June 16, 2009

Is another naming ceremony on the way for ZAIN?

By Prince Osuagwu
IF Middle East and Africa  mobile operator Zain Group finally agrees to sell its Celtel Africa unit to a bidding French media conglomerate, Vivendi SA  this week, 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 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 those who spoke to Hi-Tech, favoured dumping of the network 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 Celtel and its MTC parent body in Middle East And Africa where they 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 individuals 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. Although it is not immediately known why it decided to trade off the unit,  it is however reported that Vivendi would also purchase Celtel Africa’s debts, which will be discounted from the price money.

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.

Meanwhile whether a 6th name is on the way for  Zain Nigeria,  remains to be known because unconfirmed sources said that in the Zain Group rating, Nigeria is a peculiar market and could be regarded as a region on its own. Meaning that when Celtel Africa goes,  Zain Nigeria may still survive.