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Syrian Sensation

December 2005
Twenty -five years after leaving Syria as a teenager, Jehad "Jay" Salkini has carved out a telecoms niche which has brought him to the attention of the leading multinationals in his field.
When he was 17-years-old, Jehad Salkini left his native Syrian town of Homs and emigrated, alone, to the United States.

Twenty-five years later, Salkini is the chairman and CEO of Tecore Wireless Systems, a $30m company with 100 employees whose success in the mobile phone business is starting to get noticed by the "big boys" of the telecom world: Alcatel, Ericsson, Siemens, Nortel and Lucent. "We manufacture switching systems, which are the brains of the cellular network," he said. "And we've been profitable since our inception."

Salkini, aged 42, spoke to The Middle East at his company headquarters in a nondescript industrial park in Columbia, Maryland, located halfway between Baltimore and Washington D.C. "I have always been interested in electronics and computers - and especially telecommunications - since I was a little kid," Salkini explained.

A private man who clearly enjoys talking about technology more than talking about himself, Salkini recalls that he enrolled at Miami-Dade Community College soon after arriving from Syria, later graduating from Florida Atlantic University in 1985 with a degree in computer engineering. Working for IBM while still in school, he then moved to Siemens, later getting a job as a consultant with Northern Telecom in Texas before starting his own company in 1991.

"We had a contract to build the first mobile satellite system. That's where we made our first million dollars," he recalled. "Based on that, I started developing my own switching system to be delivered to Westinghouse under contract, and then expanded into different areas like cellular and prepaid wireless."

Along the way, Salkini - who these days is better known as Jay than Jehad - has positioned Tecore Wireless Systems as a leader in providing mobile solutions to some of the world's most remote, impoverished countries.

Take Afghanistan, for example. Afghan Wireless, which began operations in April 2002 has, in three years, grown to 250,000 subscribers. It has also emerged as one of Tecore's top clients, importing more than $35m in equipment from Salkini's company.

"Afghanistan is our biggest contract, but we don't want it to be the centre of attention," he said. "It was a success story three or four years ago. We initially started with Kabul, but then we moved to Kandahar, Mazar-a-Shafit and Herat. Afghan Wireless had the licence to operate the first mobile system in Afghanistan, and they contracted with us because we had the ideal solution and we were in there weeks after the bombing stopped."

Salkini continued: "There was no telecom infrastructure in Afghanistan; at that time, the total number of lines was about 10,000, most of them in Kabul. There were no connections between Kabul and the other main cities, so they needed a switching system in each of these cities. This is the architecture we developed. It's called distributed mobile switching architecture. Basically, instead of putting one huge switch in one city and routing all the calls in and out of that city, which creates a problem with voice quality, we place switches in all the large cities."

He added: "We've developed a scalable platform that can scale from as little as hundreds of subscribers up to a million. None of our competitors are able to do that."

Another big customer is Somafone LLC, the Mogadishu-based wireless carrier for Somalia. Salkini said he has a $10m contract to supply telecom equipment to Somafone, which in early September signed another contract with Tecore for the deployment of international roaming and SMS capabilities.

In all, Salkini said Tecore is present in 15 countries throughout the region.

"In northern Iraq, right after the war in July 2003, we installed one of our switching systems for Korek Telecom , in Irbil. But later they expanded with one of our competitors," he said, naming France's Alcatel, Sweden's Ericsson, Germany's Siemens, Canada's Nortel and the US firm Lucent as amongst his fiercest competitors. "Since then, it's become too dangerous to try to market in that region, so we're staying away until things improve."

Besides the Middle East and Africa, Salkini has contracts with wireless operators in the Pacific island of Guam, as well as in the US states of Nebraska, Texas and Oklahoma. He also plans to open a Latin American subsidiary, Tecore Latina, to be based in Argentina, where "we believe there is a huge potential for our products. We're also working with some companies in the Caribbean," he confirmed.

Tecore has a range of products, perhaps the most exciting of which is FlightCore, an air-to-ground cellular product that would allow airline passengers to use their own cellular phones while in flight. Because of safety issues, such usage is currently prohibited by federal regulators, but Salkini expects that ban to be relaxed within a few years, opening up a potential market worth billions of dollars.

"Airlines prefer that you use the onboard phones instead of cellphones because it produces revenues," he said. "Airphones are very expensive, and our system will bring this cost down just like for any other service. Because our switching system is scaled down to a much smaller platform, we can put it on an airplane. We are already doing this," he confirmed. "This will enable people to make phone calls, receive e-mails and do videoconferencing, everything... the FCC (Federal Communications Commission) and the FAA (Federal Aviation Administration) are in final negotiations to get this approved, and when it is, we'll be the first out there."

In the meantime, Salkini would very much like to do business in his native Syria, where the booming wireless market bears little resemblance to the stagnation that has characterised the country's fixed-line capacity for decades.

"I signed up for my first phone line in 1975," Salkini said to illustrate the point.

"I got it three years ago." On the other hand, according to industry sources, Syria's GSM mobile market grew by an astounding 210% between 2000 and 2004, reaching a penetration rate of 13.8% by the end of last year. Operators expect penetration to triple to 46% over the next five years, from the existing subscriber base of around 2.1m.

"Getting into the Middle East is definitely on our radar screen," Salkini said. "We've done well in Africa, and we're moving in that direction. In Lebanon, there are already established operators, and as a newcomer to this market, it's very difficult unless you're built into the network from Day One, because it's very difficult to replace what already exists. That is why we've started in the emerging markets that didn't have any established telecom infrastructure. It's easier for us to get in when there's a new licence awarded."

The Syrian market is currently dominated by SyriaTel , with 1.25m subscribers, or a 55% market share. The remaining 45% slice of the market is held by Areeba Syria, a firm owned by former Lebanese prime minister, Najib Mikati's family and Saudi interests. "We're also hoping to get into the Syrian market," Salkini said. "We have worked several times with both SyriaTel and Areeba , but nothing has happened due to the political situation between the US and Syria. They're concerned that if they buy American products, something might happen and they won't be able to get technical support."

He added: "Before we can get into Syria, the relationship between the US and Syria must improve. There's a huge market for us - hundreds of millions of dollars worth of products could be exported into Syria. Right now, they're bringing the Chinese in, which is scary. We're seeing a lot of that in the Middle East. The Chinese are taking over the telecom equipment market, which is really a disappointment for American companies. Basically, the Chinese go about this in their own way with bribing and kickbacks. They're selling subsidised wireless service like a commodity, at cost minus 15%. We have to sell at cost plus 50% so we can cover our taxes and pay our investors.

"But," he added, "what Middle Eastern operators are finding now is that the Chinese equipment that has been delivered lacks quality, and that communication with the Chinese staff is not there. We're looking forward to better relations between the US and Syria, and hopefully based on that, we'll be able to enter the market someday."

By Larry Luxner

© The Middle East 2005