Saudi Telecom tower management unit to begin commercial ops soon

Saudi Telecom Co.’s (STC) tower management subsidiary will start commercial operations soon, CEO Nasser bin Sulaiman Al-Nasser told Argaam.

The new tower management firm is expected to add value to STC’s business in the coming years, as there are great cooperation opportunities with other operators on tower management and telecom infrastructure, Al-Nasser said.

Elsewhere, he said that STC’s investment in regional ride-hailing firm Careem was very much successful and represents the firm’s diversified investment strategy.

Going forward, the telco plans to take advantage of any feasible opportunity that would add to its business integration, as the firm has all the financial, technical and logistic capabilities to pursue opportunities, whether in new licensing or ICT acquisitions.

Here’s the detailed Q&A interview with Al-Nasser:

Q: The Company reported 6 percent increase in Q1 2019 earnings. Your comments on the same?

A: This achievement is attributed to the firm’s continued implementation of its strategic plans and providing better services for its clients. Adopting cost cutting initiatives, the remarkable performance of subsidiaries, and various investments have all positively impacted Q1 results.

In addition, the company focused on digitalization, performance development and providing innovative digital services including cyber security, cloud computing and the Internet of Things (IoT), as well as enhancing data economics, which collectively boosted quarter earnings.

Read: Saudi Telecom likely to post flat profit growth in Q1 2019

Q: How much did the company save from the expenditure efficiency program?

A: Developing operations through the expenditure efficiency program and raising performance efficiency is one of the most important goals the firm always seeks to achieve.

The firm has been adopting the program for four years, including short and long term initiatives which took into account the best telecom practices. The program was a success and its impact is expected to continue for years to come.

The program’s impact on the results is evident in the improved profit margins throughout the previous years and quarters, which sustained a high return on share and a continued cash dividend distribution.

Q: Did the firm make any foreign investments in 2018? How would you evaluate your investment in Careem?

A: The company didn’t have foreign investments in 2018. The firm, however, plans to take advantage of any feasible opportunity that would contribute to business growth. STC has all the financial, technical and logistic capabilities to pursue opportunities, whether in new licensing or ICT acquisitions.

The company has the experience now and we’re focusing on the Saudi market and the Middle East and North Africa (MENA) region.

As for the investment in Careem, it’s part of the firm’s strategy to invest in new and diverse routes, enabling digital transformation and enriching customers experience.

Careem investment was more than successful, after Uber acquired Careem for SAR 3.1 billion. STC’s 8.8 percent stake in Careem is valued at $274 million, in addition to indirect stakes through STC Ventures and Saudi Technology Ventures at 6.4 percent and 2.9 percent, respectively.

Q: Would you clarify more on STC Ventures’ performance in 2018 and Q1 2019?

A: The fund started operations early 2018, and in spite of its outstanding performance, it is still early to judge its performance as its purpose is to support the company's long-term business.

The largest investment fund specialized in venture capital in the region was successful last year with investments rounds worth $250 million, representing about 30 percent of venture capital investment in the Middle East and North Africa, valued at $893 million.

The fund's direct investments reached $100 million a year from debut, making it one of the largest venture capital funds in the region, and one of the key supporters of discovering and promoting companies that can make a dent in entrepreneurship with promising growth opportunities in the technology sector.

Read: Saudi Telecom Co launches first US$ dominated sukuk

Q: Any updates on the tower management firm and its strategic partnerships?

A: As have established a specialized company for tower management, as part of our "accelerating core asset performance" strategy and it will start commercial operations soon.

The new company will start with focusing on managing STC towers. We believe that there is a great cooperation opportunity with other operators in terms of tower management, which represents a strategic national initiative to increase the return on investments in telecom infrastructure.

The firm is expected to add value to STC business in the coming years.

Q: STC closed its stores for a day and provided its services and sales through the My STC app in 2018-end. What were the objectives and the results of this experiment?

A: The experiment was very successful and business wasn’t affected by any means.

We aimed to encourage our clients to try our special digital channels and show the firm’s digitalization capabilities, as customer experience innovation is part of our strategy.

We closed 220 stores for 24 hours in 118 cities. Sales through the app increased by 500 percent and rose 86 percent through other digital channels.

Q: What’s new on your negotiations with the Saudi Arabian Football Federation (SAFF) to broadcast football matches and sponsor the new football season?

A: We’re still in negotiations with both the Sports authority and SAFF and any developments will be revealed as they occur.