Celtel’s was rebranded as Zain across Africa in line with its Middle Eastern parent company. For the Kenyan operation, however, it is already the third incarnation, and it has continued to loose ground against market leader Safaricom in the last financial year. Will this be the beginning of the much needed turnaround?
On Friday, 1 August, all the Celtel operations across Africa rebranded as Zain, the brand that Middle Eastern MTC already adopted in September 2007 to streamline their operations across the middle east. Celtel had become one of the most successful pan-African brands, with its brand equity estimated at more than US$1bn. Tito Alai, the company’s Chief Commercial Officer and the creator of the Celtel brand, proudly described it as a ‘tremendous success’.
The reason for abandoning such a successful brand was the group’s ambition to become a truly global player, aiming to be the first telecoms company in the top 100 global brands. Celtel’s Making Life Better – a powerful slogan for Africa’s emerging middle class – was not suited for the MTC/Zain clientele in the Middle East, where operations in several countries were first united under one brand nearly a year ago.
The Zain launch across Africa was an impressive affair: In Nairobi, Zain hosted the Kenyan president, several senior government officials and corporate leaders for a stylish ceremony at the newly refurbished National Museum. With literally much song and dance, a live videolink connected the celebrations between all Zain operations on the continent. At the same time, the company also announced the extension of its One Network – which removes all roaming charges for Celtel/Zain clients for calls within the network across Africa – to the Middle East operations.
As impressive as the function was, for the Kenyan operation, sleekness and cool graphics alone are not going to turn around what has been a surprisingly disappointing operation so far: The lavish rebranding introduces the company’s third incarnation – many people still remember the mobile phone operator by its first name, KenCell. Slightly confusing, it is also the chance for a much needed new beginning: For the longest time, Celtel had lagged behind seemingly unassailable market leader Safaricom. If Celtel’s marketing appeared slicker, it also failed to connect with Kenyan consumers who disliked the pan-African images for not looking Kenyan enough. Celtel had a reputation as being an expensive, elite product, and Safaricom, with often more pedestrian artwork, has consistently pursued its mass market appeal and has nearly 85% of the market share.
Inconsistency was another problem: Despite its often innovative products, Celtel’s marketing flipflopped almost as much as its management team. Zain finally drew a line and sacked most of the senior management, and with Rene Meza a new CEO. Meza acknowledges Zain’s difficult history in Kenya: A successful mobile operation is, he says, built on three pillars: Competitive products and services, distributions channels, and network quality. Celtel’s disappointing Kenya performance, he argues, was not because the brand did not perform, but because products and services have been suboptimal in the past. However, he notes that Celtel/Zain has seen a very good response to new tariff introductions in the past weeks, now offering clients the best value for money, and retailers the best margins in the market.
For Kenya’s consumers, more competition is obviously a good thing, and several exciting innovations have been introduced in the regional market: Celtel countered Safaricom’s M-PESA with its Sokotele money transfer service. If Sokotele was clearly by far not as attractive as M-PESA, which is effectively a virtual wallet or bank account, then Celtel pulled ahead again with the introduction of the One Network, removing roaming charges for clients across all its African operations. Safaricom quickly introduced a similar service with operators in Uganda and Tanzania, but doesn’t have the same pan-African reach. When Celtel lowered its tariff to KES3 per minute at night, Safaricom countered with an offer of unlimited free talk time at night for anyone who had loaded KES100 or more of airtime, never mind that this initially crashed the system so that the start of the free period had to moved from 9pm to 11pm. Zain had bettered this again, introducing unlimited daily talktime for a one-off payment of KES65. If this trend continues, Kenyan consumers will keep smiling.
The rebranding highlights Zain’s spending power: In the press conference, Zain CEO Dr Saad Al-Barrak estimated the rebranding costs ‘anywhere between US$20m and US$150m’, noting that it is difficult to differentiate between international and country costs. In total, Zain Group prides itself on being the single-largest investor in Africa with more than US$12bn invested. Kenya is not representative of the company’s overall African operations, and Nairobi will receive an additional boost from the location of Zain’s Africa headquarters in the East African capital. Zain is also looking at more listings – the Celtel IPO in Zamiba was one of the big success stories in the recent months alongside with, ironically, the Safaricom IPO. According to Dr Saad, Zain is currently in talks with advisors on a possibly Q1 2009 listing on the London Stock Exchange, but is also considering listing on its African markets, depending on the market conditions.
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