KUWAIT CITY, Aug 13: At a time when communications sector is considered among the survivors of the coronavirus crisis in the world and the least affected by its repercussions in the first half of 2020, the combined net profits of the three Kuwaiti telecommunications companies decreased by 24.6 percent from 134.5 to 101 million dinars, reports Al-Qabas daily.
Any observer of the performance of the telecommunications sector notices the extent of record decline in the profits of Al-Watania Mobile Telecommunications Company (Ooredoo) and severe damage suffered as a result of the crisis, reflected in the number of customers, in contrast to the competing companies that demonstrated great ability to face the repercussions and were able to reduce the negative effects.
According to Ooredoo’s financial data, its customer base in Kuwait decreased to 2.4 million in the first half of 2020 compared to 2.5 million in the same period last year, which means that about 100,000 customers abandoned the network in just six months, at a time when the share of the company accounts for only 1.5 percent of the sector’s profits. Knowlegeable telecommunications sources say the main driving force behind customers leaving one telecom company for another is poor service, which in one way or another, is due to mismanagement or weak investment and marketing, indicating Ooredoo’s competitors in the local market have made large investments over the years in developing their networks, especially to 5G network, making it possible for their customers to receive distinctive services throughout Kuwait.
The company attributed the decline in its revenues in part to its operations in Kuwait, as sales decreased (amid free support offered to local customers), noting it offered all workers in the ministries and government institutions 5 gigabytes of free data per day and unlimited local calls to support their efforts to contain the spread of Covid-19 and local companies took similar measures.
It indicated its business was affected as a result of the movement restrictions and closure of the retail establishments, which led to changes in the consumption patterns of customers and a shift in all use of costeffective mobile phones to comprehensive fixed-line services, which caused a decline in the company’s revenues considering these conditions are uniform on all competitors.
For their part, experts pointed out that the competing companies have invested well in their networks and technical cadres. They noted “this development widened the gap between Ooredoo and its competitors in the local market”. They pointed out that corona crisis created opportunities in the Kuwaiti telecom market for which Ooredoo competitors were ready. This enabled them to withstand the shock easily.
They cited the complaints of many customers about the weakness of the Ooredoo network and lack of coverage in many areas in Kuwait, coupled with the decline in customer service performance, delay in responding to customer complaints, multiple errors, and inability of the technical support to respond to them.
The sources emphasized that Ooredoo is a large company and belongs to one of the largest telecommunications companies in the region. It represents the third branch of the Kuwaiti telecommunications companies whose strong presence in the market increases the strength of competition, and positively reflects the quality of services provided to customers, and the availability of alternatives. On the other hand, Ooredoo acknowledged the extent of the problems it faces in Kuwaiti market, noting the crisis affected debit funds worth 3.5 million dinars. It stressed that the company will take the following measures to limit the economic repercussions of the corona crisis
Cases and claims
a – The tax authorities in Tunisia submitted additional tax claims on Ooredoo Tunisia SA in the amount of 14.311 million Kuwaiti dinars for the periods of tax assessment from January 1, 2013 to December 31, 2017. The administration responded to these risks and considers that the chances of settling these claims in the interest of the group looks good.
b – The tax authorities in Algeria filed additional tax claims on the Al-Watania Telecom Algeria SPA in the amount of 927,000 Kuwaiti dinars for the periods of tax assessment from January 1, 2013 to December 31, 2016.
c – In October 2019, the Central Bank of Algeria filed a claim in the amount of 26.701 million Kuwaiti dinars in relation to some foreign currency offenses that the bank claims to have committed by Al-Watania Telecom Algeria Company. The Court of Cassation is currently considering the appeal filed by Al-Watania Telecom Algeria on this claim.
d – In October 2019, a supplier representing a third party to Al-Watania Telecom Algeria Company obtained an order issued by the Algerian judicial authorities prohibiting an amount of 2.281 million Kuwaiti dinars from the bank account of Al-Watania Telecom Algeria, while Al-Watania Telecom Algeria has appealed this decision.
e – The Civil Court of First Instance in the Maldives decided to uphold claims against Ooredoo Maldives PLC in the amount of KD 1.338 million due to breach of contract, based on the civil case filed by a third party. Ooredoo Maldives PLC appealed this claim in the High Court of the Maldives in January 2019. Management believes that the chances of settling this claim in the interest of the Group appear to be good.
f – The Kuwaiti Court of Cassation in April 2017 canceled part of the regulatory tariffs imposed on mobile operators in Kuwait by the Ministry of Communications since July 26, 2011.
Accordingly, the Group has potential assets represented in recovering the regulatory tariffs paid for the increase. The group is currently estimating the recoverable amount, which is subject to approval by the judicial authorities.
Ooredoo’s measures to confront coronavirus:
1- Segmentation of creditors and cash management
2- Monitoring receivables with a strong focus on collection
3- Activating the digital transformation strategy.
4- Activating the home work strategy.
5- Continuing to provide customer services and securing market requirements.