Abdul Karim suggests that Baby Boomers are embracing technology 20 times faster than the younger generation and thus the presence of technophobes is set to diminish over time

Technology is impacting everyone. Computer power is 8,000 times cheaper than it was 30 years ago. There are now some communities on the web that are bigger than significant countries. Mobile as a technology has been adopted by more people than any other technology ever has and the statistics are astounding. At this rate, 80 per cent of the world will carry a mobile phone in five year’s time thereby creating a US$1 trillion industry.

What is happening? Mobile and web are changing human behaviour and leading to a way of living never anticipated. Let us consider five key directional changes in human behaviour caused by the convergence of communication technology. While these behavioural changes are being led by cutting-edge users and early adopters, we are also seeing some profound changes at the common level in the poorest of countries.

Five key changes to human behaviour

Indigivuality – Digital technology is enabling people to be more individualistic. Why is individuality so important for people in the first place? It is driven by the need to feel significant. Expressing oneself uniquely makes people feel important and distinct. While the idea of individuality is age-old the drive towards individuality today is manifesting itself in a number of ways across all aspects of life, and is now primarily driven by the web. Generation Y is growing up in a world of social media (blogs, Facebook, and so on). Expressing themselves digitally is the preferred choice. Media has compounded this need even further. Reality shows like American Idol and Britain’s Got Talent are encouraging people to embrace who they are and bring out whatever makes them unique.

Online marketers from all industries such as Threadless Tees, Reebok, Blue Nile and myDNAfragrance.com are relying on Indigivuality. Similarly mobile phones too have become a symbol of individuality and taste, from the handset to the ringtones to the personal accessories in which people invest. Indigivuality is a phenomenon that can only grow as communication technology becomes more and more pervasive.

Instaneity – Digital technology is enabling people to live life “here & now”. Technology is spoiling us to a point that we want everything this very moment. Instant gratification is the norm not the exception anymore and this is leading to significant changes in behaviour. There are no firm plans anymore. Everything is on-the-go, fluid and changeable. Web searches are taking Instaneity to a whole new level. With mobile Internet access to information when you need it, people as well as businesses are able to take advantage of immediacy and location. New kinds of coding technologies work with mobile phone cameras and can be used to unlock a world of possibilities instantly. All of this is changing user expectations in the real world. Attention spans are becoming shorter and shorter. “Snail mail” and email are no longer enough; we want nothing less than instant messaging. We want to be always in touch, always switched on.

Technology is empowering individuals to take control of their lives and is extending beyond the affluent segments of society. It is impacting healthcare in places like Africa and Southeast Asia for example

Virtunity – Virtual communities enabled through technology. They are driven by the human need to belong, to be a part of a community. Technology is fuelling this need and bringing people together in newer ways not seen before and this phenomenon is truly global. From social networking to multiplayer gaming to 3D virtual worlds, Virtunity is changing how people live and interact with each other. A number of things that used to be done offline are now being done with someone else online. As a direct result gaming has become a huge industry. Today some 200 million people log on worldwide to play interactive computer games. The desire to escape is another driver behind this as many enthusiasts spend numerous hours playing games online. 3D virtual communities like Second Life (SL) are other examples of how people are connecting with each other. With over 1.5 million active users alone SL is like a virtual country with an economy of its own.

Techpowered – Digital technologies are empowering individuals to take control of their lives. Driven by individuals’ desire for a sense of control over their lives, technology is enabling individuals to achieve more things with greater effectiveness. Today an individual can collaborate with others across continents seamlessly. The rules of the work place are changing. Organisations are moving from structure-based to knowledge-based setups. Techpowered organisations are doing everything from content creation, project management, knowledge management and even professional networking using Web 2.0.Business is being conducted online. Techpowered is also making a big impact on non-profit organisations. Digital Technologies are enabling individuals to contribute and make a difference in all areas of life. It is reaching more people and making participation easy for everyone. This is going beyond the affluent segments of society. Techpowered is impacting healthcare in places like Africa and Southeast Asia in a significant way. Technology is leap-frogging traditional ways of doing simple things like mobile banking.

Techvoidance – Avoid using digital technology for as long as possible and only use it when there is really no other alternative. Interestingly enough, there is conversely a new set of people who, despite all these developments and innovations, are shunning these ways and sticking to tradition. They are the late adopters who view the world today as a chaotic and confused mess. They are driven by simplicity and would shy away from anything remotely complicated. As a profile, Techvoiders are primarily older, less educated and lower in income. This does not imply that all old people or people like our parents are Techvoiders. Baby Boomers are embracing technology 20 times faster than the younger generation. Therefore in the long-run Techvoiders will be a rarity.

So what are the implications of these changes?

Constant evolution in the way we live as with the concept of “fluid planning” or planning while in the midst of implementing. In the past, we had to be precise with our schedules to meet someone and had to make sure we were there. There was no such thing as “last minute” unless there was an emergency. Today that is the way things are done regularly.

This article was contributed by Abdul Karim, strategy director of Luciola DDB

Bharti Airtel is India’s market leader with over 100 million subscribers. However intense competition is likely to change the dynamics of the market in the future

At the end of March 2005, Zain Group (then MTC Group) announced triumphantly that it had entered a binding agreement to purchase Celtel International’s 13 African operations for US$3.4 billion in cash. It was a deal that was meant to herald the ascent of the African telecoms sector as investors looked to participate in the emerging market buzz surrounding the ICT sector on the continent. Less than five years on and Zain is looking to jettison its African footprint at the same time that the continent’s pre-eminent mobile operator, MTN Group, is looking to dilute its own African beachhead through a tie up with India’s Bharti Airtel.

The justification for many a merger is the synergies that are expected to be driven by combining independent entities into a single one. It was one of the key elements in Zain’s reasoning when it acquired Celtel, and is also a factor of consideration in MTN’s dealings with Bharti, so the reasoning in heading in the other direction and sell off assets is a less straight forward one to articulate. Unless, of course, the offer for the assets is appealing enough.

Zain spent US$3.4 billion to enter Africa, and is estimated to have spent another US$6 billion acquiring additional assets such as Zain Nigeria, and in developing new and legacy infrastructure in the markets it offers service. Thus all told, Zain has invested in the region of US$8.5 – 9 billion in Africa over the past four-and-a-half years, and with an asking price estimated at US$10-11 billion for the operator’s footprint, excluding Morocco and Sudan, Zain would look to make up to 30 per cent on its investment.

Add to this upside potential the gains Zain would be able to achieve through paying down its debt, and it becomes clearer how selling its African operations could be a development widely supported by Zain shareholders. However, the timing of such a move during a period of global economic uncertainty and tightened credit markets is questionable, and while Zain claims to be in discussions with at least three parties, whether any one of them actually gets to the point of tabling an offer is still to be seen.

It is clear looking at the financials that while Africa continues to offer massive potential with respect to the number of subscribers that can be added to networks, the value of each incremental user is questionable. Nigeria, for example, is Zain Group’s largest single operation by subscriber numbers, with 17.197 million users at the end of 2008. It also contributed the most revenue of any single operation in 2008, amounting to US$1.64 billion, though it ranked 13th out of Zain Group’s 22 operational entities at the end of 2008 in terms of net income for the year.

Kuwait, which counted one tenth the number of subscribers at the end of 2008 than Nigeria’s base produced 31 times the net income Zain Nigeria achieved, highlighting clearly where the financial clout of Zain operations lie.

Incorporating the net losses racked up by Zain’s operations in Kenya, Ghana, Uganda, Madagascar and Sierra Leone in 2008, Zain Africa operations (excluding Sudan) contributed US$122.2 million to Zain Group’s overall net income of US$1.196 billion in 2008, representing a mere 10 per cent. The net losses totalling US$194 million were incurred by operations in Kenya (US$89.3 million loss), Ghana (US$61.3 million loss), Uganda (US$22.4 million loss), Madagascar (US$19.4 million loss) and Sierra Leone (US$1.6 million loss), are definitely an area of concern particularly in markets in which Zain has had a longer history such as in Kenya and Uganda.

Zain’s African assets that did make money in 2008 produced a combined net income of US$316.2 million, averaging US$31.6 million for each of the 10 operations, which prima facie is a fair return for a going telecoms concern in Africa. It has been proposed that rather than selling the entire footprint Zain only look to exit the non-profit making ones, though the easy rebuttal to that potential avenue is that the valuation of the 14-market block, which has an overall positive net income is much higher than an attempt to sell off underperforming, loss-making units individually.

Should an acquirer come forward for Zain’s African assets, the direction that will embarked by the company that remains after the sell-off is up to speculation. Zain without Africa would occupy a similar space to the one inhabited by Investcom prior to its acquisition by MTN in 2006. Investcom’s speciality had been the Middle East though it had also developed a presence in Africa through opportunistic investments. However, that model of Middle East operator has now been overtaken, principally led by Zain’s own efforts to expand geographically, which has been replicated by the likes of Etisalat, STC, Qtel and even Batelco.

“Everything we have done has been in the best interests of our shareholders,” said a Zain insider who requested not to be identified. “If selling Africa at the right price is the thing to do in order to maximise shareholder value, then it is something we’ll look seriously at doing, and what comes after that would be guided by the same principles,” he added.

Maximising shareholder value is the universal aim of corporate management, but in the case of MTN and Bharti, shareholders and analysts alike have begun to question whether a tie-up would really be in the best interests of investors.

Earlier in August the two companies announced they were extending their exclusive merger talks for the second time, until the end of September, suggesting they still would like to consummate a deal, but have more points that require thrashing out.

Having failed to come to any agreement last year MTN and Bharti resumed merger talks in May and for the last four months have been locked in negotiations that have many people asking whether the structure of the deal is just too complicated to be concluded.

MTN and Bharti have agreed that post-merger Bharti would be charged with exploring any further investment opportunities in Asia while MTN would take responsibility for pursuing deals in the MEA

As per the latest deal on the table, Bharti could acquire 49 per cent of MTN while the South African firm and its shareholders would pick up a combined 36 per cent stake in the Indian counterpart. The deal involves both paper and cash, and under the proposed arrangement, which is valued at around US$23 billion, MTN would pay US$2.9 billion and shares equivalent to 25 per cent of its share capital to Bharti in return for a 36 per cent stake in the Indian firm.

Bharti in turn would acquire a 36 per cent stake in MTN, controlled by the Mikati family and a trust representing senior management and employees. The Mikati family gained a 10 per cent stake in MTN through the acquisition of their telecom company Investcom by MTN for US$5.5 billion in 2006. Bharti’s offer to the Mikati family and MTN trust represents R86 (US$10.44) and 0.5 Bharti share for each MTN share acquired through a global depository receipt (GDR) listing on the Johannesburg Stock Exchange. Together with the earlier 25 per cent crossholding in MTN, Bharti Airtel would end up owning 49 per cent of MTN’s enlarged capital.

The two companies have also agreed that while MTN would be the primary vehicle for both Bharti and MTN to pursue further expansion across Africa and the Middle East, Bharti would be the primary vehicle for both companies to pursue further expansion in India and Asia.

The Mikati family, Bharti’s promoter Mittal family, as well as the senior MTN management led by CEO Phuthuma Nhleko, have fully supported the merger and said they would not buy or sell shares in the deal. The wider investor community, it appears, does not seem to be as enthusiastic about the deal.

Fund managers in both South Africa and India have questioned the length of time it has taken to reach an accord. Analysts have also questioned what synergies are likely to be driven by the two companies coming together given that MTN would be free to examine opportunities in Asia without the tie-up with Bharti.

Al Kaf believes the mobile industry is poised to be the natural and therefore main means of accessing broadband data in the future

Khalid Al Kaf, CEO of Mobily in Saudi Arabia likes to distinguish the development of the operator’s broadband strategy between the activities it undertook prior to the May 19, 2007 launch of UMTS/HSDPA; from how radically differently it conducted business from that date forth.

Mobily launched commercial services in the kingdom in May 2005, two years prior to its introduction of HSDPA. Internet penetration was rising steadily in Saudi Arabia, and figures from the Saudi regulator, the Communications Information Technology Commission (CITC), estimate that Internet penetration at the end of 2005 stood at 13 per cent, growing to 20 per cent by the end of 2006. At that time dialup was the most popular consumer technology used to access the Internet, and ADSL was the technology of choice for broadband access.

According to Al Kaf, Mobily’s introduction of HSPDA led to a complete revolution in the way people accessed the Internet as well as the ubiquity of the access to broadband services. Mobily first introduced Saudi Arabia’s pioneering HSDPA device based on a PCMCIA platform for laptops supporting 1.8 Mbps on the downlink. The operator then went on to introduce an unlimited mobile data plan and two high volume bundles, thereby introducing the concept of unlimited mobile access to data in the kingdom for the first time.

“Around 10-15 per cent of all laptops sold in the month following the introduction of our HSDPA service were ones linked to the Mobily offer,” Al Kaf recalled. “The average daily growth for the six months of 2007 was around 400 subscribers, and for 2008 it was over 520. This daily growth rate tripled for the first four months of 2009 to over 1,500 new subscribers a day.”

Mobily has the distinction of being the busiest mobile data network in the world with the volume of traffic for April 2009 standing at 28.3 terabytes a day, representing a 194 per cent growth rate during the month. As of the end of 2008, 24 per cent of all broadband users in Saudi Arabia were accessing services using HSPA, while ADSL remained the broadband technology of choice with 74 per cent of broadband users utilising that technology. Two per cent of broadband users utilised WiMAX.

“Mobile broadband use will exceed fixed broadband ADSL use in the next few years,” forecasted Al Kaf. “Seventy per cent of broadband applications in Europe are for mobile,” according to Al Kaf, suggesting that the potential of the access technology is clear to everyone to see.

Mobily went on to launch HSUPA in March 2009, extending HSPA coverage to 218 cities, towns, villages and regions across Saudi Arabia as at the beginning of June.

Having unsuccessfully bid for a fixed line licence Mobily went on to acquire alternative provider Bayanat in 2007, giving it access to a 12,000 kilometre national fibre-optic network as a well as aspirations to invest in WiMAX technology.

Al Kaf explained that Mobily inherited 40,000 WiMAX subscribers from Bayanat together with 400 base stations, with Mobily looking to increase that number to 1,000. The mix of broadband technologies is intended to appeal to every usage pattern, with the main mass market technology being HSPA+, and WiMAX being an alternative to offload capacity in dense and high usage areas. “WiMAX is in direct competition to ADSL,” Al Kaf asserted.

Having started to undertake HSPA+ trials in February 2009 and LTE trials in April, Al Kaf believes Mobily is on track to launch LTE commercially by 2012 at the very latest. The operator has also been taking an active role in the development of devices to compliment its network upgrades and is currently cooperating with Qualcomm in the development of a hybrid device that incorporates content services.

“The point is to move from access provision terminals to hybrid connectivity/content delivery devices,” Al Kaf said. The offer of blended services is central to Mobily’s data strategy going forward, adapting technology platforms to ensure that they can enable new services and applications, including those marketed by third parties, and host them while retaining some value.

Mobily is also looking to adapt cultures to promote innovations, meaning that while the operator’s culture has traditionally been based on the need to deliver predictable and scalable services and avoid risk to ensure a good customer experience, Al Kaf believes that nowadays risk-avoidance needs to co-exist with risk-taking in new services.

Time to market will also play an increasingly important role in producing success as the operating environment becomes much more dynamic, and the establishment of partnerships in short time frames is also a key success factor. Al Kaf believes this would best be achieved through sharing part of the value created with third parties, while maintaining control of Mobily’s position in the value chain.

Khalid Al Kaf addresses delegates at the inaugural Telecoms Leaders Summit held at MECOM 2009 in Abu Dhabi

Al Kaf describes the environment in which Mobily operates as a “flourishing ecosystem of many innovators, with a rapid birth-death cycle, hosted on a limited number of platforms,” where the creation of value lies in mobile communications’ power to capture the end-user’s context. Thus he views Mobily’s current offerings as existing in stage three of the three stages of technology – infancy; adopting its own personality; shaping the world – representing an environment where people turn away from newspapers and TV toward Internet news, or create their own media outlets (see table 1).

The nature of competition in Saudi Arabia’s mobile market is likely to spur on continued innovation from Mobily and its competitors, all the time improving the service that end-users can expect to receive. Last year Mobily undertook a review of its retail strengths and weaknesses, resulting in

Mobile broadband use will exceed fixed broadband ADSL use in the next few years. Seventy per cent of broadband applications in Europe are for mobile a revamp of its flagship stores and customer service points. At the end of 2008 the cellco operated 32 flagship stores – including three megastores in Riyadh, Jeddah and Khobar – as well as 240 fully-branded outlets operated by partners. The revamping was a joint project between retail and marketing business unites in order to enhance Mobily’s retail image and reinforce the brand in the Saudi market.

Mobily’s evolving store concept vision is based on four principles: to attract customers into a zone through a compelling design which sparks curiosity; allowing customers to freely explore and seek their own version of knowledge; fostering an emotional connection through the branded experience, interaction and sales consultation; and the ability for sophisticated showcasing of capabilities.

By the start of this year eight stores had been revamped with features including Internet cafés; giant screens displaying inspirational videos linked to Mobily’s 3.5Gservices; self-service recharge and bill-paying kiosks; gaming areas with comfortable seating; and interactive displays where visitors can try out video telephony, video mail and TV streaming services, among others.

Mobily’s efforts were rewarded in January when it won the Best International Store Design award.

Nigeria is a country well known for its fluid commercial and social activities, years of which have stifled economic progress despite a significant population and abundant mineral wealth. The former state telecoms monopoly Nitel epitomises this failure in the face of overwhelming potential, though the company’s CEO is asking for someone to take a billion dollar bet to transform the telco into a functioning converged communications provider

While Nigeria’s four leading mobile operators count more than 60 million mobile subscribers amongst them, Mtel counts fewer than 100,000

Comm. met with Nigerian Telecommunications Limited (Nitel) CEO and MD Kevin Caruso, and acting Mtel CEO and chief operating officer Mustapha Williams in Dubai between holding meetings with prospective investors in a bid to secure a strategic partner for the former state telecom monopoly. A process to privatise Nitel was supposedly completed in mid-2006, and saw the Nigerian conglomerate Transnational Corporation of Nigeria (Transcorp) acquire a 51 per cent controlling stake. However what followed was a period of under-investment and what Caruso alleges was a blatant attempt to strip assets from the telco ahead of a new strategic investor being found.

In May, Transcorp group managing director Thomas Iseghohi, deputy group managing director, Mike Okoli, and Transcorp secretary, Malam Mohammed Buba were arrested on charges of financial misappropriation. The executives were alleged to have facilitated multiple payments of legal and consultancy fees that appear to have been fraudulent, as well as general mismanagement of Nitel. Iseghohi is alleged to have severally exceeded his approval limit of N100 million (US$640,000), having used friends and associates to siphon money through bogus consultancy services.

Iseghohi also doubled as the chairman of the board of directors of Nitel, and it has been suggested that sometime in the last quarter of 2008, Transcorp put together a plan to sell off the valued backbone of the nation’s telecommunications industry, the South Atlantic 3/West Africa Submarine Cable, known as SAT-3. This was after Iseghohi and the board of Transcorp had made commitments in August 2007, through a contract with Cisco and Dimension Data to rehabilitate the SAT-3 network. After the failure of the contract to rehabilitate SAT-3, Transcorp decided to completely sell off SAT-3 to itself.

A special purpose company called the Nigerian Telecommunication Backbone Company Limited was created and it was this special purpose vehicle that was to be used to buy out Nitel’s telecommunications backbone by way of stripping the telco’s assets before the cessation of Transcorp’s majority holdings in the telco expired. Other senior executives within Nitel came to know of the ploy and were able to block the onward sale of SAT-3 to the special purpose vehicle.

“Nitel is suffering from a lack of funding and simply does not have enough working capital,” explains Caruso. “In terms of the type of investor we are looking for, it must be willing to take at least a 51 per cent stake in the telco, but we are somewhat open in terms of the upper limits of its shareholding,” he adds. Transcorp previously held a 51 per cent stake, while the Nigerian government held the remainder.

Caruso recalls how Iseghohi had tried to remove him from Nitel and how for a period there had been confusion as to who was actually running the telco as the two executives locked horns. Caruso ultimately prevailed and despite the battered state of Nitel, he believes there remains something significant worth salvaging.

“Of course the income statement of Nitel is absolutely terrible at the moment,” Caruso concedes. “We have fewer than 100,000 mobile subscribers to speak of and counted 400,000 fixed lines at the company’s peak, so the day-to-day shape of the business is not good. However, if one is to look at the balance sheet, one is able to see the assets the company owns and the potential for it to be turned around with the right kind of investment. If I had the money I would buy Nitel myself.”

Nitel employs around 3,000 staff full-time and a similar number as casual staff, with the mobile subsidiary Mtel operating with a staff compliment of between 400-500 staff. “Some people have not drawn a salary in up to 10 months,” reveals Williams, “and that is somewhat of a concern as it means they come to work everyday with the view to looking at other, mainly unauthorised, means of earning an income.”

Nitel’s fixed line operation has all but collapsed, with the number of lines having fallen drastically from a peak of around 400,000

Nitel has significant investment in land and buildings as well as the network it has so far rolled out, with the telco having been valued at around US$1 billion at the time of Transcorp’s involvement three years ago. “Nigeria is the only country that does not have a functioning national operator and this situation cannot be permitted to continue,” Caruso contends.

No real fixed line service is available in Africa’s most populous country and Caruso sees huge potential for Nitel in the delivery of Internet services, especially in light of the SAT-3 international cables the telco prevented from being sold to the Transcorp special purpose vehicle at the last minute. What little Internet service that is available in Nigeria is hugely expensive and one of Nitel’s operational priorities would be the delivery of Internet and fixed line services at a reasonable price.

Access to reliable power supplies has also plagued Nitel’s attempt to run a regular service, and this has had a knock-on effect with respect to Mtel gaining access to transmission capacity. “There are those parties that are benefiting from Nitel’s position,” says Caruso. “The company has been loosing money on interconnect since 2001, which was the time when the current GSM licences were awarded.”

Mobile market leaders MTN, Zain and Glo enjoy subscriber bases of several tens of millions, with the Mubadala/Etisalat-backed fourth mobile operator believed to have been adding subscribers at a slower pace than had been anticipated.

Despite all the murkiness that surrounds Nitel one point that Caruso is absolutely clear on is the belief that the telco ought to remain a single entity as opposed to having the mobile operation spun into a separate entity. “Separating Mtel from Nitel would be difficult, and I think the process would make both companies unsuccessful. They would fail,” Caruso asserts. He believes the pursuit of a converged fixed-mobile strategy would be the most appropriate for the telco, allowing the company to play to the few remaining strengths it possesses.

Nigeria’s bustling mobile telecoms market has resulted in congestion and poor quality of service across large parts of the country

With Nitel carrying around US$1 billion in debt and in need of a serous capital injection and operational liquidity, the party to take up the challenge, should one be forthcoming, will have to have the determination as well as the resources to stay for the long haul. It had been rumoured that South Africa’s former fixed line monopoly Telkom had expressed an interest in acquiring a telecoms asset in Nigeria, though local commentators suggest the presence of another big name South African operator in the country is unlikely given the rivalry between South Africa and Nigeria to be considered African economic powerhouses.

In the interim Nitel has been trying as best it can to place its own house in order and streamline operations. A pension buyout scheme has been implemented for staff, for example, and the telco is attempting to pay wages on a regular basis.

So while it has been more than six months since the decision was taken to identify a new strategic investor no party has yet signed on the dotted line. Nigeria’s Bureau of Public Enterprises continues to drive the process forward, though given the global economic downturn coupled with tight debt markets it comes as little surprise that bidders have not been more forthcoming.

The significance of gaining a competent strategic investor for Nitel cannot be overstated, not least with respect to improving the image of Nigeria’s foreign direct investment credentials. “We would like to sell the stake as quickly as possible and a number of aspects of the sale are negotiable,” comments Caruso. “We also possess a CDMA network that would have been used for WLL operations and we would be willing to sell that to help capitalise the core business.”

Mikkel Vinter says that the three years in which his company has been in existence has helped modify attitudes towards MVNOs in the region

Having been virtual pioneers we have developed into a virtual reality,” says Mikkel Vinter, CEOof Friendi Group, referring to a description the company received from the media in 2007 as it first went about detailing its plans for the MENA region. “The first part of our three-year vision has been fulfilled. We were the first MVNO(mobile virtual network operator) to launch in the region and we have enjoyed good initial success with that. The state of the union is strong.”

The initial success that Vinter is referring to is Friendi Mobile’s operation in Oman, which opened the door to the public at the end of April this year, and within two months, had added 50,000 subscribers. The significance of this progress can be brought into better focus when comparing the entrance of Friendi Mobile with the last time a new player launched in the Omani market. Nawras, Oman’s second licensed telecoms provider entered the market as a mobile player in March 2005, when mobile penetration stood at around 35 per cent. Despite the easier competitive landscape at the time, it took Nawras two months to reach the 50,000 subscriber milestone; the same time it took Friendi Mobile in an environment of 120 per cent penetration and three other competitors.

“Oman is an important market to Friendi,” Vinter states. “Not only from the basic revenue generating perspective, but also because it is helping in removing the doubts about this business model in the region.” Nawras has been a formidable second player in Oman and had been on course to supersede Oman Mobile as the market leader in terms of subscriber numbers, having reported that customer numbers in H109 to end-June increased by 30 per cent year-on-year to 1.7 million. Oman Mobile reported that at the end of June, its subscriber based had reached 1.797 million, a year-on-year growth rate of just 11.8 per cent.

Friendi Mobile’s reseller agreement is with Omantel, the parent company of Oman Mobile, with the mobile operator evidently requiring all the assistance it can receive in staving off the advances of second-placed Nawras.

Speaking earlier this year, Omantel’s CEO Amer Al Rawas stated that this first five-year licensing agreement with Oman’s two mobile resellers would be a learning process for all parties involved, and that he would reserve judgement on their effectiveness until later in the relationship. Omantel has a similar reseller agreement with Majan Telecom, which operates under the brand name Renna, and launched commercially in Oman a fortnight after Friendi Mobile did. Renna claims a subscriber trajectory similar to that of Friendi.

“Our launch was fantastic,” says Majan Telecom CEO Niklas Nielsen. We added more than 50,000 customers in the first couple of months and our run rate has now stabilised at a sufficient level boding well for the future.” Consensus amongst industry commentators is that a subscriber base of approximately100,000 is typically sufficient in order for MVNOs to reach breakeven in a market in the Middle East, so both Omani resellers appear well on their way to achieving this within record time.

“People keep reloading their Renna SIM cards at a satisfying rate so we are happy with the way we have managed to penetrate this very competitive multi-SIM market that Oman is, with its penetration rate of around 120 per cent,” Niklas says.

Both Omani resellers have focussed on the transparency of tariffs and the offer of value in the price plans they have introduced, which are not too dissimilar to each other’s, or to the two mobile network operators. However, where Friendi Mobile in particular looks to gain the most traction is in the targeting of expatriate communities resident in Oman, who are looking to remain in regular touch with friends and family abroad.

In July Friendi Group announced the launch of a programme called Reach Out, which was the first building block in the player’s strategy to provide Friendi Mobile customers in Oman and those out of the country with competitive mobile international call rates.

The first phase of the Reach Out programme was the launch of a partnership between Friendi Group and Idea Cellular of India. Friendi Mobile customers in Oman are able to call Idea subscribers in Kerala at a rate as low as 139 Bz (US$0.36) per minute, the lowest international mobile call rate from any mobile provider in Oman to India. Idea subscribers in Kerala will also benefit from a reduced rate when calling Friendi Mobile customers in Oman, with all calls charged at INR9.19 (US$0.19) per minute.

The two mobile resellers in Oman claim more than 100,000 subscribers between them, representing a market share of around three per cent

The deal with Idea Cellular was a precursor to an agreement announced a month later when Friendi Group revealed it had entered into a collaborative arrangement with Axiata Group (formerly known as TM International), with the intention of the two companies being to work together to address the communications needs of expatriates working in the markets Axiata and Friendi operate in.

Amongst the areas of cooperation to be explored is the possibility of setting up co-branding and MVNO relationships between the two groups. The terms of the agreement will also extend to the provision of content and services.

The deal will also have the added benefit of allowing Axiata access to the lucrative Middle East market. Axiata operating companies will be able to reach out and capture the market and do business with their own nationals living overseas.

Axiata is one of the largest Asian telecommunication companies, focussed in high growth low penetration emerging markets. The operator has controlling interests in mobile networks in Malaysia, Indonesia, Sri Lanka, Bangladesh and Cambodia with significant strategic stakes in India, Singapore and Iran.

“Axiata’s footprint is a relevant one to expats in the Gulf and the collaboration agreement lays down a framework upon which we can closer align ourselves with operations in Asia,” Vinter explains.

Friendi Group is not only expanding its activities geographically, but is also developing a number of sub-brands that will fall under the group umbrella, but which are likely to remain differentiated from one another. In Oman for example, the MVNO introduced a second of its brands to the market, called Halafoni and targeted at the youth market in the country. Halafoni is the result of a tie-up with UAE-based broadcaster MBC and is aimed at young Arab speakers and nationals, with a focus on downloadable content, some of which will be from Hala FM, MBCGroup’s local radio station in Oman.

“We are looking to build a trendy offer for young Omanis,” comments Vinter. “The point is to offer differentiated, segmented services, so for instance, Halafoni subscribers will be able to download music at a special rate or call into the local radio station at a discounted rate, which makes them part of something, part of a community of their own,” he adds.

Vinter would like to see this multi-brand approach replicated in other markets and believes the scope does exist for the successful introduction of such brands should the identification process of such niches be well-executed. “Friendi Group’s operations are scalable in two directions – regional as well as multi-branding. And with a sub-brand, the break even point is even lower, somewhere in the region of around 50,000 users,” says Vinter.

Majan Telecom’s Nielsen has been observing Friendi Group’s developments with interest, but remains confident that the pie remains large enough for multiple operators to profitably enjoy a piece of the action. “The world is big and there are many players: operators, investors, distributors and brand owners alike. We are willing to discuss with all who like what they have heard and seen from our side. Who knows, such discussions might result in a win-win relationship and the next successful launch somewhere in the region or surrounding geographies,” Nielsen comments.

With respect to the international partnerships Friendi Group is forging, Nielsen says he regards such moves as relevant if one wants to launch operations based on the MVNO model, and it seems from the outside as being a step in the right direction. “I wish them the best of luck,” he says simply.

Nawras has been gaining market share consistently throughout its lifespan, having benefited from mobile number portability as well as a focus on the youth market

Vinter describes Saudi Arabia, the UAE, South Asia and Africa as countries and geographic regions of interest to Friendi Group, which is confident of closing one more MVNO agreement this year, with a further number in the pipeline.

“The year 2010 is promising as we have a good number of strong, live, late stage negotiations taking place across the region,” Vinter comments. “We are engaged in conversations across 20 countries, and one of the things I am most encouraged by is the changing attitude of the market. In the beginning we were the ones knocking on all the doors, now we have parties coming and knocking on ours and looking to do things together,” he adds.

The time and effort spent in introducing the MVNO model to the Middle East region has been well spent, Vinter believes, and is starting to pay off as the company is being recognised from various players in the value chain as a party that can potentially bring additional value to operations. Though Friendi Group and Majan Telecom are the first commercial MVNOs in the Middle East, other parties have expressed interest in the business model.

In Jordan, for example, Friendi Group holds a MVNO licence alongside i2, the Saudi-based mobile distributor and wholesaler. Jordan’s fiercely competitive mobile landscape has disinclined any of the four mobile network operators to pen any such agreements, though Vinter says now that the 3Gspectrum award process is out of the way, his company is set to re-engage in conversations with prospective operator partners.

UAE retailer Axiom Telecom has also gone on record expressing its desire to expand operations to incorporate virtual services, having considered markets such as India as potentially of interest. It thus appears likely that the coming six-18 months shall produce significant activity in the MVNO space across the Middle East, Africa and South Asia regions.

The Chinese character for crisis is the same as the one for chaos – and includes two elements – one meaning ‘danger’ and the other ‘opportunity’. For the savvy organisation, the current economic downturn has created a unique opportunity to attract high level key personnel, the likes of which would not otherwise have been available in a more buoyant market.

Craig Coverman believes now is definitely a good time for organisations to ask themselves if they can really offer candidates compelling reasons to join them

So – first the good news

As the global credit crisis forces talent onto the global job market, candidates are obliged to look further a-field if they are to continue to work at the same level. According to Comm. earlier this year, 100,000 telecoms candidates had already lost their jobs – 84 per cent of them from within the US and EU markets. The Middle East and Africa emerging markets are therefore likely to be much more attractive to candidates now than their struggling mature home markets. We believe the skills shortages in the MEA region should become less acute as companies have a much greater choice of candidate – and, if played right, the pendulum could finally swing towards the region, permanently perhaps.

We also expect to see a raising of the bar in 2009, with a real focus on the quality of hiring. In a recent Linked-In survey, almost 20 per cent of companies said they would be hiring selectively this year – spotting opportunities for strengthening their teams as outstanding candidates came their way. This should be happening anyway, as this current economic crisis will have a lasting effect on the telco landscape – with fewer players in each channel – and with consumers making long-term changes in their attitude and expectations.

So, on the face of it, the recession should be a good thing for organisations, with a re-focussing on quality and generally more candidates about …. particularly global ones.

But here’s the rub

Firstly, quantity does not mean quality. Just because there are more candidates about, does not mean you necessarily want to hire them. In this market, even more so than in an average market, you’ll want to hire the real superstars – those that can truly make a difference. However, the superstars are keeping their heads down.

We expect most exceptional performers to stay put in 2009 and only move unless they have a truly compelling reason to do so. Amazingly, we’re seeing companies attempting to ‘buy back’ their top stars if they attempt to leave – highly unusual behaviour in what is supposed to be a recessionary market – and a feature of a market still dogged by difficulties in attracting top talent.

That said, in a recent Linked-In survey, as many as 45 per cent of potential candidates said that this year they would be sitting tight in their current roles (unless they had to) due to market uncertainty. The expression “better the devil you know” springs to mind. This may result in organisations needing to look more at the ex-pat workforce than the local or regional one – so, bizarrely, ex-pat hiring may well increase this year percentage-wise, instead of decreasing. And when we say ex-pat, we’re talking about bringing in fresh blood from abroad – not ‘localised’ ex-pats. The current market has done a good job at shaking out many of the not-so-strong performers – with many ‘local ex-pats finding themselves out of work for up to 8 to 9 months … before finally moving back home (see Dubai Summer 2009).

However, now is definitely a good time for organisations to ask themselves if they can really offer candidates compelling reasons to join them. If not, and you need to be honest with yourself, the advice is to work hard to put those reasons in place. In fact, many organisations are currently focusing on their employer branding, even in these tough trading conditions – and in readiness for when the market turns.

It’s also worth considering your own personal vulnerability – as your own role may not be as safe as you might think. The harsh reality of this market is that many organisations will be reviewing all their functional teams, top-to-bottom, to ensure they can meet the demands of an increasingly competitive marketplace. Even the ‘c’ level team’s performance won’t escape careful analysis – and we expect to see significant churn at the top – in a market already known for having, at 21 per cent, the highest level of CxO attrition across all industries.

So – will this period be a dangerous one for your organisation or one full of opportunity?

We cannot answer that – we’re seeing some organisations steam ahead in this market through careful, well considered and executed human capital strategies – and others that are quite literally falling apart. What we can say with great certainty, though, is that the same rules apply now as they did before this current madness started – namely, that it’s people that make the difference. You need to review your hiring and on-boarding processes … realistically. Do your recruitment policies and processes help you or hinder you from attracting the very top talent you proclaim to want in your business? Do you have proper development, retention and succession plans in place – or, again, do these actually hinder you from retaining the very top talent that will help drive your organisation forward?

Get this right – and you’ll definitely see the benefit when the inevitable market resurgence comes – leaving your competition in the wake.

Craig Coverman is CEO of executive search firm Eutopia