Axiom eyes new markets for expansion

 

 

Axiom Telecom is planning an eightfold increase in its operations in India as part of a move to consolidate its global position. The UAE’s leading retailer and distributor of wireless telecommunications devices is also lining up an initial public offering (IPO) to fund its expansion plans around the world, the company’s chief executive officer told Emirates Business.


In one of its largest overseas ventures, Axiom has set a target of 800 new outlets throughout India. It currently has 100 outlets in that country. Last year the Dubai-based firm entered into a Dh147 million, 50-50 venture with India’s leading retailer Pantaloon Retail India to distribute mobile phone handsets and accessories and set up service centres in India.
 

Axiom Telecom, which was founded in 1997, has distribution deals with international mobile phone brands such as Nokia, Samsung, LG, Sony Ericsson, Motorola, i-mate and Thuraya satellite communication.


Chief Executive and Founder Faisal Abdulaziz Al Bannai said: “Our focus now is to achieve a leading position globally and we believe our expansion programme in India will help us towards achieving that goal. “When we entered Saudi Arabia in 2004 we were unknown; today we are a leading player in the Saudi market. We want to maintain our leading position in the Middle East, while at the same time striving to achieve the same in our new markets.”

The company has already secured a contract to distribute Nokia devices in India and it is also expanding its service centres in the country, besides distribution of accessories. The Indian venture is aiming at revenues of about Dh732m in the first year of operations, as the company taps into the world’s fastest-growing mobile services market.

“We see great business potential in India for distribution and servicing of telecom products. We believe that our expertise in distribution and after-sales service operations and Future Group’s [the holding company Pantaloon Retail India] understanding of the Indian market and the marketplace will create a win-win situation for us as well as the Indian consumers,” said Al Bannai, who won the 2005 Lifetime Achievement Award of the Mohammed bin Rashid Awards for Young Business Leaders.

Through its distribution channel the company also exports mobile phones to neighbouring markets in Africa and Asia. The expansion programme in India will help build the Axiom Telecom brand beyond the Middle East and North African region, said Al Bannai. Each month India alone adds more than six million subscribers, who are lured by tariffs as low as one US cent a minute.

Last year Axiom Telecom also entered the Egyptian market and set up 55 showrooms across the Middle East. It currently has a total of 550 outlets, 250 of them in the UAE.

The company, which holds 55 per cent of the mobile phone retail and distribution market in the UAE, registered an overall growth of 25 per cent last year. It has sets its eyes on achieving another 25 per cent growth this year, excluding the Indian market.

Al Bannai said Axiom was also looking at new markets and acquisitions this year – with Africa high on the agenda. “Our aggressive expansion programme, coupled with the best customer care, after-sales and value-added services are the main driving forces of our sustainable growth,” said Al Bannai. “We are definitely expanding this year; but we do not want to enter new markets just to increase the number of our showrooms. We want to be the leaders in those markets.

“An IPO is certainly on the table as we continue to expand. However, the shareholders will decide on it when the time is right. It might happen soon or it might happen in two years, but it will definitely happen. Shareholders are in no hurry since they can support the company financially.”

Al Bannai Group owns 53 per cent of the company. Dubai Holdings has a 40 per cent stake, while seven per cent is owned by Al Zarooni Investments.

Earlier this month, media reports suggested Axiom Telecom was intending to borrow up to Dh1.4bn in a revolving credit facility to finance its expansion programme. The reports indicated the company would close syndication of the 18-month facility by the middle of next month. However, Al Bannai did not confirm the reports, saying the company is still able to receive financial support from its growing profits and shareholders were having no difficulty in financing the current expansions.

While other telecom companies have diversified operations to include IT products, Axiom Telecom is not willing to lose its focus on wireless communication, said Al Bannai. He said he believed the best way to survive competition and turbulence in the market is to build an identity and prove “you are the best at what you do”. “We are focused on wireless communication and we want to be the best in that. We hope to survive competition through better customer services,” he said.

Al Bannai said there is much more to mobile phone technology than helping make phone calls. New capabilities and utilities are added every day and the company will concentrate on providing its customers with additional services for their mobile phones. Axiom Telecom customers have access to after-sales services such as repairs, in case of device malfunction.

They can also benefit from value-added and content services through Axiomplus. This facility enables customers to fully utilise new technologies by offering a wide range of services, which include downloads for wallpapers, java games, video clips, jokes and quotes, true tunes, live football and cricket scores, and financial news. This week Axiom Telecom will introduce a free pick up and drop service. Through the service, customers can have their mobile phones picked up for repair from wherever they are in the region and then returned after being serviced.

Al Bannai admitted that prices of their products were a bit higher compared with those in other stores, but said this is purely due to the desire to give customers real value for their money. “Our prices are not aimed at making a bigger profit margin. We target customers who are looking for convenience in terms of better technical assistance, customer care and durability of products, and we have to invest in these services,” said Al Bannai.

He said their customers have high expectations and that the company has taken it upon itself to meet those expectations or go beyond them. To tap into the middle and low-income group, Axiom Telecom launched the One Mobile Brand in 2006 in Co-operative Union and Lulu stores, which has proved to be a success. Al Bannai said the current challenge faced by the company is getting qualified manpower, especially at a time when there is high demand for the same in Dubai.

The numbers

Dh147m

is the value of the 50-50 venture between Axiom Telecom and India’s leading retailer Pantaloon Retail India to distribute mobile phone handsets and accessories in the country


800

new outlets will be opened throughout India – a rise from the 100 it currently has in the world’s fastest-growing mobile phone market


6m

mobile phone subscribers are added by various telecom companies in India each month, who are lured by tariffs as low as one cent a minute


55

showrooms were added across the Middle East last year by the company, which currently has a total of 550 showrooms


250

the number of Axiom showrooms in the UAE


25%

overall growth last year by Axiom Telecom, which has captured 55 per    cent of the mobile phone retail and distribution market in the country


53%

of Axiom Telecom stake is held by the Al Bannai Group. Dubai Holdings has a 40 per cent stake and seven per cent is owned by Al Zarooni Investments

 
 
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