Dubai-based telecommunications operator Friendi Group believes inexpensive mobile services will buoy its expansion across the Middle East having partnered with the likes of Zain Saudi Arabia.
FRiENDi buoyed by demand for basic services
Rising consumer demand in the Middle East for basic mobile services has buoyed expansion prospects of the telecommunications operator FRiENDi Group.
The Dubai company has partnered with Zain in Saudi Arabia, one of three countries in the region where it operates. Its other operations are in Oman and Jordan, where it has launched a mobile virtual network operator (MVNO) service .
MVNO companies purchase voice and text packages at wholesale rates from existing telecoms operators and create bundled offerings for subscribers.
MVNOs typically yield Ebitda (earnings before interest, taxation, depreciation and amortisation) margins of 10 to 15 per cent, less than the 30 per cent to 50 per cent that traditional telecoms firms realise.
Mikkel Vinter, the founder and chief executive of FRiENDi Group, said the company was not operating an MVNO in Saudi Arabia because the kingdom's regulator did not offer licences for the service.
Instead, customers will remain Zain Saudi Arabia subscribers but will be entitled to FRiENDi's promotional voice and text rates.
"This is a partnership deal between us and Zain where we will jointly launch the FRiENDi mobile as a package," Mr Vinter said. "It's relatively similar to what Qtel has done with Virgin in Qatar. That's a model we've chosen because that's what can be done in the country."
FRiENDi was one of the first MVNO operators to launch in the Middle East and now has about 350,000 subscribers in the region, Mr Vinter said. About 100,000 of those are in Jordan, where the company launched services last June in partnership with Zain, while the rest are in Oman.
"There is quite a lot of interest with various regulators and operators across the region now with this model, so we are very optimistic we have a good business in place," Mr Vinter said.
He said the company was not yet profitable despite its growth, but he forecast it would break even in its Oman operations in the next six months.
"On average, we take 18 to 24 months for an operation to break even," Mr Vinter said. "So, it's about 18 months since we launched in Oman, so that's on track to break even.
"It will still be a little while until we break even on a group level."