Peter Drucker, the late American businessman and management consultant, once quipped that the best way to predict the future is to create it.
The maxim appears to be at the heart of regional telco Zain Group’s strategy. Indeed, while operators around the world continue to grapple with competition from OTT players and the need to monetise huge investments in 3G and 4G infrastructure, Scott Gegenheimer, CEO of Zain Group, sees more opportunities than threats.
With telecoms technology and services being adopted by every more industries and in every area of life, Zain Group is moving from a mobile centric company into an integrated services provider, in a bid to tap new opportunities.
In particular, Zain Group is planning to focus on innovation, the digital space and enterprise, Gegenheimer told CommsMEA. “There are going to be some acquisitions in that space [digital] so that we are able to move faster. Sometimes it will make more sense to start developing our own team but others, it is better to buy a system creator,” he said.
Machine to Machine (M2M) will play a pivotal role in Zain’s strategy, as smart cities are being developed in some of the core markets in which the company operates. He believes that UAE, Saudi and Kuwait will be the countries that will lead the way when offering opportunities within the smart cities sector in the region.
The company foresees a great market opportunity in the smart metering sector and Gegenheimer said that the next acquisitions are likely to be in this market. “In the Middle East, especially in the GCC, the consumption of electricity and water is one of the highest per capita in the world and we think that there is a huge opportunity to set smart meters in this region.”
He added that Zain is already in talks with the government of Kuwait to see how the operator can help to develop this idea in the country.
Regarding the business enterprise vertical, Zain is planning to develop its services across the group but Gegenheimer set two countries as key areas. “The markets that we are focusing now are Kuwait and Saudi Arabia. Iraq would have been there but, with the issues that we are having with the conflict, it is a difficult situation and we are going to be more focused on our 3G roll-out for the time being.”
The company is planning to duplicate its early successes in smart metering to the rest of its markets as the solution develops. “Once you have a platform and you have the services, you can replicate them and bring them to another countries. It is nice to have standard platforms so we are starting to build the teams at the group and the operations,” he added.
In order to continue with the transformation, Gegenheimer said that Zain will be investing heavily in innovation. “We have a new division for innovation and digital space. Generally, at a group level we have innovation, as the group tries to develop this department in all of the domestic operations. Not all operators at Zain have a separate innovation division. We have created some innovation centres in Jordan and Kuwait.”
He noted Zain’s collaboration with the Massachusetts Institute of Technology (MIT), as important to the development of telecoms innovation in the market. According to Zain, MIT is recognised for being one of the leading universities in the world, earning a reputation as a key player in the advancement of digital technology and services. Zain is part of the MIT Enterprise Forum (MITEF) of the Pan Arab Region, one of the 28 worldwide chapters of the MITEF Global, a Startup competition that aims to promote innovation worldwide, engage aspiring entrepreneurs in mentorship and networking. “This is a very interesting initiative as we are working with companies across the region,” said Gegenheimer.
Zain is also establishing innovation centres in some of its domestic markets. “We have the innovation centre in Jordan and Kuwait. It brings innovation, not only to the telecoms sector itself, but to the country too. We want to make sure that we are supporting innovation locally and giving access to companies, whether it is by providing network or customer information,” Gegenheimer explained.
Gegenheimer explained that Zain wants to go even further and, in order to accelerate some companies’ growth, it is investing specifically in them, as they are seen as future revenue boosters for the operator.
However, while Zain Group is obviously committed to developing new markets, it is also keeping a careful eye on its core business. Indeed, the innovation strategy is set in parallel to the traditional network and connectivity business. “In general, we want to be a leader in technology. In five of our eight markets we have deployed 4G, so we are leading the region with our 4G deployments and we will continue to do this,” he added.
Zain is also starting to look beyond 4G and Gegenheimer confirmed that the telco is already testing LTE Advanced. “We are talking about 4.5G. Right now we are testing and doing trials for LTE Advanced to actually do carrier aggregation. We want to be a leader on technology,” he said to CommsMEA.
However, when asked about 5G, a subject that was surrounded by significant hype at MWC, Gegenheimer said that it remains “a bit far off. “I don't necessarily think that you will see commercial launched 5G services by 2020 but the standards should be agreed by then.” Monetising the strong investment that operators are putting in place is another challenge that telcos are facing, and Zain is no exception. He explained that this is one of the main reasons why operators like Zain have started to expand their portfolios.
“It is a difficult situation and all the operators are thinking about that. First, we have the OTT players and we don’t want to be just a connectivity player, we want to provide services on top. We are working on that. This is the reason why we are making this company shift, so that we can offer incremental services on top. For me the M2M space can be huge, there is a huge opportunity in smart cities in the region,” he said.
Working on a regional perspective
During Mobile World Congress, the group CEOs of the region gathered to discuss the issues that the industry is facing. Gegenheimer said that roaming and network sharing where two of the topics debated during these meetings.
“The group CEOs are pushing and we agree that network sharing is something that we need to do. There is a different opinion about active or passive sharing but regulators are pushing for network sharing,” he said.
Another concern is the regulatory framework when investing in innovation, as the legal environment is not clear enough. “We cannot try to invest as heavily in areas in which we don’t know what the regulatory environment is.
He also noted that technology is changing rapidly, a trend that affects regulators when legislating. The slow pace of regulatory change in some countries could threaten to stifle the ability of operator to invest. In these cases, Gegenheimer is keen to work with the regulators. “We are trying to work with the regulators to speed up that process so that we continue investing in those countries and keep on innovating,” he said to CommsMEA.
Another topic discussed during MWC that has major repercussions for telecom operators was the demand of more spectrum for the mobile industry. “In general, all operators in the region are working with the GSMA. We support this initiative [demand of spectrum]. We need to make sure there is more bandwidth, as there are more people connected to mobile. Facebook is a good example to show that most of the people use this service through their mobile phone.”
“We are saying the same thing about broadband, it is increasing and developing the GDP. We want to push for more spectrum for mobile to support the development of countries. This will benefit everyone, and will also increase our revenues,” he said.
This year’s edition of MWC also saw Zain sign new deals and partnerships to drive the strategy that the company has designed to embrace the future of telecoms. The company committed to extend GSMA’s Mobile Connect digital identity initiative across the Middle East. Zain also partnered with Etisalat and datamena, among other companies, and discussed the expansion of 4G coverage in Lebanon with the Minister of Telecommunications, Boutros Harb, and several ministry officials.