Zain Drives New Strategy With Multi-Billion Dollar Investment
Kuwait-based Zain Group is providing more insight into its new growth strategy , first announced in June 2012. The company plans to invest around US$5.5bn over the next five years and develop high - speed mobile broadband services across its operations. Furthermore, the operator intends to adopt a customer-centric approach to its business decisions as opposed to a technology-driven approach. Zain is keen to improve its competitiveness , having underperformed its rivals in some key markets for most of the past two years.
BMI traces the source of Zain's weak performance in recent years to its preoccupation with consolidation talks, first with UAE's Etisalat and then a joint bid for its Saudi unit by Kingdom Holdings and Bahrain's Batelco. Both deals fell through during 2011, but not before distracting Zain from developing and implementing viable growth strategies based on emerging competitive dynamics in its key markets. As a result, the company's financial and operational indicators have taken a hit during the past two years, with less than satisfactory performances at group level. For the nine months ended September 30 2012, the operator reported a 1.4% y-o-y decline in group revenue and 4.1% y-o-y decline and net profit. By contrast, some of Zain's biggest rivals in the GCC states recorded impressive growth in key indicators, after investing in new services, network development and, in some cases, acquisitions during the same period.
From the detail Zain has revealed about its new strategy, which it calls Ghaduna Zain, roughly translated as Tomorrow Zain, BMI believes advanced data services will feature prominently in the operator's future offerings. Zain has launched 4G LTE in Saudi Arabia and is close to launching commercial services in Kuwait. The operator is preparing its Bahraini network for LTE services in time for the allocation of 4G spectrum by the regulator in early 2013. Zain's 3G networks in Jordan and Sudan have recorded strong growth, while the operator is expected to win 3G concession in Iraq despite the exorbitant licence fees the government is demanding. Zain's focus on data services is in line with our view of the growth potential of that segment, considering the saturation of the voice market and the prospects for strong economic and private consumption growth on the back of high government spending and wage increases.
|Keen To Reverse Underperformance|
|Zain Group Financial Indicators (USmn)|