Blue Sky Thinking

With over 200 retail outlets across the Middle East, Axiom Telecom has come a long way from its beginnings in 1997 as a wholesale mobile phone distributor. CommsMEA speaks to Faisal Al Bannai, the CEO who established the company, about moving into consumer retail and further lines of mobile-related business.

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By  Alex Ritman Published  January 30, 2006

|~|Al-Bannai200.jpg|~|Faisal Al Bannai believes that the Saudi Arabian market holds the most promise for the first Axiom MVNO. |~|There are not many retail areas in Dubai, or many other major cities across the Middle East for that matter, where the bright orange façade of an Axiom Telecom store cannot be seen. However, not content with having grown to become the largest retailer of mobile services in the region, Axiom's founder and CEO Faisal Al Bannai has plans to enter the service provider space in due course. “Becoming a mobile virtual network operator (MVNO) would be quite a natural step,” says Al Bannai from the Axiom headquarters in the Dubai World Trade Centre. “We are a retailer, a distributor. We do servicing and after-sales service. We are a value-added-service (VAS) provider. An MVNO agreement, where a service provider utilises another operator's infrastructure rather than rolling out its own, has yet to be launched in the Middle East, but for Al Bannai, it not a matter of if it will happen, but when. “The question is will it be a year or three, this is the timeframe.” He expects the first Axiom MVNO will launch before the end of 2007. “But I hope it is sooner than that.” Axiom can build on its experience from the partner agreement with satellite operator Thuraya, which sees it selling the company's products and services. “We terminate the line, we activate the line, we add services, and my income is really from customers' usage. So that is effectively an MVNO already in the Thuraya business,” explains Al Bannai. In more mature markets such as Europe, the MVNO model has enjoyed a level of success, with major players such as Virgin Mobile and Stelios Haji-Ioannou's expanding Easy empire having established themselves as alternative service providers of note. By the time Virgin Group agreed to acquire T-Mobile's stake in Virgin Mobile at the beginning of 2004, the MVNO had become a serious competitor in the UK, despite operating over the same network. While Axiom originally began operations in the UAE, Al Bannai is doubtful that this will be the breeding ground for his new virtual operator, his eyes looking towards a potentially more attractive opportunity just next door. “I think Saudi is an interesting country.” The tender for Saudi Arabia's third mobile licence will begin this year, with the licence set to be awarded in 2007. “This will add pressure to the current operators to find more innovative ways to grow their subscriber bases, to grow their hold of the market.” With Etisalat's Mobily and Saudi Telecom Company's Al Jawal networks set to fight it out against a new entrant in the kingdom, an MVNO agreement could give either operator the opportunity to provide an extra line of defence. Al Bannai believes there are other opportunities in which an MVNO could be a viable option. “Another (situation) is where an operator realises it doesn't really cover a certain market segment that well, then brings in another to focus on that group,” he suggests. This is an aspect Axiom could capitalise well on, given its bold, colourful branding and advertising, and clear attraction to the youth market, especially with its dedicated Axiom Plus VAS offerings including wallpapers, ringtones and games. New directions include the Axiom Café on Dubai's Sheikh Zayed Road, which opened to the public recently and is an establishment that Al Bannai hopes will create a broader Axiom image and build a closer connection between the company and the public. An old established incumbent that perhaps feels it has lost touch with its youth market could well turn to an MVNO agreement with a company such as Axiom, utilising its customer focused approach to retain subscribers as competition grows. In preparation for this, Al Bannai confirms that he has been talking to the operators on whose network he would like Axiom to piggyback. “Any discussions are still at a very basic stage, they aren't concluded ones. But we definitely have had discussions with a number of players, not just in Saudi. We're trying to make sure it happens sooner rather than later.” Al Bannai believes that each operator looking for an MVNO to utilise its excess capacity will have a different reasoning for the agreement. “MTC will have its own (reason), as will Etisalat and STC,” says Al Bannai. “It's matching their needs with your business model.” A move into Saudi would be boosted by the massive expansion Axiom has made across the kingdom. Since entering Saudi in August 2004, there are now over 100 stores in operation and plans to launch many more. Axiom is now the leading wireless retailer in the kingdom, overtaking the nearest competitor, which has just 10 stores. Axiom currently sells phone cards and services for the local mobile companies in the countries in which it is present, and Al Bannai says this will continue should Axiom introduce its own rival operation. “Obviously we will position our services more strongly to the customer, but a big part of why people come to Axiom is because we are a multi-brand provider. We might push one more than the other, we might strategically align one better than another, but part of the value is that you get the choice.” Within the shops themselves, the increased capabilities of mobile devices on offer and the launch of increasingly sophisticated 2.5G and 3G services by various regional operators has meant that the knowledge of in-store staff has had to improve, an issue that Al Bannai has strived to address. “This was part of how we evolved as an operation. When we were a five-showroom company, it was much easier to make sure staff was trained. When you're talking about hundreds of shops spread across several countries, then the need to establish a fully-fledged training academy becomes necessary.” Axiom set up a training academy with a regional training manager, charged with his own trainers. Every showroom must go through an induction programme, covering basic selling techniques, customer handling and basic FAQs. “If someone asks about Etisalat, for example, you want one answer,” says Al Bannai. Later on in their induction Axiom employees have more advanced training. “We try to ensure that our staff are definitely higher in terms of capability than the market average. We try to make sure the technical knowledge is quite high. It's part of our unique selling proposition.” Outside of the stores, Al Bannai has been building up a significant management team, including a COO from Telstra Australia, a logistic head from Gillette and a CRM head from UK-based Carphone Warehouse, a similar company to Axiom with its own MVNO operation, and one Al Bannai says he much admires. When looking at the service provided by Etisalat in the UAE, Al Bannai is diplomatic. “For a monopoly operator, they are doing fairly well. Are there opportunities to do things better? For sure. If I compare Etisalat to other monopoly operators, it has done reasonably.” But when the UAE's second operator arrives, predicted for mid-2006, Al Bannai believes the landscape will change dramatically. “Then we start having real competition in terms of grabbing the customer.” Al Bannai admits that Axiom is in discussion with the new operator to sell its services, and that a deal should be struck by the time it launches. In fact, the new operator is widely tipped to come under management control of Tecom Investments, part of Dubai Holding, which in December last year snapped up a 40% stake in Axiom for an undisclosed sum. With a massive consumer presence in the Middle East region, and with Axiom branching out into catering with its new café, some might suggest that Al Bannai is looking to emulate Virgin Group, perhaps with himself as the Middle East's very own Richard Branson figure. Indeed, the plans to launch an MVNO follow very much in Branson's footsteps. The British entrepreneur continues to scour new markets, so could we start seeing Axiom soft drinks, Axiom fitness centres or even Axiom transportation services? “Currently I think I have my plate full with telecommunications. And I think with the new partnership with Dubai Holding, if we had 10 opportunities before, now we have 100, so I think that will keep us busy for a while.” But once some of these opportunities are realised, he suggests that new things could appear on the horizon. “We'll see what happens after that.”||**||

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