Andrew White, chief strategy & business development officer, Zain Saudi Arabia, believes regulatory changes will help the company grow
CommsMEA: Where is the next phase of growth going to come from in telecomms services?
In Saudi Arabia, growth will continue to come from data services. Saudi consumers are amongst the most digitally engaged in the world. The Kingdom is regularly ranked as the highest per capita consumer of online videos in the World. We have experienced an explosion in data traffic over recent years, this trend is set to continue as new services, such as on-demand video streaming, become available in the Kingdom. We are now seeing the opportunity to move into other core services that would be beneficial to our customers. Like many other leading telecommunications operators, we see that it may be beneficial to our customers if we offload some of their traffic on to a fixed network. Fortunately, Zain has many different strategic options to achieve growth from this opportunity.
CommsMEA: Is Saudi Arabia competitive enough and is regulation working effectively?
This very much depends on one’s vision for the telecommunications sector in Saudi Arabia. From the perspective of the third mobile operator, we observe that consumers have a vibrant choice of competitive products and services; however, we also observe that an economist may look at the revenue market shares of the players and conclude that the market is concentrated. We are optimistic that recent changes in the regulatory environment, such as the decrease in mobile termination rates (MTRs), will continue and that the Saudi telecommunications market will become more competitive. Experience from other markets indicates that competition is good for the telecomms market, causing it to grow.
CommsMEA: KSA is a very competitive market. What is Zain KSA’s strategy to grow?
We expect the demand for mobile data services to increase even further, and we expect more data monetisation. We have an ambitious target to capture a larger share of the growing demand for data services. Recent reductions in the mobile termination rates in Saudi Arabia have enabled us to become more competitive for local voice traffic. Consequently, we have witnessed growth in carefully targeted inclusive voice and data packages aimed at the youth market.
CommsMEA: Please sum up the recent financials.
By all financial KPIs, 2015 was a record breaking year for Zain Saudi Arabia. In a very competitive market, we increased revenues by 9%, reaching 6.7 billion Saudi Riyals (nearly 1.8 billion US dollars). We increased our gross margin by seven full percentage points, up from 52% to 59%. Likewise, EBITDA rose by 48%, reaching 1.6 billion Saudi Riyals. We ended the year having reduced operating losses by 73%, down from 534 million to 141 million Saudi Riyals. However, the company continues to report an accounting loss, due mainly to the amortisation charge and debt financing charges arising from the high price paid in 2007 for the license.