CAIRO: The CEO of an Egyptian internet company has a lot to think about.
Saturation is still low here, meaning there are a lot of opportunities to expand. But there are plenty of hurdles too: The state has been slow to issue licenses, for instance, and cable cuts in the Mediterranean lopped off the entire country’s internet access twice in a year.
Ay Cairo ICT, a large information technology exhibition that opened in Nasr City yesterday, Daily News Egypt sat with Karim Beshara, CEO of LinkDotNet, to talk about what it’s like selling the web in Egypt.
Daily News Egypt: What was behind the recent decision to delay the sale of LinkDotNet?
Karim Beshara: The concept for us has been very clear from the beginning: We’re saying we look at the opportunities we get, and we don’t dismiss anything. I think the market is changing and we’re looking at how we can become more competitive. An outright acquisition, a merger, a strategic alliance are all possibilities on the table.
What sort of parties are interested?
The surprise for me was more than one company approached us at almost the same time. [They are] mainly Egyptian, but one was foreign – and it was a pretty big surprise for me.
How has business been over the last few periods, as the economic crisis has spread?
I think we’ve managed to almost continue at the same pace, so we haven’t really seen the effect of the economic crisis on Link sales.
The main concept is that people usually move to the internet and automation and so on because they want to save money. So I think it’s a good opportunity for us. Should the crunch get harsher, I think we will start seeing even better results.
What do you mean by better results?
I mean higher sales. People become a lot more price-conscious. They want to save within the organization, so they add automation to make sure things are more efficient. For example, another division in Link – online advertising – has a very efficient way of delivering a message to a customer, so people start checking it out because it costs less money. So I think we’re pretty well-positioned to make use of the current economic situation.
But are you worried about losing some business as companies cut back on extra features and other non-basic services?
We haven’t seen that so far. Numbers have been holding up pretty well. Again, the basic idea is people usually move to the internet to make sure they save money. Instead of making a call, you send an email, for example.
You would still want to have a DPN between your branches. These are, in my opinion, a bit too basic for you to decide ‘This is something I want to give up.’
What is it like, generally, working as an internet service provider in a market with very low saturation?
We’ve been seeing triple and double growth for the past, I’d say, 10 years maybe. So it’s been an interesting ride.
The market is changing. It’s getting a bit more mature even though the penetration is pretty low. I think partially because the infrastructure to the country and in the country is still under development. This is starting to change – we’re starting to see a bit more diverse offerings all over. You’ve seen the cable stories, of course, which tells you a little bit about the infrastructure that comes into the country. Now that it’s starting to open up, more cables are coming in. That will not only add to the reliability, but will also add to competitive pricing, better quality of service, and so on. So I believe we still have quite a bit to go before we start seeing a slowdown.
Where else do you see the market getting more mature? Consumer behavior?
I think we have a little bit to go there. I think the market is moving into integrated services. It will continue to do so. So, making it easier on the customer, having seamless integration between your mobile, your fixed, your data. Having one support that can actually help you out. Prices also, got a bit cheaper, so people are more interested now. You put all these together, I think you can really tell where the market is headed.
I see you have a Blackberry, what is Link’s relationship with this kind of device?
We provide bandwidth through mobile operators to operate their 3G. We’re also making services on the mobile. Some of our portals have their own WAC, or mobile-ready [services].
[At this point in the interview, Beshara picked up his Blackberry to demonstrate some of its features.]
For example, this is yallabina.com. It has a mobile version, so it’s made specifically for the mobile. The interface is very different from what you see on the web. And part of the concept is to make sure it’s simple, it’s fast, and it gets you the information you need. We started putting that on our major portals and they’ve started to show serious success, especially after the introduction of the iPhone in Egypt.
A lot of people in the US are talking about getting government support to increase broadband coverage and capacity as a way of boosting the economy. Are you lobbying for anything like that here?
We are lobbying. But it’s not only about lobbying and getting more stimulus or aid, in that form. It’s also about opening up the market. Basically, I think increasing competition, allowing more companies to come in, is going to [have an impact] on its own. Again, I would give the example of international cables.
Where is most of Link’s business? In homes or businesses?
We have three main divisions that do sales. Consumer, SMEs [small and medium enterprises] and corporate. The largest portion used to be SMEs and corporate. Now consumer is gaining a lot of steam, within this last year.
How did the two big cable cuts over the past year affect your business?
We didn’t really lose a lot of business, because the other ISPs have the same problem. So it’s not like [our company] has gone down and the rest are fine. It’s a countrywide problem. Again, I would go back to the cable companies. We really need to increase the number of cables that come into the country. That’s the only solution to fix the problem. Satellite is definitely not good enough as a technology to be able to do this on this amount of bandwidth.
The government has allowed a couple of cables to come in. I hope they continue to do this, because it becomes a law of probabilities. .We need more cables going north, basically, towards Italy and Europe, and more cables going south, toward Saudi and the east. And again, if you have a lot of cables, economies of scale play in and bandwidth becomes cheaper.
What’s your relationship like with the government?
I think we’re lucky with the current administration. They really believe in public-private partnership. They get us early on in the projects and take our opinion. There’s the Committee for Telecom Industry Development, that basically gets the main players in the communication area, and they take our opinion, they give us drafts of the license and ask how it would best affect the country, the government, the private sector. When it comes out it’s usually a much more mature product than what we used to see a long time ago where it was ‘this is how it’s going to be and that’s it.’
TE Data is state-owned and also one of your biggest competitors. Does this lead to any conflict in dealing with the government?
From a government perspective, no. It makes it a bit hard sometimes working with Telecom Egypt, which owns TEData and yet is one of my main suppliers. It puts TE in a bit of an awkward position.
They are usually cooperative. If any problems arise, the NTRA [National Telecommunication Regulatory Authority] gets involved. That’s how the mechanics work. We’ve been so far able to fix most of the problems on a LinkDotNet to TE level, without needing any type of escalation.
What other improvements in the telecom environment would you like to see here?
I would hope we would consider again the second fixed [line license]. I think it would be a very positive step for the market, for the infrastructure, for the reliability.
I’d also love to see faster introduction of new licenses.
So basically, WiMAX, IPTV, other wireless technology maybe. That would give us a little bit more to play with.
There are areas in Egypt now where you can’t connect to DSL. Your only choice is to go wireless, and if the government is not giving the wireless license, this guy is simply disconnected. So, in general, we’re hoping for more licenses, a bit faster.
