MTN vs Zain

Rudolph Muller

Rudolph Muller is the editor at MyBroadband and covers telecoms and broadband news. Rudolph comes from an academic background, but left the University of...

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MTN’s ambitions to rule the developing world could be seriously slowed down by another big player that is making inroads in its territory.

Zain Telecoms, a network provider whose operations are headquartered in Kuwait, has recently voiced its intentions to enter the local market.

Lindsey McDonald, an analyst with consultancy Frost and Sullivan, said it made sense for Zain to look for a foothold in SA.

“SA is still a very lucrative market, and there is still a lot of room to grow. The only realistic avenue would be for Zain to seek a partnership with Telkom,” McDonald said.

Some observers have speculated that Zain might rather buy Cell C, the smallest of SA’s cellphone operators.

The other option would be to acquire a licence, which might prove difficult because of the Independent Communications Authority of SA’s stringent application requirements.

Mwambu Wanendeya, Zain Africa’s director of communications, said the company was looking for opportunities across Africa. “Competition is good for the industry. It allows us to see the strength of our network. We have a superior network coverage, wide availability of products and efficient service levels,” he said.

MTN might have to brace itself for a serious war on its home turf before it can expand further into Africa, the Middle East and the Far East.

While attending the World Telecoms Africa 2008 conference, Zain Africa chief executive Chris Gabriel told ITWeb that the company was looking to gain coverage “from Cape to Cairo”.

“I will not go into specifics on the deals we are looking at, but we plan to have them completed by 2011,” he said.

Last month parent company Zain Group said it was keen to enter SA. It has spent 12-billion in investments and infrastructure roll-out across its 15 operations in Africa, and has seven operations in the Middle East.

Zain has been increasing its public profile of late, co-sponsoring local broadcasts of the Beijing Olympics and rebranding its Africa-wide Celtel unit from Celtel to Zain Africa last month.

The company’s expansion has also been fuelled by its One Network promotion. Subscribers travelling within 15 selected countries are charged normal tariffs without roaming fees. MTN recently launched its own “Roam Africa for only R5” offer, but it is set to end just after the 2010 World Cup.

Rajay Ambekar, IT analyst at Cadiz Asset Management, said: “I think Zain is a threat to MTN. Even the R5 roaming offer is still more expensive than what Zain charges on its network. ”

In Nigeria, where MTN has more clients than in SA, Zain has added more subscribers than MTN, Ambekar added.

MTN versus Zain discussion