Breaking the monopoly

The UAE's second network operator has come a long way since its launch last year. And with plans to move du beyond second-player status, CEO Osman Sultan discusses his ambitions for the company.

  • E-Mail
By  Administrator Published  December 2, 2007

As the man charged with setting up du, the UAE's second telecom operator, CEO Osman Sultan admits he has "a lot on his plate". And by anybody's standards, the task of establishing, from scratch, a credible rival to a telecom operator with more than 30 years in the game is no mean feat.

But for Sultan, setting up a company is nothing new. Back in 1998, he was instrumental in establishing Mobinil, Egypt's first mobile operator, and spent the next few years developing the company into one the region's most successful GSM operators. Despite this, Sultan sees more differences than similarities between his role at Mobinil and his remit at du.

"Mobinil was in a totally different market - one of largest but least penetrated markets, and also one of the most challenging in terms of economic power at that time," Sultan says. "I moved to the UAE, one of the most penetrated and most developed markets, and one of the strongest in terms of purchasing power. Mobinil was mobile only, while du is an integrated operator, but there is a lot to be taken from this great experience that I have in order to take du to the next level."

I moved to the UAE, one of the most penetrated and most developed markets, and one of the strongest in terms of purchasing power.

Despite the UAE mobile market being saturated, du has managed to build up an impressive client base. The company announced that it had gained some 882,000 active subscribers by the end of the third quarter of 2007, a figure that compared with the 6.2 million posted by Etisalat.

And while there has been criticism that there is no fixed definition of the term "active subscriber" in the UAE, Sultan insists that the figures add up and indicate that du is developing into a credible competitor to Etisalat.

In its third quarter results, du said it had quadrupled its revenue as mobile phone customers grew by almost 60% and it sold more fixed-line telephones.

The company also said it had made net loss of AED241.94 million (US$65.88 million) in its second full quarter as a mobile phone provider, although this was significantly smaller than the AED346 million loss forecast of MacSharaf Securities, in a recent Reuters net profit survey.

"We have always indicated, including in our pre-IPO report, that profitability is expected within three years after starting operations, taking us until the end of 2009," Sultan says.

"We believe that we should be challenging this timescale ourselves, but it is premature for me to say. Our results were better than analysts had been forecasting and the interesting thing is that they were better in two correlated dimensions; one is subscriber numbers - we had posted 880,000 customers at the end of September and we are now announcing that we have reached one million subscribers."

He added that the level of activity within these customers is also high, and this was translated into the revenue that exceeded analysts' expectations.

"The level of use from these customers is very high. Within any market you have users and active users. Somewhere in the region of more than 85% of our subscribers are actual active customers, so we are pleased with levels of activity," Sultan adds.

And despite some analysts having questioned the way Etisalat and du calculate their of ‘active subscriber' bases, given the lack of a standard definition from the TRA, Sultan is open on the subject. "Many operators have different definitions of active users. A lot of operators use the 90-day definition and this is what we use internally, which is to indicate the customers that have made an outgoing billable ‘event' in the last 90 days," he says.

"We are looking forward to having a standard definition of this by the TRA. This will allow the analysts, the community and the shareholders to eventually be able to make comparisons and compare our number of subscribers to our competitors."

But managing the level of consumer interest du has developed so far has also brought its share of challenges. Indeed, while most companies evolve with a growing market, du had to establish a large company capable of handling thousands of enquiries in a matter of weeks.

"The overwhelming response we had during the very beginning - the first few weeks and months - was a very good learning curve," Sultan says. "It was a very good experience to go into the storm and learn how to improve quickly. Like any beginning launch of a service, you have to fine-tune the service.

"The first week after we opened the subscription, we had more than a quarter of a million calls into our call centre, so gearing our processes, capacity and level of knowledge of our people was really something we had to do in an accelerated mode. Today we are very pleased because every day we can see an improvement. We have benchmarks both in the quality of service offered and in the operational efficiency."

To maintain this momentum, du is now focusing on the rollout of its network, particularly by increasing its number of base stations. The company has already doubled its base stations across the UAE since February. And while du might be a new company, Sultan is adamant that this should offer no excuse for complacency.

"We know that expectations were and still are very high and it is only normal that customers will compare our network, which has been built over a year, to a network that has been built over more than 30 years. We know that this is a challenge and we want to take every measure and to do whatever it takes to be up to this challenge and to make sure customers feel confident with our network," he adds.

Add a Comment

Your display name This field is mandatory

Your e-mail address This field is mandatory (Your e-mail address won't be published)

Security code