Qanawat Telecom: A Major Digital Mobile Solutions Provider in Saudi Arabia and the MENA Region

Interview with Mohammed Sadyeh, CEO of Qanawat Telecom Co KSA

How has corporate life changed for you during COVID?

The traditional office concept has stopped being used because of COVID-19. We are accelerating this “virtual desk” now and virtual meeting. In the next five years, this will be the standard of business. People will be working from home. Some European countries are asking permission for something called “educational room” for online education. That means it is a long term strategy, not just during COVID. In the beginning, we used to complain about this way of doing business. But once we changed our ecosystem, we could see the difference in the corporate way of doing business. We wasted our time. I was on the plane, living like a pilot with more than 70 flights a year. This is almost two flights every week. COVID forced me to start to think about how to manage my business and subsidiaries. Now, travel is open, but I travel only a minimum. It has been a big change. Especially in the corporate enterprise, we saw that and we knew it. But, no one thought it would come this fast. They thought it would come in gradually, but COVID brought everything quicker. The company is dynamic, agile, and ready for change, so we could benefit. However, during this COVID pandemic, we saw the big guys triple their money when most of the world is suffering and complaining about jobs and money. This shows you that there is money, but you need to know where to go to get the money.

What is the scope of business for Qanawat and what is the sector like in Saudi?

At Qanawat Telecom, our core business is as a telecom distributor. We are not an operator. We are in the middle between the end user and the service provider. We distribute to the end user directly through our own retail or through the market sales channel, either digital or physical, wholesale, retail, electronic voucher machine, or digital services sold over a popular website like Amazon, etc.

I am in the chain of the telecom industry, working dependent on the best service provider. I am a dynamic, neutral operator and I move for the value because I am customer focused. In the telecom sector, the telecom operators have a bad relationship with the customer, whether in customer retention or customer gaining. The problem is that the customer has traditionally thought of the operator as the bad guy who is trying to charge them more, asking them to pay more, playing with the bill, charging for 30 seconds and cut two seconds. Even when the customer complains, they give part of the value back as almost a charity. Customers start to realize this once they start to deal with direct in contact operators like Google, Facebook, Twitter, etc. They feel there is a right service for the customer for almost free of charge. Of course, the problem here is that those big companies are selling you as the product. Someone is paying for the luxury of communication and the operator knows that. They are giving a rosy message and then the customer service is done. In a market like Saudi, when we come to the operator, it is more challenging because the market here is more a prepaid market rather than postpaid. This is another challenge for people to shift to postpaid. The world is a postpaid market. Prepaid customers receive the worst customer service. In the last decade, everyone used to say they had a customer focused innovation. Nokia disappeared because they could not understand the customer. At the time, Nokia told the customer, “this is the right device for you”, but now it is time for the customer to tell the manufacturer what they need and what product will dematerialize their life. A mobile smartphone is now a laptop, GPS, calculator, calendar, everything. I do not have to use 20 different devices. Now, the current terminology is not customer focus anymore, but customer empowerment. My device is customized to listen to me, to do what I need, and manage my life. This is why they give the power for this content rather than the telecoms because those IT companies have direct relation, direct contact with the customer rather than having layers in between. I have an optimistic view of the telecom outlook in the short term to 2025 because of this digital transformation. But in the mid to long term, the business is changing. A lot of companies will go bankrupt if they do not start to change. Soon, those big brands will disappear like Kodak, Nokia, etc. But they should always be the future. The problem is that the transformation for those big companies is not as easy, especially the money in the digital world. My expectation is that those telecom operators will move to be only connection carriers. At Qanawat, we do not have this bad relationship between the operator and the customer. I have my footprint in Saudi. I have the operator plus extra service. I give a full solution for bundle. This gives us better customer service. This is the advantage and sustainability of my business. There is continuous innovation, there is the management, there is the Qanawat excellence, there is the normal KPI, but this is my edge for the people above me and the people below me. We always think ahead and bigger. Qanawat started this digital transformation mission in 2009. Now, we are into digital platform creation and management and we are proud of having two really good platforms. The first is in health management recognized in the UK, Egypt, and now GCC. The other one in the GCC is DOTS dealing with supply chain management, mainly for ecommerce. When we went to supply chain logistics, I did not go the traditional way of UPS, DHL, etc. Today, with the increasing demand in ecommerce, the logistics part is crucial, where we can accelerate the speed of reaching the customer as well as the cost. Compared to my competitors, we were ahead of them in transforming the business into the digital era and the sophisticated, advanced telecom product where the customer benefits. This can be seen by the strong footprint and infrastructure Qanawat has in the Saudi market, as well as in the GCC market. Qanawat now operates in Saudi, Kuwait, the Emirates, Egypt, Lebanon, and even the UK.

What are the major challenges for you to boost your business? What are your competitive advantages?

At Qanawat Telecom, our core business is as a telecom distributor. We are not an operator. We are in the middle between the end user and the service provider. We distribute to the end user directly through our own retail or through the market sales channel, either digital or physical, wholesale, retail, electronic voucher machine, or digital services sold over a popular website like Amazon, etc. We are marketeers to all distribution channels in the telecom area. That is why we always have a good partnership with the operator, which is a major part of our revenue, and then we add our extras, either a service or a product. Now, we are a distributor of mobile accessories and cables called MiLi, one of the top five brands in the world in 15 countries. Again, it is a complete experience. We are a distributor of four smart home products and one smart car product. Consumer electronics is the core, but this is not the future. We have a proper distribution network and infrastructure in Saudi. We have the reach for the customer and we are acknowledged by the major operator or major vendor to carry their product. Until now, our distribution was a physical one rather than digital. We have a small digital part, especially in the recharge and vouchers, such as PlayStation, iTunes. These sell to the people in the suburbs and remote areas, mainly. The major cities are more tech savvy and they can go to the internet and reload an iTunes voucher or PlayStation voucher. In the remote areas, they want to go to the supermarket to buy vouchers. They are looking for traditional way of buying in these regions. The layer between the operator and the end user is shrinking. First, there is the challenge of the operator financially with the competition, the reduction of the cost, the selling price of the minute, and the free voice services over IP like messengers, WhatsApp, etc. One of the areas for operators to enhance their margin is to reduce the channels or the layers between them and the end user. They can reduce the commission they pay and make the relation with the end user closer. What will help that is the digital infrastructure with people becoming more bankable, more digital. The big guy can reach the customer without having people in between. Since 2010, we started an initiative to tap into the digital market. We were working with two international players for partnership and digital transformation. I do not want to be an application owner. The B2B and corporate is where our strength is. I am always thinking how I can add value to this sector. We evaluated different platforms. In 2010, we launched something we were developing called Smart Taxi. At that time, there was no Uber, Careem, etc. in the market. I knew that the taxi in the traditional way would start to be phased out where people would order a taxi over their mobile. However, by the time we were ready to launch, Uber was coming to Saudi. We decided not to compete with them and use the same technology to move to somewhere where we could compete. We got into supply chain management and we started the DOTS application. We now have a significant number of logistics companies using it to manage their delivery, collection of goods, distributing the goods to the courier, and delivering the goods by doing the calculation of the fastest time, route, and even communication with the customer. The address is now auto installed. This integration has been very successful. So, I moved from competing over to an area where I have my strength on the ground and it was successful; otherwise, it would have killed my business. Today, we have a mature health platform called Balsamee. Balsamee is one of the top digitally recognized platforms worldwide. A few years ago, Vodafone released a 50 platforms to monitor list and Balsamee was number nine. We are happy with the development. With Balsamee we are disruptive in the market. For two years, we faced a challenge to get to the market. The core of Balsamee is built around patient records management. Your records in your hospital, with your doctor, with your pharmacy, with your medicine, you own it in your wallet. Traveling from the UK to New York to Oman you can have all your medical work with you – your history, your bills, your allergies. You decide what to share or what not to share. We have 15 patents within Balsamee. One is sonar compressed in a technology where this application can be read and transferred to a simple format that a doctor can read. The problem with the patient record system is that there is resistance from the big guys, especially the hospitals, because they want to keep your data. That means that next time, you will go to the hospital instead of your computer to continue your treatment. We are offering the customer empowerment. Now, we have started to break through the market and the big players are coming to join us. One is NHS Wales. They already recognized Balsamee as one of the top three platforms to take preventive medicine forward and now they have even granted them extra funds to develop new models. From the other focus, we work in digital transformation, especially with logistics and supply chain where our DOTS platform is doing well. There are multiple players and multiple platforms in this area. We believe that we are one of the good ones and we are doing good business in Saudi.

My personal passion is tapping into digitalizing the supply chain in the FMCG market. There is a big need and a big gap and they are left behind. Most of the FMCG market do business in the traditional way. For example, a dairy product company does milk, yogurt, those short life products. Every two days a big truck will go with a new product to supermarkets to give them new product and they will collect expired or nearly expired product. The problem is that every time, they get surprised. The truck goes in with 100,000 packages, but maybe they will find 150,000 expired packages in the supermarket and you actually need two trucks. They do not know what they will collect and what they will sell. We started B2B ecommerce focusing on the end user. This small point of sale – pharmaceutical or restaurant or grocery shop – why are they not treated like the end user? Why do they have to call the supplier to ask for this quantity of sugar and that quantity of milk? Why does the pharmacy wait to finish his supply of panadol or paracetamol to call his supplier to bring more? We have started connecting the pharmaceutical warehouses with the pharmacies. The pharmacy can now see the multi vendor, multi product, the inventory, the expiry, the pricing and the offering, and the vendor can also have certain visibility of the inventory in the pharmacy, be it high inventory, low inventory. They can plan this supply. So, there are two revenue streams. One is the transaction of the ecommerce itself. It will create a lot of logistics business. These pharmaceutical company warehouses today have a sales team, they have a logistics company, and it is not feasible because it is not their core business. The delivery is costing much more. The world is going for outsourcing. Now, pharmaceutical is not my worry and it is a limited market. I have a bigger market here in Saudi in the electronic voucher machine. The number of grocery shops in Saudi actually exceeds 50,000 and I have a machine in almost 7,000 of those. Even in a more sophisticated market like Emirates or some European countries, most of this sector is still traditional. Information is gathered, no one has the data of this one grocery, most of them do not have a cash register – they just do transactions on a calculator. We are introducing to them a smart device, a smart cashier, full service; plus, it is an ERP for his grocery for goods going out, inventory management, it communicates with the vendor. It can even use artificial intelligence where the system would automatically order 10 bottles of water once you have a certain stock and it can filter and see the supplier because it will see the shortest time and the price offered, promotions, etc. So, there is a big value for the point of sale and the vendor. My biggest value was not foreseen which is why dealing with the operator, you see their mistakes and you try to avoid them. I learned from the operator. With IT guys, utilizing the operator data, they want more from you they want to sell you more SMS, more data, etc. They never realized that they have 10 million customers with clean data. I see their behavior, I can profile them, and this is valid data: what they purchase, where they go, how they visit, how many kilos they move per day, how many SMS they do. You can see this breakdown in America and even Europe. They have tapped into this. They are profiling companies. For them, we are numbers as we are for Facebook or Twitter. I am aiming to reach almost 50% of the grocery shops which is a challenge with 25,000 shops. I am working with two international players on the hardware and the software, some of it developed internally, some developed internationally. I have a full ecommerce ERP inventory management within one device and this small grocery. My biggest value I want to reach is having the behavior of the market, this big data, analyze it, share it, and sell it. This is a big benefit for everyone in the chain. Procter and Gamble sells multiple products. But if you tell them that Johnson and Johnson in the eastern region are increasing demand from average point of sale consumers by one piece per day and this type, this size is more popular in the western rather than the northern area, this is female rather than male, this is data they need. For a dairy company, before he goes he can see in the system that this driver’s route will have to collect 20,000 expired products. They can save 30% of their logistics and transportation business.

This is a project you are working on now or something for the future?

We started it in 2019. We developed the software and we upgraded the hardware. Last year, we had some work to get in the market. The only delay happened because of COVID. Things are down for both the local and international market. However, we kept some steady progress. Our plan is that in 2021 it will be on the ground on the market. By the end of 2021, we should have our footprint clear in that direction. It snowballs. After three or four major vendors, a lot of vendors will come in. It is more valuable even for newcomers. Imagine you are coming to Saudi with a new brand of drink or frozen hotdog. Now, you will have a sales team go to the grocery store, tell them what to put on the shelf, I will give you credit, and I do not know the market. With this new method, you come to the platform and by the second day, your product is on every shelf. By that second day, everyone can see your product, they can order, without recruiting one sales person or even one logistics person because it is an integrated, real time platform where you can even have some third party deliver for you. This will cut down on time in the FMCG market. We take whatever we can from the other side of the business and other sectors and we see how it can lower cost and increase efficiency.

How do you see the development of these projects, not only in Saudi but internationally?

It is very optimistic, expandable, and great projects to move forward because I could not see such a project in the whole region similar to my vision. We are optimistic about recovery, but I did not see a full solution from the way we were thinking with our alliances, even worldwide, not even in America or Europe. Procter and Gamble develops their own digital platform to communicate with their point of sale, but it is limited. Procter and Gamble does not want to eventually know how much I sold of this item from the grocer because they know. But, they would love to see how they are doing with the competitors, how much product they are pushing, how to tap into new markets, how to understand the behavior of the customer at whatever time of the day they buy the product compared to hygiene products. You cannot sense this unless you are with the other platform, which is a third party not the point of sale. It is the third party to me. Uber is not the taxi owner, they are not the customer, but there are in between. They make sure they have the benefit of both. The owner is making good money and has a good customer base and good client referrals and the customer is having great service, convenience, and price. That is why we always play in this layer. I love this product. I make sure your product reaches your target audience in the most efficient way. Using this tool will give you visibility over what is going on and cost cutting.

Are you looking for partnerships?

We already have a consortium of four mega companies, from Emirates, from Jordan, from China. For instance, for the device, we signed with our strategic partner. We develop the customized software inside fax machines. The hardware with the software and the modem inside it we had a plan to roll out the first 1,000 devices in January 2020. We postponed it for five months, because I want to roll out 5,000 machines in the first month because 5,000 machines will give me the real pulse, the real data.

What are you working on at the moment?

Last year and this year, the focus was the market that we can change and the quickest way. My focus was on the old way, which is expanding my retail. I doubled my retail pool from 51 retail outlets in early 2019. Yesterday, we finished the last outlet and today we are at 98 outlets. To sustain in the market, you have to reach the customer in the fastest way which is my own retail. That means my customer is coming to me rather than moving multi channels to reach the customer. That is why the focus was not innovation; rather, focusing on our strengths to guarantee my territory and my revenue. We did not stop the digital work. I was focusing on deploying and having market share of my two existing digital platforms, Balsamee and DOTS, the health and the logistics. In the development area to come soon, bigger than both of them is the FMCG ecommerce and digital platform. I am shifting my business from wholesale business to retail business. We were successful in 2019 in retail versus wholesale business with 80% from wholesale and 20% from retail. January 2021, my revenue is 45% from retail and 65% wholesale. This is from restructuring the current model of my business. I started the accessories and smart gadgets and health gadget business where I am a distributor for that because I already have a reach and customer base.

You have been in this industry and with this company for a very long time. What is your inspiration for doing what you do?

I remember sitting at dinner with a very close a friend and my brother. All of a sudden, the friend told me, “Of course he’s your brother and that’s why you took his side.” I said, “Listen, he’s my brother by force. You are my brother by choice. You should be more flattered because I choose you. That means you are even closer.” For me, it is by choice that I choose telecom. I have developed the passion for telecom. I graduated as a mechanical engineer. Even my career started at the manufacturing facilities. I was the quality assurance manager of manufacturing. In two years of doing manufacturing, I saw that the economy of scale, the expansion is limited. In a couple of years, I would be the manufacturing GM, the facility manager of the manufacturing. Then, I would be stuck in a routine job. The best thing I could do would be to play with a formula to reduce costs and open more markets. So, I quit without having a job. I had a friend in telecom. In 1998, the GSM started, especially in this region, with a lot of mystery about it and where it would reach. Is it a product for the rich people? Is it a product for everyone? What kind of service is it? I loved it and I started studying it and I engaged with international courses later. The passion was there. One key thing in my character is that for me, your only competitor is yourself. I always want to be a better person tomorrow. I do not need to look at my competitor and defeat him, but if I can be every day, every year, better than before in my knowledge, my position, my career, my values, then I am fine. I will not be richer than Elon Musk. I want to be richer than Mohammed today. I want to be smarter than Mohammed today. I want to be more knowledgeable than Mohammed today. This is what I transfer to my team. My passion taught me that competing with myself will always give me a challenge, that your “good” is not enough. You need to be better. I started my career in telecom in 1998 as a data and process analyst in Global Star Satellite Company. In 2008, 10 years from starting in telecom, I was the CEO of Qanawat. I have two things with me always: knowledge and passion. If you have these two factors, you will always find your way. I am not saying you will not fall. You will fall. For me, the bad times, like COVID, is my school, the learning time. The good day is the exam where I can show and I can practice what I learned during the bad time. By this, even during a bad time, you monitor, you layer, you see the good and the bad so when a chance comes, you will know exactly what you are going for. I have a passion for this and I keep chasing knowledge. I never stop reading. For me, telecom knowledge and understanding are like with a medical doctor – they have to be updated. If we are not updated, we are out. Most of the products we have launched here, we were the first to the market. This is what keeps me moving, what keeps me ahead in the business perspective. Personally, I cannot work in something where I do not have a passion. If I have a passion, I can develop knowledge fast. My style in management, the difference between me and the finance focused CFOs, is that I am more people focused. I manage people, while those CFOs are managing money, managing numbers. That guy will look into the numbers of the budget. He needs to achieve 100 million and he will do everything for the 100 million – cut here, add here, etc. I take it the other way around. I go to the team and we see what their potential is. Then, I can measure this team with this potential, where they can take me, and I keep opening the door for them. I really take my budget bottom to top, not top to bottom.

Do you have a final message for the future of the sector in Saudi Arabia?

In Saudi, we are optimistic. We know the market is a good market, even for the traditional services that we used to have, especially when we are a young country moving fast with the new members of the country and they have a bigger dream and they are chasing it with smart cities, smart life, more women empowerment and having the ladies back to the market. This is a big segment coming back to be active as investors or as participants. In Saudi now, we are at the door of another 5 to 10 years of potential growth. In telecom, the major difference now is the 5G. Saudi is one of the biggest investors in the 5G operator in the region. The top countries in the world would be South Korea, followed by the US or China who have 45% to 50% of the 5G network. In Saudi today, we are in the 20 plus, which is considered to be one of the top range. 5G is good and bad. It is a headache for the operator in terms of the infrastructure. They try to delay it. They do not like it. 5G is not about my mobile internet speed. Yes, I am now enjoying 300 megabytes when I used to have 5 and 10. For the operator, this is a door for other services and the money will come from enterprise solutions. 5G will help other sectors to present disruptive products and services to the customer. This extremely high speed is supposed to support the IoT, machine to machine, and artificial intelligence rather than supporting speed for video streaming. Yes, we are enjoying this but it is the collateral that we take from the equation. But the money is there not from individuals because it will cost the same money to download a movie in one second or download it in one hour. If I consume 10 GB, the operator will charge me 10 GB. To make money off of this infrastructure there is corporate focus. In CSR, I have a small support group that I started in Jordan with my nephew and his colleague in university. Now, we have almost 50 people and we advise them on a career path. I see something and I believe in it. I see the world is changing. By 2030, the world will lose 30% to 35% of jobs. The current job positions will disappear. Ladies would be more affected, not because they are not working but because when we go to admin and clerical work there are more ladies. This is one of the biggest areas to be harmed by digital, artificial intelligence, robotics, and automation. When 40% of the jobs disappear, and with the acceleration of artificial intelligence, will more jobs be lost? My dream is to have a small mentor academy or platform to talk to those freshly graduated from university or before going to college. It is not about what is best to study anymore – medicine or engineering or dentistry – or what the salary is. This is what we used to think. Now, you need to study something where you can sell yourself, you are a business case, where you can end up by being a full corporate by yourself and you can sell your service over a marketplace. You can be fixing a car, teaching math, fixing an AC. If I have a marketplace here, I do not need an employer. An Uber driver is an example. He is a driver, but it is not enough. Why can’t he also fix the car? The Ring doorbell company had a problem in America for a few years: because there is the cost of installation, installing the product is more expensive than the product itself. They developed an ecosystem to give taxi drivers simple training in installation and whenever there is an order, have them install it. They reduced the installation fees by 90%. The taxi driver could make more income, the customer paid less, and the company could distribute more. The new generation should be in school before college and we should start teaching them how they can be a full business case. If you are talented in IT, you go two years and you become a freelance IT developer from your home, taking projects in China and Egypt. Corporate will go this way for me when I make my plan for my expansion of employees. That is 50%, outsource 50% in house. So, 50% outsourced that I need to recruit, there could be someone working from home in Ukraine, but he proves to me that he has talent in his job, he will cost me less and he will make more money. This is the new job style. This is how I personally want to empower these young people.

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