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Zain targets MTN market share

By Patrick Kagenda

Bharti Airtel Chief Executive Officer (International) and joint Managing Director Manoj Kohli’s announcement in Kampala last week that the company intends to invest US$100 million in network expansion is likely to spark renewed price wars.

Speaking on the sidelines of the Bharti/Zain Africa CEO`s meeting held at Kampala Serena Hotel, Kohli said the company wants to be the market leader in Uganda. The new money will be invested in network expansion and technology.

Bharti, the Indian telecoms company, acquired the Zain Africa operations of the Kuwaiti based Zain at US$10.7billion in April. The company intends to re-brand before the end of the year.

In Uganda, Zain, is the second largest operator with an estimated two million subscribers. Its strategy has been to sharply discount on calling rates and improve network quality.

Its main rival, MTN Uganda, which has the largest subscriber base estimated at 5.6 million, has also a focus on low pricing. However, it has ridden on its wider network coverage and user services like MTN Mobile Money transfer.

Bharti’s new strategy is likely to lead to increased competition based on the same strategy. Kohli said it will continue with the one network strategy initiated by Zain and adopt co-hosting to bring affordability of its services.

Financial muscle is likely to be a major factor as Bharti attempts to grab first place from MTN. Their renewed rivalry in Africa follows a failed deal by MTN and Bharti to merge and create the world’s third largest telecom company.

Kohli said Bharti will invest US$100million in Uganda in the coming two years. He listed four objectives in its plans for Uganda which include coverage expansion, affordability to all, employment creation and promotion of local talent.

Kohli announced that about 40 new staff will be brought to the entire Bharti Africa operations while 30 people from the company`s Africa operations will be taken to India. He said there will be no management restructuring at Zain Uganda.

€œWe are here to generate employment and not to make people redundant,€ he said.

He said Uganda is a very important market to Bharti Airtel because of its low coverage of tele-density that stands at 30% and the company will drive major growth up to over 60%.

Until recently, MTN has been ranked in 10th position while Bharti Airtel was one place behind at 11. China Mobile is ranked number one globally followed by Vodafone.

However, with the acquisition of Zain Africa operation, Bharti has become the fifth largest telecom company in the world according to Kohli.

Latest reports from March show MTN recording the highest revenue growth of any telephone company in the world.

According to the report on telegraphy.com, MTN revenue increased by 140 per cent, Bharti by 120 per cent, and Zain by 110 per cent over the three-year period reviewed.

The revenue growth for all of them focused on wireless markets in Africa, Latin America, the Middle East, India and China.

In Uganda, competition will be focused on a very small market but also one of the fastest growing markets in Africa and the Middle East.

Uganda has seven mobile phone operators but with a very low penetration, estimated at 39.0 percent in 2009.

According to some research reports in the sector, penetration is expected to grow to 70.7 percent by 2014.

One analyst has predicted that in the next five years, Uganda will experience the second highest percentage increase in terms of mobile subscriptions among the African countries.

There is high competition for market share marked by price wars and introduction of new technologies such as WiMax, IPTV, and VoIP.

Kohli said to compete with MTN and Warid Uganda, which was recently acquired by Essar Telecoms, another Indian telecoms company, Zain’s strategy will be customer satisfaction.

The company has promised to bring, efficiency, speed and productivity into access of its network in the Ugandan villages where coverage has been low.

Bharti Airtel was established in Nov 1995 in Delhi India and has now a presence in 18 countries with up to 180 million customers hooked onto its network. In India alone the company has up to 140 million customers, while the other 40 million customers are from Sri Lanka, Bangladesh and now Africa.

The company inherited a US$1.7 billion debt from Zain. When it rebrands, Zain will be changing names and ownership for the third time. Zain started its operations in Uganda in Dec. 1994 as Celtel (U).

 

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