In an exclusive interview with Telecom Review, Salem Itani, Chairman and CEO of touch, discusses the importance of collaboration and partnership, the achievements of touch in the face of the country’s economic crisis and the company’s future projects in line with the continued development of the telecommunications sector.
The Telecom sector in Lebanon has faced key issues such as poor connectivity and coverage, limited resources and currency fluctuations. How have you successfully addressed these challenges in the past few years?
During the crisis, we confronted a wide array of challenges stemming from limited resources, encompassing financial, material, human, and intellectual aspects. We adopted an approach that ingeniously harnessed these constrained resources as potential solutions, propelling our pursuit of success. To illustrate, we addressed issues concerning network and material resources stemming from fuel scarcity and a substantial reduction in electricity availability — almost reaching 100%. In fact, our power supply dwindled to zero. Overcoming these terrible obstacles demanded innovative strategies, including the implementation of progressive solutions such as hybrid approaches and intensified battery usage. Furthermore, we diligently optimized diesel consumption across all sites to safeguard our operations.
Our strategy also centered on network hybridization. Guided by strategic investments and real-time solutions, we seamlessly integrated high-lifecycle batteries and solar technology, effectively complementing traditional electricity sources and generators. Despite enduring these challenges during the crisis, we are proud to announce that as touch, we have succeeded to reduce the number of site outages from more than 300 sites to less than 45 sites, reflecting an improvement in the network availability from 74% to almost 98%. We also succeeded not only in enhancing network availability but also in improving “Quality of Experience” (QoE) from “Average” to “Excellent” levels as per the international norms, especially in urbane and dense urban areas, as well as quality of voice and data. Worth mentioning that we achieved this milestone with the cooperation of the Ministry of Telecommunications further to a comprehensive strategic plan.
It is said that any catastrophe presents an opportunity for the future. How have you, and how do you continue to, incorporate such problem-solving as a business strategy with measurable accomplishments?
Three pivotal factors come into play in this discussion. Primarily, cooperation has been instrumental. We collaborated with key stakeholders to navigate the catastrophe despite resource limitations. To illustrate, a noteworthy partnership was established with universities to revive the call center's proficiency. A critical juncture arose when our call center services were jeopardized due to the discontinuation of our previous contractors. Concurrently, compliance and legal constraints emerged. From a legal standpoint, recruiting external individuals for the task was unfeasible. Our strategic solution? Collaborate with universities — a move that proved remarkably successful. Within just three months of initiating this partnership, our answering success rate in call center increased rapidly from 30% to a resounding 100%. This transformation in call response success exemplifies the efficacy of our collaborative endeavors, in addition to OPEX saving of around 60% vs. contracting.
Furthermore, we made significant strides in recapturing missed technology milestones, including re-engaging with 5G technology. A comprehensive commercial test was conducted at our headquarters, resulting in our headquarters becoming 5G-equipped. The test revealed an impressive download speed of 2 Gbps, surpassing regional norms, coupled with a latency of below 10 ms. This milestone affirms our preparedness to tackle crises and technological challenges head-on.
Innovation also served as a pivotal escape route in various facets, leading us to devise solutions previously unexplored internally. Leveraging our internal resources, we crafted ingenious, out-of-the-box solutions. A notable achievement in this regard is our in-house automated tool, capable of instantly pinpointing outage descriptions on Lebanon's map. With a mere glance at the map, one can discern network issues, their nature, and their likely solutions. This tool significantly contributes to corrective maintenance efforts. Moreover, the incorporated learning element aids in advancing preventive maintenance strategies.
Do you have any plans to upgrade your network coverage? And what measures are you taking to ensure a progressive and sustainable ICT sector in Lebanon?
In terms of our upgrade plans, our approach has been strategic and resourceful. Over the past four years, due to budget constraints, legislative limitations, and revenue restrictions tied to the official LBP rate, our ability to invest in upgrades has been curtailed. However, the financial landscape has shifted as we've rectified our fiscal situation through price revisions and reduced our main liabilities. Now, whenever we identify components reaching their end of service or end of life in the technology realm, we promptly upgrade to the latest available technology. This dual-purpose strategy yields two significant benefits: we are poised to transition to a 5G-ready network within a short period, and we eliminate end-of-life equipment vulnerabilities, thus eradicating single points of failure. This comprehensive approach serves as a cornerstone for fortifying and future-proofing our network.
For data consumption, it has witnessed a remarkable 25% increase between Q3 2022 and Q2 2023. This growth trend holds true even within our LTE network, where we have implemented the addition of third carrier. Our LTE network remains a robust foundation, standing as a backup for our 5G endeavors.
Turning to our 5G network aspirations, the journey hinges on regulatory permissions and licenses.
Our strategy involves a phased introduction, commencing with the integration of 5G in hotspots where enhanced mobile broadband is paramount. As 5G matures, we will seamlessly phase out 3G, with LTE bridging the remaining gaps and 5G hotspots addressing diverse economic, industrial, and consumer requirements. This strategy aligns our network evolution with the dynamic demands of the economy, industry, and public.
Touch is also adopting digital transformation strategy whereby we are digitizing our internal core capabilities and adopting automated real time monitoring dashboards needed to enhance our QoE, by securing automated preventive maintenance not only at the level of power management, but also at the level of network management.
You are utilizing the Sayrafa Exchange Platform in your bill collection. How has this impacted various parameters, including Average Revenue Per User (ARPU), churn rate and subscriber growth?
The mobile sector's status in Lebanon, in terms of customer demand, remains robust. Strong interest in data services is increasing, indicating potential for further growth. Notably, the period from Q3 2022, following the price changes, saw a significant increase of 222% in Q2 2023 in the Sayrafa rate, more than doubling its value. Interestingly, during this time, the Average Revenue Per User (ARPU) remained relatively stable, showing no significant variation.
This consistent ARPU is a positive indicator for us. Additionally, when examining customer churn, it actually decreased by 1% only compared to the period when prices were directly altered. The decrease in churn, along with a consistent total customer base, indicates that despite the fluctuations in Sayrafa's rate and price changes, the customer base has remained relatively steady. This suggests a consistent demand for services, sustained growth, and a well-handled response to the price changes.
It's important to note that, despite expectations, the customer base has been maintained even after transitioning from the official USD rate to the Sayrafa rate. Furthermore, the influx of seasonal visitors has contributed positively to net roaming revenue, with July 2023 showing the highest net roaming revenue in four years.
Over the crisis period until now, the ARPU has grown over six times, exceeding 7 dollars. There's potential for even greater growth, and the aim for the upcoming year is to surpass the current ARPU through the introduction of new services. With strategic customer targeting, there's potential for Lebanon's mobile sector to grow further, given the existing opportunities in the market.
Are you planning to integrate the use of e-wallet services for your customers?
Few weeks back, we initiated the first phase of a similar experience by introducing the touch Visa Card. While not a full-fledged wallet, this represents the initial step (phase 0) in understanding customer reactions to this FinTech-like encounter. In the inaugural week, we registered an immediate uptake of 500 customers. Additionally, this venture involves a banking partner. For the forthcoming e-wallet, we are also seeking a partnering institution to facilitate its availability.
Our focus lies in crafting a mobile wallet solution. The necessary groundwork is underway, and we are convinced that the most effective path forward is to collaborate with a FinTech expert holding the requisite license.
This combination of expertise ensures we deliver optimal services to our customers, who have showcased their loyalty. Notably, our market share has surged to 54% from the initial 50%, showcasing substantial growth.
Leveraging this substantial customer base, coupled with the introduction of the e-wallet, will open doors to previously untapped markets. These include sectors like mobile gaming and subscriptions to OTT services.
The introduction of new services is on the horizon as well. Enterprises today have discerning needs, demanding reliable solutions with guaranteed service levels. To meet this, we are constructing a robust infrastructure to offer high-bandwidth, highly dependable connectivity — a challenge often unmet by others in the field.
An enticing opportunity lies in the realm of untargeted B2B sectors. Our approach is characterized by collaboration, partnership, and innovation. Efforts are underway to forge a strategic partnership offering cloud solutions to enterprises.
Do you think the Telecom sector in Lebanon can regain its standing on the global telecommunications’ map and align itself with the current pace of industry development?
We've experienced a gap spanning more than three years in our progress. Our initial step was to retain our existing capabilities. Now, the imperative is to catch up by pursuing growth, addressing the gaps we've identified, embracing cutting-edge technologies, and replacing outdated equipment. This comprehensive effort positions us to regain our standing on the regional telecommunications landscape.
Simultaneously, our focus on digital transformation is gaining momentum, allowing us to glean insights from the mistakes of other operators. While we might not be the first to implement 5G or achieve complete digital transformation, our strategy is centered on drawing lessons from their experiences, both pitfalls and successes. This approach acknowledges the diverse nuances of different countries and customer needs. We're attuned to the specific requirements of customers in Lebanon as well as the sector's demands.
Our strategy aligns with projections for future requirements, ensuring that we are well-prepared for what lies ahead from both a technological and digital transformation perspective. To illustrate, we're actively working on adopting the latest technology, such as Optical Character Recognition (OCR), for onboarding processes. This move will transform our current manual experience into a fully automated one. Additionally, we've already transitioned our systems into a cloud-native architecture, positioning us for end-to-end cloud solutions.
In essence, we're determined to bridge the gap, leveraging insights from the past and integrating them with current digital advancements to propel us back onto the trajectory of success.
