Wireless Federation

Zain, Middle East and African mobile operator posts its Q3′08 results. The net profits rose to $326.6 million, up by 7%. Zain’s revenues grew to $1.887 billion, climbing 25% and EBITDA rose to $763.6 million, up by 20%. Zain had a subscriber base of 56.3 million at September end, seeing a 54% rise since September 2007.
Profits seemed a bit sluggish due to its cost to launch in Saudi Arabia, where it claimed 1 million subscribers in 2 months. Zain Kuwait contributed considerably to the profits along with Bahrain. In Iraq, Sudan and Jordan it faces a challenging market.
Looking at Africa, Zain plans to launch in Ghana by year end, in Nigeria operations are undergoing heavy investments to support growth , while Tanzania, Uganda and Madagascar are doing very well.

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Celtel International is considering a major re-branding strategy that would see it drop the ‘Celtel’ brand and adopt a completely new identity - Zain. The plan is expected to create unique difficulties in Kenya and Nigeria, where the Celtel brand is still quite new, as well as across all non-Arab operations. It is part of a long-term strategy by Kuwait’s MTC Group, which owns the mobile telephone operator, to re-invent itself through the launch of a global brand.

MTC, which has expanded significantly through acquisitions, is seeking to consolidate recent growth under one banner. “We have a new brand that will be launched as single global brand for all our operations,” Dr Saad Al-Barrak, MTC’s deputy chairman and chief executive officer, said recently. “We will start any new operation with this new global brand.”

Controversy

Controversy has already erupted over the brand name chosen. Critics feel Zain, leaked in Kuwait in early August, has limited appeal to cultures outside the Arab world. A recent valuation of MTC by analysts from investment banker Morgan Stanley found that Africa accounted for 70 per cent of the company’s fair value.

MTC Chairman, Mr Asa’ad Al Banwan , Celtel International Chairman, Mr Mo Ibrahim, and MTC Deputy Chairman & Managing Director, Dr Saad Al-Barrak. Photo by MTC

The new logo has also been described as too dark and moody. The re-branding process has reportedly begun in Kuwait and is expected to spread to other MTC-branded operations in the Middle East.

Change will come to Africa and its Celtel-branded operations from 2008. The new changes come shortly after a regional marketing blitz to announce the expansion of Celtel’s borderless mobile network to include the Republic of Congo, Gabon and Democratic Republic of Congo. The service was previously limited to Kenya, Uganda and Tanzania. The decision to re-brand will create a costly marketing and logistical challenge for the Kenya and Nigeria operations, given that the two only recently re-branded to Celtel from KenCell and V-Mobile respectively.

The change from KenCell, which began in 2004, is yet to be completed by Celtel Kenya: Many of their telephone booths - admittedly an atrophied part of the business - are still branded KenCell. Nigeria’s switch from VMobile, which began last year, will also have to be scrapped.

A huge task

Speaking to FS during the Second Annual Connecting Rural Communities Africa Forum in Nairobi, Mr Mwaghazi Mwachofi, Celtel International Vice-President for Regulatory Affairs, confirmed that discussions on rebranding were in progress. “Nothing has been decided as yet, nothing concrete,” Mwachofi said when pressed on the matter.

“The Celtel brand is strong and powerful and re-branding is huge task.” MTC Kuwait is also expected to form a new subsidiary, MTC International, as a private company to hold all the MTC Group’s foreign assets and operations.

A newspaper report on the plan several weeks ago saw the Kuwait Stock Exchange halt trading in MTC shares pending clarification of the issues raised.

A local Arabic-language daily had reported that MTC was going to form an entity with $1.73 billion (Sh116 billion) in capital as an umbrella company under which MTC Kuwait and MTC International, called Zain, would operate.

The paper had also said the international unit would sell a stake - possibly 40 per cent or more - in an initial public offering on the London Stock Exchange next year. The re-branding confirms MTC’s ambitions to become one of the biggest mobile operators in the world.

The strategy

According Al-Barrak, the company was looking for a global brand that would work from China to Gabon, in Rio-de-Janeiro and Madras, in Moscow and Iceland. Currently, MTC is looking to fill gaps in sub-Saharan Africa - for example Angola Ethiopia and Senegal - and eyeing Saudi Arabia’s third licence. The company is also making noises about moving its headquarters because of Kuwait’s investor-unfriendly laws.

“The Kuwaiti business environment repels investment and the country’s laws are not good for a financial hub,” Al-Barrak was recently quoted as saying. Kuwait has been dragging its feet on reforms to create a more transparent stock exchange.

Another Kuwaiti law imposes a 55 per cent tax on foreign investors. MTC, Kuwait’s largest publicly traded company, said last week that it could move to Dubai or Bahrain, the Gulf’s financial centres, or to Amsterdam, headquarters of its subsidiary Celtel. The firm operates in Bahrain in partnership with Britain’s Vodafone Group and acquired Netherlands-based Celtel in 2005. It has no presence in Dubai. “MTC is today thinking on the global scale… especially since Kuwait accounts for only 15 per cent of its revenue, (a figure that) will fall below seven per cent in the next two years.” Incorporated in 1983 in Kuwait, MTC now has a presence in 20 countries.

The Group is a leading mobile operator in six Middle Eastern and 14 sub-Saharan African countries providing a comprehensive range of mobile voice and data services to over 29.7 million active individual and business customers.

It operates in Kuwait and Bahrain as MTCVodafone, in Jordan as Fastlink, in Iraq as MTC-Atheer, in Lebanon as MTC-Touch and in Sudan as Mobitel. It also has 14 operations in sub-Saharan Africa as Celtel. These are Burkina Faso, Chad, Democratic Republic of the Congo, Republic of the Congo, Gabon, Kenya, Malawi, Madagascar, Niger, Nigeria, Sierra Leone, Tanzania, Uganda and Zambia. The company has also won Saudi Arabia’s third mobile license and is expected to roll-out a network soon. The change of identity is part of MTC’s plan to re-brand its operations across all networks in line with their “three by three by three (3×3x3)” strategy.

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Celtel International, the pan-African cellco which is a subsidiary of the MTC Group of Kuwait has been given a USD320 package of loans from the International Finance Corporation (IFC), the private sector arm of the World Bank, to modernise and develop its mobile networks in the Democratic Republic of Congo, Madagascar, Malawi, Sierra Leone and Uganda. All are countries with obsolete and inadequate fixed-line networks and very low combined penetration rates, for example just 5% in Malawi, 6% in Madagascar and 10% in Sierra Leone at the end of 2006. The loans will be divvied out as follows:

Celtel DRC will get USD150 million
Celtel Madagascar will get USD50 million
Celtel Malawi will get USD30 million
Celtel Sierra Leone will get USD50 million
Celtel Uganda will get USD40 million

‘Since our first cellular investment in the former Zaire in 1989, IFC has continued to invest heavily in the sector in Africa and to strengthen our partnership with companies such as Celtel,’ said Mohsen Khalil, Director of the World Bank Group’s Global Information and Communication Technologies department. He added, ‘Africa is now the fastest growing cellular market, leading the world with truly innovative service offerings such as Celtel’s borderless free roaming across six countries in Africa.’

Wireless Mobile Telecom Wireless News
 

Celtel International, the pan-African cellco which is a subsidiary of the MTC Group of Kuwait has been given a USD320 package of loans from the International Finance Corporation (IFC), the private sector arm of the World Bank, to modernise and develop its mobile networks in the Democratic Republic of Congo, Madagascar, Malawi, Sierra Leone and Uganda. All are countries with obsolete and inadequate fixed-line networks and very low combined penetration rates, for example just 5% in Malawi, 6% in Madagascar and 10% in Sierra Leone at the end of 2006. The loans will be divvied out as follows:

Celtel DRC will get USD150 million
Celtel Madagascar will get USD50 million
Celtel Malawi will get USD30 million
Celtel Sierra Leone will get USD50 million
Celtel Uganda will get USD40 million

‘Since our first cellular investment in the former Zaire in 1989, IFC has continued to invest heavily in the sector in Africa and to strengthen our partnership with companies such as Celtel,’ said Mohsen Khalil, Director of the World Bank Group’s Global Information and Communication Technologies department. He added, ‘Africa is now the fastest growing cellular market, leading the world with truly innovative service offerings such as Celtel’s borderless free roaming across six countries in Africa.’

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Telegeography writes…The Kenyan government is pushing ahead with three separate undersea cable deals in an effort to boost the country’s international broadband connectivity. The Ministry of Information and Communication is placing a priority on the East African Marine System (TEAMS), which offers a link to Fujairah in the United Arab Emirates. The Highway Africa news agency reports that under the TEAMS agreement the Kenyan government will have a 40% holding in the project, Etisalat of UAE will hold 20% and the remaining 40% will go to investors in the East African region. The government is also continuing negotiations over its part in the East Africa Submarine System (EASSy), a 9,000km cable which will connect Djibouti, Kenya, Madagascar, Mozambique, Somalia, South Africa, Sudan and Tanzania (including Zanzibar). Meanwhile, Kenya Data Network (KDN) has signed an agreement to create a link to the FLAG system; KDN will link from Mombasa and terminate in an undersea junction in international waters off the Yemen, Highway Africa reports. KDN says the link will be fully operational in the first quarter of 2008.

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