If you think your mobile customers use a lot of data you should have a word with Viva, the Kuwait operator that is now second in a market of three in terms of revenue. “Our customers use an average of 63GB a month each,” says Zarrar Khan, the company’s CTO. Do that quick calculation: 2GB a day per person.
And they pay for it – which also means they have high expectations, adds Khan. “There is intense competition in Kuwait. There are very rigid customer expectations. What sort of value are we giving them in terms of customer experience?”
Viva won Kuwait’s third licence in 2007 and started up the following year when there was already 100% penetration in the Gulf state. Zain and what was then Wataniya – now Ooredoo – had it all.
“I was there in 2008,” says Khan. He had to build the new network with a major challenge: “How do you grow market share with a very small operation? You have to be innovative about it and create a brand that allows customers to do stuff.”
A decade later similar challenges are still there, even though Viva has displaced Ooredoo and now holds second place in terms of revenue. According to Viva’s 2016 figures Zain was ahead with 38% of customers and 41.1% of revenue. Ooredoo had 31% of customers but only 24.4% of revenue. Viva had 31% of the customers but 34.5% of the revenue.
Kuwait has a total market of 7.7 million users, but the country faces challenges, says Khan. The country depends on oil revenue, “and that market is not growing, and the economy is not growing”. Nevertheless, “our shareholders expect short-term and long-term value creation”.
Viva’s shareholders understand all too well about the oil price. Back in 2007 Saudi Telecom – more commonly called STC today – paid $900 million for a 26% stake in the new licensee via a state-run auction. That was almost certainly the most expensive mobile licence ever per head of population. “It was a very strategic move by STC,” says Khan today.
Three years ago STC decided to increase its stake by buying shares on the Kuwaiti stock exchange. Today STC holds 52%, the government of Kuwait 24% and public shareholders another 24%.
So, having won a healthy market share in nine years since starting service, what are today’s challenges for Viva? The usage, says Khan. “Kuwait has the highest mobile usage per subscriber anywhere in the world. People use mobile broadband as a substitute for fixed broadband. People use five times as much as do users in South Korea, Japan or Hong Kong.”
Khan is talking to Global Telecoms Business in Hong Kong, at Huawei’s annual operations transformation forum. He’s taking part in the conference itself, but he’s giving this interview on the Sunday afternoon before the formal proceedings start.
Viva has to invest substantially in technology to provide this data for its customers, he adds. “We have four-carrier aggregation across the whole network. We would like to offer five-carrier aggregation but there aren’t the technical standards yet nor the handsets to cater for this.” The company also uses 8×8 MIMO – multiple input, multiple output, a technique that re-uses spectrum in frequency and time, but receives different bits of the signal via separate antennas.
From the start Viva used an all-IP network. A bit early, he admits, but the company didn’t want to swap out legacy infrastructure after two or three years. Now “we are going for network functions virtualisation in our core network”, says Khan.
Single vendor contract
He and the rest of the management team took what he still admits was a bold step back in 2008 – awarding a single-vendor contract to one company, Huawei, to design the network and the IT and to run it under a managed services deal. “The usual mindset is that there has to be competition between vendors, to challenge each other’s performance. We took a step that was radial and controversial. We decided not to slice the company.”
Nearly a decade later he’s more or less comfortable with that decision. “Today Huawei is arguably the leader in mobile, which it certainly was not in 2008.” But for the future? “Monopoly stifles innovation and creativity,” he says. “We have to ensure we get the best value for our shareholders.”