Friendi Group in Dubai has made unexpectedly fast progress in Oman using a mobile business model.
Friendi hooks up 100,000 Oman subscribers
Friendi Group, a small telecommunications operator based in Dubai, has made unexpectedly fast progress in Oman using a mobile business model that has yet to be widely introduced in the Middle East. @Body:Having obtained a mobile virtual network operator (MVNO) licence in April, Friendi has already signed up more than 100,000 subscribers, spurring regional interest in the technology, analysts say. An MVNO operator generally works with an existing telecoms operator to purchase voice and text packages at wholesale rates and create bundled offerings to resell to subscribers. The MVNO service is common in saturated markets in North America and Europe, but it is just beginning to catch on in the Middle East, with firms such as Renna, Kalaam Telecom and i2 Mobile starting operations in the past year. "When a new operator starts, there's a lot of time used to iron out network problems to reach a certain level of quality. Since we don't have to worry about that, we can concentrate on focusing on getting a better customer experience, pricing and distribution," said Mikkel Vinter, the chief executive and founder of Friendi. Although Mr Vinter declined to comment on Friendi's profit margins, MVNOs typically yield Ebitda (earnings before interest, taxation, depreciation and amortisation) margins of 10 to 15 per cent, less than the 30 to 50 per cent that traditional telecoms firms realise. Oman has two traditionally configured operators, Omantel and Nawras, and two MVNO operators, Friendi and Renna, which began operations last May. The regulator sold five MVNO licences last year, but only two are in use. "There's a lot of value in the GCC market, where operators have mobile penetration over 100 per cent," said Deepika Dudeja, a telecoms analyst with the consultancy IDC Middle East and Africa. "An MVNO-type company acquiring that amount of the market in less than a year of operation is definitely great." The influx in competition has seen Oman expand its mobile subscriber base by more than 10 per cent to 3.5 million users, with monthly average revenue per user declining from US$30.80 (Dh113.30) last year to $26, a recent report by Arab Advisors Group showed. Friendi now has about 3 per cent of the market, compared with the host operator Omantel, which has about 54 per cent of the market. "We've been very clear that we want an attractive price point, that we want to have the best prices, and we've defended that against the other new entrant with a couple of rounds of price adjustments," Mr Vinter said. Ms Dudeja said Friendi would now be in a position to negotiate better wholesale rates from its host operator. "MVNOs are a pure margin business," said Ms Dudeja. "The real profitability and long-term prospects of an MVNO will be strengthened if they are able to encourage their providers to obtain preferable numbers for their users and have their subscribers use a lot of air-time minutes." Given that Friendi is in a long-term partnership with Omantel, the company still needed to find the right balance in acquiring its mobile inventory, Mr Vinter said. "Things are a little bit easier when you can show results, especially that you're the first MVNO in the region," he said. @Email:firstname.lastname@example.org