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Econet wireless fights against another naming ceremony for ZAIN

By Prince Osuagwu
IF Middle East and Africa mobile operator Zain Group finally agrees to sell its Celtel Africa unit to the French company, new Orange, allegedly bidding for it,  the Nigerian operation of the company may be heading for the 6th time name change.
The company is reported to be fascinated in this deal as it is expected to rake in up to USD 12 billion to its coffers.

But fears are that loss of job is imminient if the deal pulls through.
However, the effort may run into murky waters if Econet Wireless Group which has been reported to have invoked legal conditions that would frustrate the deal, succeeds.

Bayo Ligali, Zain Nigeria CEO
Bayo Ligali, Zain Nigeria CEO

Mobile Week gathered that as the news of the deal made the rounds, Econet Wireless Group immediately initiated moves to block Zain’s sale of its interest in Zain Nigeria until a ruling on a dispute over ownership of the company is passed.

A spokesperson for Econet Wireless Group was quoted in a report to have said  that  following reports that Zain was trying to sell its African operations, its lawyers wrote to Zain officials reminding them that they could not offer for sale shares whose ownership is in dispute and subject of litigation in a number of international jurisdictions.

Econet is claiming that its pre-emption rights were breached when its predominantly Nigerian partners decided to sell their shares in Vmobile to Zain in 2006, and has taken the matter  to the United Nations Commission on International Trade Law arbitration.

Meanwhile Nigerian subscribers who feel another name change barely one year after rebranding to Zain from Celtel, would affect their image and pride, are not taking the matter lightly.

For them it is disheartening that when other networks are planning more acquisitions to position them towards market leadership, their preferred network was planning to cut off part of the operation that gives the company market stability.

Others believe that it is a wrong business decision for any telecom company to sell its African unit, considering that telecom growth is today driven by the emerging markets which Africa is greatly part of.

Opinion of some of those who spoke to Mobile Week, favoured dumping the network’s services  for  competition should any name change be anticipated, expressing fears that the network might not catch up with competition after going through image crisis that may possibly follow.

The operator has witnessed a series of transformation which saw it from Econet Wireless which it started operations in Nigeria in 2001 to Vodacom, Vmobile, Celtel and Zain. These transformations followed traces of squabbles and board room conflicts which did not help its fast roll out plans and adequate expansion programmes.

However, both subscribers and telecom enthusiasts hoped that the troubles were over with the network  after a whopping $1.005 billion acquisition money from MTC of Kuwait in 2006, coupled with the pedigree of the company in both Middle East And Africa where it  held  sway.

Four years before MTC indicated interest in the then Vmobile, the company steadily grew from a one country operator in Kuwait to a multinational telecommunications operator with presence in 20 countries and total of 23 million subscribers.  In 2005, it pulled one of the largest acquisition in the Middle East and Africa, with a $3.4 billion acquisition of Celtel International, that was the leading mobile operator in Sub-Saharan Africa.

Between that 2005 and 2006 when it grabbed 65% Vmobile, MTC also concluded record deals acquiring 61% of Mobitel in Sudan, majority equity stake in Madacom in Madagascar as well as signing a $4 billion syndication credit facility deal, underwritten by 4 international banks to fund its expansion and corporate strategy.

With the acquisition of Vmobile, converting it to Celtel and harmonizing all its African operations to generally answer Zain in August 2008, the company Zain operates in 22 countries with over 15,000 employees providing a range of mobile voice and data services to over 63.5 million active subscribers and business customers. It has presence in the 6 countries in the middle East, including Bahrain, Iraq, Jordan Kuwait,Saudi Arabia, and Lebanon. These are in addition to its presence in 16 countries in Africa, including Nigeria, Ghana, Sierra Leone, Sudan, Tanzania, Uganda, Kenya, Madagascar, Niger, Zambia, Burkina Faso, Chad, Republic of Congo, Malawi and Democratic Republic of the Congo.

Early this year, Zain, in a joint venture with Al Ajial Investment Fund acquired a 31% state in the Moroccan telecom Operator, Wana, and just recently got a nod from the extraordinary General Assembly of Palestine Telecom, Paltel towards acquiring the Operator, Paltel. All these, obviously did not betray a company in distress and so, trading off a unit like Celtel Africa was less anticipated.

Besides, Zain’s Africa operations have been very profitable. In the year ended Dec. 31, 2008, Zain group posted record results, with revenue increasing by 26 percent to reach $7.4 billion. The profits were mainly pushed by growth in Africa, where the company has the largest presence.

In Nigeria, uncertainty beclouds the fate of subscribers on the issue and the Corporate Communications department of the Nigerian company is not forthcoming with any information on the sale. Neither do several calls and even email sent to the company’s Group Corporate Communication Director for Africa, Mr. Nwanbu Wanedeva, get any response.

For a company that have hosted a harvest of naming ceremonies and survived, another may not be different from the others but subscribers are giving indications of having it up their neck.

One of Zain subscribers, an entertainment icon, Mr Ambrose Ndukwu, said “ I just hope this is not going to be real because I will throw this line away. You can’t imagine that a company that just changed its name some few months ago may also be heading for another name change. I do not know what they think of we subscribers. Today the name of your network is Econet, tomorrow it is Vmobile, the next day its Celtel, then Zain and the list goes on. I will just quit immediately before the inconsistency begins to affect me” he added.
But for Constance Ehiri, another Zain subscriber, “merely hearing the news, I am getting irritated already. I don’t know what I will do really, but its just so bad if that happens”
However, a lot of subscribers also were indifferent, saying that whatever name an operator bears or how many time it changes the names, does not really matter, but that what mattered was to provide good services. Now if Econet Wire-less succeeds in its’ threat,  Zain Nigerian and its subscribers may be relieved of whatever shame a 6th name change may bring.

But unconfirmed sources also said that in the Zain Group rating, Nigeria is a peculiar market and could be regarded as a region on its own.
Meaning that if Celtel Africa eventually goes,  Zain Nigeria may still survive and actually retain the name ZAIN.


Disclaimer

Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.