Zain Logo
Really another name? for Zain?? From Kencel to Celtel to Zain and now what next after the impeding acquisition of Zain African unit by Bharti Airtel Limited. Will it be Bhartizain or bharticell or bharti airtel or Bharti or just Airtel. Since it is only Africa unit being sold, expect that Zain will rebrand and actually change its name. What it is in a name?
Kuwait’s Zain telecom will focus its operations on the Middle East after it concludes the sale of its African assets to India’s Bharti Airtel, new CEO Nabil bin Salamah said on Tuesday. The group is going to focus its operation in Gulf region and middle East,? which according to Salamah generate most of its revenue and profits.
The bigger question is does rebranding and frequent? name changes affect the uptake of? Zain services in Kenya? Is it the reason why despite having the clearest network and some of the best offers around zain has never be able to capture the imagination of Kenyans.
During the time when it was still known as Kencell in Kenya, it? made a big mistake by employing per minute billing while its rival Safaricom went for per second billing. In a country where people are used to flashing, per minute billing was not going to a appeal to anybody. The fact that when you try to flash someone you are deemed to have used one minute was horrifying for many people. So Kenyans went for Safaricom and from then? hence forth Safaricom has never looked back and Zain remained with annoying tag of an expensive network? for a very long time.
On BBC website there is an article titled? Can you rebrand a bad memory? The answer to this is could be both yes and no. There some memories that can never be rebranded but there others which can easily be done. It is hard to re-brand post election violence witnessed in Kenya after 2007 election, but we have seen politicians like Moi re-branding themselves effectively on the people’s eyes despite what people thought about them before.
Back to Zain, I think it is possible for it to rebrand itself and come out stronger but there is a big If on that.? In Zain case, you have to go way back? to understand how Kencell days damaged? Zain’s imagine and despite numerous attempts to re-brand and numerous change of names, Zain has never be able to catch up with rival Safaricom. A classic example on how hard it is to re-brand bad memory in business.? But at the same time? Zain at the moment is completely different and can never be compared with what it was during Kencell days.? It stands out in many ways:
- One, it occupies unique position as Kenyan second largest mobile network operator by subscriptions and its subscriber base stands at 2.4 million. Although they have to constantly look at their back less they be overtaken by the likes of Orange and Yu, they have been reasonably successful in? getting new subscribers before. Great example is? when they waged a great tariff war in 2008 which drove their subscriber base to three million by December 2008, only to lose 600,000 of those new customers by August 2009. That can be explained by the fact that most Kenyans buy Zain Sim cards and keep them in their pockets, in such case, it is easier to lose the Sim card or just neglect it somewhere. Yours truly being one culprit in this.
- Two, its Zap money transfer service seems to be doing well and gaining ground in Kenya. Kenya’s status as world innovator in the budding mobile money industry is legendary. Although Mpesa still dominate the money transfer business in Kenya, there is a feeling that there is a bigger space in this industry and Zap in particular has been well received considering how popular Mpesa is.
- Finally i have to say that Zain got it right when come pricing of? data and internet business.? It is right to say they are cheaper option when come to broadband internet. And right from the beginning they had the unlimited broadband internet offer at a good rate month and even per day. Well the others like Safaricom have followed suite on this but it is always great sign of creativity to be the first
Looking at the other side of the coin there a number of factors which could upset the whole process.
Competition
To start with, the competition in the country is now very tight and even the giant of the industry Safaricom is feeling it. The two late entrants on Kenyan market Yu and Orange have held their own and now can never be taken lightly.? Orange started with inbuilt infrastructural and institutional advantage inherited from former Telkom Kenya, but the star of all has been Yu. They started from the scratch and in less than two years they are a real force to be reckoned? with in many ways. With that kind of a situation,? it might not go well if Zain makes? a mistake during the rebranding period. So the process has to be spot on else….
Financial factors
It is hard to imagine this but probably there is an explanation,? how do you feel if you are in an industry where your rival is making $226 million in profit while you are posting a loss of $28.5 million after tax. Zain made a huge loss in Kenya last year and even the year before, probably one of the reason why the current owners feel like giving away the African unit. You look at the way they described their planned action after selling if in case the deal goes through you will realize that they think that African unit was not that profitable enough, as compared to the Gulf region and Middle East.
Bharti
All in all the deal has not gone through but there is high probably that after two months or so, Zain in Kenya might be something else and you better start getting used to the name Bharti. This is the statement on their website
Bharti Airtel Limited (?Bharti?) and Zain have agreed to enter into exclusive discussions until 25 March 2010 for the acquisition of Zain?s African unit (Zain Africa BV) based on an enterprise value of USD 10.7 billion. This potential transaction does not include Zain?s operations in Morocco and Sudan and remains subject to due diligence, customary regulatory approvals and signing of final transaction documentation. There can be no assurance that a transaction will be consummated.? Further announcements will be made in due course.