DHABI GROUP TO INVEST $150-200M IN WIMAX MOBILE COMPANY IN UGANDA
An Abu Dhabi Group is seeking a license to start a new mobile phone company in Uganda. Business Editor Paul Busharizi interviewed Bashir Ahmad Tahir about his plans.
QUESTION. Who are the Dhabi Group?
ANSWER: The Dhabi Group is very diversified. We have seven core investors four of whom are from the ruling family of Abu Dhabi and the other three are well known businessmen in the United Arab Emirates (UAE).
The chairman, His Excellency Sheikh Nahayan Mabarak Al Nahayan is related to the president of the UAE and is a federal minister in his own right.
What are you involved in?
Our core business is banking. Sheik Al Nahayan is the chairman of the fifth largest bank in UAE, the Union National Bank, United Bank Ltd, the third largest bank in Pakistan which we own a 51% stake and the Bank Al Falah which we own 80%. In UAE, we have an edible oil manufacturing plant.
We have own hotels - the Royal Meridian and the Al Ain in Abu Dhabi and in Dubai we are building the Movenpick Hotel.
The group also owns a car air-conditioning plant in Iran, a $159m joint venture with a Japanese company. We are involved in oil exploration and we have about $1b in real estate.
Our Warid Telecoms has seven million subscribers in Pakistan and we are to launch in Bangladesh in January - where we have planned for five million subscribers and Congo Brazaville where we expect to launch by June.
What is your interest in Uganda?
We are looking to invest in telecoms, set up a mobile phone company. Through this investment Uganda will become the first country in Africa to adopt Wimax technology, a step up above current 3G technologies.
We want to establish a pharmaceutical plant for the local markets and for export. We will start feasibility studies for the project. We hope to be on the ground by the end of next year or a little bit later subject to permission and land acquisitions.
We also want to develop a shopping complex in Kampala, a five-star hotel, office space and residences.
We also plan to open a branch of our Bank Al Falah. We already have board approval and we are applying to the central bank.
If all goes according to plan, in the next few years, we should be one of the biggest investors in the country. We will not only be an investor in Uganda but will attract other investors from the region like we did in Pakistan. An initial $40m investment in Pakistan has now grown to $1.5b.
How much are you earmarking for investment in Uganda?
In the next two to three years, we should have invested $400 to $500m but naturally as you go along, you see more opportunities and this could change.
What kind of support would you require from the Government?
We are going to seat with the Government and to see whether the existing tax regime and regulatory environment is feasible and make any business sense. The Government has to look at the benefits of our participation in technology transfer and employment.
In Congo Brazzaville, we have some tax relief and other incentives that make it possible to do business at the levels to which we are used to.
When do you hope your mobile company will be up and running?
As far as the GSM license is concerned, the Government has been very supportive. We are now under pressure to be as efficient in our investment as government was. I am looking forward to being in the market by August. We will be a GSM operator. Our next step is to provide Wimax services and establish a pharmaceutical plant. The difference between us and other telecom operators is that we are investors in the broad sense. We are not only mobile telephone operators.
What are your expectations of the Ugandan mobile phone market?
A country of 28 million people, the number of mobile users is approximately 8%. When we went to Pakistan last year, the teledensity was 6%. Today it is more than 20%. You have to gauge the income level. If you can provide what people want, get the right type of handset and tariff structure, you should be okay.
How much do you think will go into start up costs?
The team is working on that but I guess an initial investment before operations of between $170 and $180m. But it could be more; $150 to $200m.
How many subscribers are you hoping for by putting down such money?
We are planning for four million users within three to five years. But we will have capacity for 1.5 million at launch. In Pakistan, our first year expectations were met in the 40 days.
What is the attraction of Uganda for you?
In Europe, we are talking about GDP growth of less than 3%. They have come to a saturation point.
In Pakistan, Bangladesh, India, we were talking of 2 -3% growth five years ago. They are now 6%. China's growth was 0% a few years ago, it is now 10%. In Africa, we are talking of 5-8%. Everybody recognises that in the years to come, growth will come from the sub-continent, Far East and Africa
You think Uganda can sustain this magnitude of investment?
If your head tells you this is a good place, and your heart confirms, you have to do it and by the Grace of God, we will be successful in Uganda.
What drives your expansion?
Our chairman's vision and instructions are that you don't focus on financial outcome, wherever you are; concentrate on quality and value-added services. There is no reason that technology used in the West should not be used here. You will be success if you have quality, the right price and service.
What is the relationship between the Middle East and Africa?
I think there are a lot of things that can happen between Africa and the Middle East. We have a very long history and there are a lot of things that can happen between these two regions.
What is the book value of the Dhabi Group?
We don't talk about wealth where we come from in those terms. But each of our core seven investors is worth $1b. So the Group's book value is more than $7b.