There’s a new Group CEO in place at Etisalat. Ahmad Julfar outlines his plans for the operator
There’s a new Group CEO in place at Etisalat. Ahmad Julfar outlines his plans for the operator.
Ahmad Julfar, who was appointed to the newly created role of Group CEO of Etisalat in August, relishes a challenge. And this is just as well given Etisalat’s scale. Indeed, the telco has a customer base of about 140 million subscribers spread across 18 countries in the Middle East, Africa and Asia covering a total population of over 2.3 billion people, having transformed itself from a local operator to global operator in just seven years.
“You have to deal with different challenges in different markets differently, and all markets have challenges,” Julfar says. “This is what makes telecoms very interesting and a fun industry to be in.”
Etisalat grew rapidly through the acquisition of new licences and existing operations since around 2004. One of the company’s first forays abroad was its acquisition of a licence to launch mobile services in Saudi Arabia, under the brand Mobily. The company has since gained a presence in 11 countries in Africa, as well as operations in Pakistan, Afghanistan, Sri Lanka, and Indonesia.
While some of Etisalat’s international operations have proved challenging, particularly in Sub-Saharan Africa, Julfar is adamant that the company has wrested control of the more difficult operations.
“We have already started to see some turnaround in our African operations and I think next year we will be seeing very good results in Africa,” he says.
“East, West and Central Africa have their own specific challenges and the people on the ground know what is most suitable for each market.”
In its first half results for 2011, Etisalat reported that revenues from its international operations reached AED3.39 billion ($923 million), a rise of 17% compared to the same period last year. This meant that international revenues accounted for some 25% of the company’s overall revenues.
One way in which Etisalat hopes to strengthen some of its emerging market operations is by passive infrastructure sharing.
“In Nigeria, Tanzania and Ivory Coast we have started tower sharing. This will reduce our costs without sacrificing anything on the expansion or distribution,” Julfar says. “Next year I think will be an excellent year for our African operation.”
He adds that in Sri Lanka, Etisalat is also in discussions with its rivals regarding infrastructure sharing agreements. Etisalat now has “the best 3G roll out” in Sri Lanka. According to Julfar, one of the other operators is interested in sharing some parts of the passive infrastructure. “I put the teams together, our CEOs with their CEOs, to talk about what can be shared,” he says.
Julfar also insists that the international operations benefit from being part of a bigger group through lower procurement costs and also through shared expertise. “We are very much engaged with them. Today, I have a team in Tanzania, Nigeria, Ivory Coast, India, Pakistan and Sri Lanka. They go for days or months depending on the purpose of the visit,” Julfar says.
While Etisalat still appears open to the idea of further expansion, should the right opportunity arise, Julfar says that he intends to focus mainly on generating greater value from the firm’s existing assets. “Our strategy going forward is really to focus on our existing portfolio that we have while keeping an eye into strong expansion opportunities if they arise. We will continue to create value for the communities and countries we serve and also create value and a return for our shareholders at the same time, so we have to do a balance between the two,” Julfar says.
There are plenty of opportunities for growth in most of Etisalat’s international markets, where mobile penetration rates remain relatively low.
“In these 18 market we operate in, penetration is not so high in most of the markets, so there is huge opportunity for us to grow in the normal mobile business and value added services.
Beyond regular mobile services, Julfar also sees opportunities to grow mobile data, internet, and enterprise services across its footprint. But he sees mobile broadband in particular as the real “killer” service and application over the coming five years, particularly in emerging markets that lack decent fixed line infrastructure.
Referring to mobile broadband in emerging markets, Julfar says: “People have different perspectives. Some people say these people can barely afford to eat or drink, how can they afford to pay for mobile broadband? But look at the economic impact of it. Mobile data can bring prosperity to these communities, to farmers and small traders, so they can have their products online, do marketing, sales, and money transfers. They don’t need anything except the mobile. Once they see those benefits I think it will bring prosperity, especially to Africa.”
Despite a number of Etisalat’s operations, including Saudi Arabia and the UAE, facing mobile penetration rates of more than 100%, Julfar still sees potential for growth in these markets. “When we reached 100% penetration here in the UAE, everyone thought: ‘the UAE is fully saturated, and if anything is 100% saturated then it means there is no room to grow’. But we saw the UAE market has grown from 100% saturation to over 200% saturation, so we don’t see that 100% penetration means there is no room to grow in this market.
“There is room to grow in all the markets beyond 100% penetration, mainly because in this region the population is very young and in many of the countries the turnover of the population is also very high. So there is room for growth whenever you have these trends.”
In terms of raising ARPU, Julfar points to services such as mobile data including 3G and LTE, fixed internet, and other value added services. “We have a huge opportunity in this area and the market is still under developed in that area,” he says.