Exclusive Q&A: Mobily CEO says debt default not on the horizon

As fiscal year 2015 winds to an end, Argaam speaks with Ahmad Farroukh, chief executive officer of Mobily, about his expectations for the telecom sector, as well as the company's debt outlook and overall performance.

Farrouk, who was appointed as CEO in July 2015, joined the company during a tumultuous financial time. However, he says Mobily is on its way to profitability, as it plans to capitalize on key growth areas within the sector.

Q: What is Mobily’s outlook for the Saudi telecom sector in 2016?

A: “At the end of Q2-2015, the total number of mobile subscribers reached around 53.1 million representing a penetration rate of 170.5 percent. This clearly demonstrates that at least in terms of voice and messaging, the market is close to saturation. However, the sector still provides for several growth opportunities. In terms of traditional communication services, 2016 market growth is expected to be slower than 2015. However, there is still potential in many areas within the telecom portfolio, such as FTTH (fiber-to-the-home) and advanced ICT solutions that represent a growing need for government and business sectors.”

Q: What strategy is the company utilizing in order to increase its market share going forward?

A: “As I have mentioned, data is the most obvious choice, which everyone will be now focusing on. And, hopefully over a period of time, you will see a lot of innovative, first-to-market services coming from Mobily that will be immensely useful for our customers.”

Q: How will Mobily handle current debt covenants?

A: “We are already in negotiations with banks regarding only one covenant and we trust to wind up these discussions soon. I would like to seize this opportunity to ensure that Mobily has not any payment default with any of its lenders.”

Q: What is the company currently doing to further develop data services in Saudi Arabia?  

A: “Data is one of the key growth areas, both directly and indirectly for the industry. We are focusing on improving the penetration of our FTTH infrastructure, since we cover now about not far than one million households across the kingdom. With our technical input and infrastructure, Yanbu for instance, is set to be the first truly smart city of the Kingdom.”

Q: Are there any updates on the sales of Mobily’s infrastructure towers in the kingdom?

A: “We are still working out how possible and how effective such (an) arrangement will be. We definitely feel that as an organization we should be more focused towards our core products and services, rather than facilities management. However, we are not in a position to say anything definitive about it for now. We will not undertake this step until we are confident it will bring value to our investors and will not negatively affect our customer experience.”

Q: When does Mobily expect to return to profitability? 

A: “We definitely are on our way back there; we are focusing on balancing our income and costs through our operational excellence initiatives, as well as driving revenue generation. Once again, it would be a bit speculative to give a date for this.”

Write to Reem Abdellatif at reem.a@argaam.com