Zain Iraq, the country’s largest mobile operator by subscribers, has contracted European vendor Nokia Siemens Networks (NSN) for a USD150 million job to expand capacity and simplify and modernise the existing core network. Further details were not provided.Zain Iraq was formed at the end of 2007 when cellco MTC Atheer adopted the corporate brand of parent company, the Zain Group of Kuwait, formerly MTC. MTC Atheer won a 15-year national cellular licence in August 2007 for USD1.25 billion. The parent company acquired rival Iraqna from Egyptian group Orascom late last year for USD1.2 billion, and has since consolidated the two networks. The unified infrastructure served well over seven million customers at the end of 2007, a market share of 57%.
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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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Only five companies will take part in the auction of three Iraqi mobile phone licences, writes Dow Jones, citing the country’s finance minister, Bayan al-Zubaidi. They are the three main operators, Egyptian company Orascom Telecom’s Iraqna, Kuwait’s MTC-Atheer and Kuwait’s AsiaCell, part of Wataniya, plus Korek Telecom, which operates in the Kurdish city of Erbil, and one new candidate, Turkcell. A total of ten companies had originally expressed interest in the auction, but five withdrew due to security concerns, Al-Zubaidi said. The auction is being held in Amman, Jordan, on 16 August and could run into the following day, with the results to be announced on 20 August, according to Siyamend Othman, head of Iraq’s telecommunications and media regulator. PriceWaterhouseCoopers is advising on the auction.
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Iraq is to offer three new 15-year mobile network operating licences this month, according to a statement from government officials yesterday, with a fourth licence likely to go to the Iraqi Ministry of Communications. ‘An auction to grant these licences is expected to be held in Amman on 16-17 August and results will be announced on 18 August,’ a senior official working with one of the existing mobile operators told Dow Jones Newswires. The Iraqi government announced a tender to grant the new licences last month. The current temporary licences, held by Egypt’s Orascom Telecom (Iraqna), Kuwait’s MTC-Atheer and AsiaCell, owned by Kuwait’s Watanyia, have been extended several times, and are set to expire on 31 August. Around ten firms are said to have pre-qualified for the tender. A source at the Ministry of Communications said Japanese and US firms are among the new bidders.
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Zain to employ Nokia Siemens for expansion work
