Hanging on the line

Axiom Telecom has growing pains, CEO Faisal Al Bannai tells David Robinson. But he hopes the firm will develop into a world-class player.

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By  David Robinson Published  August 7, 2005

Hanging on the line|~|3-AXIOM-FEAT-PICS-200.jpg|~||~|AXIOM Telecom chief executive officer Faisal Al Bannai has a lurking fear. The mobile phone retailer he founded may be one of the fastest-growing companies in the region; set to more than double in size by the end of next year. But one problem keeps him awake at night because it threatens to undermine all his firm’s grand plans for the future. “The biggest threat to our growth is not being able to find the right staff,” the 32-year-old entrepreneur admits. “Hiring staff locally has been such a nightmare.” What Axiom needs, Al Bannai says, is “management and staff capable of transforming a local company operating in a local market to a company that can compete at a world-class standard”. And finding such people — whether they are expatriates or locals — has proved an exhausting task. “In Dubai, the calibre of staff we are looking for don’t tend to move around too easily,” he laments. Meanwhile, getting key people to move to Saudi Arabia — the kingdom is the firm’s fastest growing market, making up a quarter of its total business — has proven enormously difficult. “If anything is going to slow down our plans [for the future] it’s [these manpower difficulties],” he says pensively. If there are any good headhunting firms out there, give this man a call. Al Bannai’s office, with its ornaments and heavy wooden furniture, provides a rather down-to-earth backdrop to the up-to-the-minute, tech-savvy industry that drives his business. It’s a business that’s been growing at breakneck speed. Al Bannai started Axiom Telecom with just four employees back in 1997; today it is one of the largest distributors of wireless products — mobiles, gadgets, wireless devices and applications — in the region, employing in excess of 700 people in more than 200 branches in Saudi Arabia, Bahrain, Oman, Kuwait and the UAE. On the back of such stellar growth, Al Bannai has quickly established himself as one of the region’s leading young entrepreneurs, and this year received the Lifetime Achievement Award from the Mohammed Bin Rashid Establishment for Young Business Leaders. Axiom’s turnover last year topped US$680 million — compared with US$11 million in its first year of operations. This year, Al Bannai reckons the company’s turnover could touch US$1 billion. Not bad for a venture started by accident. “Getting involved in the mobile business was actually a coincidence,” he says. His original plan was to work in the software industry. With three associates, Al Bannai set up a software firm, which, he admits, didn’t exactly set the world on fire. But it was during this time he had an idea for an application in the telecommunications field. “The software business wasn’t going anywhere. [But what we realised was that] the mobile business was far more interesting.” Back in the late 1990s, mobile retailing was split between small traders who knew the business but lacked capital and reach; and big corporations that had deep pockets and wide distribution, but no real knowledge of the mobile industry. “The corporations could strategise, but they didn’t understand the mobile business. They often classified mobiles under electronics, but they’re not really part of the electronics business. Meanwhile, the [smaller] traders were never going to be anything [significant],” he explains. “[Axiom] entered from the trade side, but had a corporate structure and strategies to develop the business — and the ability to move fast and react to the market.” It had to. In a few short years the mobile phone industry has evolved at a lightening pace. The result is that today, nothing short of a mini-revolution is taking place, Al Bannai reckons. “The most interesting thing that’s happening at the moment is this convergence between the mobile, camera, music, and PC industry. They are all converging in one place and the mobile phone makers are leading this race.” This convergence is happening so fast that the distinction between, for example, a phone and a camera is becoming ever more blurred. “Today’s mobile cameras are up to two mega pixels — when it goes to three mega pixels or four mega pixels, consumers won’t be buying digital cameras anymore. “You can’t see the difference between four mega pixels and eight mega pixels unless you blow the photo up to the size of a wall. So slowly there will be a drop in the number of people buying digital cameras,” Al Bannai adds. The same applies to mobile phones with digital music applications. In time, fewer and fewer people will be buying MP3s or iPods because the equivalent technology will already be embedded in their phones. “An era will be come when everything is here,” he says picking up his mobile phone and looking at it thoughtfully. “Your banking, your music, even your TV.” Moreover, the last few years have seen the mobile phone go from a necessary communication device to something of a fashion item. “[The mobile] has become another accessory, like your pen or your watch,” Al Bannai explains. At every stage — from manufacturing and marketing through to retailing — the mobile industry is now incredibly brand conscious. To a large proportion of consumers, brand profile is their primary consideration. The dominance of a handful of key players — Nokia, Sony Ericsson, Motorola, Siemens, Samsung, LG, Palm and i-mate — acts like a barrier to entry for other firms entering the market. There may be space for the odd niche player, for example Swatch or Apple, to come in and offer something different. But otherwise the global market looks increasingly impenetrable for newcomers. “Ultimately, I don’t care which brand people buy,” Al Bannai says. “From day one we needed to have a reason why a customer would go and buy not just a Sony Ericsson phone — but an Axiom Sony Ericsson phone!” Since the beginning, the company’s emphasis has been on building its brand. “There has to be some reason a customer buys from us? After all, whatever we sell is available in all the other shops. We can never take it for granted that people will buy from us.” Axiom’s sales are supported by warranty protection, theft insurance and price protection guarantees. Meanwhile, subsidiary AxoimPlus offers mobile users a wide variety of services like wallpapers, picture messages, animated MMS, Java games, and SMS alert services. “This is not supposed to be a mobile shop. This is supposed to be a wireless communications shop for mobiles, wireless applications, modems, multi-media products or whatever else,” he continues. It’s a tactic that seems to be working. The company’s spectacular growth has led to inevitable talk that a public listing may be just on the horizon. It’s a possibility that Al Bannai does little to deny. “As a company we are ready to go public — it’s just a case of deciding when would be the best time to go,” he says. Should the UAE-based opt for an IPO in the next year or so, it would be faced with an uncommon dilemma. Which of the country’s three stock markets — the Dubai Financial Market, the Abu Dhabi Stock Exchange and the soon-to-be-opened Dubai International Financial Centre — to plump for. “They all have pluses and minuses,” Al Bannai explains. “The DIFC needs to check some parts of the regulation, because if it allows foreigners to buy in, we have no problem with that, but we need to see how that will affect us going into other GCC markets. “For example, would Saudi Arabia allow a company that’s not fully GCC-owned to operate there? These are questions that we need to consider.” As for the future, Axiom’s main challenge will be meeting the exhaustive expansion plans it has set itself. By the end of next year, the company intends to expand its retail presence in the region to 500 outlets, an increase of 150%. Al Bannai himself seems confident enough. Axiom Telecom has the strategy, the backing and the market all worked out. Everything should be fine — if it can just find the staff. ||**||

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