Marching ahead

Zain Group emerged as the winner of the 'overall operator of the year 2016'
Scott Gegenheimer
Scott Gegenheimer


A customer-first attitude, a holistic approach to digital transformation and the courage to do things differently came together for Zain Group to be the proud winner of the ‘overall operator of the year’ at the CommsMEA Awards 2016.

As the traditional revenue streams for telecom operators continue to dry up gradually, and the industry landscape is disrupted with the onset of data era, survival and sustenance has become quite a challenge for telcos worldwide.

In these troublesome circumstances, the organisations that still manage to retain and grow their market position are the ones who dare to take risks and do things differently. Zain Group happens to be amongst those few telcos in the region which dared to take digitisation in its stride as an opportunity rather than a threat to its legacy model of structuring and operations.

Over the three decades of its existence, the company has managed to build its own niche in the MEA marketplace. Though the winds of digitisation haven’t really left the company unaffected, it has managed to prevent huge losses with a combination of futuristic strategies and a holistic analysis of its existing infrastructure, business model, solutions and services. For the first nine months of 2016, Zain Group generated consolidated revenues of KD 826 million ($2.7 billion), down 3% YoY in KD terms, while consolidated EBITDA for the period reached KD 390 million ($1.3 billion), up 5% YoY, reflecting a healthy EBITDA margin of 47.2%. Consolidated net income reached KD 124 million ($413 million), reflecting a 5% YoY increase. Earnings per share amounted to KD 0.032 ($ 0.11) for the nine-month period. The results have been good especially considering the fact that in Iraq, continued civil instability and implementation of a 20% sales tax on mobile services, as well as wide-ranging tax increases on other sectors affect spending on mobile services, seriously impacting Zain Iraq’s operational results and consequently the Group’s overall key financial metrics.

Ahead of the digital curve

In order to retain its relevance with the changing times, the Group has devised a wise strategy so as to focus primarily on six areas. These are customer experience; cost optimisation; talent development; Zain Digital Frontier and Innovation (ZDFI); customer value management and enterprise.

So, which have been the biggest investments by Zain in terms of technology? In response, Scott Gegenheimer, the group CEO highlights the roll out of LTE in six markets (most recently 4G in Sudan and Jordan), investment in LTE Advanced in key markets such as Kuwait and KSA; and the introduction of a Big Data platform in Kuwait, Bahrain, and Jordan.

In full recognition of the enormous potential of new revenue streams coming from the digital space in the future, especially in the domains of M2M, IoT and smart cities, the company established the Zain Digital Frontier and Innovation [ZDFI] business unit in 2014 to launch Zain into the digital space. The unit focuses on innovation, digital services, corporate venturing and smart cities, with the ultimate aim of transforming Zain into a regional innovation trendsetter. Partnerships with Uber, Zeptolab and are exemplary of Zain’s strategy to offer innovative services to its customers and bring new business models to its markets.

Zain Group has further made a strategic investment in FOO, a successful Lebanon-based entity offering a full spectrum of innovative end-to-end mobility related services including digital strategic consultancy, user interface and experience (UI- UX) design, app and web development solutions, digital marketing and incubation of start-ups.

To make sure it doesn’t lag behind on the smart city revolution, the group has entered into a strategic collaboration with neXgen Group, a leading smart city advisory and consulting services provider. Zain has already identified substantial incremental revenue opportunities from the investment in smart city deployments in the Gulf region, and the strategic cooperation with neXgen Group will initially focus on smart city opportunities in key Zain operating markets. Zain Group CEO, Scott Gegenheimer believes that the pairing of Zain’s regional footprint and expertise as a communications provider with neXgen’s competence in smart city technology and services will fast-track Zain’s development and success in smart city revolution.

To further the cause of innovation, Zain has also invested in three venture capital funds- MEVP, Wamda and Earlybird- that are focused on early-stage and growth-stage digital opportunities in Central and Eastern Europe, Turkey, the Middle East, and Africa. The group hopes to use technologies found by these VCs to enhance its customer offerings.

In mid-2015, Zain expanded its existing partner market agreement with Vodafone, to deliver M2M services to enterprise and government sectors across the region, with its operations in Kuwait, Bahrain, Jordan and Saudi Arabia at the forefront of this initiative. With an aim of financial inclusion, the group has also launched end-to-end mobile money services in Jordan and Iraq in partnership with eServGlobal, and plans to take it to other opcos soon.

Considering the increasing tendencies of its customers to use mobile phones for more and more tasks, Zain has also entered into an agreement with SLA Mobile to provide customers with Direct Operator Billing (also known as Carrier Billing). This enables Zain’s customers to pay for digital goods from a third-party content or service provider by charging the transaction to their mobile phone monthly bill or using their pre-paid credit. With mobile content and apps revenue in emerging markets such as the Middle East and Africa predicted to skyrocket, giving customers an easy solution to purchase and consume digital services on their mobile devices is definitely a wise step by Zain.

Building a powerful brand

The power of a brand has evolved greatly over time. The pressure to maintain a great brand image has gone up with the pre-eminence of social media and constantly engaging customers who are way too quick to appreciate a good thing and quicker still to point out follies. The key is to maintain a healthy balance between creating buzz and retaining the identity that brought customers to the company in the first place. Zain as a group has understood this very well, and takes its brand value pretty seriously. In the past 12 months, the group has spent around $100 million (~ 2.5% of its revenues) just on media spending campaigns promoting its brand and services on all media channels. Such investment has surely contributed to increasing the loyalty amongst customers in addition to attracting new customers.

The brand put forth a great example when its Ramadan 2016 TVC garnered 10 million views on YouTube, in a span of only 30 days, while the company’s EID 2016 TVC also attained in excess of 10 million YouTube views within just two weeks.

Zain Group and its local operations boast more than 8 million fans on Facebook (a 30% annual increase), more than 4.5 million followers on Twitter, and 850,000 on Instagram. Over the past 4 years, Zain Group’s and operations’ YouTube channels have had nearly 215 million views.

Committed to creating a positive impact

As a company, Zain group is constantly pursuing its sustainability agenda and supporting its communities through outreach activities such as capacity-building, education, socio-economic development, and environmental stewardship. It is dedicated to supporting the achievement of the Sustainable Development Goals (SDGs) and is continuously taking positive steps in that direction. Part of this approach has been to continue developing inclusive and accessible products and services, particularly as human displacement and conflict in the region continues to unfold.

Recently Zain Group adopted the globally recognised and supported ‘Business Backs Education’ (BBE) Framework, which seeks the support of the private sector for education-related initiatives in the same quantum as healthcare issues are championed by corporate entities across the globe.

As far as human resource development is concerned, Zain Group has crafted an employer value proposition that consists of six value statements that essentially form the group HR strategy. The group has experienced phenomenal employee engagement results with its recent ‘We Heart Zain’ campaign bringing in a 93% participation rate, and an 80% Employee Engagement Index, which is +10% versus the IBM global norm. Zain also achieved a 77% Performance Excellence Index, which is +3% versus IBM global norm.

In addition to the various initiatives introduced by the group to promote training and employee engagement, Zain group has also implemented, an e-learning platform to support employees, and let them enjoy the benefits of a strong employer brand.

Playing in the bigger fields

In spite of being a regional player, Zain plays the role of an active participant in the determination of technology standards across the globe. It has been a pro-active member of the GSMA. Recently, Gegenheimer was elected as a member of the Board of Directors of GSMA for a two-year period commencing January 2017 through December 2018. The term will see him involved in charting the future course of mobile connectivity across the globe. In March 2016 he was appointed as a Broadband Commissioner.

Following the recent grant of an extended and unified licence to Zain Saudi Arabia, Gegenheimer is hopeful that the licence concessions will allow Zain Saudi to invest more in network upgrades and expansion as it rolls out newer services to meet the ever increasing demand for telecommunications across the Kingdom.

Digital journey is not going to be an easy one for any organisation and keeping that in consideration, the CommsMEA Award 2016 for the Best Overall Operator of the Year is as much of an encouragement as it’s a recognition of Zain’s efforts.

Gegenheimer says the New Year will witness continued high focus from Zain on innovation in the digital space, partnerships with leading application and OTT/digital providers in order to deliver the richest content to customers; and better monetisation of the data networks.

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