The ride to the top of the headquarters at Emirates Integrated Telecommunications Co.—du, to you and I—takes longer than the journey across Dubai Media City to reach it; 45 floors demanding elevator attention at almost every level, as workers mill in and out. Osman Sultan, CEO of what counts as the younger of the UAE’s two telecom giants—Etisalat being the other—is no exception. Veteran of the telecom industry, his time is in demand. The afternoon is drawing to a close, a meeting overran; he’s late. But the Lebanese chief exec can be forgiven; his company isn’t just riding a wave of social transformation, it’s at the heart of it.
“We just need to look at what our kids are doing,” asserts Sultan, who marvels at the morphing telecom behaviors of his own five children. “Look at the transformation in social behavior, how cities are getting organized differently, how corporations are doing their work.” The list goes on: evolution of the Internet, the explosion of smart devices, increased mobility, the social media revolution; take your pick. And du, with its close-to-2,000 staff, is in the mix.
Market cap of $8.26 billion hints at just how significant the company, which is listed on the Dubai Financial Market, has become to the UAE’s own data-driven transformation. Sole competitor, Etisalat, which is 60% owned by Emirates Investment Authority (EIA) and operates across multiple geographies, boasts a market cap today of around $25.5 billion—more than three times that of its UAE-centric counterpart. Still, since its debut in 2006, when mobile penetration in the UAE was already at 110%, du, which also counts EIA amongst its shareholders, along with Mubadala Development Company and Emirates Communications and Technology, has witnessed strong growth.
Revenues grew 9.7% last year to $2.94 billion, net profits hit $540.9 million up from $539.1 million in 2012, despite a $49.8 million increase in royalty charges, and its share in the UAE mobile subscriber market stood at 47.4% next to Etisalat’s 52.6% in December 2013.
The UAE’s du and Etisalat, however, are not alone in their dynamism. For Sultan, telecom is, quite frankly, the most exciting industry out there right now, in a world where—at the risk of sounding cliché—the only certainty is uncertainty. “I think the world is transforming from what I call ‘the unshared certainties’ to ‘shared uncertainties,’” asserts the articulate businessman who founded and ran Egypt’s MobiNil for seven years before assuming his current role in 2006.
Unpacking his assertion, Sultan explains that where sectors once worked independently to certain industry givens, stakeholders across industries are now collaborating in the face of rapid change. This isn’t a goodwill gesture; it’s vital to success in an environment where interdependency and knowledge-sharing reign.
It comes as little surprise then, that for the man who entered the telecom world in 1983, the debate over who’s leading the race is null and void. “I don’t like to use the words ‘leading’ or ‘following’—that is a little bit linear in my opinion. Today you have multiple stakeholders engaging in conversation and working to create an ecosystem.”
Where telecom is concerned, the ecosystem is thriving. Sultan’s company may be just one of two operators in the UAE, but competition has heated up of late as Etisalat turns its wandering international eye back to home turf. “2013 was dynamic because Etisalat came back to the market with new management, they underwent restructuring…they set new targets to refocus on the UAE, gain market share and fight back,” explains Taher Safieddine from Shuaa Capital.
Sultan is only too aware of the increased rivalry, describing the past three quarters as “heated” on the mobile front. And while du remains unchallenged in the home services arena, he acknowledges that it will only be a matter of time before things heat up there too. But despite the competition, for Safieddine, du is building on 2013 success. “Osman Sultan and the team managed to do a very decent job and I think they’re focusing on the right pockets of growth,” he remarks, pointing to post-paid—an area in which du is under-represented, with the segment accounting for around 9% of the subscriber base, compared to approximately 16% for Etisalat.
More broadly, findings from the research wing of Kuwait’s Global Investment House (Global), cited the GCC’s total mobile subscriber base at 83.2 million at the end of Q3 2013, with the UAE accounting for 18.2%. Now, the trend looks set to continue with telecom companies in the Emirates reaping the benefits of increased individual and corporate spending as economic recovery gains pace. Adding figures into the equation, Global estimates that du’s revenues will reach $3.05 billion this year, rising to $3.26 billion in 2016; compared to forecasts of $11 billion and $11.67 billion, respectively, for Etisalat.
It’s not just the UAE’s strong economic fundamentals that bode well for du, it’s the vision. The country’s “deliberate political willingness,” as the CEO puts it, to embrace the smart universe and the digital space, is unique. The announcement from Dubai Government last year of two key drives is fuelling the smart fire: the Smart Government initiative and the goal to elevate Dubai to the status of smartest city in the world within three years. The Smart City project is set to enable the public to interact via smart phone with government departments 24/7, with fiber and high-speed Wi-Fi at its core.
For the du CEO, who describes himself as tech-savvy, but “not a geek,” the implications for his company are manifold. At the infrastructure level, du has a clear part to play in its traditional role as a telecoms operator; from developments in mobile technology, to Wi-Fi, to fiber. “The UAE is the highest-ranked country in terms of deployment of fiber in the world and the du story has been a continuity of this,” explains the man who built his career at The Orange Group in Europe, Questel Orbit Inc and France Telecom Group.
As smart initiatives pick up pace, du is also entering discussions with real estate developers—thus far unnamed—that could see collaboration in designing the digital layer of newly-developed communities. The CEO anticipates a role in the regulatory sphere too. As the country moots the best way to manage its pioneering systems once up and running, questions remain over how to ensure security, and the best methods of payment and authentication for customers.
And let’s not forget the creativity that engineered the digital revolution in the first place. “There is a layer of building the ecosystem for all these people to be able to be creative, devising applications on anything—applications using transportation, applications using weather—whatever,” explains Sultan.
From infrastructure to creative design, the ambitious CEO may have carved out roles for his company to help turn Dubai’s vision into a reality, but the effort is unmistakably collaborative. “When it comes from the top as it’s happening, it has to be a convergence of efforts of various stakeholders,” urges the seasoned telecoms expert.
Convergence defines his own philosophy too, with his du vision inspired by—as he terms it—“the UAE way of doing things.” For Sultan, this is nothing short of a “milestone in the history of civilization” as the Emirates develop global hub status for industries as wide ranging as finance to fashion.
Still, keeping up with an ever-evolving landscape where ‘long-term’ is a thing of the past, can be tough. This is a reality that Sultan takes in his stride; predicting the future is becoming increasingly hard, but in his opinion, it’s not necessary. “You don’t need to predict exactly, you just need to read the major trends,” he asserts. “I always like to say, ‘I’m stubborn on the vision, I’m flexible on the execution as long as we’re going in the right direction.’”
Maintaining the right direction in a transformational era requires a business model as flexible as the execution. Where voice and later messaging once dictated telecom business models, data now occupies top spot. Moreover, new players are on the scene, revolutionizing the way society interacts—WhatsApp serving as a prime example. Sultan isn’t fazed; “Good for them! We have to learn to be innovative, not only in terms of technology, but in terms of new business models.”
The quest for a malleable model isn’t the only challenge that he appears to relish. “Leapfrogging” challenges—doing things differently—is in fact, says the CEO, the genesis of du. But in all the talk of technological advancement, the greatest task has a human face; making sure that competencies, skills and talents evolve at the same pace as change.
This need translates to the societal level too. “If you go to dinner with friends, you have a discussion on how to deal with your child when he isn’t interacting with you the way you used to because he’s on a console,” Sultan hypothesizes. “There are fundamental conversations and if we are moving towards shared uncertainties, we need to make sure they are happening.”
And who better to have them with than a veteran of the communications world? The du CEO isn’t all talk—a 30-year track record attests to that—but in a time of social transformation where collaboration and knowledge-sharing are the orders of the day, it’s time to engage in constructive conversation.
Fixing his tie and heading back to the boardroom to rejoin the meeting he left, that’s exactly what Osman Sultan is about to do in the quest to keep his company beating with the heart of change.