February 24, 2010
Bharti's announced takeover of Zain's African operations for $10.7bn appears to be a solid investment from a business point of view. The transaction is largely driven by the combination of Zain's potential to generate revenue and growth in key national markets in Africa, and by Bharti's ability to improve operational efficiencies and generate profits. Whether that translates into a clear and decisive victory for Bharti remains to be seen.
On the positive side, Zain Africa's assets include operations in 15 mostly densely populated and under-penetrated sub-Saharan countries, translating into an immediate potential for tremendous growth. As of Q3 2009, all but two of Zain's operations in the region were in countries with a mobile penetration of less than 50%, and six of these countries had a mobile penetration rate of less than 25%.
Nigeria stands as the biggest prize in Zain's portfolio. In the first nine months of 2009, the country contributed 33% of Zain Africa's 41.9m subscriptions and 35% of the company's $2.8bn revenue in the region (See Exhibits 2 and 3).
Exhibit 1: Zain Africa revenue breakdown by country for first nine months of 2009
Source: Pyramid Research, Zain
Exhibit 2: Zain Africa subscription breakdown by country for first nine months of 2009
Total = 41.9m
Source: Pyramid Research, Zain
In some critical ways, Nigeria will present a tough challenge for Bharti, which is counting on its proven cost-cutting abilities to make the Zain acquisition a profitable one. Zain Nigeria already is a low-cost operation - it already outsources many of its functions, it has negotiated favorable terms with vendors, and it has already reorganized its distribution and slimmed down its workforce. Finding additional cost savings could prove difficult for Bharti.
Cost savings aside, Bharti also will have to contend with some negative issues regarding market perception of its new property. Zain Nigeria has not yet recovered from a string of rebrandings, strategic misfortunes and network capacity issues, and will still be facing these challenges in the immediate and medium-term future.
The key to Bharti's success in Nigeria will not lie in cutting costs; instead, the operator will have to support existing efforts to expand its network in rural areas to generate subscription growth, roll out targeted services across segments to retain and attract clients, target the youth and enterprise segments to generate value, and develop data services to mitigate the decline in voice revenue. These tough challenges will ultimately determine just how wise Bharti's African investment turns out to be.
— Badii Kechiche, Associate Manager
Africa & Middle East Mobile Operator KPI Forecasts
Forecasts published quarterly
Our Mobile Operator Key Performance Indicators Forecast products provide a complete picture of wireline voice and data communications in each of 25 African & Middle Eastern markets. The Excel output includes five years of historical data and five years of market projections for metrics such as subscription totals, market shares, net and gross additions, prepaid and postpaid subscriptions, business subscriptions, data ARPS, aggregate ARPS, prepaid and postpaid MOU, churn and total service revenue - all broken down for the mobile operators in the respective markets. We believe our Mobile Operator KPI Forecasts are superior because they capture granular data gathered through extensive field research and use a thorough methodology consistently applied to all markets.
Smartphone Forecast: Operator Strategies Will Fuel Growth in Emerging Markets
Research Report published December 2009
Emerging markets will become the leading growth engine for smartphone sales over the next five years, with China becoming the biggest smartphone market in 2010. Understanding local conditions will be vital for operators, smartphone vendors and OS developers. This report examines the state of the global smartphone market today, focusing on operator and vendor strategies. It also looks at the intense struggle for market dominance among the various software platforms. The report investigates in detail and forecasts the smartphone business in eight crucial markets: Brazil, China, India, Nigeria, Russia, Turkey, the UK and the US. Watch video highlights from the report here .
Pyramid Research DataTracker
Online access to Forecast data
The Pyramid Research DataTracker is a unique online data retrieval tool enabling clients to retrieve forecast data drawn from multiple geographical markets, indicators and industry sectors with a single request. Created especially for our clients, DataTracker allows the user to instantly produce customized reports covering all the Fixed Communications, Handset, Enhanced Handset, Media, Multiplay Services, Mobile Demand and Mobile Data Forecast services subscribed to. DataTracker is an important tool that will help you identify market opportunities faster. View the videocast on DataTracker featuring Gabriela Baez, Managing Director of Research. To learn more about the Pyramid DataTracker or request a live demonstration, please contact us at email@example.com .
Mobile Internet Adoption: Content is the Catalyst
Telecom Insider published December 2009
Mobile online services remain an attractive but elusive opportunity in much of Africa and the Middle East. The low usage of traditional, PC-based Internet services leaves a void that will be largely filled by mobile handsets, and social networking will be a key application. Case studies cover Egypt, Nigeria, Senegal and South Africa.