Dubai: It should be pretty easy to get an idea of how Salik is doing as a company.
Take a look at the traffic moving on Dubai’s road networks and do some calculations on the numbers that could pass through the city’s 8 toll gates. In the third quarter of 2023, anyone running these numbers in their head would have been right: Salik was doing quite well.
But what the company, which held a blockbuster initial public offering last year, does next is equally important, whether through new gateways to the city or through rate changes. Ibrahim Al Haddad, CEO of Salik, gives some clues about what could come from the company.
Organically, Salik has had good quarters, with toll usage growing exponentially. But isn’t it time you took a look at your rates (from the current Dh4 per use)?
Toll rates are set by the RTA; any decision to change the existing rate rests with them. As you point out, we have achieved healthy growth over the last 12 to 18 months and we will carry that momentum into the final quarter of this year.
We expect to meet our previously increased guidance of toll usage growth in the range of 9-10 percent compared to 2022.
The reality is that traffic volumes are increasing in Dubai, supported by macroeconomic and demographic factors, including the growth of tourism and the number of residents moving to the city. This supports Salik’s growth, with or without changes to tariffs.
How about we add more tolls in the city? Any specific plans pending municipal approval?
The prerogative to introduce more tolls also belongs to the RTA. If introduced, those gates would be operated by Salik. But we have no role in deciding when or where they are installed.
It is worth noting that any new gate would also require approval from the Dubai Executive Council. As things stand, we don’t know of any specific plans for new doors, but discussions are ongoing.
Some analysts say Salik will need a fairly “considerable” number of new doors to drive growth beyond current levels. And that he must do it in the next 12 months. What would you say to that?
Naturally, new doors would fuel our growth, but we are not dependent on them.
Firstly, the UAE’s macroeconomic environment greatly supports our business model and strategy. A growing population in Dubai means more vehicles on the roads and more vehicles passing through our doors. We believe these tailwinds are strong and sustained, and we expect them to prevail through 2023 and 2024.
At the time of its IPO, it mentioned that the doors will be technologically enabled to “drive” personalized marketing messages. Is it available now?
This is a work in progress, but it is something we are seriously exploring, with a view to maximizing a variety of opportunities to monetize our gate network through data and advertising. We remain in active discussions with various parties regarding potential future partnerships and will disclose these to the market once agreements are in place and approved.
We are actively pursuing opportunities in advertising and data monetization, and have made great progress with them. Additionally, you may have seen that we recently partnered with AW Rostamani Group – this allows the exclusive distributor of several car brands (including Nissan and Renault) operating in Dubai and Sharjah to conveniently process and deliver Salik tags to their customers.
We remain in discussions with various parties regarding potential partnerships, including internationally, and will disclose these to the market in due course.
Any avenue for inorganic growth?
There are avenues for inorganic growth, both at home and abroad, but it’s too early to mention anything specific. We are actively exploring our options and will make updates to the market when there is a material development to disclose.