DUBAI/JUBA: Mobile phone group Zain knew it was facing a challenge when it set out to build up its network in Africa’s newest frontier market — the vast, strife-torn expanses of South Sudan.
And a challenge is what it got, in the form of months of headaches, including a government order to dismiss workers and temporarily shut down part of its network over fears the country’s old foe Sudan could listen in to calls.
Almost two years after South Sudan emerged as an independent nation, the Kuwaiti firm, like other operators, is also still waiting for a formal licence to operate there.
The company, market leader in South Sudan though with a shrinking share, says it is committed to staying and expanding.
But, against the background of toughening competition, a struggling economy and high costs, some analysts say Zain may have bitten off more than it can profitably chew.
Some say it might even make sense for the group to cut its losses and quit its last remaining sub-Saharan operation — it sold its assets in 15 other African states to India’s Bharti Airtel in 2010 to focus on the more lucrative Middle East.
Africa is regularly presented as one of the last great growth opportunities for telecoms operators, a continent still piling on mobile subscribers, with lots of room to expand.
Zain’s experience highlights the risks that go alongside those opportunities in markets where it is often impossible to untangle commercial from political interests.
“We are fully committed to the development of our operation in terms of human resources and technologies,” it said.
“The fact that we maintain the largest network and are the number one provider of mobile telecommunication services in the country clearly demonstrates the depth of our commitment to investment in South Sudan,” it added in another statement.
But in August, Zain’s then Chief Executive Nabeel bin Salamah wrote to managers highlighting “continued unacceptable financial losses” in the territory, according to an internal email.
In the email, he said he was freezing hiring and all new capital and operational expenditure pending a budget review and ordered any requests for emergency expenditure to be sent to headquarters for approval. The company has since said it is committed to building more phone masts, getting more subscribers and “optimising our opex”.
Zain had a licence to operate across all Sudan until the country’s south split away in July 2011 under a peace deal that ended its long civil war with the government in the north.
The newly independent South Sudan said Zain could stay — alongside South Africa’s MTN and Sudan’s state-owned Sudani — as long as they dismissed all Sudanese staff and cut management and network links with the north, said Juma Stephen, undersecretary at the south’s telecommunication ministry.
The forced changes were at least partly prompted by distrust between the countries, accumulated through decades of fighting over oil, religion and territory. In April last year, border skirmishes brought them close to war.
Reuters
