STC GCEO: Ensuring future investments

Biyari talks about how STC is planning to overcome the challenges brought by MVNOs
Dr. Khaled Bin Hussain Biyari, CEO at STC Group.
Dr. Khaled Bin Hussain Biyari, CEO at STC Group.

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Working as the head of the Gulf’s biggest telecom operator by market value is not an easy task, but Dr. Khaled Bin Hussain Biyari is comfortable in his position as Group CEO while he explains the work that the company is currently developing.

Biyari comments on how fierce the competitive mobile market in Saudi Arabia is. Reported penetration rates are upward of 180%, but mobile indicators tend to fluctuate due to the country’s fluid population with large numbers of pilgrims and expatriate workers living in Saudi Arabia.

STC competes with Mobily, Zain and two Mobile Virtual Network Operators (MVNOs) — Virgin Mobile and Lebara. Saudi Arabia is the second country in the Gulf, after Oman, to have allowed MVNOs. “The whole telco landscape in Saudi Arabia is one of the most competitive in the entire region, adding the MVNOs clearly added to that competitiveness, we have been very much aligned with the regulator’s vision in terms of introducing the MVNOs into the market,” says Biyari about the MVNOs.

He reminds that STC is providing services to Virgin Mobile and adds that the company has been involved in expediting their ability to provide services into the kingdom.

“They [MVNOs] need to get subscribers to survive, so our strategy is to have a very structured relationship with the MVNOs, they are served by our wholesale organisation, so that we have Chinese Walls within STC as it relates to services provided to our MVNO partner, to be ethical in the way we interact, but wholesale is a very important business model for us, so when the MVNOs grows, clearly that adds to our wholesale aspect — so as a CEO, I see it positively,” he adds.

According to analysts, mobile broadband subscriptions are likely to continue growing beyond the 100% per capita penetration threshold due to some users having more than one mobile connected device, but fixed-line broadband will hit market saturation when household penetration reaches 100% —which is not far away for Saudi Arabia.

STC is working largely on developing its fixed network technologies, as Biyari explains. The fixed broadband market is experiencing a major technology shift from ADSL to fibre, with STC expanding FTTH coverage to most urban centres.

“We have been marching big time to deploy our fibre network. We have a huge legacy copper network, but that is being replaced in certain parts of the Kingdom by a state-of-the-art fibre network, which is providing fibre services to the home, and also to enterprise customers. There is major spending in that domain, and we continue spending in that, and that is part of the drive to provide broadband services to citizens, business and government,” Biyari says.

When asked if fibre will fully replace copper, Biyari clarifies that the process will take a long time. “We have started a major initiative that looks into the aspect of decommissioning of copper. What that study focuses on is where it makes commercial sense to replace copper with fibre. We are marching along with that, but decommissioning the whole copper network will take some time. Again, we will look at the 80/20 rule, where are the areas where it really makes sense to deploy fibre.”

“We are also looking at technologies that will give us better utilisation of the copper network, that again will ensure that even if it doesn’t make sense to replace the copper network, the copper will be improved and provide an improved service,” he adds.

Biyari says that STC is constantly trialling new technology and in dialogue with vendors to develop news solutions. “We participate in standards organisations to ensure that whatever gets developed will be suitable for our customers,” he adds.

He believes in Public and Private Partnerships (PPP) to develop the telecoms sector further. STC is the national operator and has a major historic relationship with all kinds of government organisations.

“As you move on from just providing connectivity to providing solutions, it doesn’t make sense to try and provide the whole thing by yourself, the essence is partnership. We are working with multiple vendors across different dimensions, and providing complete solutions to the customer,” Biyari adds.

Traditionally, urban areas are the ones where this connectivity can be found, but what is the work that has been done in rural areas? Biyari says that the government has instituted a fund called The Universal Service Fund, governed by the CITC, the purpose of which is to provide wireless connectivity in areas where it is not commercially viable for operators to invest.

“What they do is talk to the operators, show them the area and the different operators give a proposal in terms of how much subsidy they need from the government. We [STC] have six of those projects, and we have been deploying them and we are still deploying in different regions,” he explains.

ROAMING REDUCTION

In June 2015, the GCC Ministerial Committee for Post, Communications and Information Technology approved the gradual reduction of roaming, telephone calls, text messaging and data service prices throughout the GCC countries.

The gradual price reduction is set to begin from 1st April 2016, for a period of three years. The reduction will be applied for local calls within the roaming country, incoming calls while roaming and text messages. As for data services while roaming in the GCC, the procedure will begin 1st April 2016 and will resume for five years.

“We are assessing the impact, we have been aware of that direction [roaming reduction] for a while, but let me just highlight one important aspect... Success of the telco sector depends largely on its ability to invest. We need to learn from what happened in Europe, when the regulators turned into customer advocacy groups, leading to excessive competition in those markets, leading to inability of operators to invest, leading to declining services. It is a chain. I think it is fundamental that governments, regulators and policy makers, ensure that the sector is able to invest, especially at this time,” he adds.

“With the exponential increase in data demand, the need to invest is becoming much more important than before. It is fundamental that telcos are able to continue their investments, and whatever the decision that regulators and policy makers take, [they] need to always look at that aspect. If we start continuing pressure on the ecosystem to provide all kinds of free services, then our ability to invest will not be there, and that would lead to decline of service.”

Biyari hopes that roaming reduction will not become a risk and adds that STC is in continuous dialogue with policy makers “to make that picture clear to them”.

“We should always pride ourselves on the level of services that exist here, and I think our customers enjoy some of the best services available. That is possible because we are able to invest. If the ecosystem changes in such a way that we will not be able to invest as much, then I think it is clear what will happen. Policy makers are aware of that, and I hope that whatever decisions are taken are put in that bigger aspect of customer service,” he concludes.

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