No challenge too big for Zain Group

Dubai - Zain committed to delivering best services in Mena region.

Zain will continue to overcome the challenge of providing high-quality connectivity to its subscribers regardless of geographical, social or economic barriers in the Middle East.
This was disclosed by Zain Group chief executive officer Scott Gegenheimer during an interview with Khaleej Times ahead of today's start of Gitex Technology Week. Gegenheimer is a keynote speaker at the upcoming "Mobile 360 - Middle East" event, which is co-located with Gitex at the Dubai World Trade Centre.
The growth and impact of mobile communications on economies around the world cannot be overstated. Between 2004 and 2014 the number of people with mobile subscriptions grew from 20 per cent of the global population to 50 per cent. By 2020, a further one billion individuals are expected to gain mobile connectivity.
The continued rise in Internet and broadband connectivity has a direct impact on the growth of economies and economic activity within a country.
"I will highlight how that this social responsibility means that network operators and national regulators together have to create an environment in which the sector can continue to innovate and grow,  positively impacting as many individuals and businesses as possible," he explained.                        
Talking about consolidation in the telecom sector in the region, Gegenheimer said: "The current status quo is acceptable in many of our markets, and I don't think consolidation is something that any of the major regional operators are considering. All mobile operators need to discuss how we can all avoid the destructive competition in our markets."
"We are all facing major revenue threats from the OTT players that are already eating enormous chunks of our revenues, and further price competition and subsidies on devices will not be a healthy option for any of us in the long term," he added. 
Regulatory framework in Mena
The regulatory frameworks vary in maturity within the Middle East and North Africa region region. "We are seeing genuine interest from our government and regulators to protect competition and encourage public private partnership," Gegenheimer said.
"Nevertheless, licenced MNOs in the Mena are facing tougher regulations, while lots of our regulators are still analysing and studying issues that have a drastic impact on our future capabilities and revenues, including insufficient spectrum available for broadband services and unfair competition from over-the-top [OTT] players," he said.
Zain, he said, has been hit by the very high fees it had to pay for the 4G spectrum and even the 3G spectrum in some countries, while the company sees a need for more spectrum in the near future for some of our operations.
Developed vs emerging markets
"The obvious difference is that our developed markets [Kuwait, Bahrain, Saudi Arabia and Jordan] have state-of-the-art 4G LTE networks thus offering customers more quality services and data bundled packages," Gegenheimer said.
Customers in these markets have probably one of the highest consumption of data per capita across in the world; YouTube and other streaming services are highly in-demand.
In these mature markets, there is intense competition among rival operators, which is slimming profit margins. OTT players are also threatening core telecom services revenue, but governments still see telecom revenues as a key source of income and thus are instilling additional taxes on telecom operators and consumers.
"In our less-developed markets, challenges include civil unrest and social instability [Iraq and South Sudan]; the huge capex needed to cover vast areas [Sudan and Iraq]; maintaining and attracting talented personnel; and ensuring we have the regulatory frameworks and approvals in place to attain the license spectrum and new services for 4G," he explained.
Political instability impact
Zain has a long history of operating in areas affected by social instability having operations across the Middle East and Africa.
"Nevertheless we are committed in ensuring that essential mobile services are offered to the communities we serve as the mobile phone plays a major role in many aspects of the livelihoods of these communities - and we continue to invest in our networks in these areas," Gegenheimer said.
This strategy, although cumbersome and fraught with enormous risk, has proven successful in both building Zain's brand reputation, attracting customers and in creating value to all its stakeholders.
"In Iraq, since our grant of a licence there in 2003, we have invested in the vicinity of $5 billion in rolling out mobile services, overcoming major hurdles throughout these past 12 years. Today, Zain Iraq is the largest contributor to Zain Group customer base currently serving 12.8 million customers (28 per cent of total group customer base), while the revenue represents 33 per cent of total group consolidated revenues, the highest contribution to the group," he said.
Smart cities
Zain recognises the enormous potential of new revenue streams coming from the digital space in the future, especially in both smart cities and M2M opportunities, and it is imperative for the company to focus and exploit such opportunities that these two and other digital areas offer.
"To support these ambitions, we established the Zain Digital Frontier and Innovation [ZDFI] business unit in mid-2014 to launch Zain into the digital space with the view to growing the business through new innovative business streams adding to Zain's financial viability and market capitalisation. The unit focuses on innovation, digital services, corporate venturing and smart cities, with the ultimate aim of transforming Zain into a regional innovation trendsetter."
Several major events have transpired since launch of the ZDFI, namely in February 2015 the strategic collaboration with neXgen Group, a leading smart city advisory and consulting services provider based in the UAE, which will see both entities join forces in advising governments and large real-estate developers in facilitating the deployment of smart city solutions across the region.
"We expect to be a major force in the smart cities arena in the region and are excited by the opportunities available," he said.
- abdulbasit@khaleejtimes.com