Du has come a long way since its launch as the UAE’s second operator in 2007. To say that the operator’s growth since then has been strong would be an understatement, and while it was admittedly growing from a low base in the early years, analysts have been surprised by its ability to continue a strong pace of growth even as it approaches a market share of 50% in mobile.
In the first quarter of 2013, Du posted a 40.5% rise in profit, beating analysts’ estimates as lower taxes, reduced operating costs and a rising customer base added to the bottom line. The firm made a net profit of AED467.9 million ($127.38m) in the three months to March 31, up from AED333.13 million in the year-earlier period, while revenues reached AED2.63 billion, compared to AED2.45 billion a year ago.
But as the operator nears a market share of 50%, and with its older rival becoming more innovative in terms of its competitive offering, it is widely expected that Du’s pace of growth will slow. Added to this, the operator also faces the challenge that is common to all of its peers around the world: voice and SMS revenues are declining while profits from mobile broadband are not yet, on average, picking up the slack.
It is in this light that Du sees a major opportunity to develop and grow its enterprise offering. Indeed, the enterprise sector offers a compelling growth story in the UAE, with many multinational companies having selected the country as their base for the wider region and thousands of SMEs present in the country. On top of this, there is a seismic shift in progress in terms of the way companies of all size manage their ICT resources, with infrastructure-as-a-service and cloud computing changing the way companies view communications. Furthermore, advances in fixed and mobile technology, with the deployment of fibre and LTE, is allowing a raft of new types of services to transform most industries, from healthcare to transportation, education and banking, to name just a few.
This is a trend that Hatem Bamatraf, EVP enterprise business commercial at Du, knows well. And since Du recently changed its organisational structure by splitting the company into consumer and enterprise divisions, it has become Bamatraf’s mission to see the enterprise unit reach its full potential.
“The main aim is to grow the enterprise business. We believe that there is a lot of opportunity and potential to grow that business even further. We don’t want to rely on connectivity only as a sort of business,” Bamatraf says. “We want to also provide business solutions and services to enterprise, so this is what we are looking at. Of course, increasing our connectivity space in the mobile and fixed, and driving customer acquisition in the market with new accounts and new enterprises, remains important. In parallel to that we are starting to fuel new revenue streams to enterprise, which is managed services and professional services, and of course the applications and solutions as well.”
The type of solutions that Bamatraf refers to include automation, infrastructure-as-a-service and various cloud-based applications. It also includes various packages and tariffs tailored for enterprise, such as the Office Connect plan, a connectivity package specifically customised for the small to medium-sized business market, which it launched last month.
“We are relying on those kinds of services that will enable new revenue streams, we are focusing on industries that we believe lack a lot of solutions or actually require solutions,” Bamatraf says. “We’re talking about solutions to transform their business, bring mobility to their business and save their operational expenditure, to outsource their IT department and so on. So we are focusing on services to provide those kind of managed services, outsourcing services and solutions to enable those verticals to make their life easier.”
Du is focusing on a number of sectors or verticals that hold particular potential and have specific requirements in terms of enterprise services: government, real estate, construction, hospitality, banking and oil and gas. However, Bamatraf describes the government sector inparticular as “very encouraging”.
“We see a lot of signs of opportunity there, especially the announcement to transform the entire government to be electronic, and now with the recent announcement by His Highness Sheikh Mohammed to be a smart government. This by itself creates a lot of opportunity to move in that direction and to be part of this chain where we should be an enabler for the government to transform, to be more intelligent,” he says.
But across most industries, a common trend is the move towards managed ICT services and cloud-based solutions. In some respects, the benefit of these solutions is a no-brainer. As Bamatraf states, most cloud strategies have an initial focus on cost reduction or improved cost efficiencies, and with about 50% of IT budgets dedicated to infrastructure acquisition and management, IaaS in particular can represent a significant source of savings. “Clouds reduce the cost, pain, and risk of using IT assets,” he says.
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