STC LOOKS TO THE FU­TURE

AF­TER A TU­MUL­TUOUS TURN OF THE DECADE, STC LOOKS TO MAKE THE MOST OF ITS RESUR­GENCE BY TAP­PING INTO DATA

CEO Middle East - - CONTENTS -

CHART­ING THE TELE­COM OP­ER­A­TOR’S RESUR­GENCE AND ITS AM­BI­TIONS

IT TAKES ZEAL, INI­TIA­TIVE, AND THE abil­ity to ex­e­cute a plan to be ef­fec­tive as a CEO, and few com­pa­nies de­mand that com­bi­na­tion from their top ex­ec­u­tives as much as Saudi Tele­com Com­pany (STC).

The largest tele­com op­er­a­tor in the Mid­dle East by mar­ket value, STC op­er­ates in an in­dus­try which de­mands ag­ile think­ing and in­no­va­tion. Long re­liant on rev­enue from voice and SMS ser­vices, the emer­gence of the three fastest adopted forms of tech­nol­ogy in hu­man his­tory – the in­ter­net, smart­phone, and 4G LTE – has the tele­coms in­dus­try scram­bling to find a way to re­tain its profit mar­gins as the mar­ket for cheap data con­tin­ues to grow by leaps and bounds.

Nowhere in the Mid­dle East does that hold more true than in Saudi Ara­bia, a coun­try that could lay claim to hav­ing the most dig­i­tally hun­gry pop­u­la­tion in the GCC; more than 44 per­cent pre­fer us­ing apps on their phones to browse the in­ter­net, ac­cord­ing to AT Kear­ney, out­strip­ping the GCC av­er­age (42 per­cent) and even ma­ture mar­kets such as Europe (25 per­cent) and the US (36 per­cent).

Ad­di­tion­ally, the coun­try has also ar­dently pur­sued a lib­er­al­i­sa­tion of its telecom­mu­ni­ca­tions econ­omy. From one tele­com op­er­a­tor un­til 2005, the coun­try now has six in­clud­ing a num­ber of low cost mo­bile vir­tual net­work op­er­a­tors aim­ing to carve a share out of the grow­ing mar­ket for data in the coun­try.

The mo­bile broad­band phe­nom­e­non had a marked ef­fect on STC’s for­tunes. In 2013, an­nual prof­its fell 43 per­cent from their 2006 peak, in stark con­trast to the pe­riod be­tween 2002 and 2006 when prof­its had quadru­pled.

Part of the rea­son for the abrupt change in prof­itabil­ity was that Saudi Ara­bia’s in­tro­duc­tion of a sec­ond tele­com op­er­a­tor in the coun­try. In re­sponse, be­tween 2007 and 2011, STC spent $10.6bn in a slew of ac­qui­si­tions that saw it lead

the charge among GCC tele­com op­er­a­tors scoop­ing up newly ap­proved tele­com li­censes in fron­tier economies in a bid to boost prof­its. STC, in fact, ex­panded its scope of global op­er­a­tions all the way from South Africa to In­done­sia in­clud­ing In­dia. How­ever, suc­cess was not eas­ily at­tained. Global ex­pan­sions at the turn of the decade came while its own do­mes­tic prof­its dropped nearly 74 per­cent in 2012. Do­mes­tic prof­its also ac­counted for well over four fifths of the com­pany’s rev­enue base, and poor per­for­mance in 2012, when prof­its fell 79 per­cent in the first quar­ter over the same pe­riod a year ear­lier, led to a sig­nif­i­cant chunk of its se­nior lead­er­ship to de­part over lack­lus­tre per­for­mance.

How­ever, over the past five years, STC has man­aged to re­verse a trend that had de­fined its tra­jec­tory over the prior decade. It took nearly two years for CEO Khalid Bi­yari to be named CEO of the $21 bil­lion com­pany in Jan­uary 2015 af­ter which he ex­e­cuted the turn­around plan that has ce­mented the com­pany’s sta­tus as a re­gional be­he­moth to­day.

Dur­ing his three year ten­ure, which ended in Fe­bru­ary af­ter a royal de­cree named him As­sis­tant Min­is­ter of De­fence, Bi­yari suc­cess­fully steered the state owned op­er­a­tor to sta­bil­ity, even reg­is­ter­ing an in­crease in prof­itabil­ity – an­nual net in­come in 2017 grew by 1 per­cent over a year ear­lier.

That trend looks set to con­tinue un­der the stew­ard­ship of new CEO Eng Nasser Bin Su­laiman Al Nasser. Half year net prof­its at STC in 2018 al­ready show a 3.3 per­cent in­crease over the same pe­riod last year.

Key to the com­pany’s fu­ture will be how it lever­ages the growth of data into its fu­ture strat­egy, some­thing Al Nasser aims to pur­sue to its fullest.

The com­pany, along with Etisalat, re­cently an­nounced the avail­abil­ity of 5G ser­vices. Em­bold­ened by a $100 mil­lion in­vest­ment in re­turn for a 10 per­cent stake in re­gional startup uni­corn Ca­reem, STC is also look­ing to bankroll more ven­tures that could help break ground into ar­ti­fi­cial in­tel­li­gence and vir­tual re­al­ity. The cash pile at its dis­posal stands at $500 mil­lion in an in­vest­ment fund run by ex-Google ex­ec­u­tive, Ab­dul­Rah­man Tarab­zouni, and the fund could be larger.

“[Our in­vest­ments] will help to achieve the tar­geted growth that the com­pany seeks in the near fu­ture,” said Al Nasser in a state­ment an­nounc­ing the com­pany’s half year re­sults.

“In ad­di­tion, the new data cen­ter in Riyadh, which rep­re­sents the in­fra­struc­ture of dig­i­tal trans­for­ma­tion, has been launched in line with the Na­tional Trans­for­ma­tion Pro­gram 2020 and Vi­sion 2030. It will have a pos­i­tive role to play in sup­port­ing and en­abling the dig­i­tal ser­vices for both pub­lic and pri­vate sectors in ad­vanced tech­nolo­gies of cloud com­put­ing, cy­ber se­cu­rity, data anal­y­sis and smart cities.”

Al Nasser added that the com­pany aims to ex­pand its in­vest­ment in tech­ni­cal and Fin­Tech so­lu­tions and con­tent, as well as open 12 new data cen­tres within the next three years. “This will make us the largest provider of in­fra­struc­ture in the Mid­dle East for Cloud Com­put­ing ser­vices,” he said.

As tech­nol­ogy con­tin­ues to af­fect con­sumer be­hav­iour, STC will need to keep on top of its strat­egy to make the most of data to re­main among the Mid­dle East’s most rel­e­vant tele­com op­er­a­tors. For­tu­nately, this time, it looks like it has mo­men­tum on its side.

In charge A 22 year tele­coms vet­eran, Eng Nasser Bin Su­laiman Al Nasser was named STC CEO in Fe­bru­ary

Data charge With a $500 mil­lion in­vest­ment fund and new data cen­tres on the hori­zon, STC is bet­ting big on data

Newspapers in English

Newspapers from UAE

© PressReader. All rights reserved.