'Kuwaitâs Zain not exiting trouble-hit Sudan'

sudan

Despite losses, the telecoms provider says it’s sticking to Sudan and even plans to enter Libya.

Kuwaiti telecoms provider Zain has no intention of exiting its loss-making Sudan operations and even plans to enter Libya, a company official has told a Dubai-based publication.

Zain had a licence to operate across all of Sudan until the country's south split away in July 2011 under a peace deal that ended its long civil war with the government in the north.

The newly independent South Sudan said Zain could stay - alongside South Africa's MTN and Sudan's state-owned Sudani - as long as they dismissed all Sudanese staff and cut management and network links with the north, said Juma Stephen, undersecretary at the south's telecommunication ministry.

The forced changes were at least partly prompted by distrust between the countries, accumulated through decades of fighting over oil, religion and territory. In April last year, border skirmishes brought them close to war.

In that time, Zain’s operations have been hard hit in that part of the world.

It had 56% of the market in mid-2011, according to Sydney-based consultants BuddeComm. But that had fallen to 37% by September 2012, just ahead of MTN's 32%.

Zain added 168,000 new subscribers in the last nine months of 2012 to bring its subscriber base to 667,000, providing just 1% of the group's total revenues last year.

Moreover, Zain, which operates in eight countries, reported a 27% fall in first-quarter net profit, in part because of what it says has been the devaluation in the Sudanese pound.

According to Dubai-based ArabianBusiness.com, Sudan accounted for nearly a third of Zain's customer base and a fifth of its group revenue last year.

But in July 2012, Sudan devalued its currency to 4.4 pounds to the US dollar from 2.6, says ArabianBusiness.com. The devaluation, in turn, is said to have cost Zain the equivalent of $179 million in revenue and $44 million in profit in the first quarter.

Zain has sold its assets in 15 other African states to India's Bharti Airtel in 2010 to focus more on the Middle East.

Yet, Zain board member Bader Nasser Al-Kharafi has told ArabianBusiness.com that the Kuwaiti telecoms firm is committed to Sudan, despite the telco’s woes in that country.

“We exist in eight markets and in Iraq and Sudan we have huge potential from those two. We will definitely hold onto Sudan. I mean the numbers are good, but [for] the fluctuation in currency.

“We believe things will be solved in Sudan soon. On the long-term I think Sudan will settle down and I see it as a great opportunity. We will keep that,” Al-Kharafi told ArabianBusiness.com.

And Zain is even looking to enter the Libyan market.

“We don’t have a number [of target markets] but whenever there is an opportunity we will invest. We were targeting Libya and they stopped the process there but Libya is one of the countries we would like to be in,” Al-Kharafi said.

According to BuddeComm, following Libya's civil war in 2011, it is estimated that more than $1 billion worth of telecom infrastructure has been destroyed, including about 20% of the country's cell sites.

Nevertheless, reconstruction efforts are underway and BuddeComm says “Libya’s telecommunications infrastructure is superior to those in most other African countries and services are available at some of the lowest prices on the continent.”

This is also reflected by the country’s teledensity rates, which are among the highest in Africa. Libya only has two mobile operators but its Libya mobile (SIM card) penetration rates stand at 265%, says BuddeComm research. Meanwhile, the country’s fixed line and internet penetration rates respectively stand at 20% 17%, according to BuddeComm.

Libya had a recorded population of 6.4 million in 2011, according to the World Bank.