Wednesday, June 17, 2009

‘Selling Zain will spell doom’

The allegations that French conglomerate, Vivendi, may buy over the African operations of Zain Group, could spell doom for the company, industry experts predicted at the weekend.

ITRealms Online recalls that reports from Zain Group’s home country, Kuwait, last weekend, indicated that the group has decided to offer its African operations for sale with anticipation that it could climax to about $12 billion, (about N1.7 trillion).

It was also gathered that Zain Group, is reviewing a large number of bids across four continents, comprising Africa, America, Europe and Asia Pacific; Chinese and Indian telcos, to acquire Celtel Africa which was rebranded about 11 months ago to Zain, traversing the African operations.

Even as Zain Group is gearing up for the due diligence on the bids based on the avalanche of offers at its disposal and to give room for proper examination of the offers, thus it is predicted to move upward the anticipated date of conclusion, which was earlier slated for a week to a month.

However, those who hold the position that the proposed plans to dispose Zain Africa may spell doom for the investors, according to ITRealms Online investigations, was predicated on the premise that the number of rebranding that has characterized the telecom company, especially in the Nigeria’s telecommunications industry, which incidentally is touted as the ‘bride’ for the latest bidding, has become worrisome.

Equally, experts who spoke to ITRealms Online noted that the latest offer for sale is coming too soon for Zain Africa, mostly for the Nigeria’s market, arguing that by the frequency in re-acquisition and rebranding, that it would have its own impact on the customer service delivery of the telco, in terms of putting fund into the business, more so, for the investing public.

“The unreliability of investment and even for elementary enhancement of subscribers’ relationship to the brand, leaves out tale of confusions on its shadow with the frequency,” one of our respondents said.

In the past eight years, what is now Zain Nigeria, has transformed from Econet to brief instinct as Vodafone to Vmobile, then Celtel before its latest form.

It is also being highly speculated that Globacom if it can muscle the required fund, then its dream of connecting Africa would have become a leapfrog desire and so, also, is MTN Group, which recently advanced strategies for a merger with India’s Bharti Airtel in the bid to create an estimated $61 billion (about N9 trillion) telecoms giant with tentacles across Africa, Asia and Middle East.

If Vivendi plans scale through, it would be the first French telecom operating company to play in the Nigeria’s telecommunications sector, just as stakeholders are wondering the name Zain may take this time around.

Responding to our inquiries, Head, Corporate Communications, Zain Nigeria, Mr. Emeka Oparah, said, “I‘m afraid I would not be able to comment on the subject.”

Meanwhile, Zain Africa has operations in 16 countries and had in May 2005 invested US$3.36 billion, which underscored Zain’s ambition to become an international telecommunications services provider.

This figure has grown to about $12 billion, which is what Vivendi is prospected to pay for the takeover.

Precisely, on August 1, 2008 Zain Nigeria joined all Celtel operations to rebrand into Zain, even as the move coincided with the linking of the world’s first borderless mobile service ‘One Network’ across two continents on the platform.

Zain also prides itself as a leading mobile operator in sub-Saharan Africa, with over 40 million customers as at March 31, 2009 , while it has presence in Nigeria, Burkina Faso, Chad, Democratic Republic of the Congo, Republic of the Congo, Gabon, Ghana, Kenya, Madagascar, Malawi, Niger, Sierra Leone, Tanzania, Uganda and Zambia, even as Zain’s operation in Sudan is regarded as part of the Middle East operation.

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