Africa asset sale 'part of Zain's new strategy'
Kuwait, February 17, 2010
Zain's decision to sell off its priced African assets to India's Bharti Airtel indicates a sea change in its strategy - with a focus on core assets, according to industry expert Frost & Sullivan.
This move would indicate a period in which Zain is set to reconsider its strategy, Frost & Sullivan said in its analysis on the Zain deal.
Zain's interests in Africa have been under scrutiny for sometime as news surfaced that the operator was considering a sale of its African assets, which Frost & Sullivan believes, represent the jewels in its crown.
Market watchers too were surprised by the sudden move, since Zain had invested heavily in the African business in line with its objective to acquire the status of a leading regional mobile player.
"While there is a lot of potential in the African market, it is an expensive region in which to deploy assets," remarked Lindsey Mc Donald, Consultant Mena, ICT Practice, Frost & Sullivan.
"Given the force of the global downturn, it is likely that this has had a role to play in Zain's decision to sell. An additional dimension to this situation is the recently announced resignation of the CEO - an individual widely credited with turning Zain into the success story it has become," he opined.
Lindsey said Zain was a suitable partner for Bharti Airtel, which had sought to gain access to the African market for the past two years via negotiations for merger with MTN. "This move will pitch them as highly competitive rivals," he noted.
The African mobile consumer is set to benefit most from this latest move as Bharti will employ its market winning strategies utilised in India, for the African market, he pointed out.
"Zain's success on the continent lays a favourable foundation for the fulfilment of this objective and 2010 is likely to be a very dynamic year for the African mobile market," he added.
The sale of African assets, Lindsey said, had given Zain an unique opportunity to focus on core markets, which are known to be very lucrative, with high-growth potential.
"Opportunities to gain greater hold of the telecoms value chain could be an area of interest to Zain in an attempt to move beyond being seen as a simple mobile operator, Lindsey noted.
"There are clearly challenging times ahead for the new management of Zain, but this is certainly a chance for it to emerge as a much stronger organisation, he added.-TradeArabia News Service