An interview conducted with Mr. Liu Dongfang, Vice President of Huawei North Africa, by the media of ICT Business. To give an insight on how Huawei perceives its presence in the region and its new plan of “excellent network”.
How do you see the future of mobile telecommunications in the region given that most countries have reached saturation – Egypt being one of them? Do you feel there is still room or opportunities for growth?
With the fast development in past years, the mobile voice market in North Africa including Egypt really entered into the saturated stage (the mobile penetration is 70%-120%), but we think there is still room for growth.
In traditional voice market, though the user number decreased quickly in these years, there remains about 15% growth rate for a large number young users (~40% of population <20 years) now.
On the other hand, the broadband and mobile internet is booming, like as mobile internet, mobile video, SNS, mobile commercial services, etc. There is large room to growth in North Africa. As the data, the fixed broadband penetration is about 1%-3% in North Africa countries, but the global average penetration is 9%, and developed market is 30%. For MBB, the penetration is 5%-10% in North Africa, but it is 40%~60% in developed market. We are entering into mobile internet era, and it will generate more revenue in telecom industry.
In addition, ICT society brings a huge demand in smart city, e-government, e-health, e-education, M2M, cloud-based services etc.
So, for the whole telecom industry, we believe there is stable growth in the next years. But to get this target, we need to do more.
What challenges do you see in the telecom sector in North Africa today?
For challenges, we mainly focus on 3 points.
- With IT and CT convergence, more and more telecom services are eroded by IT industry, such as Skype, google, facebook, etc. According to statistic data, there are 10%~30% telecom revenue flowing to IT industry every year in different regions.
- Operators are lack of new source and measures to increase revenue, such as MBB data traffic operation. In North Africa, data revenue ratio is only 5%~10% in total revenue, and the operators just get some revenue on pipe access.
- New services bring new requirement for carrier’s network and operation model. Operators’ current network and business model can’t satisfy these requirements. Operators need transformation, and there is great difficulty.
What is Huawei's overall strategy for future development in North Africa? Do you have diversification plans?
Huawei’s strategy mainly focuses on customers concerns, to become the best strategic partner of customers, and we mainly focus on the below 3 areas:
- Firstly, we will continuously contribute to MBB development, to help our customers to improve user experience and get more revenue from MBB.
- Secondly, help operators realize ICT transformation by E2E solution including innovative solutions, new business models, consulting etc. ICT demands include broadband access, smart city, enterprise information platform, and ICT applications etc., which exceed the traditional telecom services scope. Huawei can share global experience to help operators to realize ICT transformation.
- A series of innovative solutions to improve operation efficiency and reduce operation cost for operators, such as new energy solution, smart phone, NGBSS, one-stop manage service, etc.
Worth mentioning, with this strategy, Huawei launched a new concept of “Excellent Network”, which can help the operators to increase revenue and improve users’ experience.
What is Huawei's Excellent Network and how does it work? What are benefits for operators and users that the new Excellent Network can provide?
Excellent network simply is a network that could convert the customer needs to profit for the mobile operators following the new equation.
So it is a mutual trade in relation between the operator and their customer. To formalize this relation, Huawei has developed Excellent Network equation which includes four areas (CE, Revenue growth, TCO and TTM) as follow.
In this equation, customer experience (CE) is what the customer always looking for to guarantee the value for the money of what he / she is spending on operator services. We can divide it into 2 areas:
Customer known needs: and this is the easy part for the operator to know and to improve since it is strongly linked to the network quality, performance and the investment strategy for the operator.
In this area, and in order to maintain the leadership position , Huawei keeps on innovating in the technology direction introducing new mechanisms and solutions to help operators to control and satisfy customer needs so (1 Mbps anywhere, anytime for user) is one of excellent network new concepts that Huawei introduced through excellent network
In addition to the Intelligent CAPEX (I-CAPEX) to guarantee the investment efficiency for the operator based on valuable area and potential valuable areas to meet the operator’s challenges will be an added value to Huawei Customers in the Program.
Customer unknown needs (expectations): and that is not that easy for operators to achieve without understanding the user behavior and always trying to be one step ahead of customer needs, so business intelligence solutions and mechanisms to be involved in customer daily life cycle are key differentiators between operators in this area.
In this area Huawei introduce new business intelligence mechanisms and solutions which enable the operators to measure their customer behavior in measurable scales to easy for operators to meet customer expectations from different aspects.
So introducing the Smart Care solution is one of the added values in the excellent network to measure the customer behavior and experience, in addition to Value Growth Solution to monetize the data traffic to increase data revenue for Huawei partners is an innovative way to maximize the value of the pipe traffic and transformation towards the ICT era.
On the other hand, in the equation, Revenue Growth comparing to Total Cost of Ownership (TCO) and Time to Market (TTM) is what the operator is looking for to guarantee its business sustainability and continue serving its users in an innovative way. Through the excellent network Huawei has introduced different innovative solutions to cover these aspects based on E2E deep analysis understanding.
Do Huawei have successful case for excellent network to increase data traffic revenue?
With Huawei MBB wide and global experience, a lot of its partners over the world through strategic cooperation could achieve valuable targets and transformation from price leaders to value leaders which directly impacted their business performance in short time.
In China, CUCC for example , through cooperation with Huawei , the operator realized MBB precise marketing and investment through deep TRUST (traffic/resource/user/service/terminal) analysis and network evaluation, Huawei customized the excellent network activities which contributed in 20% data revenue growing within one year (2011-2012).
What are the challenges Huawei has faced in the region since 2011 and the onset of the Arab Spring?
Actually, like other companies, Huawei’s business has been slightly affected in 2011, because operators delayed some of their plans, but it recovered very quickly, because operators just delayed their plans, not cancelled or no demand. Actually in 2012, Huawei has achieved their business targets.
On the other hand, after the Arab Spring, there is a small burst in the telecom service demand, especially in mobile internet service and SNS service. People need more information and communication. So we believe North Africa market will keep on growing in the coming years.
Huawei looks forward to a stable business environment. We believe that the Egyptian market and economy is strong enough to recover and we also believe that development never ends and consumers will never stop using our technologies.
Has Huawei considered or been faced with a situation where it had to down-size or shift its strategy in the region? What were they and how was this handled?
The industry today is experiencing an unprecedented rate of change, and we are all facing many big challenges for both operators and vendors as a result. Huawei is actively overcoming the challenges by focusing on the pipe business and effectively improving operations quality. Huawei achieved US$35.35 billion in sales revenue and US$2.47 billion in net profit in fiscal year 2012, steadily increasing operating performance.
We had a good market share in North Africa due to good cooperation in past years. Especially, we have gained more trust during the Arab Spring because we always work together with operators under any condition. For the next years, we believe we can keep a good development in a stable business environment.
In the future, we are continuously innovating in new solutions and services based on the emerging market demands, as well as improving the inner operation efficiency. Huawei will continue investment in North Africa.