IHS Global Insight Perspective | |
Significance | The investment by Zain and Al Ajial will provide Wana with funding requirements and operational contributions to continue with its growth plan and to successfully launch GSM services in late 2009. |
Implications | Wana will primarily benefit from the technical support and experience Zain has in targeting the low-ARPU end of the market. |
Outlook | Although Wana has yet to enter the market, its brand reputation from existing services, combined with Zain's experience and innovative services such as its One Network, will enable it to acquire a market share of 10-15% within its first year of operation. |
Kuwait's Mobile Telecommunications Co (Zain) said it is acquiring a 31% stake in telecoms firm Wana, a unit of Morocco's biggest conglomerate ONA, for US$324 million. Zain has formed a 50/50 partnership with Al Ajial Investment Fund Holding after expressing interest last week, approximately one month after Wana's licence win (see Morocco: 9 March 2009: Zain Considers 31% Stake in Wana Morocco and 6 February 2009: Wana Wins Third GSM Licence in Morocco). Under the agreement, Zain will assist Wana in the deployment of the new GSM network and provide Wana with the funding requirements to launch GSM services in late 2009. Currently Wana provides integrated telecoms services, offering fixed and restricted mobile wireless services (branded as ìBaynî), full CDMA mobility services (branded as "Wana"), and internet and data services throughout Morocco. Wana will operate mobile services in a market that has around 22.5 million customers with a penetration of 70%. The chief executive officer (CEO) of Zain, Dr Saad Al Barrak, commented on the decision, saying, "Alongside ONA, the largest conglomerate in Morocco and its main shareholder SNI, we look forward to assisting Wana to capitalise on its demonstrated track-record of introducing innovative products to the Moroccan community and to share the substantial growth opportunities that lie ahead as Wana launches its new GSM offering."
Outlook and Implications
Wana will clearly gain from the operational support of Zain and additional financial aid from Al Ajial.
- Support: Wana and Zain will enter into an operating framework agreement that will give Wana the possibility to access Zain's expertise, purchasing power, products and services, including Zain's 'One Network', its most unique asset, which connects 17 countries in its network, offering roaming calls without having to pay to receive incoming calls and local rates.
- Competition: At the end of 2007, market leader Maroc Telecom reported a 66.5% market share with 13.3 million customers. Maroc Telecom provides both pre-paid and post-paid mobile services and 3G services, such as international multimedia messaging, address books, personalised ringtones, 3G mobile internet, instant mobile messaging and business applications via BlackBerry. The addition of a third mobile operator in most markets dramatically reduces prices and should encourage additional value-added services, stimulating innovation among service provision. Wana is expected to take market share from the existing market leader, although Meditel has been in operation in Morocco for eight years and only managed a 33.5% market share. Although this puts it in a reasonable position, in other MENA markets second mobile operators have been obtaining a 30-40% market share in two years.
- Zain Strategy: Zain has already stated it is hunting three or four assets in 2009 and it is in a strong financial position to be able to take advantage of lower priced assets in the region. The investment is at a relatively low cost compared to other investments it has made in emerging markets, such as Iraq at an estimated US$5 billion. In Morocco, Zain will be able to help Wana focus on low-end users, which will help the venture increase its overall customer base.