ITWeb: How is the current global economic crisis affecting your growth and expansion plans within the African market?
Gabriel: The global financial crisis has both upsides and downsides for us. An upside is that acquisitions within our markets are becoming increasingly more affordable. It is, therefore, a golden opportunity to grow as we are cashed up - after our recent listing on the Kuwaiti Stock Exchange we have the money to invest. Our market capitalisation exceeded US$27 billion half way through the year.
In terms of yearly capital expenditure, we spend about US$1-2 on network roll-outs and upgrades. This year, we plan to invest US$4.5 billion on acquisitions and mergers; admittedly that is across the Middle East and Africa.
In the next year we are going to close four significant acquisition deals. We are looking at acquiring existing mobile operations or any other greenfield opportunities that arise within the African and Middle Eastern markets. We have particular interest in South Africa, Rwanda, Cote d'Ivoire, Mozambique, Mali, Yemen, Syria and even Zimbabwe.
There is a big focus on Africa. It is a hugely under-saturated market with the potential to grow.
This year, we plan to invest US$4.5 billion on acquisitions and mergers across Middle East and Africa.
Chris Gabriel, Zain Africa's CEO
People talk about reaching a ceiling point with regards to market penetration and that one can only reach 100% market saturation, but if you observe other markets, we are well in excess of 100% saturation. There is so much room for growth as people carry two or three lines: date lines, business lines and personal lines. So saturation never ends at 100% and that is why Africa is such positive market to expand in. If we continue to optimise our business model with both the high end and the lower end market in sight, we see significant potential in this market.
ITWeb: What are the company's plans in SA? Rumour has it that Zain is looking to take over Cell C as well as partner with Telkom. Any chance you might be able to verify or dispel the rumour?
Gabriel: We cannot be specific on the deals, but all I can say is we are very interested in this market and where opportunity lies - we will assess and take it.
ITWeb: What is the thinking behind investing in Zimbabwe?
Gabriel: Where there is risk, there is opportunity. Clearly there are some issues there. We have taken some bold moves before and because of this, received some considerable returns in these kinds of markets.
ITWeb: What is your biggest challenge in the African market and how are you tackling it?
Gabriel: There are only a few countries where we do not have control of the international gateway licences and unfortunately Zambia is one of them. Sierre Leone is the other. We are currently in talks with the Zambian government and the regulator on this issue and hope to make headway with this issue. The One Network has encouraged the Zambian ministers to heavily consider the international gateway debacle because of the transparent opportunities that it has created for subscribers, most especially small to medium business users.
ITWeb: What innovative plans do you have for the future?
Gabriel: On top of the 'One Network', Zain has introduced an m-commerce platform in East Africa to assist with the transfer of cash across borders. It is a cross-border mobile money transfer facility. If you overlay this on the 'One Network' you get an incredibly empowering situation for Africans, which will no doubt bring huge economic benefits to the region. This will not only empower SMEs but also sole traders and other individuals who want to make small transactions.
The One Network has really bought significant change to many Africans in the reach of the network, most specifically in connection with the cross-border trade within continents. The East African market is benefiting significantly with cross-border trade.
ITWeb: What makes you distinct within the African market and keep ahead of your competition?
Gabriel: We have a lot of competition, which we welcome. Our emphasis, however, is on quality of service and providing extensive network coverage. We do compete on price, but all market players compete on price, and what this does is deplete the market and take away money that would otherwise be used for investment and penetration into rural areas.
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