LEBANON - Telecoms & IT
CEO, Pesco Telecom
Rony Kaddoum has more than 20 years of experience in the telecoms business in Lebanon, and is currently the CEO of Pesco Telecom, a data service provider, and CEO of WISE, an internet service provider. He holds a degree in Electrical Engineering and an MBA.
Pesco Telecom was established in 1992 and started as a contractor for large telecoms projects, including satellite earth stations for international communications. In 1997, we moved on to become operators. In the same year, we were granted a license from the government to build and operate a nationwide wireless data network, and this is how we started. With time, we expanded the network and started servicing larger corporate customers that required wide area network (WAN) services. Over the past few decades, in line with growing demand for the internet, we expanded our network to deliver services to ISPs that did not have the license to build their own. Today, we have a customer portfolio that includes corporate customers, who we service directly, as well as all the other ISPs that happen to use our network to deliver internet bandwidth to their customers. We pioneered the first wireless mobile residential network in Lebanon in 2005, known as WISE. By doing so, we moved into the ISP business and finally DSL in 2007. An ISP leases internet deals in terms of buying and selling access and acting as a bridge between the government and the private user. ISP companies in Lebanon are not allowed to build their own infrastructure, and hence must rely on the infrastructure of data service providers.
The lack of a clear regulatory environment makes it impossible for us to plan major investments in the near future. Nevertheless, we will definitely be investing in growing our existing networks.
It is tough. We are caught in limbo between the full deregulation of the telecoms market and the government monopoly, and the politicization of the sector makes things harder still for us. Despite the fact that a law was approved almost 10 years ago that aimed to privatize and deregulate the sector, it was never fully enacted nor implemented. This state of limbo has a very negative impact on business because long-term visibility of 10-15 years is essential to be able to invest in the telecoms sector, due to the high capital expenditures involved. We are in an unfriendly environment where the de facto licensing regime is not in our favor and the regulatory environment is far from clear. We lobby as hard as possible, but most of the time we are caught in the crossfire. Because of the high politicization of the business, if one party expresses an opinion, the opposition makes a stand and the situation becomes deadlocked. It is nonsense to hold the entire nation hostage to political bickering. A free-from-politics telecoms sector would be beneficial to all parties and to the nation. The Telecommunications Regulatory Authority (TRA) tries to do what it can in good faith, but the agency has practically zero enforcement capabilities. It cannot issue rules, much less enforce them.
There is no doubt in my mind that this is slowing down the whole innovation process and the creation of new business enterprises. The situation is slowing down the economy at a time when growth is most needed in order to make up for the lack of stability, which exacerbates political volatility. The formula for the enhancement of telecoms and internet communications leading to higher GPD growth is obvious. It is pity that we have only registered limited improvement—we could have done much better, but this is typical of Lebanon, a country that has missed so many opportunities.
We are well established in the market, and are managing to post a decent bottom line, but growth is a problem. The whole economy is shrinking and I long for the kind of growth we witnessed a few years ago, when the government was fully committed to the full deregulation of the market.
We are experiencing organic growth and the constant and continuous needs of people for more bandwidth. Bandwidth is something that will always be crucial in the sector, and demand can only increase in the future. I have never heard of anyone whose need for bandwidth is decreasing. Regardless of what industry you are in, your need for communications will always rise.
I am positive because we are going through a rough patch now, but eventually things will settle down and the politicians will ultimately agree on some type of deregulation. Meanwhile, we will continue developing new products and infrastructure despite prevailing constraints, no matter what they are. Lebanon is a very resilient country and its people are very brave. From an economic perspective, business goes on no matter what, and this applies also to the telecoms sector. It is a challenging and dynamic industry where things always change, and where every year introduces new products.
In the last few years, we have introduced a few key services, the biggest one being 3G. The impact could have been better had we been allowed to market it more aggressively, but we are bound by constraints set by the Ministry. We have also introduced many hardware products to the market, such as miniature Wi-Fi routers for 3G dongles and tablet PCs.
Our competitive advantage is our excellent team. I am very proud to say that we have one of the best teams in the country; our people are highly skilled engineers who are fully dedicated. Because of our status as a service company, our people are our core assets. We pride ourselves on being a fully transparent company with a high standard of corporate social responsibility, and we try to communicate this to all levels of the hierarchy.
Growth and innovation are the key words. We plan to innovate no matter what the constraints are. We live in a country where it is hard to predict what will happen in the future, but no matter what the givens are, we will work with that status quo and strive to remain the best and the most innovative company. The trick is to adapt to the times that we are going through. Flexibility is crucial in this case. In the private sector, we are probably number two when it comes to size. And as far as reputation and quality of work are concerned, we rank among the best.
© The Business Year – November 2013
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