Data force

Mobily has put broadband at the centre of its strategy to tap Saudi Arabia’s potential.

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Data force Al Kaf is keen to see Mobily expand in the enterprise space (ITP Images)
By  Roger Field Published  April 8, 2011

If there is one thing that preoccupies the mind of Khalid Al Kaf, CEO and managing director of Saudi Arabian mobile operator Mobily, it is broadband. It is not just that the operator has spent the past year upgrading its mobile broadband networks and running LTE trials, but also that Al Kaf has placed broadband at the centre of the company’s growth strategy.

Indeed, for Al Kaf, Mobily’s future lies in the company being able to expand its lead in the wireless data market. To this end, the company has started to realign its operations around a three-pronged strategy labeled GED, which stands for ‘growth, efficiency and differentiation.’

And it is also in the mobile broadband space that Al Kaf thinks the company will be able to best differentiate its offering. “In the late 1990s, they said the market would shift from voice to data communications. That shift has happened, and today that trend is repeating itself aggressively in the mobile market but at a much faster rate,” Al Kaf says. “We see our future in data and have positioned ourselves around data for the coming five years.

To pave the way for this transformation, Mobily has made some significant investments in its infrastructure, including the deployment of its nationwide HSPA+ network and the expansion of WiMAX infrastructure. Last year Mobily awarded vendors with a $213 million contract for a Kingdom-wide capacity expansion of its mobile broadband network.

“We are rolling out an HSPA+ upgrade across our network. We already cover 587 cities, regions and governorates, representing 92% of all populated areas with our mobile broadband network,” Al Kaf says.

The telco already appears to be making inroads with its strategy, after more than doubling its high volume mobile broadband subscriber base, and closing 2010 with 2.3 million customers.

“We have now captured a market share of 80% of all wireless connectivity in the Kingdom and a 52% market share of the overall broadband market in the country,” Al Kaf says.

He adds that Saudi Arabia’s broadband penetration in 2010 stood at about 16%, according to a report from the country’s telecom regulator, the CITC. “What we want to achieve in the long run is to contribute to taking that number to a much more meaningful level, as we believe that any increase in telecom service adoption has a significant impact on the overall economy. And as we are part of this economy, we want to see it grow,” he adds.

Despite the investments that Mobily has made in broadband during the past year and the strong customer uptake it has experienced, it is clear that the growth so far is just the tip of the iceberg. Indeed, last year just 18% of Mobily’s revenues came from data services, indicating that huge growth potential remains. “Feeding that growth are a number of factors. You have a significantly young population that embraces new technologies and integrates them into their lives quickly,” Al Kaf says.

Revenue creation

After investing heavily in its networks, Al Kaf says that Mobily intends to generate revenues by creating “new customer experiences” across a broad base of customers. “Using this network, we have shifted the trend for mobile data from a niche, necessity service and allowed it to become an essential mainstream service […] affordable to the widest segment possible.

“That trend has been based mostly on providing a very basic service, connectivity using a dongle or a router,” Al Kaf says.

“Over the past year and a half, we have created new usage scenarios by introducing new customer experiences. We were the first operator to promote smart phones aggressively in the Kingdom.

“To give you an idea of how this impacts our revenue base, smart phone users typically spend double that of regular customers for the simple fact that they not only use voice services, but also data services,” he adds.

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