Virtual doctor

As pan-Gulf operator Hits Telecom prepares to list in Kuwait, Claire Ferris-Lay talks to the chairman of the Saudi telco to find out why the doctor-turned-businessman is looking to expand beyond the region.

Dr Sultan Bahabri is not your average physician. After founding the King Faisal Jeddah Hospital in Saudi Arabia, he turned his attention to the telecoms business and became chairman of the Hits Telecom Group in 2001.

Like medicine, Bahabri believes the telecoms industry has the power to change people's lives - and nowhere more so than in Africa where his group is hoping to expand its network in an attempt to gain as many as six million subscribers by 2010.

"The mobile phone is the most powerful invention in the last 50 years and it continues to evolve," he tells Arabian Business.

Hits Telecom hopes to raise as much US$300m through a share sale on the Kuwait Stock Exchange which will allow it to boost mobile penetration in Africa.

The Kuwait listing is being arranged with co-investor Al Madina Company for Investment, while Bahabri reveals that the company is also considering listing its shares in Dubai later this year.

"By participating in the Kuwait stock exchange, we believe we can gain the benefit of trading our shares in a well regulated, sophisticated and respected Middle East market," says Bahabri.

Hits Telecom was established in Saudi Arabia but will move its operations to Kuwait following the share listing. Its management offices will remain in Bahrain.

By 2010 Hits aims to have between 4-6 million subscribers in 10 countries and where better to look for expanding the company abroad than Africa, says Bahabri. "The African market is going to be the future, even for European operators.

"I think Middle East operators have taken a bold move [by expanding into these countries] as just three years ago the African market was considered risky and unpredictable," says Bahabri.

---

"The mobile phone is a very powerful tool in Africa. It is much more powerful than in other markets because you are connecting one billion people to each other," he adds.

Having started its operations outside of the Middle East just 18 months ago the company is now 100% owner of Hits Yemen Distribution, Hits Egypt Distribution and its African subsidiary, Hits Africa.

Hits Africa is a major shareholder in a full service network in Liberia, and it is currently building new-generation communications networks in Tanzania and the Democratic Republic of Congo.

It has also just been selected as the operator of the second national network in Equatorial Guinea.

Not only does Africa provide a great deal of opportunity for Hits to expand, it is also, along with a number of other Middle East operators, being actively encouraged to do so by the African governments.

"I think GCC investments are welcome because they are so close to African markets; they understand the culture well and they have a history dating back thousands of years.

Hits also has ambitions to conquer markets less close to home with Hits in Latin America due to launch in July.

Like Africa, Latin America offers a great deal of opportunity for the company. Subscriber growth in the region exceeds 350 million and has grown 30% year on year for the past five years. 150 million people are expected to subscribe by 2012 and penetration rates are just 60% in the major markets of Brazil, Mexico, Columbia and Venezuela.

With already well-established telcos, Bahabri doesn't deny that cracking the Latin America markets may be more difficult than in Africa. "Traditionally those markets have very strong operators that have been in existence [for some time] but there are opportunities.

Does Bahabri want Hits to become the largest operator in the world? Being ever the good doctor, he would rather offer his customers a difference than aim for global dominance he claims.

We don't want to be the biggest, in terms of numbers, revenues and profits. We would prefer to be remembered as the people who have changed the way mobiles are used today.