Maximizing Value: Monty Mobile Founder And CEO Mountasser Hachem Two major avenues Hachem sees telcos losing returns on are SMS (Short Message Service) and digital advertising, which are the services Monty Mobile is focusing on.
By Megha Merani
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Tell them how they can make more money, offer them something no one else ever has, and be flexible– that's the simple secret to Mountasser Hachem's success. Them, in this case, is mobile operators around the world. It's no secret that telecommunications companies across the globe have been struggling with revenue losses on international calls and roaming fees since the birth of over-the-top (OTT) applications such as the Microsoft Skype, Viber, Snapchat and several others.
London-based research and analytics firm Ovum forecasts in its 2014 report that the telecommunications industry, globally, would lose a combined US$386 billion between 2012 and 2018 to OTT apps. Ovum predicted that just consumer use of OTT VoIP (Voice Over Internet Protocol) would grow at a compounded annual rate of 20% between 2012 and 2018 to reach 1.7 trillion minutes, translating to $63 billion in lost income in the final year of its forecast. As the sector scrambles to stop the haemorrahge in earnings, Hachem, CEO of Monty Mobile, has built a business on showing operators the revenue opportunities they are missing, and offering them services to tap in to those avenues.
Monty Mobile, which is a member of the Monty Holding Group, was founded by Hachem in 1998. The parent company started as a small one-office operation, and has since evolved into an international player in mobile messaging and transaction services. Monty Mobile is a GSMA certified Open Connectivity SMS Hub and Roaming Broker, that works closely with mobile operators to facilitate the international flow of data, voice, and SMS. That may be a complex mouthful for those unfamiliar with the industry, and so, Hachem explains, "Basically, our objective is to allow the operators to benefit from any additional revenues." Two major avenues Hachem sees telcos losing returns on are SMS (Short Message Service) and digital advertising, which are the services Monty Mobile is focusing on. He adds that most operators seem oblivious to the "real potential" they could be achieving. In other words, he wants to make them an offer they can't refuse, with Monty Mobile's services.
Image credit: Monty Mobile.
"For them (operators), of course, the SMS revenues that we are committing to give them would be considered low compared to other revenues they collect from many other services as a mobile operator. But because it (traditional SMS) is a dead revenue (source), of course any revenue out of a dead opportunity is a really good deal for the operator." While typical everyday peer-to-peer (P2P) SMS to family, friends and colleagues is near obsolete since the birth of instant messaging applications like WhatsApp and Facebook, Hachem says there is still great opportunity to claw back lost revenue through Application-to-Person (A2P) SMS."It's true that WhatsApp and other applications have taken over the SMS, or let's call it the chatting business, but they still need the operators to survive," Hachem says. "You need to have a mobile number to use WhatsApp– and the only way to verify the user or to prove that you own this number is to send you a verification through A2P SMS." A2P also applies to other applications such as Skype, Facebook, Snapchat, as well as banks. "So, SMS is being used today either to notify or to verify," Hachem says, and there lies the untapped opportunity. "The international applications would pay more to deliver the SMS than the local. So, Facebook would pay, for example, up to four or five cents sometimes to deliver their verification SMS because it's the only way to reach their customerwhile a local A2P SMS cannot go that far and the average is around one cent," he explains. Monty Mobile works closely with mobile operators to secure their networks so that Facebook, WhatsApp and Viber, and other OTT apps do not find "cheap" ways or grey routes to terminate SMS to their networks.
"So they send it through the official route, which would be Monty Mobile, and we make them pay a higher rate for the operators." A grey route is a messaging route that is legal but takes advantage of a loophole in the GSM commercial framework because all operators do not have a commercial agreement to terminate an SMS. So, an SMS route might be, "white" at origin, for example, but "black" at the destination. This makes it impossible to bill at the destination, resulting in loss of revenue as well as reliability. The numbers Monty Mobile commits to, Hachem says, often "surprise" operators– which is what has given him the confidence to take on bigger, and more established global competitors.
Entering the arena to compete with firms offering the same service and that have been around far longer and hold existing agreements with the operators didn't scare him, he says. On the contrary, he adds, the challenge fueled him. You can almost hear the sales pitch come on when he passionately explains, "Of course, there is someone else offering the same service, but what differentiates us from others are the commercial offers that we are putting in place... so to summarize it in one word, I would say flexibility. If you go today to a company, they might be bigger than us, but they don't have the flexibility that we have." Hachem has also analyzed and capitalized on the mistakes his competitors have made that have left the way open for Monty Mobile and given his team solid footing against bigger players.
Image credit: Monty Holding.
"We have a lot of people (competitors) hating us because of the business we are taking from them, not only because we are good, but because they were not good as well," Hachem cheekily says. But he's factual, not cocky. "Their mistake is that they were not advising the operator with how they can make more money. So, we stumped a lot of operators when we put our offers on the table. Their existing partners, our competitors, would then propose a similar offer, but they will not match it, of course." Hachem adds that it's also been a disadvantage to his competitors that, unlike Monty Mobile, they do not proactively approach operators to help them optimize, and maximize their shrinking revenues. Monty Mobile's model also comes with the option of prepayment and investment that the company covers on behalf of the operator, which eliminates the financing risk for the operator. In fact, so confident is Hachem of this model that the company announced in September that it plans to invest $1.8 billion to drastically increase the operators' revenues, especially from international A2P SMS as well as in roaming and value-added services.
"We have our own investors ready to invest," Hachem confirms. "What puts us in a good position today is our previous good history with those investors. The investors themselves have felt the value of our ideas. We never came up with an idea that's not logical." Hachem adds that the telecom market is a booming market and Monty Mobile's $1.8 billion investment is "relatively small" when compared to the huge potential profits. Monty Mobile is not new to the SMS monetizing space either, he adds. "Previously, before telecom we (Monty Holding) were into media. We had some TV channels where people sent SMS, for example, to participate in games or ask for their horoscope. At that time, also, we were the pioneers in bringing that idea to the Middle East."
But things changed significantly since the SMS-chatting- over-TV boom around 1999, as new technologies emerged to rattle and transform the economy on all fronts, Hachem's company went through a period of major upheaval. In 2007, the company had to downsize to less than 10 employees and shut down its media business. "We passed through very hard times," Hachem recalls. "After seven years the (SMS chat over TV) market was very much saturated, so we had to shift our focus to telecommunications, even though we have succeeded in launching the idea of entertainment TV in the region." He is pragmatic however, insisting that those who don't make mistakes "will never succeed in life," and keeping up with technology innovation is crucial for businesses.
"I would not call it [2007] a mistake, but because we like to take risks, many times we fail to succeed," he says. "But we have the will," he insists– now evident in the fact that the company has about 80 employees in their Beirut office, with another 50 in India, 20 in the United Kingdom, and more across other locations including Fiji and Dubai. "If you looked at us 10 years ago, you would say that we would never manage to stand on our feet," Hachem says, with both pride and humility. "But today Monty Holding, especially Monty Mobile, is the pioneer and is considered one of the biggest players in SMS and valueadded services by mobile operators." The CEO says he believes he had to "fail to succeed." "That's the biggest lesson I've learned– that it's okay to fail, but it's not okay to give up. So, we never gave up."
And that's one of the key traits he looks for in his people as well. Experience is secondary, he says, admitting that he was never big on attending classes during university and although he studied finance, it was just to make his parents happy. Instead, he is drawn by people who can match his risk-taking propensity, and those who can see the vision in his ideas as well as adapt to new ideas quickly. "I try to choose people who are convinced and ready to take risks- even though the risk on my team is not as big as the risk on me," he says. That's what thrills him. "We have never entered an easy deal. All our deals are challenging and exciting, and it's part of our flexibility to take risks." More importantly, he looks for people who believe in Monty's ideas. "Otherwise, even if we gave the best deal but the sales person is not convinced with the service, he will not manage at all to sell it to the operator," he says.
"Even the developers who are developing the services themselves, they have to believe in the service they are developing, otherwise they will not manage to do it perfectly. Whenever you go to an operator, the first thing they will be doing is trying to find an excuse not to take the service- especially the technical people on the operator's side, they're always the negative people in any discussion so you have to be ready to clear all their concerns." Hachem speaks from years of experience going from operator to operator trying to convince them of his ideas. "It was not easy at all and it's still not easy," he says. "This is mostly because discussions with mobile operators take a lot of time, and also because many operators wish to keep their existing partners on even after Monty Mobile proposes additional revenue opportunities. Any negotiation with an operator takes time and it's not always that we succeed, but even when we don't succeed we know that we have offered them something that no one else is offering." In some instances, he adds, operators belong to large groups and the decision not to work with Monty Mobile is due to group-wide agreements with other firms.
But all this may be about to change as Monty is preparing to launch new services in February at its RVS4 (Roaming, VAS and SMS) event in Dubai. The new ideas are expected to help operators to profit from digital advertising. "Today, all kinds of digital advertising are in the market and everybody is benefiting from them except the mobile operators," Hachem says. "No one else has put digital advertising in the same way we put it," he adds, although other services similar to Monty Mobile's upcoming new offering are already available. When asked if his competition needs to start worrying, Hachem laughs and says: "They are."
'TREP TALK
Monty Mobile founder and CEO Mountasser Hachem's tips for entrepreneurs
Mountasser Hachem, founder and CEO, Monty Mobile. Image credit: Monty Mobile.
2. It's okay to fail but it's not okay to give up. "That's the biggest lesson I've learned."
3. If your policy does not achieve your goals, it is time to change the policy and take action! "In today's highly competitive environment, those who can adapt will survive and keep on achieving financial success; while those who cannot will suffer the inevitable death of their business.
