Dr Saad Al Barrak, CEO of the Kuwait-based MTC group, is an
ambitious man. "Our plans are based on our long-term vision,
which is to expand regionally, then internationally, then
|Saad Al Barrak:
Organic growth will
lead us to more than
22 million subscribers by
the end of 2006
And he's already heading along that road. "We've started in
January 2003. We were only in one country at that time, with
600,000 subscribers. Today we are in 19 countries with 15
million plus subscribers."
It won't stop there, he says: "We will continue expanding in
our emerging markets, such as the Middle East and Africa, and
part of Asia such as Pakistan, India and Bangadesh."
MTC operates in Kuwait as MTC Vodafone, as it does also in
Bahrain. It has other brands in neighbouring countries:
Fastlink in Jordan, MTC Touch in Lebanon, and MTC Atheer in
But in April 2005 it made its biggest move so far, by buying
Celtel, a Dutch-registered company with operations in 13
African countries, for $3.3 billion. And in December, under
MTC's ownership, Celtel bought a majority stake in Madagascar's
mobile operator, Madacom, for an undisclosed sum.
Early in 2006 Celtel took over the remaining 61% of Mobitel
in Sudan from the incumbent, Sudatel, in a deal valued at $1.3
billion, taking ownership to 100%.
So that's growth from one country to 19 countries in three
years. Celtel brought operations in Malawi, Kenya, Tanzania,
Uganda, Zambia in the east, both the Congos in the middle,
Burkina Faso, Gabon and Sierra Leone in the west, and Chad and
Sudan further north.
Al Barrak doesn't want to stop there: "Africa is definitely
a prime target for us. Through our company Celtel we definitely
are determined to be the leading African mobile operator."
The company is already "pursuing opportunities in the
biggest 20 economies in Africa to start with", which implies he
has ambitions in Nigeria and South Africa. Yes, he confirms:
"We are looking at opportunities in Nigeria, Ghana, Senegal,
Angola and South Africa as well."
The company announced in February that it was applying for
the third mobile licence in Egypt, but there are, so far as we
know, no plans for additional mobile licences in South Africa.
There are three operators in the republic: MTN, which has no
connection with MTC, Vodacom, which does have a connection with
Vodafone, and Cell C.
Is he looking for an extra licence or at one of the existing
operators. "No we're looking at one of the existing," says Al
And what sort of deal would that be? "Acquisition," he says,
bluntly. What is available in South Africa? "Anything could be
available for the right value."
That implies he has a large budget for acquisitions. Yes,
"we have $5 billion", he confirms, "for the next two
Islamic finance deal
MTC, which is the second largest company on the Kuwaiti
stock exchange, has usually relied on conventional funding
arrangements. But earlier this year in concluded a $750 million
Islamic finance — or murabaha — facility. A
total of 20 financial institutions, from the Middle East, North
Africa, Asia and Europe, took part in what has been one of the
larges Islamic financings.
ABC Islamic Bank, Calyon, Gulf International Bank and Kuwait
Finance House were joint bookrunners.
Proceeds were uses to partly pre-pay a $2.4 billion bridge
facility that MTC used in May 2005 to fund part of the Celtel
Mandated lead arrangers were ABC Islamic Bank, Calyon, Gulf
International Bank, Kuwait Finance House, Arab Bank and
National Bank of Abu Dhabi. Gulf International Bank was the
modareb and facility agent.
NBK Capital, the investment banking arm of the National Bank
of Kuwait, acted as financial advisor to MTC, which decided to
tap the Islamic market for the first time, in line with the its
overall strategy to diversify sources of funding.
And how does he plan to spend that $5 billion over two
years? "It's mainly acquisitions but we are looking for some
greenfield licences," says Al Barrak. "For example, the third
licence in Egypt, the third licence in Saudi Arabia. In general
it's mainly acquisitions."
Does he have any particular preferences for technology? Is
it GSM all the way through or is he also looking at 3G. "For
us, it's either. We are a mobile telecommunications company,
mainly in GSM and 3G, but we will not exclude other options of
Most of the revenue is voice. "It will continue to be voice
for a very long time. You're talking about 90% of the
Let's project forward those two years. When he's spent that
$5 billion, where does he hope to be in terms of subscriber
"At the end, if we organically grow, our organic growth will
lead us to more than 22 million subscribers by the end of 2006.
But we are hoping to reach 30 million in two years."
At the beginning of the interview he spoke of a progression
from regionally, to internationally, to globally. Does that
mean he is looking further afield that in the markets where MTC
is established now?
"The priority is, if there are enough opportunities in our
direct markets, that's fine. Otherwise we would definitely
entertain opportunities in eastern Europe, Russia and places
What particular skills does MTC have that means they will be
good territories for the company? "The skills we have in MTC:
we have the most diverse countries and economies and cultures
that any company has," said Al Barrak.
But doesn't that make it hard to get synergies? "No, I think
synergies are there. The point is we want to be a leading
company in emerging markets. That's an area we can handle,
vis-à-vis other international players who have not done
well at all in emerging markets — you can see that
from their track record."
Why have they failed? "They are not geared to leverage such
opportunities. It would be a stupid mistake by them to try to
address it at this stage. They have enough on their plate and
they should keep busy with what they have."
What is MTC's policy with regard to suppliers? Does he plan
to work with the same suppliers across all territories? "No,
it's really value addition. We have a great relationship with
all renowned suppliers. Obviously with a footprint which is the
fourth largest mobile company worldwide, definitely suppliers
are highly interested in MTC and therefore we are talking
openly all the time with all of them, looking at new
technologies and better economics."
This is a programme that has run for three years, and he
plans to spend $5 billion over the next two, but has Al Barrak
got a strategy for the longer term? Does he have an idea of
where he wants to take MTC after the next two years?
Vision for the world
"Yes, of course. We have our vision, which is three by three
by three. In the first three years we wanted to be a regional
company, and we are already beyond that. In the second three
years we wanted to be an international company, expanding
beyond the Middle East and Africa, to Asia and other parts of
The final three years of this programme? "The final stage we
would aspire to be a global company, in the big league. This is
our dream. And we started the implementation of this vision
only three years ago."
In started in January 2003, and since then it has expanded
to 19 countries "and achieved a geographic area which
categorises us as the fourth largest company worldwide". That
is, to be clear, the geographic area that MTC covers: and
Niger, Chad, Sudan, the Democratic Republic of the Congo,
Zambia, Tanzania and Madagascar between them cover around 9.6
million square kilometres. There are some large spaces in
Does he plan a country-by-country or network-by-network
acquisition strategy, or is he looking for a deal similar to
the Celtel purchase, acquiring a group of operations in one
"I think we are looking at both," says Al Barrak. "It
depends on the country size. There are some big countries
where, yes we'll look at a company that serves that country.
But for smaller countries, we are looking at groups such as
Celtel, where we could be in 10 countries in one move. We are
in a hurry. We don't have time."
He is in a hurry in more senses than one. The interview is
being conducted in a noisy meeting room at the 3GSM conference
in Barcelona, with advisers around him. Al Barrak has cancelled
a series of interviews with other journalists, as other
meetings have taken priority, but not that with Global Telecoms
Business, for which we're grateful. Even we don't have as much
time as ideally we'd like.
But why is he in a hurry? "Our window is really the next
five years. After that the whole world will be deregulated."
The World Trade Organisation "will have its pervasive impact
over all these areas", he says. "Big players will come and
freely service this market, so we want to be at least as big as
them before the end of this phase."
Following the takeovers he has already achieved, does MTC
plan to rebrand its new properties as MTC? "Yes, of course, but
not as MTC. We are looking at new options. We are looking at a
new brand, and a global brand, that could be understood and
appreciated and celebrated and embraced from China and Gabon,
in Rio de Janeiro and Madras, in Moscow and Iceland at the same
time. It's tough, but we'll try."
He laughs. "Definitely it'll be better than all these brands
that come from big companies, that belong to the stone age of
What's the timescale for a new branding? "We expect to do
that by the end of 2006 to settle on a global brand," says Al
Barrak. "Within 2007 we hope to implement it completely."
So what is Al Barrak's own background? "Very simple," he
says. "I was an engineer. I failed so I got promoted to be a
manager. And I failed as a manager, so I was promoted to
If he fails in that, he'll be a consultant, he jokes. "If I
fail as a consultant I'll be a politician."
Seriously, "I was an IT man all my life, for 19 years. I'm a
stranger to the world of telecommunications." It was only three
years ago that he joined this industry, though he was serving
the telecoms industry from an IT perspective. "But, you know,
IT people have a lot of ego and they think they should control
the world. They think they know much better than others. So I
came with this attitude to MTC."
And has he been proved right? "So far, from the financial
results. We were a $2.8 billion company when we started three
years ago. We are a $14 billion company today. That's our
market capitalisation. Our profits today are approaching $600
million. It was only $200 million three years ago. So the
numbers are really good, thanks to the great effort of the
great people at MTC." There are 6,000 employees, he adds.
The next step: is he in negotiation at the moment with
anyone else about a deal? "Oh yes, we are in negotiations with
a number of countries. We are in negotiations all the time. We
thrive on negotiation."
And the next announcements? "Mid March, insh'Allah," he
says. That's just after this issue of Global Telecoms Business
goes to press. By the time you read this, it might have