Coffee With: Hatem Dowidar, Group CEO of e&

Coffee With: Hatem Dowidar (LinkedIn), Group CEO of e& (formerly Etisalat): Hatem Dowidar joined the UAE’s largest telecoms operator as its COO in 2015, becoming its international CEO the following year, and Group CEO in 2020. In the two years since, the company’s market value has increased by more than 150% to record upwards of USD 83 bn as of April 2022, according to Forbes Middle East, which named Dowidar #16 in its 2022 ranking of the region’s top 100 CEOs. 

Dowidar was at the helm for the rebranding of the company earlier this year as e&, which saw it split into telecoms provider etisalat by e&, e& international, consumer services branch e& life, investment arm e& capital, and e& enterprise.

ENTERPRISE: Etisalat was a known name. It had brand equity, particularly in the UAE, but had emerged as a clear Mideast-born telecoms operator with a clear business proposition. Why the shift in strategy? What does it mean to become a global tech and investment company?

HATEM DOWIDAR: We’re a 46-year-old company that, like many others in our industry, has seen the telecoms market reach saturation around the world. Almost in parallel, we’ve all seen these tiny companies that sprung up in Silicon Valley 25 years ago start to compete. Once, they were tiny compared to even the smallest telcos. Today, they’ve become giants and the telcos are still largely where they are: stagnant. That’s not e&. We’ve done things differently since our foundation and as the business landscape underwent unprecedented changes, we embraced a progressive outlook to seek ways to transform into a global technology and investment conglomerate early this year.

Our performance in the first half of the year demonstrates our resilience as we drive value from our core, focus on diversification, further digitalize and develop innovative solutions, build stronger regional adjacencies organically and through M&A. This year alone, we’ve taken massive strides in entering strategic partnerships and made several acquisitions for future business growth, driven by our commitment to providing innovative solutions for the benefit of our customers and offering long-term sustainable investments for our investors.

E: So that was the catalyst? The rise of Planet Startup? 

HD: Yeah. What these companies offer are services that we call “over the top” services they can offer on top of anybody’s infrastructure. Ours or others. What we’ve set out to do is design a suite of services that we can offer to any customer. To customers who are buying our connectivity, sure. But also to people who are getting their connectivity elsewhere. We planted the first seeds of this with our enterprise services, pushing into the internet of things (IoT) and cloud services. We started building our own data centers and selling capacity on these data centers.

E: What was the turning point? 

HD: It was the pandemic. It was a great catalyst for us to rethink our business model. At first, we thought we were fortunate to be a defensive industry in the middle of the pandemic. If you were in aviation or hospitality, you really suffered. If you were in medical supplies, you did amazing. For us, as a telco, we found that there were fewer people out in the streets and in offices using their mobiles — but they needed a lot more broadband as they started working remotely, studying remotely, and so on.

As a defensive industry, we managed to deliver solid numbers in the middle of the pandemic, but we started thinking. The whole process of adapting to new ways of thinking, of working remotely — it was a catalyst for us to step back and say, “Right, what do we want to do in our next phase?” 

I mean, the regulators opened up voice-over-IP, opened Zoom, opened Teams, and a dozen other apps. We realized that the pandemic was a stimulus, that it was changing the ground beneath our feet, and we wanted to be ahead of it rather than being reactive.

Hence the realigning of our business operations by creating business pillars (etisalat by e&, e& international, e& life, e& enterprise) and our investment arm, e& capital. Our overarching promise is increased smart connectivity, more digital products, innovative tech platforms, and a more seamless customer experience. Most importantly, our commitment is to remain agile and continuously adjust gears in our shareholders’ and customers’ best interests. 

E: So the future is a business that combines the steady dividends of a utility with the growth prospects of a tech company?

HD: Absolutely. The telco industry was being commoditized — our goal was to pivot beyond that. There’s a limit to how many gigabytes and minutes you can sell as a telco. But to become a technology company that’s at the forefront of advancement and that creates a lot more value? That has the dividend stream of a utility but the growth prospects of a tech player? That’s the best of both worlds — for our customers, our shareholders, and our people. That’s why we’re transforming from a regional telecom into a global tech company. 

E: Why was it necessary to change the name? Why “e&”? 

HD: It’s more than just a name change. We knew we needed to signal to the world, to our staff, and to ourselves as a leadership team that we’re becoming something different. It was to signal the magnitude of the change. It denotes that, yeah, you have our traditional telecom business Etisalat but there’s lots more coming into play. “Etisalat” in Arabic means connectivity, which was fitting for our role as a telco. However, with our progression into the digital space, we now provide more than just traditional connectivity. The name e& is a reflection of our ambition to push boundaries, accomplish more, and be well-positioned for the future.

E: What are your investment priorities right now? 

HD: I think what we’re doing with e& enterprise is particularly interesting. We’re investing in three key areas: cloud, cybersecurity, loT, and Al.

In the cloud, it’s all about the growth of our data centers and platforms as we help more companies move away from their own hardware and into the cloud and play a leading role in customer cloud transformation, including for our government clients, large-scale corporates, and enterprises.

Moving customers towards the cloud brings forward the need to step up cybersecurity, so in addition to our own resources, we’ve recently acquired Help AG, a leading 

regional provider that is headquartered here in Dubai. It’s a full acquisition and has helped us deepen our offering already trusted by some of the most demanding clients in the region — banks, governments, and major corporates.

We’ve focused our Al and loT efforts on helping governments and enterprises elevate to data-driven and highly automated organizations. Recently, we fully acquired Smartworld, one of the UAE’s leading systems integrators, and formed a new company called e& enterprise iot & ai which will act as the vehicle for the loT and Al organization.

E: You mentioned loT?

HD: Yeah, at GITEX Global 2022, our booth had everything from self-driving cars that rely on our 5G technology to drones. IoT is about connected devices of every kind — and beyond cars, delivery fleets, machines and refrigerators, you have use cases like smart meters in Egypt. No more going and putting credit on a recharge card and manually adding money to your meter. Instead, there’s no card at all—you charge it over the air from your mobile wallet, right there on your phone. This is just one small example of how loT is making life easier for people and businesses by connecting devices.

E: You’re also making investments in fintech and entertainment (beyond linear TV)? 

HD: Absolutely. The content side has seen us become the largest owner for StarzPlay Arabia, a leading subscription video on demand and streaming service provider in MENA in which we recently made an investment. It’s a clear example of the e& approach – you don’t need to buy your connectivity from us to use Starz Play Arabia. We’ve made it possible that through the evision-led consortium with ADQ, our majority equity stake of c. 57% in Starz Play has strengthened our service offerings, adding significant value for our customers who enjoy high- quality content, and seamless streaming capabilities. 

On the fintech side, we’ve rebranded our wallet proposition that falls under the business pillar e& life. It’s called e& money in the UAE and we’ll be changing the name in Egypt, too. The service is doing really well in Egypt, where we have new services in the pipeline. In Pakistan, we already have a bank. You’re definitely going to see a lot more investment in fintech across our footprint. We’re also looking at some compelling niches in e-education and e-health.

E: Is this through the e& capital arm? 

HD: e& capital is for situations in which we would consider making a minority investment in tech businesses to help them grow.  We’re being pretty aggressive there. We’ve committed to investing USD 250 mn over the next three years as a venture capital investor. We’ll be targeting startups both in our region and beyond. It doesn’t need to be in the Middle East and it doesn’t have to fit with our existing businesses, but it needs to be technology- based or -enabled.

E: Is that function a captive VC unit? Are you hoping for early looks at companies that you might want to buy and take off the board?

HD: No, we’re looking for companies with excellent growth prospects, a disruptive business model, and superior potential from a tech and business performance perspective. This is purely a financial investment activity, it’s not about getting first looks at new tech. And in many cases, we’re one of many investors who are coming in. Of course, sometimes we can also help these companies grow because we have markets, we have a huge customer base, and we have deep expertise in investments and strategy backed by a thorough understanding of various technology business models to transform all sectors. But it’s not about taking them off the board.

e& capital also has a growth fund where we’re writing even larger tickets in later-stage companies — in established companies with proven business models and revenue streams. They’re at series C and D and beyond. On the VC side, we can go to Series A and B, but with the growth fund, we’ll look at companies doing C rounds and beyond. Again, they need to be companies that promise growth and solid returns over a multi-year period. It doesn’t mean they absolutely must be companies that we want to acquire and integrate with e& enterprise or our telco businesses (etisalat by e& or e& international) or e& life.

I think we’re one of the first in the world to take this approach — you’ve seen a number of other companies make similar announcements after we did ours. We’re well ahead of them in terms of strategy and in terms of having already restructured our operations to be ready for this new approach to doing business. But like I said, it’s about how we can be better than anyone else for our investors, our customers and our staff. We want to beat global technology companies, not just big telcos. 

E: What are the growth prospects for your telco business? 

HD: We’re not selling our telco assets – we’re doubling down. There is a world in which we invest more in telecommunications. We’re actively looking at a number of potential countries and territories we’re not in today. Look, we have fiscal discipline, and thanks to the good work of my predecessors, I don’t need to sell assets to be able to invest. We actually have a lot of dry powder that’s letting me do things that my global competitors aren’t doing — we can take on debt, we can acquire companies, we can invest more.

E: Another important step in your transformation from a telco to a global technology and investment conglomerate was e&’s net zero commitments at COP27. How do you envisage your sustainability ambitions will sustain your pledge towards a low-carbon society? 

HD: It was a historical moment for us at COP27 as we declared our net zero targets, to solidify our commitment to reducing carbon emissions of our own operations and ramping up the efforts towards achieving the climate action goals. We will continue to work to achieve net zero emissions within the group’s operations in the UAE by 2030, focusing on key initiatives to reduce our carbon footprint through improving energy efficiency and sourcing renewable energy, among other initiatives. 

Our sustainability plans and ambitions support the UAE Net Zero by 2050 Strategic Initiative, and the UN’s Sustainable Development Goals (UN SDGs), as well as our commitment to the Global System for Mobile Communications Association’s (GSMA) initiative to take the entire mobile industry to net zero carbon emissions by 2050.

In addition, the Group’s climate action programme will be aligned with the Science Based Targets (SBTI) initiative, which sets an emissions reduction trajectory between 2020 and 2030 for all information and communications technology (ICT) sub-sectors.

e& is committed to accelerating the decarbonisation of operations through the increased use of renewable energy sources and carbon offsetting initiatives. The Group’s current activities focus on best practices to reduce energy consumption and the development of sustainable architecture to achieve a positive environmental impact. By keeping sustainability at the core of our business model, we will continue to explore clean and green solutions, so as to stay on track in achieving our environmental, social, and governance (ESG) ambitions.

E: What are the five things on your dashboard that tell you you’re moving in the right direction? 

HD: The first thing I would look at is our net promoter score: Are our customers happy? Only then do I look at revenues. Why? Because if we don’t have happy customers, you have a recipe for revenue erosion. But if revenues take a hit and your customers are still happy? You can rebound. Third, I would look at how engaged our staff are. And then I’d look at profitability and my share price — the latter tells me how happy my investors are with me. I look at a lot of things, but these are my top five.

E: How much time do you spend, as a leader, on the “here and now” vs where you want the business to be two, three, five years down the road? 

HD: When we first started this process two years ago, I was lucky if I got to spend 10% of my time on long-term stuff. Today? After the restructuring? I think I’m spending more than 50% of my time looking forward. About a quarter of my time is spent engaging with the outside world — with investors, the media, regulators, and government. And then 25% looking at day-to-day operations.

E: What type of revenue and profitability split between the various pillars of the business are you looking for five years down the road? What does the success of this strategy look like? 

HD: We have targets for each of our pillars, for each geography. We have targets by source of income that look at new services compared to old. But I can’t share any of that now. Check back with us in March 2023 after we release our FY 2022 numbers and update our guidance.

E: What’s the one thing that the business community at large doesn’t get about e&? 

HD: I think there are people who still think of us as a telco. This has shifted very quickly in the UAE, but it will take time in other markets before people realize they can depend on us for their connectivity, sure, but also to run their loT and IT systems, to give them Al, cloud and cybersecurity services, fintech solutions, to be one of the backbones of their businesses.