With the bold ambition to transform itself into a well-rounded ICT solutions provider, UAE telco, du, is increasing its investment by 18% in 2017 relative to 2016. Chief commercial officer, Fahad Al Hassawi on how differential experience is giving du the competitive edge.
In 2017 du is all set to invest in order to broaden its horizons and continue transitioning from a connectivity provider to a ICT solutions provider. This year the operator is embarking on an 18% increase in its investment compared to 2016. This investment will be directed towards enhancing network and infrastructure. Beyond financial investments, du is investing in its human capital and equipping them with skill-sets since the telco believes this is critical to steer the company towards new business avenues and growth areas.
CommsMEA had the chance to speak to Fahad Al Hassawi, the CCO at du, a few days after his return from the Mobile World Congress 2017 in Barcelona. Upon being asked about the most interesting aspects of the MWC 2017, Al Hassawi highlights the new digital and networking capabilities with 5G round the corner, and the various new use cases and unconventional revenue streams these will unleash for operators worldwide. “Everyone needs to change their thinking from just selling data and minutes to selling other types of services,” he says.
du completed the year 2016 with a 3.2% increase in its annual revenues and a 12% increase in mobile subscribers. However, mobile ARPU decreased 12.5% YoY relative to 2015. While net profit before royalty remained flat, the net profits after royalty decreased 9.7%. Explaining the declining ARPUs, Al Hassawi says this is an industry wide phenomenon, adding: “At times it’s a healthy sign of penetration; the more you penetrate into the market, the deeper you go into different sizes of wallets, the ARPU figures tend to change.”
In terms of profits, while several key indicators showed improvement in 2016, a near 10% rise in the amount of royalty paid to the government meant net profit for the telco was lower compared with the previous year. Al Hassawi highlights that in spite of the challenges, du delivered a healthy bottom line for the shareholders.
Al Hassawi adds that in spite of being a market with just two telcos, competition has always persisted. In the attempt to win a larger share of customers’ wallets, operators have resorted to price reduction several times and that has eaten into the ARPU numbers as well.
So, how have the economic uncertainties affected du? “Unfortunately we aren’t completely immune to the situation of the market, but I think we did a fairly good job as an industry in 2016,” says Al Hassawi. “But we still see growth on top line which means the market is still healthy.”
Going forward, as the role of telcos in the ecosystem changes, they have the potential of becoming bigger players in the ecosystem. With a lot at stake, what will be the main revenue generators for du? Al Hassawi says that the core business is still strong and growing, however the growth rate isn’t enough as a consequence of which innovation is all the more necessary to devise newer revenue streams.
Every operator worldwide is finding new sources of revenue, at times from entirely new digital streams, and at times from something nearer to the core business. Bringing in an interesting proposition, Al Hassawi says once service providers understand in more detail the exact needs and preferences of the customers, it might be possible to provide a specially tailor made experience to them for an extra premium in price they pay for the services. Hotels have been traditionally resorting to this model; being yet another service industry, it might not be long before the telecom industry adopts a similar model. But how feasible will that be? Rafael Domane, senior partner at Peppers & Rogers Group says it’s primarily centred around the perception; if customers see distinct value in the service, they might be convinced to pay an extra premium for that. What’s needed is a better understanding of the customer behaviour, innovative customised value propositions and the right execution model to implement it in practice.
du has ambitious plans to become an ICT provider and has a whole host of revenue streams that it is currently targeting. Al Hassawi says: “We continue to innovate and strengthen our mobile services which currently contribute to 33% of our revenues. As well as enhancing our unconventional revenue opportunities which currently represent 2%, this year we will focus on further developing our enterprise mobility, managed and cloud services and push further into the digital space, increasing opportunities around smart homes and smart cities.”
Talking of smart cities, or for that instance, internet of things or virtual reality and connected things, one tends to wonder if all this future planning takes the attention away from the present day challenges. Al Hassawi says: “I don’t see us thinking of the future distracting us from the present challenges. I think they complement each other and this is the evolution of the industry itself.”
Telecommunications as an industry has invested heavily in capex. Even looking at just the UAE market, it can be seen that both du and Etisalat have been investing heavily in networks, trying to make it faster, available everywhere, and they have done far better than many other operators in developed countries of Europe and America. Al Hassawi says that going forward, the operators still need to continue to invest in networks to make them capable of carrying much more data traffic to support all different use cases that could come up from going smart and digital.