In the revamping of cellular network operations in Lebanon, a joint venture under leadership of German company Detecon – itself a full subsidiary of Deutsche Telekom – was awarded a contract to manage the network formerly known as Cellis under a $201 million contract over 48 months. EXECUTIVE talked to Ineke Botter, who is the managing director of the new company, Fal Dete and, incidentally, the first top female executive of a company of its size in Lebanon.
You have stepped into the management of the former Cellis mobile phone network at the beginning of June. What are your impressions after the first three months?
When I came here, I quickly discovered that the personnel – what we have left – is very professional and skilled. That helps a lot. I also discovered that the people are very anxious to keep the business growing, which again is a big benefit to us. We are involved in several areas, beginning with the setup of Fal Dete Telecommunications as the managing company. On the other hand, we have to run the operations and we are running them on half force. About half of the staff left, but the company is undertaking the human resources project to bring staff again to acceptable levels. And we are starting new projects, like the numbering plan, studying business environment, assessing distributors and reviewing the plan of the company – so there is a whole lot to do. My first interest was to get the company up and running by September 1 with almost full staff.
How many employees do you have at present?
At September 1, our number is about 350.
Down the road, what head count do you plan for?
Approximately 400 in the autumn. But we aim to introduce new lines into the market at a very steady base. Each time you do that, you have to look at your personnel because the ratio, for example, between the contact center (to answer all the questions) and the number of subscribers is almost linear. We will grow further.
Your offer to manage the network was much lower than sums paid under previous arrangements. How could you give such an aggressive offer for managing the network?
One of the competing bidders had almost the same offer, so there are at least two people who have the same sort of opinion. I think [we could place this bid] because Detecon is in so many countries and has so much experience with how one can rationalize a company and make it more efficient. Of course, it has also to do with the fact that the sector was very cash rich in the past. In the last few years, it was not so cash rich. Detecon has experience with how to look at efficiencies in companies. We are looking at future proof systems to be put in place, which means that we will grow, but at a steady pace and in line with customer care needs and subscriber numbers.
What is in it for you? Isn’t it correct that as an operator, you do not participate in profits and if you increase profitability, you do not get a greater share?
I cannot comment on that. You have to talk to the shareholders. I am running the company and I have targets.
And these targets are to develop the company in terms of market penetration?
Yes, that is part of it. Of course, our bid was based on a business plan, and the business plan foresees growth in the market. Our company is the manager on behalf of the government. I am the chairperson and also the CEO. We have targets that are related first of all to the business plan that Fal Dete has, which was accepted by the government as an integral part of the network management agreement. Targets are that we manage it and improve the efficiency and put new systems in and make sure that especially the quality is of a high level. It also includes that we propose new services and make sure that the distribution network is in place.
This relationship is limited to managing the network over four years on behalf of the government?
The agreement is that we will manage the network for four years, with measuring activities to make sure that the quality is guaranteed. Some issues will be measured on a weekly, others on a monthly basis and the packet is to make sure that we have performance in our operation and serve the customer according to the government wishes. It doesn’t mean that we are sitting on a chair and just doing what the government says. We were also hired because we are a professional company and come up with ideas and suggestions. It is for the government to decide if they want to accept them.
Would it for instance be possible to switch in the near future from per minute billing to per second billing?
That is the government’s decision. To implement such a change in technical terms requires having information on the billing system and I actually asked this question. It is typical that older systems have more difficulties and you have to make sure that they are addressed. Are some of the network’s tech systems in need of an upgrade?
For sure. In the lifetime of our agreement we will have to replace equipment. For example there about 400 base stations. These do not only have an economic depreciation but also a technical depreciation time, and over the years, a lot of them will have to be replaced. We are carrying out studies now on the whole network to make sure that we understand where we have to upgrade and where the equipment is running out of lifetime.
What are your limits on numbering and the timeframe for a new numbering plan?
Between MTC and ourselves, we can have one million subscribers in the 03 numbering block. We will of course run into a limit and talks are ongoing between Fal Dete and the ministry. They have proposed new methodologies etc, and we are having a look at the technical and economic possibilities of how the proposals would work.
Where do you see the potential for mobile penetration in Lebanon?
Again, I have to refer back to the government, because the investments are done by the government. In our estimation we have predicted a 40% market penetration. But every step needs studies. It is price elasticity that drives the penetration and on the other hand the revenues. There is always equilibrium.
The Cellis services included value added systems such as the plugged portal and StarAd corporate advertising service. Are you developing them, or perhaps reducing some?
One thing is that we will at one point have a new brand name. Once we have a new brand, we will start marketing certain services. It is too early to say which ones we will market more than other ones. We are looking at all possibilities.
Have future fee structures and charges for new lines already been determined?
I cannot comment.
Does Detecon have a position in the discussion on the virtue of liberalization of telecoms markets?
From my personal experience, comparing the difference in development of the regulatory environment for instance between Eastern Europe and Lebanon, I have to admit that Eastern Europe is a lot further. But I have to also say that I had talks with the ministry about these regulatory talks and there is definitely a willingness from the ministry.
Beyond managing networks, Detecon is well known as consultants doing studies and advising governments on ICT. As far as the Middle East, is it correct that you have thus far been doing business only in Saudi Arabia?
There are Saudi partners and we are doing business development with them as we speak, for other countries in the region.
Detecon is expanding in the Middle East?
Detecon is in many countries, and yes, from a communications point of view, the Middle East is very interesting for us.
Let’s talk a bit more about brand building. What does Fal Dete stand for?
That is the manager, it is not a brand. Fal stands for a Saudi Group, and Dete for Detecon.
And you are phasing out the Cellis name?
We have phased it out in a sense that Cellis was sometimes used as the company name and there was a little bit of confusion. We are making some efforts to get the company on the map; that is why we have put the banners with Fal Dete up on this building. That is the first step. We should not confuse the customers, so we introduce the company now and next we will introduce the brand. At some point, the brand awareness for the new brand should be higher than for the company name.
How much of a budget are you allocating to the development of the new brand?
Can you provide numbers on that?
No. It is again something that we need to discuss with the government.
Is the new brand name being devised by you or by the government?
It is a joint project.
Can you reveal the brand name?
No, we haven’t decided yet (laughs). It is still in production.
By what time do you anticipate the establishment of the brand to be concluded?
It will be concluded by the end of 2004. It is a big project.
How many members of the Detecon staff are working with Fal Dete?
At the moment there is a group of consultants but it is diminishing almost per week. Then there is the management, which consists of four persons. The management stays for four years and the consultants are phased out.
And the bulk of employees are Lebanese?
Yes, except for the four managers.
You said that the level of human resource quality is good?
Yes, and talking from personal experience, that is what I find. I left the Netherlands in 1988 and have worked all over the world since then. I worked in very rich countries like Sweden and Switzerland and in very poor countries, like Kosovo. And if I see how the people are so ambitious to grow and make their lives better, I am always impressed. We appreciate that a lot.
Are employment benefits and salaries comparable to what staff members could earn before, or are there differences?
Reorganization also means that we looked at salary scales, etc. I cannot comment on the level but we are, in my opinion, still on a good pay scale.