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September, 2010 |
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Market Update |
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Best Brands |
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2009
December |
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The best in Oman across 15 categories |
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Best Brands |
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2008
December |
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A more comprehensive outlook on offer this year with six new categories added |
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Also From the Apex Stable |
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A New Approach |
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Benoy George Thomas, Mar 2010 |
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How different will Omantel’s policies be from before?
We are a new, transformed organisation, in terms of the operating model, the governing model and in terms of empowerment at different levels of leadership across the organisation. There is now a larger empowerment process that has been put into action which will allow individual leaders to take decisions and act on them accordingly.
What does the integration of Oman Mobile and Omantel into one entity mean for customers?
Omantel comes with a very strong legacy of network components that will be the basis of the combined entity. The new entity will be a very powerful one – one that is built on the infrastructure of both companies and the competitive experience that comes from Oman Mobile.
These are two separate licences that are coming together as one business operation and so we will be able to provide a full spectrum of services with the very solid infrastructure that has been built over 40 years.
How many employees are there in the new entity?
We have currently around 2,700 employees.
What were the challenges in the integration process?
We are now operating as a unified operating model that is integrated in all aspects with the focus on the customer. The main challenge was to focus the two organisations on customer orientation.
While this has been structurally achieved and we are now in the process of closing the outstanding aspects of the integration, our prime focus going forward will be to enhance customer experience. This will naturally take a while to be completed as it also involves a cultural change process.
Oman Mobile had more customers even though it was Omantel’s subsidiary. Did that make things difficult for the integration process? The two companies were not competing with each other.
In fact, Oman Mobile was working in the mobile telephony services domain. The very nature of mobile telephony means that it touches the lives of everyone.
Fixed lines on the other hand are mostly linked to households and businesses. So the growth in the fixed-line segment has traditionally been lower than that in mobile phones. We were operating in two separate domains, complementing each other and not necessarily competing with each other.
The number of fixed lines has remained in the 240,000-275,000 range for close to a decade. Now that Nawras plans to enter the fixed line space, do you foresee competition leading to an explosion in the fixed line segment?
These are two different services that we are talking about. In the case of mobile services, it is an individual who is the user. Households and businesses are the customers of fixed line services. The growth of the fixed line segment is thus dependent to a large extent on broadband services offers and the number of households while the growth in mobile subscribers is primarily dependent on how competitive and affordable the offering is and also the individual subscriber’s needs.
Some people have two or more SIM cards – one SIM card for a particular usage (like an office-provided line for local calls) and another SIM card for something else (international calls, personal calls and the like).
So, even if we should expect an explosion in the numbers of users, as current levels of penetration in the fixed market are moderate, seeing penetration levels to go beyond number of households is not as likely in the fixed market as it is in the mobile market.
Coming to the business segment, even though companies will have many fixed lines, they will always have fewer fixed lines than the number of their employees – meaning lines will be shared unlike mobile phones which are considered personal and used only by one person. So, while there may be a growth in the fixed line, that growth is not likely come close to the explosion in numbers that was witnessed in the mobile services sector.
With multiple players and rapid growth in the number of subscribers in the mobile services sector, do you think it has reached a saturation point?
Experts are now struggling to decide what penetration numbers make up the saturation point in a market, because the penetration numbers keep going up constantly. The numbers, of course, depend on how many SIMs people have. Also it depends on the transient population – people who come into the country, buy SIM cards and keep them for a while.
Some countries have tried to curb the number of SIMs in the market, particularly those used by the transient population, by reducing the validity time after they have left the country. That has not really happened in Oman. More interesting is the emerging market for machine to machine communication. What we are seeing is that many machines start to be connected to the network and there are many types of machines that may be connected to networks through SIM cards.
So we believe the numbers will continue to grow, not only due to the growing number of resellers, but also due to new ways to communicate.
As for resellers, we are expecting two more to launch. Three are already operational in the market. So, in the end, there is no critical limit in terms of the saturation point – meaning till what percentage of penetration you can go to. But there should be a limit on the number of resellers to reflect our specific conditions, e.g. size of the market.
In fact we are already above the 100 per cent mark – quite close to 140 per cent. This seems as a very high penetration level, but tomorrow, we may see even higher levels.
In this particular case, will the TRA's ruling on limiting the validity of SIM cards to six months be of any help to the operators?
The regulator is continuously studying the situation and as the TRA has already issued the new ruling, we believe it will serve to manage the situation and rationalise our finite number resources. When the markets have adjusted we do not feel that this will curb the growth in the mobile services segment. This move on the part of the regulator will probably encourage the active use of SIM cards, which will be beneficial to the operators and the market.
Do the new operators working on the MVNO model pose a threat to you? Will their growth eat into your profitability?
In a market where you have resellers, the incumbent players will have a special deal with the resellers and there will be a certain space (in terms of pricing) within which the resellers can manoeuvre. And this space is not governed by any special regulatory governance. What the resellers do with that space – meaning the difference between the wholesale and the retail price – is completely up to them. If they decide to compete on pricing, they can pass on some of the benefits of the lower pricing to their customer. Or they can use it to provide a different service, something that will be a differentiator between them and the other players in the market. Ultimately, it is the decision of the resellers about what course of action they would like to pursue in terms of gaining more subscribers and for their subscribers to increase usage. We look forward to seeing the players add value to the sector and to the market.
Does the fact that Omantel operates the only international gateway have a major impact on the international call market? There are currently two operators who can provide international gateway services – Omantel and Nawras. We will continue to build our capabilities and upgrade our services and also bring down pricing as and when market dynamics permit. Given that Omantel has continuously invested in deploying new technology, will increased competition help to bring down international call charges?
Call charges depend on many factors. Apart from the technological side, there are also commercial agreements to consider in bringing these down – agreements between operators in the call-originating country (Oman in this case) and the country where the call is terminated. We are continuously negotiating with our partners around the world to reduce the rates and from time to time, the rates do come down. In the last couple of years, the rates have come down significantly. This will continue to happen in the future too.
Is Omantel considering WiMax or 4G to take broadband to areas where geography and distance have so far prevented that?
We are currently continuing to expand our ADSL network. We have been taking our exchanges closer to neighbourhoods and remote places. In the last nine months, we have deployed over 100 MSANs (multiple service access nodes), which is a kind of neighbourhood exchange.
It allows us to provide high-speed Internet to more areas. Omantel is also considering numerous new technologies to take broadband to more places, especially to those areas where it is too expensive to take wireline (DSL) technology. We are working in close coordination with the regulator in this regard. Once we get the required frequencies allocated by the regulator, we should be able to announce our strategy on new wireless broadband services.
Do you have a time-frame for this?
In the coming period Omantel will be able to bring in new wireless technologies. But it is still too early now to elaborate on our plans or timelines. We will reveal them at some point in the future.
Has the introduction of 3.5G helped large-scale uptake of broadband?
Internet data usage has gone up by a massive 40 per cent after the launch of 3.5G wireless broadband by Oman Mobile. We believe certain deployments that we are doing on 3.5G will fuel a further increase in broadband. This is despite the fact that we have had major limitations in terms of frequency allotted to us this far. All our wireless initiatives will run in parallel to our strategies on the wireline front.
How quickly can you take broadband to the remotest parts of the country?
We are deploying the exchanges (MSANs) not only in Muscat but also in various other cities and towns in order to be closer to our customers and give them the benefit of higher speeds and better quality of service. However, there will be areas that we will need to cover using wireless broadband. We believe that Omantel is in a better position than any other company to do that since we already have the fixed infrastructure in many remote areas. We are thus in a position to go wireless for last-mile connectivity.
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