|CEO of Kuwait's MTC laughing all the way to success (Daily Star)
|Telecom group's profits hit $346.6 million last year
Already available in 5 countries in the region, MTC plans to move from 2.8 to 5 million subscribers by next year
It's not easy to keep a straight face when speaking to Saad Barrak, the jolly CEO of Mobile Telecommunications Company, one of the fastest growing wireless providers in the Arab World.
In less than 18 months, MTC, which turned a profit of $346.6 million last year, has seen its stock bloom under the jocular Harvard alumnus - from a former state-owned operator in Kuwait, to buying up, running or building networks from scratch in Jordan, Bahrain, Lebanon, and even Iraq.
"Today we are in five countries. Very soon, inshallah (God willing), we will progress toward a sixth" - part of the company's ambitious nine year plan, he explains, to branch out to Africa, Asia, Eastern Europe and beyond.
But the university of London PhD, affably known by his employees as "The Doc" jokes around as if he was seated in the back of a high school classroom. He regularly draws outbursts of laughter from journalists and businesspeople by peppering financial presentations with hard-hitting sarcasm on regional economies, once comparing the Arab public sector to Abu Ghraib prison in Iraq.
A staunch opponent of state-monopolies, Barrak recently took a jab at the Lebanese government's inability to take a stand on privatization, despite promising to do so years ago. "If we are not allowed to invest in telecom, then what choices do we have? Potatoes?" he said earlier this year.
Yet despite earlier reservations, Barrak snatched up a contract in the auction for the temporary management of part of the lucrative local mobile market, creating MTC Touch, which took over LibanCell in June. However, Lebanon's two cell networks remain a state-monopoly, and the sector is notorious in the global industry, marred by political infighting, opaque dealings, and some of the highest mobile rates in the world.
Local consumers made international headlines earlier this year by turning off their phones to protest rates.
At the launch of MTC Touch in November, Barrak said it would be easier to solve the Arab-Israeli conflict than reconcile the series of real or imagined scandals that have plagued the sector. So why bother?
"We will not run from our home market," he says firmly. "Our home market is the Arab world. We must succeed in the most challenging environment in our market in order to set the way forward."
For MTC, which plans to move from 2.8 million to five million subscribers by next year, this means tapping into one of the least serviced cellular markets in the global industry, and by default, one of the most profitable. "There are around 280 million people Arab people and we only have something like 26 or 27 million mobiles. That's less than 10 percent penetration.
"It's a huge opportunity from that angle, but at the same time it's suffocated through red tape bureaucracy, politics, antiquated legal systems, the absence of transparency, neutrality, and the lack of strategic vision vis-a-vis economic development of the region," he says.
Contrary to the situation in Lebanon, where the state has auctioned off only the management, and not full control over its networks, liberalization, Barrak argues, "can never be partial." And economic changes, he segues, must be accompanied by much broader, systemic changes.
"You cannot liberalize economically without liberalizing politically." In both business and politics, Barrak clearly believes in flying with the best. He is a proponent of forming tight alliances with the world's most powerful entities, corporate or governmental.
After joining the company in 2002, Barrak signed a "partner network agreement" with mammoth UK-based telecom provider Vodafone. The accord created MTC Vodafone in Kuwait, which was later followed by MTC Vodafone Bahrain. Barrak says the move was integral to the company's long term expansion plans.
"What happened at MTC in 18 months would not take place even in five to six years in other companies without the pressure of this extremely strategic and valuable relationship," he explains.
"We wanted as a company to shortcut our way to the future by moving as quickly as possible to a world class company in our products and services. This agreement has allowed us to interact to have a relationship with the giant in the world of mobile communications," he says.
If only in name, that relationship is central to Barrak's vision for his company. "It has allowed us to put Vodafone side by side with our name and therefore our quality, standards of our products, our customer service, the way we organize, the way we come across must be commensurate to the value of this great brand called Vodafone."
Still, like other Arab firms that are hungry for regional growth, MTC will be faced with intractable trade barriers, such as laws that do not allow complete foreign ownership. "Even if it is allowed, it's just a slogan. You will run into a lot of obstacles where you have to bring in a local partner, hopefully one with political muscles, to ease the way through."
With momentum building for reform, Barrak believes the tables will turn in the Middle East, either willfully or by force. Markets will naturally open up under foreign pressure, he says, "but still the majority of our countries are doing that reactively. When the World Bank comes to discuss their economic issues, they will impose on them: liberalization of markets, transparency, restructuring the legal system and so on," he says.
As in business, Barrak believes regional governments should align themselves with influential multinational organizations to meet the challenges ahead. In the case of Lebanon, where "the tendency is to politicize everything," Barrak feels an internationalist strategy would have been the solution.
"Economic issues should be dealt with by the government through professional institutions and in partnership with world recognized international institutions such as the World Bank, the IMF, IFC (International Finance Corporation). And once we shift the gear from the local pressures to international pressure, we can guarantee issues such as transparency and move the internal economic challenge from being an internal political issue that politicians settle accounts through, to an economic issue which is strategic for the whole country."
He waives off charges of foul play over the $10 million re-branding budget allotted by the government to MTC Touch and Alfa, the winner of Lebanon's second cellular management contract. Some politicians have alleged that the spending was frivolous, since both networks are owned by the government, which is solely responsible for tariff rates and services. Thus competition between the two networks will be marginal.
"People care the least in Kuwait what the government spends on this or that, it doesn't become a media issue, I mean, as if it is the only issue in the world. The difference is in degree it's not in kind. The degree to where people take these issues in Lebanon is far beyond any reasonable degree. It has to do with the credibility of the overall system."
The Daily Star