Mr. Khaled Hegazy is the External Affairs Director for Vodafone Egypt, the leading telecommunications company and one of the largest companies in the Middle East.
His scope includes Media and Public Relations, Corporate Social Responsibility and the Vodafone Foundation, Regulatory Affairs, Government Relations, Legal Affairs and Corporate Security.
Mr. Khaled Hegazy shared his insight into the telecoms market with Africa Business Communities
How has the telecom market performed in 2012, and what were the main growth drivers?
“The telecom sector grows with the […] economy. On the enterprise level, if businesses are doing well, their expenditure in services such as banking and telecoms tends to grow. When the Egyptian economy was growing at 7% or 8%, telecoms were growing by around 14–15%, so it was always ahead of the overall economy.
In 2012, the telecom market saw growth of around 5% with the biggest growth coming from data services, which has been the case for the past few years. This is due to several reasons such as the advancement in technology and the propagation of devices like smartphones and tablets, mobile internet and USBs all of which have been growing at double-digit figures of around 20%.
On the other hand, voice revenues are more or less starting to flatten. Although there is an increase in the number of subscribers, there is also a decline in the minute rate year after year due to the fierce competition. The price per minute 10 years ago was LE 1.75 whereas now it is as low as LE 0.12; it is the only thing that gets cheaper in Egypt.”
Is this shift in growth segments a general trend or does it happen only in more developed markets?
“This is a general trend for mobile services worldwide. However we’re are not yet at par nor have we reached the stages of the more developed markets. If we’re saying that the penetration rate here is 100%, which means that there are around 90 million SIMs out there, it doesn’t mean that there are 90 million people [with] mobiles.
You could have a SIM in your phone, one in your iPad and another for your USB internet. Companies can have hundreds of lines for their employees and you have SIMs in ATM machines and credit card POS, and so if you add up all of these you get 90 million SIMs.
If you do the same for a developed market, you’ll find that penetration is around 200–230% and the market is saturated.Developed markets have reached saturation a long time ago and therefore their growth is heavily dependent on data and other services like pay TV and home boxes, which we are still far from.
Although we have a penetration rate of 100%, we have not yet reached saturation. The flattening of voice revenues is more related to the decline in the minute rate rather than the penetration rate.”
What, in your opinion, are the main opportunities for growth in Egypt’s telecom market?
“The growth from data will continue as the percentage of people using internet and data services in Egypt is still relatively low. I won’t compare us to countries like the US, but we still haven’t even reached the smartphone penetration of a country like Turkey or the UAE.
This growth will depend on a number of factors, namely affordability, level of education and general customer behavior.More people are starting to demand connectivity on the go, not just from younger people but the older generation as well, and the flexibility and ease of mobile internet makes this possible.
Another growth area is in mobile applications and IT managed services. We now have complete IT solutions for SMEs […] in addition to connectivity services, like technical support, accounting system, POS management software, IT hosting for their data and web sites etc. So its more of a B2B product that offers a complete telecom solution for companies that don’t have the knowledge to build their own IT infrastructure.
We are also hoping to launch the mobile payment system soon, which, according to the minister’s statement, should become operational within the next few months. This is basically a system where users can open an account and deposit money and then, through a mobile application on their device, transfer these funds to others.
The telecom operator will have a partner bank and you can cash the money in your account at one of the bank or operators’ branches. It is also possible to have agreements with other retail outlets and certified dealers such as grocery stores and shops where [this] service can be utilized.
I can go to one of the cash points and cash the money, transfer it to someone else who has an account or use it with merchants to purchase products or services. So it becomes a solution for moving money around and is mainly targeting the unbanked population.
We launched the service in Kenya, and it was very successful even though Kenya has a higher banked population than Egypt. It was so successful that when we had some technical difficulties and had to suspend the service for a few hours, the Kenyan president inquired why it had stopped because people had come to depend on it so much.”
What do you think is Egypt’s competitive edge in the IT and communications industry?
“One of the things we’ve noticed is the amazing talent in the area of developing applications and online-related products and services. This country is filled with geniuses who know how to create the technical part but may struggle with the business aspect. That’s why Vodafone Egypt has set up a fund called Vodafone Ventures, which acts as an incubator for these projects.
Egypt also has a lot of advantages in outsourcing IT support services and help desks. We provide services through our Vodafone international services department not just in call centers but also business processes outsourcing to Vodafone Germany, the UK, Ireland and Qatar.
The location and time zone allows us to provide the right caliber of people at the right time. So, for example, the time difference between the UK and a country like India would entail that you need support centers to work at inconvenient and odd hours and therefore will not have best caliber of people. Having only a two-hour difference between Egypt and UK makes this much easier.
We have won a lot of awards for our offshore call services. When Vodafone UK wins an award for the iPhone support from Apple, the people who actually win the award are sitting here in Sixth of October.”
Vodafone has been present in Egypt for over a decade, can you give me a brief about your investments in the economy and in corporate social responsibility (CSR)?
“We have been in Egypt for 14 years now and have since invested tens of billions of pounds in the economy. We spend around LE 3 billion every year in infrastructure and have over 6,000 employees, making us one of the country’s biggest employers.
We were the first company in Egypt to set up a corporate foundation for CSR and have undertaken a lot of work that we are proud of, such as the school rehabilitation program Madrasty. I think the latest statistics show that we spent over LE 200 million on CSR activities in Egypt and have touched the lives of over 20 million people.
The project we are most proud of, however, is the current illiteracy eradication program that we had launched in February 2011. It is our view that the country cannot proceed with democracy if citizens are not able to read electoral programs and are still using symbols to pick their candidates, for example.
We have thus decided to pool all of our resources into this one megaproject where we hope to abolish illiteracy of some 17 million Egyptians over a period of five years. We called on all of the NGOs with experience in the field to help us design a program and system to implement it. We graduate the first class next month.
Of course, we know that a target of 17 million is huge, and we will not be able to do it on our own. However, what we wish to demonstrate that the program works by graduating this first class and show success. We will then take the case to the rest of the country and business community so that we can join hands.”
Mr. Hegazy is very active in the Egyptian Business Community on different forums. He was a Principal Member of the Egypt’s International Economic Forum representing P&G, and remains a member representing Vodafone. He is also a member of the Board of The Arab Academy Marketing Association (AAMA) of the Arab Academy for Science, Technology and Maritime Transport– College of Management and Technology. He is a member of the Egyptian American Chamber of Commerce (AmCham) and of the Egyptian Junior Businessmen Association.
He held the position of Chairman of the Detergents Committee in the Exporters Association of the Egyptian Federation of the Chambers of Commerce. Mr. Hegazy was the Chairman of the Egyptian Brand Protection Association and is a Board Member of the Egyptian–Lebanese Businessmen Association.
Mr. Hegazy is married and has two girls.
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