Zain: Five names, nine lives

Reputed to be the first company to launch commercial GSM operations in Nigeria (Econet, in August 2001), as well as toll-free 24-hour care lines, an emergency helpline and monthly free SMS; one unacknowledged Zain record exists: it is the only Nigerian telecommunications company to have changed owners – and brand identity – four times, in eight years. Not even the chronically troubled NITEL has managed such a feat.

Its first incarnation, Econet Wireless Nigeria, was founded in 2000, by local and foreign investors, which included three Nigerian state governments (Akwa Ibom, Delta and Lagos), and Econet Wireless International (EWI), which, apart from its minority stake, had a contract to manage the company.

In 2003, South Africa’s Vodacom made a bid to acquire a 51 percent stake in Econet Wireless Nigeria (EWN). EWI’s stiff opposition – including a court case – to Vodacom’s acquisition ensured the failure of the bid. In April 2004 Vodacom settled for a five-year management contract with EWN. EWN then transformed into Vee Networks Ltd, operating in the market as the Vodacom brand.

Vodacom Nigeria was to last for only about six weeks. It pulled out of its contract amid allegations by EWI of fraudulent dealings in Vodacom’s takeover of EWN. Nigeria’s Finance Ministry subsequently took over the company, and it was rebranded as Vmobile.

In May 2006, Celtel, the sub-Saharan African subsidiary of Kuwait’s MTC Group acquired a 65 percent stake in Vmobile, thus necessitating yet another name change. EWI protested, arguing that it had the right of first refusal on Vmobile’s shares, and again went to court. The latest name change (the fourth) took place in June 2008, following the decision of the MTC Group to rebrand to Zain, in a bid to unify its diverse operations in 22 countries across Africa and the Middle East.

The possibility of yet another sale (and possible rebranding) looms. Speculations have been rife in recent times that Zain is considering selling off its African operations. Names of potential buyers have been bandied, with France’s Vivendi being one of the front-runners.

The Challenges

Apart from the frequent changes of ownership, there are the subsisting Econet Wireless International court cases, which have swung between Nigerian and overseas courts, with no resolution in sight. There is also the controversy surrounding the sack of 300 staff of the company in May (another 450 were reportedly slated for outsourcing to Ericsson).

The latest from Zain’s bag of surprises is the recent appointment of the erstwhile Chief Operating Officer, Khaled Khorshid as the Acting Chief Executive Officer of the company. In a telephone interview with NEXT, Zain Chairman Gamaliel Onosode was quoted as saying “Mr. Khaled Khorshid was appointed as the acting chief executive officer because Mr. Bayo Ligali, the incumbent chief executive officer had been indisposed for a period of two weeks.”

Survival Instincts

Despite being the first to begin operations in Nigeria, perhaps it is because of all these challenges that Zain (24.74 percent market share; June 2009 figures), remains behind its major competitors, MTN (46.19 percent) and Globacom (26.87 percent). But a comment on a popular Nigerian online forum said in its defence, regarding the company’s change of name from Celtel to Zain: “Everyone is hitting out at Celtel (now Zain). No one is acknowledging the survival instinct of the company... I see a company with nine lives that despite the odds [has] managed to stay afloat.”Aaron Ukodie, a telecoms industry analyst and publisher of eWorld (an ICT journal), attributed the relative success of Zain (despite the many boardroom and court battles) to the substantial financial backing it has enjoyed from its investors, as well as the profitable nature of its operations. “The issue is that there was money and there was ROI (returns-on-investment),” he said. “When Zain started it was backed by a [number] of state governments... there was money from the onset given by the state governments.”

According to him, Celtel “brought in a lot of money.” And Vodacom’s exit was not premised on the company’s non-viability but simply due to its “reading of the [legal] situation.”

On the lingering legal battles, Mr. Ukodie said: “Those who had the financial power were not the ones involved in the boardroom battles... the main challenger [EWI’s Strive Masiyiwa] did not pose [a] formidable financial challenge.”

Calls to Zain’s Head of Corporate Communications for an official statement were not picked; while the Public Relations Manager said he was out of town on official assignment, and asked to be sent an SMS, which went unreplied.

Four ‘transformations’, and many court cases later, Zain is still alive, seemingly determined to define itself by subscriber base and profit declarations; not court cases, or rebranding expenses.