Viva la vida

In December 2008 STC-backed Viva Kuwait launched as the country’s third mobile operator. Incumbents Zain and Wataniya had waged a long war of words expressing scepticism for the need of a third player in the country of 3.4 million inhabitants. A year on and Viva is successfully carving out a niche for itself, and its CEO Najeeb Al Awadi sees no reason why it should not aim for the top spot

Najeeb Al Awadi says Viva is looking to garner a market share of 30-33 per cent as soon as possible, and sees no reason why it shouldn’t target the top spot

Unlike other Gulf countries that have an independent telecom regulator in place and a mobile penetration rate exceeding 100 per cent, when Viva splashed onto Kuwait’s telecom landscape in December 2008 it was faced with a relatively less daunting task of participating in a market that was 75 per cent penetrated. Given the pedigree of the incumbents, Viva was always going to have to work extremely hard to attract customers to its nascent network and even more so, to make existing mobile users churn from the established operators and give Viva a try. The new entrant opted to offer early subscribers free local calls for their first three months. Following the free call period, post-paid subscribers were allowed to take advantage of local calls at no cost if their call duration exceeded five minutes, while receiving international and landline calls at no additional charge.

“Free incoming calls were introduced by Viva,” comments Viva CEO Najeeb Al Awadi. “Since launching we have added 500,000 subscribers, which equates to 10-12 per cent market share,” he adds.

Al Awadi says his company is looking to increase its market participation to 30-33 per cent as soon as it can, and that Viva’s ultimate target is to become the leading provider in Kuwait; which Al Awadi believes is a realistic target to aim for.

The nature of competition in Kuwait limits the possibility of an out-and-out price war breaking out, though each operator works hard to be able to offer subscribers deals and value that they may not easily receive from a competitor. Viva’s parent company, STC has been a strong proponent of utilising technology leadership in order to gain a competitive advantage, and this viewpoint has trickled down to its Kuwaiti operation, where Viva has been pushing the limits of its HSDPA network.

At the beginning of this year the Kuwait operator announced it had become the first retailer in the country to offer the smallest, most lightweight portable Internet router. The new device is compact and portable, offering speeds of up to 7.2Mbps over Viva’s HSDPA network.

Viva’s router allows up to five PCs or laptops to connect at once, acting like a Wi-Fi hotspot on the go. Unlike pre-existing routers, which are larger and rely on electrical sockets to function, Viva’s operates using rechargeable batteries that offer up to four hours of use.

“Our price on data is on par with the competitors, which is around US$90 a month” says Al Awadi. “We offer subsidised modems, and believe this is necessary to help drive adoption.”

Viva has also been quick off the mark with the offer of other value added services. In February 2009 the operator announced it would launch a mobile commerce solution using a platform provided by Irish firm Macalla Software.

In September 2009 Roamware announced the completion of the acquisition of Macalla, and according to Juniper Research, the service provider market revenues for mobile financial services are set to exceed US$5 billion globally by 2013. These revenues are based on the commissions and charges acquired from the gross value of money transactions derived from mobile money transfer services and remittances, making this a potentially viable income stream for operators such as Viva, if implemented correctly.

Viva said it was looking to provide payment services in Arabic and English directly to Viva subscribers and also via its dealer and agent network. Rollout would be undertaken on a phased basis, and service channels were to include mobile, kiosks and online, with supporting payments done by mobile wallet, cash, debit or credit card.

Mobile penetration in Kuwait stood at around 75 per cent when Viva launched in December 2008

At the end of 2009 Viva counted around 370 employees, of whom around 60 per cent were Kuwaiti nationals. STC owns 26 per cent of the Kuwait operator, though the strategic emphasis appears to be to position the operator as a Kuwaiti player that is helping to champion the communications needs of the Kuwaiti people. Indeed, the Kuwait government holds a 24 per cent stake in the operator, with the remaining 50 per cent held by Kuwaiti nationals following an initial public offering. Viva’s paid-in capital stands at KWD50 million (US$182 million).

“In terms of our performance over the first year of operation, I would give ourselves a B-grade,” says a Viva executive who preferred not to be named. “I think we need to improve our ARPU levels, and this is something we are already addressing.”

The introduction of mobile number portability (MNP) has been on the agenda in Kuwait for some time now, though it remains unavailable at this point in time. Al Awadi believes its introduction is likely to have a positive impact on Viva’s growth prospects as it is typically later entrants with smaller subscriber bases that benefit to a larger degree with its introduction.

“Kuwait’s Ministry of Communications is seriously discussing mobile number portability,” Al Awadi says. “A request for proposals is set to come out this month and hopefully by 2010 we may see the implementation of MNP in Kuwait.”

STC, which recently appointed Ghassan Hasbani to head its international operations, has been active in its expansion of operations across the Arabian peninsular, having also acquired a licence to operate Bahrain’s third operator. STC paid significant premiums in order to gain access to the telecom markets of its two Gulf neighbours, and part of that strategy must have been motivated by a desire to be able to offer a competitive pan-regional rate, similar to Zain’s One Network and Qtel’s SmartRoamer.

At the time of launch Viva offered calls made to STC numbers in Saudi Arabia at local rates, and the Kuwaiti operator further expanded upon this offer during the Hajj. At the beginning of November Viva announced the offer of the Viva Hajj package, which featured the ability to have subscribers know and share STC local numbers before heading to Saudi Arabia. In addition, customers using the STC line were able to have their devices remain  connected even when no credit has been added to the SIM , received incoming calls to still be permitted.

Viva Hajj package customers were able to use the same prepaid line when they returned to Kuwait, top up locally in both countries, and are even able to use the line should they travel to Saudi Arabia in the future. Upon  purchasing a Hajj “2 in 1” package, customers receive a prepaid Viva line including KD 9 (US$ 31.46) credit along with a prepaid STC local number with SR 5 (US$1.33) credit.