The Saudi Telecom Company's Performance - Case Study Example

STC Performance With advances in technology, there is a surge in the availability of telecommunications services, and their popularity. The change from wired phones to hands-free and wireless technology can be appreciated in countries all over the world. Saudi Arabia, traditionally known as KSA or the Kingdom of Saudi Arabia, has been no exception to the wave of telecommunications technology that has swept the world. Communications through mobile phones was first proposed by Bell Laboratories over six decades ago. Since Japan first developed the mobile phone, the cellular industry has boomed. Statistics depict the increased usage and popularity of mobile services. In 2008, cellular service was being used by more than 4.1 billion subscribers all over the world, a figure representative of 50%. Cellular services were introduced in Kingdom of Saudi Arabia in 1995. The huge shift to cellular services from wired technology is illustrated in statistics. The total number of people using cellular services reached a number of 36 million by the end of 2008 penetration, showing a penetration of 143.6%. In the first three months of 2009, the number of subscribers showed an increase to 37.4 million, with the penetration rising to 148% (Simsim 2009, 432). Mobile phones are preferred over wired technology because of the mobility they provide to users, and the fact that their use is not limited to communications only. In fact, mobile phones are used for educational purposes, for surfing the Internet, and for finding information such as stock exchange rates, news headlines, etc.; the facilities offered depending upon the service providers. In Saudi Arabia, there are three mobile service providers: STC, Zain and Mobily. STC was the first to be established in the country, followed by Zain seven years later. Mobily initiated its services two years after Zain had started operating. Competition rose with Mobily and Zain in the market. Since the introduction of STC mobile service, the penetration rose to as much as 51% by 2005 (Simsim 2009, 432). With intense competition between the providers, the companies are in a race in which each one tries to offers better services and products, trying to attract more customers than its adversary. The cost at which these services have been offered has also lowered significantly over time. with the increment in the Cost of Living Index by a figure of 19% from 2002 to 2008, the cost of telecom services also reduced by 23.5% during this time (Simsim 2009, 432). As mentioned above, the STC, or the Saudi Telecom Company, was the first mobile service provider in the KSA. The company was launched in 1998 and to date offers a range of telecom services extending from landline to the mobile and Internet. It was launched after the approval of the telecom ministry, under the Council of Ministers’ Decree No. 213 dated 23/12/1418 H. STC is one of the leading providers of mobile service in the KSA, and has attracted a large customer base ever since its initiation twelve years ago. The main goal of the STC is to reform the business of mobile services in the KSA from the public model of operation to a more commercialized and uniform model that meets the international business standards. Subsequently the company has spent time and resources developing strategies that enhance its performance and allow it to improve upon various aspects of service delivery. These strategies focus on the re-organization of the way the company operates, the training of its labor force to meet the expected standards of performance and to improve their its performance, development and promotion of the internal processes of the company for more smooth running of the business and doing market surveys on competitors and the needs of the consumers. The company is accountable to the government for its activities and hence it carries out its research and processes by complying with its ethical and social obligations. The company operates within legal limits and fulfils the national responsibilities entrusted to it. The STC has climbed the charts of performance by assessing the demand for products and services, developing these products and making them available to the consumers. The company is functioning to not only meet the requirements of the consumers but also be head to head with innovations in technology, enabling it to establish itself more firmly with advances in technology and meet competently the demands of the modern technological world. The STC mission statement states that, “As leaders in a world of constant change, we strive to exceed our customer’s expectations so that, together, we reach new horizons” (STC 2010). This statement stresses upon the importance the company gives to its customers. The STC values also highlight the customer-STC relationship. This relationship is the prime feature of the services and products developed by the company. The STC values are honesty, commitment, cooperation, respect, initiative and loyalty. These comprehensive set of values encompasses not only the relationship with the customers, but also integrates the Mission statement that focus on continuous improvement and the adoption of latest technology to keep at par with the modern world. The foundation of the STC network is a 5000-km long fiber optical network spread throughout KSA (Inc Icon Group International 2008, 268). The services offered by STC are classified into three main types. Jawal is the mobile network service, Hatif is the landline network service and the third service that STC offers is the Internet. The Jawal mobile service offers an assortment of facilities ranging from postpaid to prepaid connections to facilitate all sorts of customers. The messaging services include Short Messaging Service, Multimedia Messaging Services, interactive messages and special messaging features like Smart SMS and Groupy. The company also offers 3G services like video calls on mobiles. The Internet services provided by STC on mobiles allow customers to check their Email and benefit from facilities such as Internet Sim card, Quick Net and JAWALnet. Privacy is ensured by services such as vehicle tracking and AlJAWAL control, EIR service etc. the mobile services also encompass international roaming and special offers such as credit transfer. The company also provides recreational services for its cellular service users. These entertainment services range from MMS album and SADA video to sports and communication services like Manchester Yunadeek and ALJAWAL messenger and forums. The Internet service is offered for both at home and for customers who are at the move. There are many packages for Internet At Home available with varying BroadBand speeds and features, like STC WiFi and AFAQ DSL service. SuadiNet cards and Easynet are also available to facilitate the customers. Internet on the Move gives services like My Email, Black Berry, SAWA broadband and Quick Net to its customers. The landline services, known as Hatif, are divided into three main categories: for home, for public and save and control. Home landline services include a range of packages that customers can choose from according to their requirements, along with a Smart Calculator. Public landline services present both public telephone services and prepaid cards services for is users. The save and control feature offers special packages such as favorite country plan and favorite call number. There is a multitude of call services available like call waiting, do not disturb, call conferencing, voice mail, call divert, caller identification, hotline and reminder service. Additional services include same3ni, Naqa Net services, Call me and Hatif Mawjood. The Yellow pages is another service that STC offers, where buyers and sellers can meet and advertise their products and services. The STC maintains on its website the facility to sell Prepaid Saudi Net cards and online subscriptions for Hatif and AFAQ DSL installation. This is of great convenience to customers. The STC has also worked on its customer experience, giving them incentives such as the Qitaf. The Qitaf is a program that permits its customers to collect points which allow them to avail free SMS for Jawal and free minutes for Hatif. For customers whose billing exceeds a certain benchmark, the STC offers benefits through a program known as Tamayouz. The STC also provides on its website the facility to view billing details. The STC has made its customers its first priority. With the incorporation of the FORWARD policy, as discussed below, the company has not only been successfully satisfying consumer demand, but also has been able to keep competition at bay. This strategy further promotes a customer-centered culture in all facets of the products and services being offered. The customer-centered approach of the company is mirrored in its structural framework. The company has delegated its tasks to different units which accentuate the customer-centric model. These units include the Corporate Center, a myriad of Functional Units and four chief business units namely the Personal BU, Home BU, Enterprise BU and Wholesale BU. These business units function under the Key STC Customer Categories. The FORWARD policy aims to cater to Customer Centricity. The company has formulated a set of strategic priorities to follow in the future in order to maintain its success and further advance its performance. The word FORWARD is an abbreviation for the seven goals the company aims to fulfill in the future. The F stands for fulfilling personal communication potential; this is to be achieved by enhancing the personal communication market and by building top-class customer experience. The O stands for Offer wholesale services, while R1 encompasses the company’s goal to re-invent home communication. The W is illustrative winning enterprise customers by expanding sales and offering specialized communication solutions. The goals represented by the letter A include the achievement of external growth by doing telecom related business both in KSA and internationally, whereas those represented by R2 aim to realign and mould the operating model for customer excellence. The final letter D stands for the derivation of operational efficiencies by developing a cost-conscious mindset. The STC is not functioning in the KSA only; it has developed itself internationally as well. It has broken into the international market, boasting large investments and business deals in many Gulf Cooperation Council (GCC) countries – Asia and Africa. The company has entered many countries, including India, Kuwait, Turkey and South Africa. By expanding abroad, the STC has increased the number of customers it serves, and has helped it assess the feasibility of future investments internationally. The STC has developed string roots in the GCC and the Middle East and North Africa region. This is represented in the umpteenth performance awards that it has won over the passage of time. Amongst the most recent awards that it has received include the Won King Abdul Aziz Quality Award for the year 2008, which was presented to STC by the Saudi Arabian Standards & Specifications Organization (SASO). The company has also won the Transparency Award for Saudi Stock Companies and the Best Telecommunications Company Award in 2008. It was also rated amongst the top ten in the Top International Fixed Telephone Services Providers Worldwide and acquired classes of A1 and A+ by Agencies for credit services like Moody’s Investor Service Agency and Standard and Poor’s Agency. In 2010, the STC was endorsed by American Board of Project Management PMP and is honored to be the first telecommunications company in the Middle East to incorporate this management plan into its processes. The company is also accredited as the Advertiser of the Year by the Dubai Lynx Excellence in the Middle East and North Africa Advertising Awards for 2010. The company has also retained number one position in the Forbes magazine for rating of Telecom companies in the year 2008. The annual report for the performance of 2009 is an attestation of the high quality and standards that the company boasts. The STC accomplished substantial progress in its operations and financial gains. Operating revenues were more than SR 50 million by the end of the fiscal year 2009, as compared to SR 47.469 million made during 2008, showing an increase of 7%. The total assets of the company grew as well in the year 2009, with an increase of 10% as compared to the previous year; the total assets amounted to a lump sum of SR 109.587 million in 2009. Total liabilities also showed an increase by SR 1.555 million by the end of the fiscal year 2008. These statistics represent the strong financial position the company holds. Subsequently, the stakeholders’ equities also escalated by 12% by the end of 2009 (STC Annual Report 2009, 25). The performance of STC can be assessed from the most recent quality report issued by the company. The report for the first quarter of 2010 shows high performance rates. The Fixed Voice installation time (i.e. ‘5’ working days) had an average of 97% for installing the product within five days, the rate being very high to the Communication and Information Technology Commission (CITC) standards, which made 90% a minimum. The company’s performance of fixing the problem in fixed voice for fault repair within 24 hours showed an average of 92%, with the CITC criteria fixed at 90%. Another indicator for quality of the services offered by the company is the response time for operator service within a minute. This service showed an average satisfaction rate of 88%, where CITC standards required a minimum of 80%. The CITC set rates for unsuccessful call rates and call drop rates to be both less than 2%. The company however exhibited outstanding performance in this regard with for unsuccessful call rates being less than 0.55% throughout the trimester whereas call drop rates were as low as 0.06% for fixed voice. The fault rates were 16 faults per 1000 lines, the figure being significantly lower than the minimum standard set by the CITC, which was 50 faults per 1000 lines. The voice quality standards, as measured by the Mean Opinion Score (MOS), exceeded the CITC standards by 0.84. The high performance of STC was also reflected in mobile services. The unsuccessful call rates and call drop rates for mobiles were 0.26% and 0.71% respectively, with the CITC standard being less than 2%. However, the response time for operator services in mobile voice was slightly lower than the CITC standard; the standard being 80% whereas the efficiency of the service being an average of 75% for the first three months of 2010. The statistics for Internet services offered by the STC demonstrate a high performance rate as well. This can be exemplified by progress indicators like the installation time for Internet within ten working days, showing an average of 98.8% with performance reaching up to 99.5% in February 2010; the CITC benchmark was 90%. The fault repairs time also surpassed the CITC standards. However, the response time for BroadBand service, within 60 seconds, was slightly less than the CITC standards. Moreover the fault rate, judged in 50 faults per 1000 lines per quarter, averaged a figure of 70, representing more faults than the CITC standards. Business data was also above the CITC standards, with service availability ranging as high as 99.98% in January 2010 (STC quality report 2010). Thus in conclusion, the STC has followed its mission statement and has achieved high performance rates. The STC is the incumbent telecom service provider in KSA and provides internet, mobile and landline services (Oxford Business Group 2007, 78). The company provided advanced services through state-of-the-art technology. The range of services that it offers has helped establish it as the leading provider of mobile services in the KSA. Its high performance rates are reflected in the statistics. The company continues to grow, not only nationally, but also in international markets. Reference List Inc Icon Group International. 2008. Saudi Arabia: Webster's Facts and Phrases. California: ICON Group International, Inc. Oxford Business Group. 2007. The report: Emerging Saudi Arabia. Oxford Business Group. Simsim, Mohammed T. 2009. Mobile Phone Services in Makkah, Saudi Arabia. World Academy of Science, Engineering and Technology 58. http://www.waset.org/journals/waset/v58/v58-77.pdf (accessed May 31, 2010). STC. 2010. Our Mission and Values. http://www.stc.com.sa/cws/portal/en/stc/stc-landing/stc-lnd-abtsaudtelc/stc-lnd-abtst-ovsnmsn (accessed May 31, 2010). STC Annual Report. 2009. STC Annual Report. http://www.stc.com.sa/cws/content/en//stc/files/Financial-Statements/annual-report2009.pdf (accessed May 31, 2010). STC Quality Report. 2010. STC Quality Report 2010 1st Quarter. http://www.stc.com.sa/cws/portal/en/stc/stc-landing/stc-lnd-abtsaudtelc/stc-lnd-inves-rel-qual-report?2010%201st%20Quarter (accessed May 31, 2010). Read More