By Neil Halligan
Increased competition and an economic downturn have created a tough playing field for Bahrain’s telcos. But despite the challenges, CEO of the national operator, Batelco, Muna Al Hashemi remains confident about the future.
Muna Al Hashemi remains remarkably calm as she discusses the “very challenging” business year for Bahrain’s national telco, Batelco.
Once a monopoly, Batelco is now facing a crowded market, with strong competition from Kuwait’s Zain and Saudi Telecom Company-owned VIVA, as well as about ten internet providers for 1.4 million residents.
Current economic conditions are making it increasingly difficult to keep up margins. Batelco Group, the telco’s parent company, is reflecting those difficulties in its most recent quarterly figures. The state-owned company reported a 27 percent drop in revenues for the third quarter, compared to July-September 2015. In year to date figures, Batelco Group ended the nine months with a net profit of $86m, a 21 percent drop on the previous year.
Batelco Bahrain, which contributes 41 percent of the group’s revenues, reported a nine-month profit of $62m, a 24 percent drop from 2015.
“It’s very challenging, and interesting at the same time, because in Bahrain the market is very dynamic,” Al Hashemi says in the midst of another busy Gitex event in Dubai’s World Trade Centre.
“For us, we love to work in such a competitive environment because you’re always pushing the limit of everyone.”
Bahrain has seen a number of cutbacks in spending at government level, and while Hashemi admits there is an impact on business, she insists that Batelco Bahrain is focussed on the future.
“Let me be honest: there is an impact on that definitely, but being a national company we are here to support the government,” she says. “This is the time that we need to support the government so that we can cross the critical period. For that, we don’t look into what we have lost today, we look into the future opportunities.
“From market share, from customer size, yes we have grown in almost all the areas. From the profitability perspective, this is something that’s a natural reaction to the economic situation of Bahrain.”
Added to the strong competition from other telcos in the kingdom, Batelco faces challenges in what is a consumer-driven marketplace.
Batelco Group revealed in the third quarter figures that subscriber mobile numbers at the Bahrain telco are down by 6 percent year-on-year, which it said was “due to market pressure”.
Speaking prior to the release of the quarterly financials, Al Hashemi says Batelco Bahrain has “grown in the majority of segments, be it from the consumer side or the enterprise”.
Mobile penetration in the kingdom is among the highest in the world — Al Hashemi says it’s 200 percent, compared to the global average of 40 percent.
“Bahrain is considered to be one of the leading countries in the telecommunications [sector] and that has been proven by a couple of the international research [reports],” she says.
The reason, Al Hashemi explains, is a mixture of Bahrain’s wealthy and budget-conscious consumers.
“The [high] GDP per Bahraini citizen … allows them to have multiple sim cards. Beside this, the prices in Bahrain are considered to be the lowest in the region, if not the world. It is too low, and that’s why it has becoming affordable for everybody,” she says.
“You can even see the low-end workers in Bahrain, they will be carrying easily two to three sim cards in their pocket and they will respond immediately to the cheapest price. All the lines will be active, but they will switch to the cheapest price. The level of pricing point in Bahrain was a real driver for this high penetration of mobile.”
Competition has helped keep the pricing competitive and so Batelco has adopted a core strategy to “become really innovative”.
“If I were to summarise it in other words, we decided to keep the customer at the centre of everything we do. We would like to become the customer-centric organisation,” Al Hashemi says.
“One way to sustain this is to really become innovative and ahead of the game, focussing on the digital aspect, because the traditional service is no longer sustainable. We would like to make sure that we provide the best customer service, end-to-end, addressing their needs. We would like to provide a differentiated service.”
Part of that strategy has seen Batelco invest in fibre optic cabling across the kingdom that has significantly improved broadband speeds and its customer base.
The outstanding positive for Batelco Bahrain in the most recent results was the 29 percent year-on-year increase in broadband subscribers, which has been attributed to the take up of fibre services.
“We are rolling out fibre optic cable to the majority of cities in Bahrain,” says Al Hashemi. “We launched the 500MB [megabytes] per second, which is the fastest broadband to home. We are committed to rolling out more and more.”
At the recent Gitex in Dubai, Batelco signed a number of agreements that Al Hashemi says will continue to keep the national telco ahead of the competition. The most significant from a consumer point of view was the signing of a memorandum of understanding with Ericsson to collaborate on the development of 5G and the use of ‘internet of things’ (IoT) in Bahrain. The agreement hopes to see IoT applications being developed on the 5G mobile network technology based on the market requirements in Bahrain.
“We are very proud that we were the first to launch 4G service in Bahrain. Then, we were the first to launch using the technology to have the fastest 4G mobile network (4G plus). It gives us a speed of almost 250MB per second for the individual,” Al Hashemi says. “We will trial 5G and the other IoT applications in life-case scenarios to see what demand 5G could bring to the market.”
Al Hashemi says there’s a significant demand for security services in Bahrain, underlined by the partnership agreement with Sophos, an IT security and data protection company. Batelco also has a partnership with US-based network security company Palo Alto Networks.
“There is a big focus right now, even from the government: security… the safety of people. It’s not only in Bahrain, I think this is the trend worldwide. We believe the ICT sector can really help the community here by addressing the security aspect,” Al Hashemi says.
As part of its burgeoning smart city strategy, Batelco launched a smart bus — which is equipped with cameras and sensors aimed at increasing safety on board.
“It’s about how we can really help the community, especially when it comes to the kids at school, by providing them with complete digital bus whereby we are allowing their parents, the school and all the administration to be in contact with the people. The objective is to provide the utmost security and safety for our children,” she says.
Developing smart cities in Bahrain is the next step, with support for the various IoT additions coming from the highest echelons in the kingdom.
“There is very good appetite from the authority in Bahrain and the big players and influencers,” Al Hashemi says.
“There’s a clear roadmap from the government to really encourage and to turn Bahrain into an ICT hub. The smart city is one of the many things that will come under this umbrella.”
Growing its own ICT capabilities, Batelco launched a TV service earlier this year. Batelco TV, which uses Internet Protocol TV (IPTV), offers OSN channels, as well as a movie library and a catch-up TV service. Recently, it added Netflix to the service, which it hosts on its data server.
“The take-up is very encouraging so far,” she says. “[Netflix] is complementing what we’re providing, because with the users in Bahrain, you have people who are adamant about OSN [but also] love to see Netflix. We’re providing them with options and it’s up to the customer to decide.”
Al Hashemi is also hoping to tie-up with beIN Sports, which would give Batelco TV access to a wide range of sporting events, including the English Premier League.
“They are not with us right now, but we are hoping to get them on board. They have their own governance and structure that does not allow them, at this stage, to join us,” she explains.
Al Hashemi says IPTV could work well with the small and medium-sized enterprises, “especially if they are having their own hospitality models”.
“We can see a really big demand from the consumer because it’s combining more than one box in one. We have paid attention to the experience and how user friendly it is,” she adds.
An engineer by profession, Al Hashemi has been a pioneer in Bahrain, becoming the first female to be appointed CEO in the GCC telco industry. She says her appointment in late 2014 did not come as a surprise in Bahrain, given the kingdom’s enthusiasm in promoting equality in the workplace.
“I’m very proud to get this role; it means a lot to me,” Al Hashemi says. “But it didn’t come as a surprise to me because if you look into the culture of Bahrain, having women in leadership positions is not something new.
“Probably in the telecom industry, yes, I was the first one, but we also believe in Bahrain there are fair opportunities. It doesn’t matter whether you are male or female, it all depends on the capability and the performance. I have a very supportive board of directors who really pushed for that. We got the support from the board and government to give an equal opportunity to everybody. What matters really is the performance.”
And that performance starts with the figures. While profits have fallen from their high speed rates, with Al Hashemi at the helm, it is not worth hanging up on Batelco just yet.