A daily "milk round" delivering mobile phones and accessories to more than 1,000 small traders across the country has helped to double profits at Axiom Telecom.
The retailer, distributor and service provider of mobile phonesand accessories grew its revenues 30 per cent to Dh7.3 billion (US$1.9bn) last year, compared with the previous year, driven by selling to family-run mobile-phone traders and shops.
On a daily basis, Axiom serves about 95 per cent of the 1,500 small shops trading in the UAE, offering phones, Sim cards and accessories on an ad-hoc basis to capture the lower end of the market.
"We have something called 'micro distribution', which is something similar to what you would call the milk round in the UK," said Faisal Al Bannai, the chief executive of Axiom. "We sell to small mom-and-pop shops. Our micro distribution goes from shop to shop, with stock in the van."
Mr Al Bannai said this part of the business was key to the company's growth and had helped to double net profits last year, but he declined to disclose a figure.
Retailers throughout the country have reported booming sales in the past year as consumer confidence has increased and tourists are spending freely in the UAE.
Electronics stores and mobile shops have achieved particularly strong sales on the back of upgradings for smartphones, as well as the addition of new sectors such as tablets.
Mr Al Bannai said the ease at which small businesses could buy goods from the milk-round delivery had boosted its success.
"If [a trader] says I don't need anything today, [the driver] will say that's OK, I will be here at 10am tomorrow," said Mr Al Bannai.
"This guy doesn't come because you call him, he comes everyday anyway. We cover today 95 per cent of every [small shop] in the country. Every single day."
Nearly 30 per cent of Axiom's revenues come from this type of business and directly selling to consumers through its network of stores. A further 25 per cent is made of distributing products around the Gulf, and the remainder from running after-sales services centres and other telecommunications products for a large number of retailers.
Axiom has more than 700 retail outlets in the Gulf, with 110 in the UAE. It also has 200 outlets in India.
The company was the subject of much investor discussion last year after it cancelled a planned initial public offering on Nasdaq Dubai and began examining a listing on the London Stock Exchange.
Mr Al Bannai said the aim of raising cash was to support growth and that it did not make a difference to the company if the money came from private or public investors.
"We wanted to go public to increase the capital of the company to support growth," he said. "When it came to the shareholders to sign-off making it public, the shareholders were not happy with the price, so they cancelled."
Axiom eventually decided to sell a 35 per cent stake to the Mannai Group, based in Qatar, last June, which calculated the company to be worth $800 million to $1.1bn, Mr Al Bannai said, higher than the listing valuation.
Emirates International Telecommunications, a subsidiary of Dubai Holding, is mulling the sale of its 26 per cent stake in Axiom, which could fetch up to $300m, Reuters reported yesterday.
