Beyond borders

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After rebranding its African operations and expanding its roaming network, Zain outlines its aim to become one of the world's leading mobile operators by 2011 and unite its users throughout the Middle East and Africa.

While many companies in the Middle East have been winding down for the quieter summer months, directors at Kuwaiti operator Zain have been having none of it.

Far from relaxing the pace, the company has been busy raising funds, re-branding its African operations, and expanding its One Network operation, which allows mobile users in most of Zain's markets to make international calls to other Zain users at local rates.

And while some analysts have questioned the company's recent profit growth, which experienced a 3.6% decline in the second quarter of the year, the company's CEO, Saad Al-Barrak, has few worries, and indicated the company would stick to its goal of 5% profit growth.

Some analysts have said that Zain, which also led a group that paid US$6.1 billion for the third Saudi mobile phone licence last year, is unlikely to begin reaping gains from its investments until 2009.

However, while the Saudi Arabian licence and other recent investments may be weighing on Zain's balance sheets, Barrack is bullish about the potential of the expanded group as it moves towards its aim of becoming one of the top-ten global mobile telecom operators by 2011.

"We have started to reap the rewards of our recent large investments particularly in Iraq, Nigeria and Sudan... and we expect similar rewards when our operations in Saudi Arabia and Ghana commence commercial operations," says Al-Barrak.

Indeed, while Zain's rapid expansion, which has given the company a footprint in some 20 countries in the Middle East and Africa, may have put its profit growth behind some of its rivals, company directors are convinced that the investment will pay off.

They are also keen to stress that the recent round of fundraising, which saw Zain raise $4.5 billion from a rights issue to existing shareholders, has put the company on a sound financial footing.

"Raising the $4.5 billion fulfils a number of objectives for us," says Al-Barrak. "It shores up our balance sheet and puts us in a much stronger position to continue of the road to becoming one of the top ten global mobile companies.

We have proven in the past five years that we are prudent in the selection of targets for expansion and this will give us the ammunition and allow us to explore many of the opportunities we see in front of us."

Come together

Zain sees numerous opportunities to pursue in the region. The company is currently consolidating its position in Africa, and recently re-branded its operations in the continent, bringing them all under the Zain banner. The company staged an internal event for staff, and an external event for customers to ensure the re-branding was well received.

"It mirrors somewhat the launch of the Zain brand in the Middle East last year. Each market held its own events such as music concerts," says Ibrahim Adel, Zain's group chief communications officer.

The events were held simultaneously and were all linked to each other via live satellite screens. It was something that had never been done in Africa before in that we had a satellite link that allowed us to have all 14 operations communicate via satellite with each other, so we had the MD of each opco say a few words," Adel says.

The re-branding coincided with the expansion of Zain's One Network, which allows Zain users in most of the company's markets to make international calls to other Zain users at their local tariff. Zain recently joined its African and Middle East networks together, giving the network a footprint of 20 countries.

Saudi Arabia also joined the network when Zain started operations in the country in August, and Ghana will also be added by the end of the year, according to Adel. Zain's home territory of Kuwait currently remains outside the network as the required reforms have not yet taken place to allow the company an international gateway - a key requirement for it be added to One Network. Zain's operations in Lebanon, Zambia and Sierra Leone are also outside the network.

"We have introduced One Network and we have linked to the Middle East and Africa in all of the countries where we have an international gateway, because that is an essential part of the formula we have it in most countries," Adel says. "It allows our customers to receive calls while they are travelling. On the One Network they receive calls for free and they make calls at the local tariff.

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