Partnering with SME and OTT to make a difference

Ihab Hinnawi, CEO of Umniah, on how the company is changing its business model
Ihab Hinnawi, CEO, Umniah.
Ihab Hinnawi, CEO, Umniah.

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“Nobody can deny the fact that the revenue is still coming from the voice. What we are trying to do now is to prepare ourselves, to adapt,” said Ihab Hinnawi, CEO at Umniah, regarding the business model change that all operators in the region must adapt to. In order to make the shift from voice to data revenue, Hinnawi said that the company is getting ready for new revenue drivers.

This pace is driven by consumers’ demands in a dynamic and continuously changing market, according to Hinnawi. He believes that customers are mainly using social media and Youtube, so the company will focus on delivering quality service that can cater to this, without over-investment in new technology. “We don’t want to give them [customers] something that they don’t need,” said Hinnawi, as he believes that the market is not ready for 4G yet.

One of Umniah's main focus areas is promoting entrepreneurs in Jordan. The operator recently signed a partnership with Plug and Play, one of the largest business accelerators worldwide, based in Silicon Valley. Selected companies will be sponsored by Umniah to join Plug and Play’s comprehensive three month start-up acceleration program, where they will have access to hundreds of investors, corporations, mentors within the Plug and Play network, exposure at its events, regular educational seminars and workshops and office space.

The agreement will facilitate cooperation and enhance the international presence of Plug and Play in Jordan by establishing a joint accelerator centre. It also aims to acquire a new path to support start-ups and emerging technology companies in addition to bridging the gap between Jordan-based companies and the United States.

Hinnawi also points out that Umniah has chosen nine companies to join their project in Silicon Valley since July 2013.

By giving entrepreneurs and application creators this opportunity and allowing them to use Umniah’s brand as a launching platform, Umniah foresees new revenue drivers, opportunities and businesses that can be monetised by both actors.

In July, Umniah also announced a new partnership with Startup Grind Jordan, powered by Google for Entrepreneurs.

“We are going to start investing in the start-ups as they will be a potential revenue that is coming up and another thing that we will start doing is that we will be adding more accelerators in the country, not only Plug and Play, we will have more,” he said.

Along with the focus on entrepreneurs, Hinnawi says that the company differentiates itself through its approach to OTT service providers. “Umniah is differentiated from its competitors. We have a focus on innovation and on how we approach OTT,” he said.

Last month, Umniah announced a partnership with Facebook, which follows several other agreements with similar service providers.

“There are three million users of Facebook in the country [Jordan], which is 50% of the population. We signed with Skype, Wikipedia... [We have] all these OTTs in order to get better customer experience. This is one of the differentiators,” Hinnawi commented.

Improvements to be made

LTE has not arrived yet in Jordan and Hinnawi believes that the country is not prepared for the technology at present.

“What the government has charged for the spectrum licence is exorbitant and it doesn’t make any sense, because the return on investment will never be positive for the operators. The second part is the need of the consumer: they don’t need a very high speed on the usage of the data. Three: the [number of] LTE handsets [available] are minimum, and they are too expensive. Fixed networks like WiMax can give you this [service]. I am not saying it is not coming. It is a destiny, but definitely, not now,” noted Hinnawi.

He said that Umniah already has WiMax, which will be upgraded to LTE.

Hinnawi does not agree either with the decision of the Jordanian Government to double taxes on mobile phones from 8% to 16% and from 12% to 24% on mobile subscriptions. He said that “the unclear vision from the government regarding the taxation” puts pressure on the operators. Hinnawi also believes that this taxation will make investment more difficult in the country.

The decision was a surprise to the operators in the country, he said, and the government needed to have clear rules going forward. The decision has also led to reduced consumer spending.

“Now the consumer spends less. They are still spending, but less. Our revenues dropped dramatically, around 9% to 11%. This [decrease in the revenue] collapses with the investment you need and costs. We are fighting to reverse it, I think we will. It depends if the government positively acts with us,” he said.

The Jordanian Government also increased the electricity price in 2012, as Hinnawi notes: “The whole sector was hit by this. This [increase] will drive less investment in the country. We as a sector, we are subsidising other sectors.”

In the region, Hinnawi commented that the financial future for the telecom sector is not clear, due to the expectations of shareholders in operators and because of the how to balance the need for major investment in infrastructure against the impact of revenues due to OTTs.

“The first thing, the ability of the stakeholders to change their mind. Shareholders have to start thinking differently on the return of their investment because they need to invest more and there is not the same revenue coming back. The second part is that regulators and the policy makers should start to [think] differently in how they can get the sector back in order to adapt to the new phase of the explosion of OTT coming, heavy capital expenditure needed, so they need to change their mindset,” he said.

In order to amend this situation, Hinnawi asks for cooperation between operators and regulators through organisations such as SAMENA and the GSMA to define a future plan.

“We need to sit down and agree that we are not going to fight together. Actually, we started to succeed on doing that. You need to be flexible, you need to compromise.”

“There is still a lot of work to be done with the regulators and the policy makers and the companies with their shareholders,” he concluded.

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