A disciplined approach

01 February 2009 |


STC Wholesale has expanded internationally with a view to taking a place on the global telecoms stage, reports Guy Matthews.

A Middle East telecoms operator does not derive status simply from effective delivery of services to its domestic market. To be taken seriously you need a wide-ranging international footprint, and it helps to hold a stake in one of the subsea cable systems that land in the region so that you can play a part in the international movement of traffic.

Partly as a legacy of a heavily protected and carefully regulated economy, and partly because it has, unusually for a Persian Gulf country, a huge domestic market to keep it busy, Saudi incumbent STC was late to the game of besting rivals on the global stage.

But with peers like Batelco and Zain now licensees on Saudi soil, STC has been investing to catch up internationally. In a short time, STC has developed a comprehensive international wholesale offer, as well as taking a stake in the delivery of retail services in a number of markets.

“STC has expanded internationally over the last few years through acquisitions and new licenses, and now has a footprint in Kuwait, India, Indonesia, Malaysia, Turkey and South Africa,” says Abdulrahman Bahanshal, marcoms manager with STC’s wholesale business unit.

STC has also just won Bahrain’s third mobile licence at a bargain price of $230 million, a symbolic move in the light of the Bahraini incumbent’s involvement in the Saudi fixed-line space. It has a slice of Kuwaiti mobile business, and a 35% stake in Oger Telecom giving it part control over South Africa’s C-Cell and Turkey’s Turk Telekom.

But STC’s evolution as a wholesaler best defines its progress from an introspective state monopoly to confident global player. After all, anyone with enough money can bid for a domestic licence, but success at a wholesale level demands scale, reach and above all credibility.

STC’s approach to building wholesale operations, domestically and in the wider region, has required hard work and rigour, says Bahanshal. “STC Wholesale has a disciplined approach. Wholesale clients are defined as national and international licensed operators in the retail or wholesale telecoms sectors who either own network facilities, or are operating through other licensed service providers,” he says. Bahanshal explains that on a national level, STC currently serves Saudi Arabia’s other licensed mobile operators, namely Mobily and Zain, data operators ITC and Bayanat as well as newcomer fixed-line operators like Atheeb: “We also serve international and regional carriers, data operators and ISPs.”

He says STC Wholesale has developed strategically targeted wholesale products and services that address the requirements of wholesale clients that are segmented along geographical and business lines: “More than 50 wholesale services are now offered by us in categories like voice services, data services, capacity services, IP services and co-location,” he says. “National services include, but are not limited to, national call and SMS termination, national roaming, transmission and interconnection links, mobile number portability, international call conveyance, mobile tower site sharing and IP and internet connectivity. International services include international call and SMS termination and transiting, IP and internet transit, international hard-patched transit, international submarine cable capacity, and international landing station interconnection.” He says that STC’s international wholesale business is backed by capacity on a diverse set of national and international routes served by consortium-based submarine cable systems including SeaMeWe4, IMeWe and EIG.

He concedes that the Middle East wholesale telecoms market has become a very competitive place over the last few years. “This trend will continue with the advent of licensed virtual network operators representing a new customer segment for wholesalers,” he says. “As a consequence of the increased competition, wholesalers have accelerated their efforts towards offering more innovative services, improving quality while at the same time reducing prices.” He points out that despite competition, STC remains the largest telecommunications operator within the Middle East region, still ranked amongst the top four Middle East organisations. “STC is capitalised at more than $30 billion, even after the drop in the Middle East stock market,” he claims.

He sees the next 12 months as an exciting period for STC Wholesale. “The IMeWe and EIG submarine cable systems will be either complete or close to completion,” he says. He points also to the possibilities that should emerge from STC’s partnerships with global operators.

One such is AT&T. John Gibson, president of business development for AT&T’s Middle East and Africa business, says he is impressed with the way STC has streamlined domestic operations and expanded into other markets. But despite tokens of progress, it is early days for STC internationally, says Mohsen Malaki, manager with Dubai-based analyst Delta Partners: “STC does not have a fully developed wholesale strategy yet,” he says. “Etisalat does, and is well established in places like Africa as well as having a stake in several subsea cable consortia. STC’s wholesale revenue at the moment is mainly domestic.