Interview: Osman Sultan
What new opportunities lie ahead for private sector participation, and what challenges does the telecoms industry in the GCC region face?
OSMAN SULTAN: New channels of communication are bringing in additional players. The opportunities span from companies’ core business, to new marketing channels, to creating an environment that will enable this country to thrive as a regional business centre. The UAE has performed admirably over the last 20-30 years, first as a centre for goods and merchandise through the Creek and the ports, then with a focus on aviation, themed cities, hotels and more. Later, the country concentrated on capital and investments, with sector-specific free zone clusters. The UAE must now sustain the move towards becoming a key digital player to reinforce its competitive advantage, partly through greater collaboration on the infrastructure front. Duplication of infrastructure investments with individual operators laying their own fibre networks is not economically efficient, so there will need to be more sharing of infrastructure and greater participation from the government, as is the case in Australia, Korea, Japan, Singapore and Qatar.
How can the ICT industry strengthen integration of technology into other sectors of the economy?
SULTAN: The sector needs an overall strategy to optimise the advanced position that the UAE has in terms of telecoms infrastructure. The UAE is a strong contender to be the first country with 100% fibre-to-the-home coverage. Telecoms services, and their underlying infrastructure, are more crucial than ever because tourism, banking, education, media, capital markets and more all require high-quality connectivity at reasonable costs to be globally competitive.
What strategies can better monetise user bases?
SULTAN: As markets become more advanced in terms of liberalisation, there is growing pressure on profit margins. The constant struggle for telecoms operators around the globe is to grow shareholders’ returns, while at the same time tackling the inherent contradiction between rising investment demand and falling revenues and margins. Revenue was once driven by voice calls, which is now becoming a commodity. The economics of providing access are under pressure, so we need to learn how to move away from charging individual customers and towards monetising audiences. This is the model of the dominant players such as Google and Facebook. I do not believe that we are in direct competition with these players, but we have to coexist with them as they begin to step into the services we provide, such as messaging and even voice, blurring the lines between traditional telecoms operators and over-the-top players. There will be a transformation in the entire ICT model, not just in telecoms. We need to start shifting from offers that are voice-centric to those that are more data-centric, in the sense that data becomes the core of our offerings, instead of being the “add-on” to voice plans.
With the current focus on value-added services, do you foresee a renewed focus on infrastructure?
SULTAN: I do not believe that we will see operators focusing on competing on the infrastructure side of the business. Rather, I expect a global trend toward less infrastructure-based competition, with more and more state investments in infrastructure assets. On the services layer, however, there will be less government and more private investment and competition in the medium to long term, for example, with mobile virtual network operators. The traditionally vertical world of telecoms is becoming more horizontal. In addition to infrastructure and access, security will play an increasingly important role, along with applications and content. Digital distribution and payments will also be key. Infrastructure investors will be analogous to utility investors, seeking predictable incomes, long-term reasonable returns and less competition. Meanwhile, application and content investors will be seeking higher and more immediate returns, which will naturally be more volatile.
Read More from OBG
