Mr mobile

Saudi Arabia-based i2 has grown into the region's largest mobile phone provider with 1,300 employees and 350 stores across multiple countries, while its acquisition of CompuME UAE earlier this year has aided its foray into the traditional IT retail market. Abdul Hameed Al Sunaid, CEO at i2, outlines where the Nokia-focused outfit's loyalties rest going forward and gives his response to would-be suitors that might have their eye on the company.

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By  Dawinderpal Sahota Published  November 14, 2007

Saudi Arabia-based i2 has grown into the region's largest mobile phone provider with 1,300 employees and 350 stores across multiple countries, while its acquisition of CompuME UAE earlier this year has aided its foray into the traditional IT retail market. Abdul Hameed Al Sunaid, CEO at i2, outlines where the Nokia-focused outfit's loyalties rest going forward and gives his response to would-be suitors that might have their eye on the company.

How has business been going this year and what trends are shaping demand in the market?

Business is going very well and we're seeing strong growth; this year we're growing between 80% to 100%. In terms of distribution I think the market is getting more segmented and there's more of a focus on retail. In terms of consumer demand, I would say it goes with the trend. The consumer is not so picky, they don't go into the stores and cite the specifications they need, they go with the brand that they like and Nokia is still the preferred brand with the biggest market share in the region.

Normally we look to an opportunity that is going to add value to us to continue building the brand and the growth of the company. Today, i2 does not need a partner to offer it financial support.

What has the acquisition of CompuME earlier this year done for i2's business and how does it fit into your long-term strategy?

Electronics and IT is a very strong growing business and CompuME has a very good brand in the UAE in the IT business. We acquired CompuMe in the UAE, and we want to take the success story of CompuME into the region. We have plans to expand the operations into other markets in the region under the i2 brand. We don't own the brand of CompuMe, we acquired the operation in the UAE, which is the franchise - but there are still existing CompuMEs in Saudi Arabia, Bahrain and Egypt.

i2 also has affiliate companies in locations such as the UK and Africa. How serious is the company about developing a portfolio outside the Middle East and what are the major challenges involved in entering new markets?

Our operation in the UK is nothing new, it's an old subsidiary that we have and the business is focused on trading within Europe. But in Africa, in markets like Senegal, Ivory Coast, Ghana and Angola, it's starting to develop. Africa will have a lot of growth but the market still needs a lot of development in terms of infrastructure, retail and customer care, but if there's no risk there's no gain. We have to take risks when going to these markets and become one of the first-comers to grab the market share. In Africa, most of the handsets are smuggled to avoid the high customs duty so there's no warranty and they don't have the after-sales service. And in a lot of cases they sell them on the street in many countries. So we're trying to develop this to educate the consumer about the warranties and after-sales service.

i2 positions itself as both a distributor and retailer. How viable is it for you to persist with such a blended model when the market is maturing so quickly?

They are both separate teams, our retail and distribution, so we don't see any problems running this model under one brand. The retail aspect gives us a very strong presence and brand through the level of customer care the consumer can see. It's really held our distribution side because of the image of our retail to customers - companies really see it as a positive.

There is a perception of i2 as a very Nokia-focused brand. Is this how the company wishes to be seen going forward or do you intend to change that?

We're very clear - we're Nokia focused. The benefit is that we grow with Nokia into different territories and that is the main focus; there is sort of an alliance together in growing. And I think Nokia is doing a lot on this by deploying their field forces and merchandising company, running the Nokia academy and developing support.

Technology retailers in the region continue to complain that rising rent prices and falling average selling prices are making their life incredibly difficult. How is i2 overcoming these challenges?

For our sector, yes, the cost of living and operating in the region is high. But if you take our growth in our business - it's higher - so I think we're okay. All the indicators suggest the region will continue to grow at a double-digit rate every year. There are plenty of young people who are going to be converted to users in the future. The growth in population is high. The prices of handsets and operator charges are coming down due to economies of scale so penetration will go up. I don't think the growth of the market will slow down any time soon, and by the time this market reaches saturation it will be huge. We will be looking at a region with over 400 million subscribers in the Middle East and North Africa.

You recently launched your first art café and digital store in Dubai. Does that move suggest that to be successful you now need to be more creative than simply opening a traditional retail boutique?

We've been ahead of the competition by continuing to offer added value packages to consumers and we're going to continue to create value-added offerings. But I think the consumer in the Middle East appreciates good service and good advice on a retail level, and they don't mind paying premium prices for it. Definitely one of our core values is to be creative and we're trying to make an impression on the consumer, so the café is a way of striking a chord with them. We launched the first one in Riyadh over two years ago, the second one is now in the UAE.

Will you launch this concept anywhere else in the region?

We're testing this concept amongst consumers where the mobile phone surfaces while they're having coffee. At the same time, we're launching the i2 digital store - which is more than just mobile phones - and this has so far been successful in the UAE and we will continue rolling it out, and this is the direction we're taking it. It's not something we're rolling out everywhere, we're now looking at Egypt, Saudi, Kuwait, Iran and maybe Jordan.

i2 is regarded as a forward-thinking retailer, but as yet you haven't developed an online presence. If Middle East trends are as closely linked to European and global patterns as we are led to believe then surely it is only a matter of time before there is demand from consumers to purchase technology products online.

We launched our portal for online shopping over three years ago, but there are still problems with the regulations of online purchasing because it has been hit by so many frauds. We therefore had to switch off the portal for online purchasing. Then at the beginning of this year we launched i2 TV, which is a free-to-air TV station specialising in mobile phones and the primary goal here is to offer TV shopping for mobile phones. But it's a mix, it doesn't just have 24-hour shopping - it has information, entertainment and shopping all at the same time.

There will be plenty of retail groups and investors from outside the region looking at the rate of growth in the Middle East and coming to the conclusion that it represents a huge investment opportunity. How much interest has i2 received from such groups and at what stage would you entertain the possibility of selling the company?

We have somebody knocking on our door every week, either they're equity investors or operators. Normally we look to an opportunity that is going to add value to us to continue building the brand and the growth of the company. Today, i2 does not need a partner to offer it financial support.

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