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10% growth in revenues for Nokia's infrastructure sector in Q2 2014: CEO [Daily News Egypt](Daily News Egypt Via Acquire Media NewsEdge) Nokia's CEO Osman Abou-El-Nasr (Photo courtesy of Nokia) By Mohamed Alaa ElDin Nokia Solutions and Network's strategy in the Egyptian market is based on three main points, which represent the most vital commercial process for Nokia, said CEO Osman Abou-El-Nasr in an interview with Daily News Egypt. These points include: remedying networks and techniques; network and programming solutions; and marketing strategy. According to Abou-El-Nasr, communications sector investments have witnessed a relative recovery compared to the past three years, where the company saw a scarcity of hard currency and a lack of security. He added that the company's revenue rates grew last year, and will continue to see a growth in profits next year, compared to the losses suffered during 2011-2012. In the past, Nokia's global strategy in the Middle East included creating a regional headquarters in Egypt to manage operations in the Middle East and North Africa, and constructing a factory for mobile network construction and associated equipment. However, after the Internet and communications outages during the 25 January Revolution, the company re-evaluated its plans, and relocated its headquarters to Dubai. He said that a unified licence will add nothing to the mobile market, instead leading only to revenue gains for Telecom Egypt. Abou-El-Nasr said the Ministry of Communications and Information Technology should continue talks with mobile operators to grant them a licence guaranteeing safety for any partner in the communications market. How do you view the investment climate for the communications sector over the past two years? What are your expectations for the coming period? The last three years have witnessed a decline in investments for many reasons. One of the main reasons is insufficient hard currency, which led to a halt in upgrading and the scheduled maintenance operations for mobile operators. This resulted in all equipment used for maintenance operations and upgrading being imported during a time in which there were not enough dollars to do so, which drove up costs for maintenance operations. Additionally, the worsening security conditions and an unstable political and economic situation negatively affected maintenance and installations operations in both the networks and infrastructure sector, which resulted in declining demand for network services. The slump in the mobile networks sector can be attributed to the absence of maintenance operations and necessary upgrades in recent years due to the security situation and pressure exerted on mobile operators' spending as a result of a shrinking value for EGP against USD. What is it that the investments sector in Egypt currently needs? The Egyptian market, especially the communications and information technology sector, holds many opportunities; however, at the same time, a lack of firm laws and sudden implementation of others leads to radical changes in companies' investment plans in the country. This is unacceptable for huge investments with plans that extend seven years or more, so it is not acceptable for the government to apply abrupt changes in laws. Providing safety and security is essential for guaranteeing the existence of energy sources, such as electricity, petrol, and diesel. Investors should not be surprised with their services being cut off due to abrupt electricity outages. What are the company's plans for the Egyptian market? The company's infrastructure strategy is based on three commercial points. The first includes remedying networks and techniques, while the second involves network and programming solutions and the third is a marketing strategy. This is a fundamental commercial process for Nokia, especially after its merger with the Microsoft Corporation. These three points account for 90% of Nokia's commercial operations. Nokia intends to inject new investments into its innovative products in addition to the services required by communications operators and managers in order to increase the transfer of wireless data, which is in a double annual increase. In addition, the future investments activity will depend on broadband and mobile services and what is connecting them so that we own the leadership in the networks technology of the next generation. How do you view the performance of Egyptian engineers from a technical perspective? We currently have some of the best Egyptian engineers working in networks, and they carry out technology operations for our customers, not only in Egypt, but also across the Middle East. Despite the absence of 4G LTE technology, the company has engineers that are experts in this technology due to their work in other locations in the Middle East. Egyptians, from a technological standpoint, have extraordinary minds with different technology and IT development and we always find Egyptians leading international companies and it is the biggest statement to the capabilities and performance of Egyptian engineers in the telecom and IT sector. What do you make of Telecom Egypt's insistence on receiving the default mobile licence? The mobile market has matured sufficiently and there are currently more than 103m mobile lines used locally. At the same time, Telecom Egypt's profits are declining due to the decline in land-line service operations and the number of Telecom Egypt customers while still retaining 55,000 employees. This situation requires that Telecom Egypt search for new investment opportunities to put their employment capacity to work and increase profits for coming years through support for mobile services, especially since land lines will cease to exist in a matter of time. Photo courtesy of Nokia How do you feel about the Ministry of Communication's handling of the unified licence issue? The ministry is taking steady steps in that direction, despite the fact that implementing the unified licence system was delayed and the period of negotiations between companies took a great deal of time. This was necessary because, in the end, operators are the major investors in the market and their activities will contribute to growth in the sector while also painting a better picture of the investment climate in Egypt for their home countries. Additionally, the Egyptian telecommunications sector needs new investments at present, which in turn requires that the unified licence system be implemented in a manner that guarantees justice and equality amongst all operators without adversely affecting any of them. In your opinion, what impact will the unified licence exert on the telecommunications market? The unified licence does not include the creation of a new mobile network, which means that there will be no improvements in the quality and performance of mobile networks. This will represent a substantial difference in the mobile services market because it is the default operator that does not do anything except purchase mobile services from operators and resell them to the public. This entails that there will not be any new additions to markets, but Telecom Egypt will witness greater revenues. Moreover, mobile phone companies might gain experience from Telecom Egypt's exchange centres located across the country to provide customer services to mobile operators, especially since Telecom Egypt will become both a competitor and partner at the same time. In the end, the unified licence will not add anything to the Egyptian telecom market, only contributing higher revenues to state-owned Telecom Egypt. Are there opportunities for Egyptian companies to expand by obtaining licences for the African mobile market? The African market has been available for mobile licences and service provision for more than 12 years, but now the situation is different what with the maturation of the majority of African markets and the presence of more large competitors in Africa. The biggest piece of evidence for this can be found in Orascom Telecom's various expansions over the past decade. How have the company's plans in Egypt been affected in recent times? In 2010, the parent company decided to make Egypt its headquarters for operations in the Middle East, and a plant was constructed for mobile network manufacturing. Following this, the company began making special preparations for this purpose and hired a large number of new employees to convert Egypt into Nokia's regional headquarters. However, the government's decision to cut off communications and Internet in 2011 caused the parent company to reconsider this decision altogether. This event demonstrated the possibility of the company's customers in the Middle East being unable to communicate with the main team in Egypt, which led to the decision to replace Cairo with Dubai as the regional headquarters for Nokia operations. What is the impact of mobile networks on the health of nearby residents? Constructing mobile networks above homes is only undertaken through National Telecommunication Regulatory Authority (NTRA) approval. Under the NTRA's conditions, which are stricter than those of a number of European countries, residents will not be adversely affected by the presence of mobile networks above their homes. Has the cost of building mobile networks increased? On the contrary. Mobile network construction has witnessed a decrease in costs at significant rates in the recent past due to technological obsolescence. The value of a mobile station in 2002 was five times higher than costs this year despite the stations at that time being constructed with 2G technology instead of 3G. What is the reason behind the increase in price for fibre cable installation when compared to that of copper cables? From a technical standpoint, copper cable installation is an easier process in terms of the depth at which it is placed under the ground and linking cables together. Fibre cables must be placed in pipes with certain specifications and are installed at lower depths than copper cables. The process of linking fibre cables together is more difficult as well and requires certain technology, but in the long run, fibre cables are less expensive than copper ones because they are less susceptible to vandalism and more efficient in transferring data at faster speeds. This helps the fibres to provide new services and utilise modern applications that depend on fibre cables. Have mobile companies begun preparing their networks to provide 4G services? The market will not witness investments in 4G technology for at least another two years. No company among Egypt's mobile operators will begin preparing their networks for 4G before obtaining the 4G licence and paying its value in order to research financing solutions to construct networks that use LTE technology. What about indicators regarding the company's activity in Egypt? In 2011 and 2012, the company suffered significant losses due to the deteriorating security situation, with mobile operations halting operations to construct networks, and delays in many works. In 2013, the company regained its profits once again, and the company is expected to invest in profit-taking this year. The financial results of the second quarter of 2014 have exceeded the estimations of industry observers, especially with the positive indicators achieved by the infrastructure sector for networks and highly-improved performance. These results reflect an increase in the same results for the first quarter which exceeded expectations, representing strong growth in LTE network performance. The infrastructure sector achieved an increase in net revenues during the second quarter at a rate of 10% in addition to its contributions to global mobile services sector to a large extent. However, this has not yet been announced. On a regional level, the increase in profits came as a result of strong seasonal revenues in addition to networks in the Middle East, North America, and North Africa achieving an increase in revenues of nearly 6% of the total during the second quarter as well. (c) 2014 Daily News Egypt. Provided by SyndiGate Media Inc. (Syndigate.info). |