability in two years from the start of operations. We expect to earn higher revenues and a better profitability this year and in coming years,” says Omran. Thuraya financed its satellite programme through a combination of debt and equity, with the former portion of US$450 million financed by a consortium of banks led by ANZ Investment Bank, based in Australia. “We plan to repay the debt every six months to close the loan by 2007,” says Omran. The plans are big, but if anyone can deliver, Omran can. Having worked in the telecoms industry for 27 years, he shows no signs of slowing down. “Yes, it’s hard work but it’s my life. I've got used to it now because it is interesting. What else can I do? I don’t want to sit at home doing nothing. There’s not much of a choice,” he says. “I started working for the company as an engineer — Etisalat had just 40 lines at that time. I felt it was the right thing to do. It was what I’ve always been interested in. And it’s so exciting right now because the technology is so different. Every day I am learning something new,” he adds.||**||

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