Executives at the recent Telecoms World event in Dubai discussed strategies and new models to address the changing telecoms landscape.
Bahjat El-Darwiche, Partner, Booze & Co (moderator)
Ross Cormack, CEO, Nawras
Daniel Ritz, chief strategy officer, Etisalat Group
Osman Sultan, CEO, Du
Hatem Dowidar, CEO, Vodafone Egypt
Rashid Abdulla, CEO, Batelco Bahrain
Hisham Akbar, deputy CEO and COO, Zain Group
Stefan Sieber, VP, MEA, Orga Systems
Moderator: With the commoditisation of traditional telco revenues and a shift in value to OTT players, how do operators fit into the equation?
Hatem Dowidar: The biggest change is to create value especially in our region. As we move from voice services to data, the challenge is to get the people to use these services together, to get them to pay for them. There has to be the right content, and then the way to deliver it.
If we look at the emerging Arab world, still we see a huge increase in smart phone penetration. Smartphone penetration in Egypt is now over 15% - it almost doubled in a year - and we find people looking for applications. We are seeing some of the apps that are relevant go through the roof. If anyone has been in Cairo recently, they will know traffic is the biggest challenge. A user-generated traffic warnings app has 200,000 people using it on their smartphones. In addition they have taken the content of this app into USSD (unstructured supplementary service data), so people can request traffic warnings wherever they are.
Rashid Abdulla: I think we know which way the wind is blowing. We agree strategic options open to us are really not clear. Do we go with the wind and be blown with OTTs […] do we have a choice, these are hard questions. The days of 40% EBITDA are gone. We cannot convince shareholders in the region that we can compete with OTTs and claim significant EBITDAs. I think it is not going to be that much.
The challenge for us will be how we can slow down the decline in our financial performance. How shall we really convince our shareholders that if we don’t ride with the wind in terms of taking on the OTTs that our financial performance could be a lot worse. With OTT on one side and smart device manufacturers on the other side, we have to coordinate better and yes the investment in mobile broadband infrastructure is a must if we want to survive, and investing in fibre is a must. We know that this is going to take time to get return on, hoping that the machine-to-machine and smart TV services will pick up.
Daniel Ritz: If you look at the collective cash flow generation of the OTTs, quite frankly, I’d rather be a telecom operator than an OTT. They come and they go. Telecom operators are at the heart of enabling digital economies with broadband infrastructure, whether that is fibre, LTE, or 3G. It is here to stay until it is superseded.
There are not too many players out there who can deploy, and here I beg to differ on the question of broadband access as a human right. This is way too dynamic for governments really to be investing in. They don’t have the money to invest continually and I don’t believe governments stepping in is the answer.
On the OTT space, my view is that this is important to us as operators but mainly to be relevant to our customers and to reduce churn. Let’s be optimistic because we have great assets and we have natural demand for our services.
Ross Cormack: At the moment we have huge EBITDA and low valuation. Valuation is as much as anything else based on innovation, progress, on action in markets, so working with OTTs can possibly give the best outcome for everyone. We heard fantastic set of visions this morning and I really believe those visions as well, and if we work collaboratively with the OTT businesses we have the opportunity to do the best for everyone concerned.
Customers are the people who should and do drive our industry and that has already been said this morning. But customers want all the services and many more. If we can work effectively with OTTs, partnering and providing optimal access to our services where they are operating, and for others a more general service, we will start to deliver services that they absolutely want.