Zain to pilot mobile money transfer service in Africa

Just over two years after mobile phone company Zain came up with the first ever cross-border mobile network, the One Network telecommunication giant is now about to launch another global first — a money transfer service that will see its customers send and receive money over the borderless network.

Zain Uganda country manager Yesse Oenga told The EastAfrican last week that this is one of the innovations that the group is set to launch as it seeks to reach its target to become one of the top 10 global telecom brands with a $6 billion Ebitda (earnings before interest, taxes, depreciation, and amortisation) rating by 2011 and a 110 million strong subscriber base, up from the current $1.3 billion and 50.7 million subscribers respectively. Mr Oenga said this is achievable following the group’s daring move to rebrand and merge its Africa and Middle East operations under one brand, Zain, in August this year.

The group was formerly made up of the Kuwait based MTC and its pan African mobile phone subsidiary, Celtel.

“For us, the sky is not the limit; it is just a border. There are many new arenas for growth. We want to go into money transfer on the One Network. We also want to go into the growing data segment as well as cable TV,” Mr Oenga said. “All these are arenas that we are going into because our strategy is based on innovation and product development. This strategy looks at how to get to our target to reach $6 billion Ebitda by 2011.”

This is part of the strategy conceived at the group’s third ACE conference held in Kampala early this year to accelerate growth, consolidate existing assets and expand into adjacent markets.

This innovation means that a good chunk of Zain’s two million subscribers in Uganda will be able to send and receive money beyond the limited banking facilities in the country. It will also open another competition front against money-transfer firms that handle remittances from Uganda’s expartriates abroad.

This is a money-minting area considering that experts predict that immigrant labour will continue to grow substantially, with global remittances set to reach $700 billion by 2012.

Indeed, Uganda currently has a steadily growing immigrant labour force in several countries of the Middle East — where Zain’s One Network is operational in Saudi Arabia, Iraq, Kuwait and Bahrain among others — and this could translate into a growth and revenue stream for the telecom giant.

At least 3,000 Ugandans are working in Iraq, while numbers in Kuwait, Saudi Arabia and the United Arab Emirates are on the rise.

The cost of remittances by mobile technology, also known as e-cash, is said to be much lower because it removes the need for physical points of presence.

As part of launching its new global identity, Zain has already spent well over $3 million in Uganda in rebranding and promotional campaigns within the past two months.

This could eat into profitability, but company officials say the exercise is one of the ways to grow the brand. It has already acquired 200,000 subscribers after rebranding.

“Branding is an investment to develop a personality; an identity that defines your position in the market,” he says.

Company officials say there are now two million active subscribers on its network. Because of this, Zain is investing another $100 million in network improvement to increase its penetration capacity in the countryside, where banking facilities are lacking.

“There are still many unpenetrated areas and that is where we want to go. We are investing another $100 million in the next six months to reach these areas,” Mr Oenga said.

Uganda’s current teledensity stands at 20 per cent despite the existence of four active telecom service providers in the market. The Zain country manager contends that the future will revolve around penetration, matched with affordability of services especially for the low-income earners, a segment that the company has been reaching with its ultra low cost handset, a ZTE-made phone that goes for Ush39,000 ($23).

Across the industry, there has been a marked fluctuation in the quality of service in recent months, despite all companies investing in multimillion dollar networks and switch capacities.

But Zain’s Ericcson built network is one of the more reliable ones for both roaming subscribers and local customers, even though it comes with a higher interconnection fee.

Source: mobileworld