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 In
spite of soaring rents, weakening currencies and
rising inflation, Gulf shoppers are spending
more than ever on mobile phones.
Abdul Hameed al Sunaid, the chairman of the
mobile distributor and retailer i2, said his
company was yet to experience anything
resembling a slowdown in consumer spending.
“In management meetings they are talking about
inflation and its effects,” he said. “But then
we look at the numbers, and sales are up 100 per
cent in the first half compared to last year. We
are just not seeing it.”
The company sold more than 12 million Nokia
handsets last year, and plans to sell at least
17 million this year – more than four times the
UAE population.
But Mr Sunaid, who founded the company in 1993
in Saudi Arabia, believes that as the market
matures, selling the ubiquitous devices will
take a back seat to selling the services
associated with them.
Much like the personal computer business, where
profitability has shifted from selling machines
and peripherals to software and services, the
mobile handset industry is expected to transform
in the coming years.
“In five years time, we will still be a mobile
business,” he said. “But where we make our money
from will be different. We will be selling
content and support. We will work as a
platform.”
Nokia, i2’s biggest partner, is already making
the shift. The Finnish company that currently
produces almost half the mobile phones sold
globally is moving aggressively into the
services market, acquiring and developing
business units that offer digital maps, music
and social networking to Nokia users.
“We are fully aligned to Nokia’s direction,” Mr
Sunaid said. “We are making major investments
in internet services and online platforms. In
five years time we will be in a direct
relationship with our customers – as the retail
market matures, that is the end game.”
For i2, part of this end game will be the
transition from selling mobile phones to
becoming a network operator, moving into a
tightly regulated market space currently
dominated by regional players like Etisalat,
Zain from Kuwait and Saudi Telecom.
The company wants to become a major mobile
virtual network operator (MVNO) in the region,
leasing wholesale bandwidth on existing mobile
networks and reselling airtime under its own
brand.
A number of MVNOs operate in Europe and North
America, but i2 became the Middle East’s first
when it acquired a licence to operate in Jordan.
Mr Sunaid said he hoped to see his company
become an MVNO in key regional markets like the
UAE, Saudi Arabia and Egypt.
“You need two things to succeed as an MVNO,” he
said. “A brand and a distribution network. We
have both of these things. A lot of people want
to become MVNOs here, and they don’t have one or
the other – I think they will fail.”
The Telecommunications Regulatory Authority has
previously said that when the time came to plan
for a third entrant to the UAE market, the MVNO
option would be considered.
But Mr Sunaid does not just want to enter the
same businesses as companies like Etisalat and
Zain. He also has a similar taste for expansion
into the emerging markets of Africa and Asia.
This week the company held a preliminary launch
for its operations in Pakistan, which will
commence in full at the end of the summer.
It already has a thriving network of operations
in Africa, stemming from its Johannesburg
regional headquarters that were opened in April.
But in its move to the East, the company is
taking slow, careful steps. Mr Sunaid said a
market the size of Pakistan would keep the
company occupied for the time being, ruling out
in the short term further expansion to India or
China.
“Look at Pakistan – it is twice the size of
Egypt or Iran, eight times the size of Saudi
Arabia,” he said. “We have to be realistic. When
we enter a market, we enter to be a leader,
number one or number two. Number three is not an
option.”
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