Saad Al Barrak: More than two million people
have already used the One Network service. It is playing a
crucial role in helping to promote and boost cross-border
We interviewed you two years ago, when you had 15
million subscribers in 19 countries. What are the current
numbers, and how has that met your plans at that time?
Since we started operating in Kuwait as the region's
first mobile operator in 1983 we have experienced strong
growth. Through the disciplined implementation of our "3x3x3"
expansion strategy in 2003, we have grown exponentially,
becoming the fourth largest telecommunications company in the
world in terms of geographic presence.
Our footprint covers 22 countries serving 42.4 million active
customers across the Middle East and the African continent
— as of January 2008.
We are on target to reach our ambitious goals of achieving 110
million customers and an EBITDA of $6 billion by 2011 based on
organic growth of our existing operations.
How far has the rebranding as Zain reached so far,
and what are the plans to expand it throughout the
In September 2007, four country operations in Kuwait,
Bahrain (both formerly MTC-Vodafone), Jordan (formerly
Fastlink) and Sudan (formerly Mobitel) simultaneously
re-branded to Zain.
Our operation in Iraq, previously called MTC Atheer, which
successfully acquired Iraqna in December 2007, re-branded to
Zain in January 2008.
After being awarded the third mobile telecommunications
licence in the Kingdom of Saudi Arabia in July 2007, we will
commence operations in Saudi Arabia under the Zain brand in
Operations in Africa currently function under the Celtel brand
but will adopt the Zain master brand in the near future.
What has been the effect of eliminating roaming
charges on the business models of your African operations, and
how has ARPU changed?
With the introduction of One Network, Celtel is
leading a paradigm shift in the mobile industry focusing on
customers' needs rather than geographic borders between
The launch of the service in East Africa in 2006 followed by
the recent extension to 12 countries has been crucial to
Celtel's strategy of ensuring that our customers in Africa are
connected through one borderless network; a world's
Additionally, One Network plays a crucial role in helping to
promote and boost cross-border trade while helping to drive
economic growth across Africa.
More than two million people have already used the One Network
service which covers a geographic area that is more than twice
the size of the European Union.
Can you explain in detail what Zain customers get in
this area — calls just to other Zain numbers, to any
number, to fixed numbers, and so on?
All postpaid and prepaid Celtel customers in Burkina
Faso, Chad, Malawi, Niger, Nigeria, Sudan, Republic of Congo,
the Democratic Republic of Congo, Gabon, Kenya, Tanzania and
Uganda enjoy the benefits of One Network; the world's first
borderless mobile phone network.
Based on Celtel's unparalleled contiguous footprint across the
African continent, the One Network experience allows customers
to make calls at local rates using their home country SIM card,
receive all incoming calls free of charge and top-up their
pre-paid phones with locally-bought airtime cards.
Alternatively, Celtel's prepaid customers may top up their
accounts with airtime cards they have brought from their home
networks. The One Network service is automatically activated
upon crossing the geographic border into any of the other 12
countries, with no prior registration required or sign-up fee
How have you been able to afford this move? For
example, have you had to increase charges to call countries
outside the area?
No, we have not increased any rates for our customers.
Traditionally, roaming charges have not been a major part of
Celtel revenues. However, since the introduction of the One
Network service, customer loyalty has increased significantly.
We have also signed up some important post-paid customers who
are attracted by the One Network offering.
Do you plan to expand the policy into other Zain
operations — either by expanding the current area or
by creating one or more separate areas?
Our Middle East operations are looking to roll-out a
One Network service wherever the infrastructures and regulatory
During the course of this year we are planning to deliver such
this service in Bahrain, Iraq, Saudi and Jordan.
In Kuwait, we are still waiting to be provided with our own
international gateway — direct access to international
networks, necessary to enable One Network service.
As soon as this is provided by the Ministry of Communications
we will include this important market in our roll-out
One Network will be just one example of real and tangible
benefits of our extended family operating under one brand and
seeking to deliver one, exceptional customer experience
wherever our customers use our services.
What lessons does this move have for other
operators, either in Africa and the Middle East or
The lesson is clear — to survive in today's
world customer experience is of paramount importance. One
Network is an initiative that comes from listening to what
customers want and then pro-actively providing a service that
helps them to save money.
Your expansion has been in the Middle East and
Africa, through the acquisition of Celtel. You said in 2006
that you wanted to expand into India , Pakistan and Bangladesh
: how are those plans going?
Zain assesses new accretive opportunities when they
arise provided they meet the group's strict investment criteria
and demonstrate long-term value for our company and our
In January 2007, the Group launched ACE — an
implementation strategy to realize the target of our 3x3x3
vision of becoming a top ten global mobile operator by
ACE seeks to extract superior value from existing assets
through three main thrusts: accelerating growth in Africa;
consolidating existing assets; and expanding into adjacent
And what plans do you currently have for investing
in or expanding into other parts of the world? Within your
current footprint, of Africa and the Middle East, are there
plans to expand into other countries not currently served by
As stated above, Zain will assess opportunities if
they meet our strict investment requirements and help us
achieve our strategic objectives.
How much have you spent in the past two years on
developing current operations and expanding into new
operations? How much do you plan to spend in the next two
In many of our operations in the Middle East and
Africa in particular significant investment in network
expansion is required to meet our customers' needs in terms of
coverage and service quality. In 2007 and 2008, the group's
capex requirements will exceed $2 billion. Following this
significant programme of investments, we expect our capex
requirements to reduce sharply.
You are primarily a 2G GSM operator: what are your
plans to move into 3G and more advanced technologies? And fixed
In Bahrain and Kuwait we already operate 3/3.5G
networks — alongside WiMax and HSPA high-speed data
Zain in Jordan will shortly launch 3G and we have already
committed over $900 million in advanced technology
infrastructure including a 3G network for Saudi Arabia when we
launch operations this year.
We also plan to selectively introduce 3G services in Nigeria
in Q2 of 2008.
Our African operations, Sudan, Iraq and Lebanon all operate
Fixed services are not part of the Zain business model as we
focus on wireless technologies which better suit the needs of
How do you plan to expand within your existing areas
in Africa and the Middle East?
Africa and the Middle East are clearly key growth
areas for slightly different reasons. In Africa growth will
come from customer acquisition and geographical expansion
(3x3x3) into adjoining markets.
In Africa we operate in 14 countries, with the addition of
operations in Ghana later this year, and although in the
majority of these countries we are the market leader, there
remains room for greater penetration and customer growth.
In the Middle East, where market penetration is generally
higher and geographical expansion is more limited, growth will
come through value added services such as high-speed wireless
internet access and increased ARPUs from the existing customer
However, Saudi Arabia offers us access to a huge addressable
market hungry for high-speed services and our shortly to be
introduced One Network service.
Iraq too, with a market penetration of only some 40%, offers
great potential for growth and customer acquisition. Here we
have some 7 million customers in a country with a population of
some 25 million people.
How are you tackling the enterprise market?
We see the enterprise market as a growth area and one
that is dependent on the availability of high-speed data
networks (3G upwards).
In Kuwait, late last year we launched an HSPA service that
provides speeds up to 7.2 megabits a second and in Bahrain
early in 2007 we launched the world's first nation-wide WiMax
service that again gives high-speed data connectivity.
With these speeds, our enterprise customers can enjoy most
business services and applications — such as email,
internet and intranet access and access to other business
applications — without being tied to a fixed
How important are broadband internet services: will
this be achieved through wireless or wireline services?
Broadband simply means high-speed, high-quality data
service. The nature of today's consumers — business,
residential and especially the youth sector — is that
they want access to the web, video clips, music and so on at a
time and place that suits them and not necessarily tethered to
a hard-wired computer terminal on a fixed network.
With 3 and 3.5G networks and services such as Kuwait's eGO
product — a wireless high-speed USB plug in modem
— there is little that can't be achieved wirelessly in
comparison to a fixed connection.
Which types of services are likely to generate most
opportunities — content, banking, networking, or
Zain is not in the business of creating content.
Rather we provide access to it and as such high-speed networks
accessing content will generate greater ARPUs.
Financial transactions using wireless networks is set to grow.
In Kuwait recently we worked with National Bank of Kuwait to
deliver a service that allows customers to make micro-payments
using their handsets to pay for goods remotely from points of
What is the mix between organic and acquisitive
With operations spread across two continents, we are
looking at a mix of both organic growth — in the more
established markets such as the Middle East — and
further acquisitions in those parts of the world that meet our
stringent investment criteria and strategic fit with our ACE
— accelerate, consolidate and expand —
What is the biggest challenge you face in achieving
your 3x3x3 strategy?
The challenges we face are simply those associated
with any business that is on such a rapid ascendancy as Zain.
Since we started operating in Kuwait as the region's first
mobile operator in 1983 we have experienced strong
The challenges are to ensure that all of our 22 operations get
the attention and support they need to ensure that local plans
and goals are met and that customers are provided with the best
services and a great brand experience.
You recently acquired a mobile license in Saudi
Arabia. Coming in as the third operator, what are your plans to
gain market share?
From day one, we will offer the best products and
services. We plan to invest over $1 billion to put in place a
state-of-the-art 3G network that will give
technology-sophisticated Saudi's high-speed access to a host of
services such video-streaming and other multi-media
Although mobile penetration in Saudi is high, currently around
85%, the latest figures also show a SIM penetration rate of
143% in UAE and 136% in Bahrain at the end of 2007.
This highlights that that there is still room for further
penetration in Saudi. On top of this, Saudi demographics
— with half the population below the age of 20
— and prospects of growth are very promising for the
economy in general and consequently for the telecom
Importantly, we intend to introduce into Saudi what is
effectively the world's first borderless mobile network that
eliminates cross-border roaming charges.
One Network will therefore be a key attraction for Saudi and
other Middle East customers and is but one example of real and
tangible benefits of our extended family operating under one
brand and seeking to deliver one, exceptional customer
experience wherever our customers use our services.
How does sector policy and regulation impact your
global strategy and how do you balance the regulatory
requirements across 22 countries?
Aside from ensuring customer welfare —
reasonable pricing, monitoring for anti-competitive practices
and so on — and legislation for interconnection and
access arrangements, we see the role of the regulator to ensure
a fair and equitable marketplace for all operators.
Regulation is a fact of business life in the telecom sector
and we therefore take regulation, and the different regulatory
environments within which we operate, very seriously.
Nearly all of our 22 operations in Africa and the Middle East
operate in regulatory environments that are at varying levels
of maturity and development. In many of our operations,
regulation is sometimes still in the development or early
We recently held a regulatory workshop in Bahrain that saw
representation from all of our 22 operations. The workshop
invited industry experts and a regulatory representative to
address our delegates and share not only their perspectives on
regulation but also to provide training and coaching on the
complexities of the regulation sector.
By sharing experiences and skills across our own operations, we
will raise the standards of our own teams that will be of
direct benefit and make a positive contribution to the
regulatory environments in each country.
With the aggressive growth strategy you have, how
will you manage shareholder expectations? How do you ensure
strong corporate governance with such a diverse portfolio of
The answer to the first question is addressed in the
second; clear and transparent reporting, corporate governance
and world-class best-practice and standards are fundamentally
crucial for Zain.
In every country where we operate we view good corporate
citizenship as paramount. Aside from our responsibilities to
our shareholders and the need to provide them with good returns
on their investments, each region and each country has its
distinct priorities, but generally speaking each year we spend
millions of dollars on education, health and social welfare are
We also prioritise the well-being and development of our
15,000 employees. Not only is this good for Zain but it is also
good for the personal development of our people. Increasingly,
the environment is coming into our corporate spotlight with
initiatives such as that launched last year in Kuwait where we
recycle tons of paper, plastic and metal waste and are looking
to also recycle the huge batteries that are necessary to drive
remote base stations.
But there is also an element of fun and entertainment that adds
much to the societies where we operate. In Africa it could be
sponsorship of musical events and concerts; in the Middle East
it is more likely to be Islamic celebrations such as Ramadan
and Eid occasions. GTB