IHS Global Insight Perspective | |
Significance | Drive 2011 will help keep Zain on target to reaching its 3x3x3 strategy which it launched back in 2003, and ACE in 2007. It is aimed at streamlining core operations and services. |
Implications | Zain has made aggressive acquisitions over the past few years; Drive 2011 will also assist in continual assessment of the company's growth plans. |
Outlook | Zain is well on track to becoming a top global operator; its investment in emerging markets has positioned it well to ensure long-term growth. Zain continues to look for new acquisitions to expand its footprint and is considering entering three new markets by June 2009. |
The CEO of Zain Group, Saad al-Barrak announced a initiative called "Drive 2011" to push the company towards its 2011 target of being a top 10 global mobile telecommunications operator. The new strategy will place emphasis on customer facing services and commercial activities while centralising or outsourcing some back office/non-core functions to strategic partners. Barrak commented on the initiative: "Drive2011 is a natural consequence of Zain's evolutionary journey. It was planned soon after the launch of our ACE strategy in 2007 and is a structured and timetabled approach to maximising efficiency. We will create genuine market differentiation through our services and deliver on our Zain brand promise of 'A wonderful world'. This will be achieved through a combination of managed outsourcing, centralisation, and leveraging capabilities, as well as training and development for our personnel, all of which will improve our operating efficiencies."
The Zain Group will also align its head office and operations structures in accordance with the new operating model. This will result in Zain reducing its current 15,500 global workforce by 2,000—a 13% reduction across the board. Zain operations in Iraq, Jordan, Kenya, Kuwait, Malawi, and Sierra Leone have already begun the process. Zain is among the largest operators in the MENA region and has coverage of 23 countries, serving 63.5 million active customers as at 31 December 2008.
Outlook and Implications
Drive 2011 is intended to tackle the challenges ahead and attaining other 2011 targets of 150 million customers and a US$6-billion EBITDA. Drive 2011 will support Zain's 3x3x3 vision that was launched in 2003, and will maximise economies of scale and realize significant efficiencies, allowing Zain to provide communication services such as voice, SMS and data at an optimum cost structure.
A the end of the first quarter of this year, Zain increased its subscriber base primarily through its African operations, in particular, Nigeria (55%), Malawi (94%), and Madagascar (117%)—as well as solid growth in Bahrain (53%) and Sudan (34%). In Nigeria, now the largest market in sub-Saharan Africa, Zain overtook Globacom during the year to become the second-largest operator. It also launched services in Ghana on 15 December 2008, reporting 270,000 subscribers by the end of the month (see Ghana: 17 December 2008: Zain Launches GSM Network in Ghana).
In June 2008, Zain’s chief executive officer for Africa, said that the company was assessing opportunities in about seven countries and was planning to expand into three new African operations within six to 12 months. The most attractive countries would be those which are contiguous with the operator’s existing footprint so that it can continue to build agglomerative economies of scale and expand its "One Network" offering (see Sub-Saharan Africa: 11 June 2008: Zain Looks for Further Expansion into African Markets).