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Gulf telecom companies go global

JEDDAH - As telecoms markets in the US and Europe reach saturation point, companies such as Zain in Kuwait, Etisalat and du in the UAE and STC in Saudi Arabia are becoming world-class players, along with others such as Orascom in Egypt, thanks to their growing home markets.

Now they are poised to make substantial new acquisitions abroad, spending billions of dollars, particularly in Asia and Africa, as well as in other parts of the Middle East and North Africa. The result could be better products and services for their customers, as well as a greater role in the global industry.

Zain alone has announced a $5 billion war chest to buy companies or strategic stakes in the next 18 months. "We have earmarked until 2011 what we initially estimated at $5 billion for new acquisitions," CEO and Deputy Chairman Dr Saad Al Barrak announced. "Our ultimate mission is to cement Zain as a top-10 leading global mobile operator by 2011." A high standard of corporate governance and an ethos of social responsibility in the communities where it operates are also a vital part of the company's corporate strategy, he noted. Talks are being held about buying a controlling stake in Syria's largest mobile phone provider, Syriatel Mobile Telecom , Al Barrak said. "We will have a presence there in the near future," he added, although he gave no further details.

Formerly known as the Mobile Telecommunications Company (MTC) , Zain has become a global player with operations in more than 22 countries serving 64m customers. These range from Nigeria, Kenya, Uganda, the Republic of Congo, the Democratic Republic of Congo, Tanzania, Burkina Faso, Chad, Gabon, Madagascar, Niger, Malawi, Sierra Leone and Zambia in Africa to Jordan, Lebanon, Iraq, the UAE, Bahrain, Kuwait and the Netherlands. Last year it also began operations in the Gulf's most lucrative market, Saudi Arabia, after a public deal worth $1.9 billion. In December it launched Africa's first advanced third-generation network in Ghana. In March this year it paid $324 million for a 31 percentstake in Wana, Morocco's third largest mobile operator. The company is now ranked among the world's top 20 players in terms of revenue per user, according to industry sources.

This year, as part of its technological innovation program, the company is planning to launch sophisticated mobile banking services to more than 100m people in East Africa through its new branded offering, Zap. It will initially be available in Kenya and Tanzania, then Uganda.

Last September, Zain , which is listed on the Kuwait Stock Exchange, raised $4.4 billion in capital after 99 percent of its existing shareholders subscribed to a rights issue offer. This was one of the most successful to date in a world hit by the global financial crisis and recession. First quarter net profit this year was also expected to be impressive, with Al Barrak saying he estimated it would be close to the 73.3 million Kuwaiti dinars ($260 million) achieved a year ago. And, despite the current tough trading conditions, he said Zain still hoped to hit its earlier target of a 30 percent rise in annual net profit by the end of December.

In the UAE, the Emirates Telecommunications Corporation (Etisalat) is also looking for new investment opportunities at home and abroad. "We are continuing to study many different markets for the best opportunities that will add to Etisalat 's reputation and support our ambition to become one of the largest 10 operators in the world," Chairman Mohammad Hassan Omran said in late April.

© The Saudi Gazette 2009