Growth in adversity

How Etisalat Misr managed to grow its business despite political & economic turmoil
Saleh Al Abdooli was CEO of Etisalat Misr from 2007 to 2012, and is now CEO of Etisalat UAE.
Saleh Al Abdooli was CEO of Etisalat Misr from 2007 to 2012, and is now CEO of Etisalat UAE.

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Etisalat Misr has come a long way since it launched services as Egypt’s third mobile operator back in 2006.

Egypt, with a population of some 82 million – of which about 32% is below the age of 15 – always represented a huge market potential for a third operator.

But in many ways, Etisalat Misr has exceeded expectations for a new entrant. Indeed, the telco has already earned the accolade of being one of the top-three operations within Etisalat Group, next to Etisalat UAE and Mobily, and is widely viewed as the fastest growing operator in the country.

The telco is understood to have garnered a significant market share in the mobile sector and the country’s broadband market, which it cornered through a series of carefully planned acquisitions at the end of 2008.

This growth to date is perhaps not too surprising given the investment that Etisalat Misr made in Egypt in its first few years of operation and the fact that the telco was the first in Egypt to launch 3G services in May 2007.

In the past year, despite facing difficulties stemming from the revolution that swept the country starting in January 2011, Etisalat Misr has managed to maintain solid growth.

Indeed, CEO Saleh Abdullah Al Abdooli said that the telco managed to acquire the vast majority of new subscribers in Egypt last year. “2011 was a very challenging year for the market players, with the uprising in Egypt and its ripple effect it had on the economy, besides the instability the country witnessed on the security level,” he told CommsMEA. “In spite of all that, we managed to acquire a large percentage of the new market entries. This gives a strong and positive indication on Etisalat’s brand equity and perception in the Egyptian market.

“Despite the economic turbulence that Egypt has witnessed starting the 25th of January revolution, we were able to meet our targets in terms of number of Etisalat subscribers. We can confidently state that Etisalat Misr has been and still is the fastest growing mobile operator in Egypt,” he adds.

“Surprisingly, we were able to accomplish more than what was expected from us.”

He adds that although the repercussions of the Arab Spring uprising resulted in a fall in the ARPU, Etisalat Misr was able to acquire more subscribers than targets, which, in turn, compensated for the fall of the ARPU.

However, despite the company’s continued growth, Abdooli admits that the past year has been tough.

“The Arab Spring uprising has affected our operation in Egypt,” he says. “With an economic slowdown, subscribers became more price conscious. Moreover, there has been a decrease in the number of tourists coming to Egypt, thus severely affecting our outbound operations.

“Our expectations for 2011 were for it to be a flourishing year from the inbound roaming standpoint. However, due to the political implications and the associated unstable events, the Egyptian tourism sector was strongly affected. Accordingly Etisalat Misr witnessed a 50% decline in its visitor roaming revenues in 2011.”

Abdooli adds that the main challenge that the telco faced last year was “modifying our operations” after the January 25th revolution and its repercussions. The telco attempted to counter these potential revenue declines by providing “new price points” and packages to its subscribers, introducing more value-added services, and concentrating on data revenues.

Despite his optimism, Abdooli adds that, along with the rest of Etisalat Misr’s management, he is under no illusions about the year ahead. “Various expectations and forecasts indicated that this year will be a tough one,” he admits.

Data growth

Given Etisalat Misr’s lead in Egypt’s mobile broadband sector, it is perhaps unsurprising that the side of the business that experienced the strongest growth in 2011 was data, consisting of mobile internet and USB modems.

“This coincides with all the political transformation that Egypt is undergoing and the urge for news and political updates, besides the subscribers’ increased desire for ‘real time’ news that drives them to seek it online rather than to wait,” Abdooli says.

Planning ahead

With Egypt still in political turmoil, Abdooli is taking a ‘business as usual’ approach to plans for 2012, albeit with a focus on “value-added” products and services.

“Our 2012 commercial plans concentrate on continuing to lead the market with the best value-added products and services,” Abdooli says. “We are constantly working on providing products and services that best serve our subscriber base.

“The plan is to introduce new products, services, applications, and solutions that satisfy the subscribers’ future needs. This would secure us an increase both in the number of subscribers and the ARPU. Besides that, the roaming returns should pick up when the country stabilises, leading to more tourists, a positive impact on the country’s GDP, and consequently, more growth for us and for the industry as a whole.”

Abdooli is also undeterred by the increasing saturation of Egypt’s mobile sector. Indeed, the CEO is bullish about growth. “Another plan is to keep on expanding our subscriber base; the mobile penetration rate in the Egyptian market is now over 119%, but this does not mean it will stop here,” he says.

He points out that some countries in the MENA region have mobile penetration rates that exceeded 200%, indicating that there remains plenty of room for growth in Egypt.

Etisalat Misr is also looking to invest in green 3G cell sites powered by renewable energy including wind and solar, while on the financial side, it is considering plans for an IPO. However, the timing of this IPO will depend on the economic and political situation in Egypt at that time, Abdooli adds.

Opportunities ahead

Aside from growing its mobile voice and data business, Abdooli also sees significant opportunities for growth in largely untapped areas including non-voice services such as machine-to-machine communications.

“There is a wide array of services that can be introduced to the market and gain momentum in the Egyptian market,” he says.

“In future, we will witness a general rise in the non-voice services, whether it be another leap in the broadband speed, the evolution and use of m-commerce, cloud computing, machine-to-machine communication, as well as over-the-top technology. All of this will be a means for us to expand our presence and market share in Egypt.”

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