Zain CEO begs governments to stay out of telecoms completely

[zawya] Middle Eastern governments should avoid taking an active role in their telecommunications sectors even when they are major shareholders in the main industry players, industry leaders said Monday, while acknowledging the need for smarter public policy and regulation.

In a panel discussion at a telecommunications conference in Jordan, some of the region's most prominent industry figures said that the need for high speed broadband rollouts across the Middle East calls for government oversight, but not involvement.

"Even the Obama administration is talking now about having intervention in the development of this kind of infrastructure, said Osman Sultan, the chief executive of du, "and this is in the fortress of capitalism in the world. So we obviously need to see collaboration between policy makers and decision makers."

But Saad al Barrak, the chairman of the Kuwaiti regional operator, Zain, said direct government involvement would be disastrous for the region.

"I agree with Osman on the seriousness of broadband, and its impact on the overall development of our part of the world, he said. "But I beg governments to stay out of it completely, because if they don't, companies will be stifled for the next ten years.

Mr al Barrak, long known for his colourful statements at industry events, issued a broadside at government involvement in the private sector, which he said remains a major issue for the region.

"I don't believe in the public sector, I think it is a socialist ideology that went away with the Soviet Union, he said. "Partnerships with the public sector are totally ridiculous, we should get rid of them. It is a poisonous ideology of the past, and a way where politicians can tamper with the private sector."

Zain's largest shareholder is a Kuwaiti government-owned fund, a situation Mr al Barrak said he is working to change. "I wish they would leave tomorrow, and I am working on this," he said. "We reduced their board seats from two to one - any government ownership imposes, by the nature of government, some economic and political decisions, which are extremely detrimental to the wellbeing of private enterprise."

Mohamed Omran, Etisalat's chairman, said rollouts of national fibre-optic broadband networks - infrastructure projects being considered as national economic stimulus opportunites by many governments - should remain driven by private companies in the Arab world.

"We have seen some countries where the government subsidised rolling out broadband, like in Japan," he said. "But these are unique cases, and not in Arab countries."

The UAE government is Etisalat's majority shareholder, and the company's state backing has helped the company get investment-grade credit ratings and political support for its expansion through the Middle East and the subcontinent. But Mr Oman said the government acts as a silent parter, and lets the business work as a private sector operator.

"Etisalat is part owned by the government, but they don't interfere in the day to day business," he said.

"The government only takes its money at the end, and that is a good thing, because we only act like a private company.

"The right thing for the government to do is to put the regulations in place, so that all operators invest in the network and make it publicly available," he said. "Otherwise, I agree with Mr al Barrak."

Telecoms 'no place for government'