Date Published: 03/24/10
End of the road for Arabs in Zain Nigeria …as Bharti acquires Zain’s African operations
Baring any last-minute challenges, the highly publicized acquisition of Zain’s African operations by Indian telecommunications giant, Bharti, will be sealed on March 25th. For the Middle Eastern telecommunications operator, it will mark the end of the lofty dream to become one of the top 10 telecommunications company in the world by 2011. For Bharti, the deal will probably serve as mollification after the failed attempt last year to acquire MTN’s African operations. It will also give the leading operator in India a strong foothold as it enters the growing African market with the potential saturation of the Indian market. For the Nigerian operation of Zain, this will mark yet another major milestone as it gears itself to re-brand for the nth time.
The company currently known as Zain Nigeria has gone through more change than any other corporate organization in the world including ownership changes, management changes and brand changes, and each of these came at a huge cost. Sadly, the company which pioneered GSM mobile telecommunications is now occupying a distant 3rd place in the ranking of market shares behind market leader, MTN, and Glo-which entered the market long after Zain and MTN. Aside market share loss, the company has lost significant revenue, reputation and even key employees over the years. At best, it has struggled to stay in the four horse race for the Nigerian telecommunications market.
But that is not the story for today. With the impending take over of the business by Indians, it seems very certain that it is the end of the road for the Arabs, who have held sway in the controversial Banana Island twin-towers since 2009, following the orchestrated exit of the Nigerian top management including the amiable Nigerian CEO, Bayo Ligali. Of course, the Arabs will be supplanted by Indians, not just because the ownership, complexion and language is changing, but also because the Arabs put up the worst performance among the lot of foreign operators. A review will be appropriate here.
In the beginning, it was Zimbabweans. Not a few people were amazed at the expertise these fellows brought to Nigeria, even with their comparatively backward economy. But the fact was that they had embraced GSM longer than Nigerians, who were just coming into it day after the fair. The team led by Zachary Wazara, was aggressive, methodical and very smart, but lacked the financial wherewithal. That was what led to the chain of events that ultimately culminated in their exit, I gather.
After the Zimbabweans came South Africans from Vodacom led by Willem Swart. They were very experienced having operated a mobile network for over ten years and they knew how to take on the competition, especially their arch-rival, MTN. But their stay was rather short-lived, in a manner of speaking. Vodacom discontinued its quest to acquire Econet Wireless Nigeria, and exited in a hurry.
The time was too short to appraise their capability and performance, but the management did get a second shot. Willem Swart led his Vodacom compatriots to negotiate a deal that enabled them to take over management of what emerged from that disappointment: Vmobile. For two years, Swart ably supported by Boye Olusanya, called the shots. With little cash but a determination to succeed driven by unparalleled passion and tenacity, the Vmobile employees dug in and held on. The period between 2004 and 2006 could be described as the glory days of the company, by whatever name it is called. Nigerians, especially the customers, still recall with nostalgia the industry and vigour with which the Vmobile employees carried on. At the Banana Island office of the company, some of the staff who pled anonymity for fear of persecution, equally remembered the Vmobile era as their best days.
Lekan (not his real name) said “we were respected and valued, and the management knew what they were doing”. Another wondered what happened to the numerous perks they used to have as employees including “our groovy end of year parties”. One actually regretted the ext of Willem Swart, whom he described as “a great manager and an experienced administrator compared to the rookies and jokers we have on board from Zain”.
According to the employees, things started going really down after the company transformed for the third time to Celtel, even though it seemed on the surface like a season of prosperity. Customer base grew exponentially from about 5 million to over 16 million in two years. Conversely, employee morale and staff engagement took a nosedive. The interplay of Nigerians and other Africans on the management just didn’t click, as later events revealed. When the Nigerian CEO, Bayo ligali, who had little or no knowledge of telecommunications, was head-hunted from Dangote Pasta, many industry watchers thought it was a wrong move, but the Celtel Group management claimed he was coming with international experience to direct the leadership of the business. He was either overwhelmed by the task or sabotaged by the more experienced subordinates, who have been long enough in the organisation to have mastered the politics of the place and the inner workings.
Ligali’s era was marked by an aggressive roll-out programme powered by massive investments by the parent company, Celtel, which later sold out to Zain (formerly MTC). Curously, the massive roll-out and the equally aggressive acquisition of customers did not translate to achieement of revenue and EBITDA targets. Also, there was substantial loss of steam by the employees, who were miffed by the orchestrated dismissal of several powerful senior employees as well the massive exit to Etisalat, which had then just entered the market. Tales of favoritism, contract scams, coupled with the legacy issues like boardroom tussles were replete in the media and industry circles. So, it was not a surprise that Zain Grop settled for a major management change in January 2009, and since then the company has not been the same.
The arrival of senior management staff of Middle Eastern origin, Also known as Arabnization of Zain Nigeria, actually marked the beginning of a possible end of the company, which Bharti of India is buying. Aside matters arising from the purchase of its Banana Island Head Office (the former chairman of the board of directors, Mr. Oba Otudeko is alleging malfeasance), the company had to contend with bad press and bad blood over the restructuring of the business in the middle of 2009. The massive loss of jobs and the attendant loss of vigour and morale by the remaining employees have all but brought the company to its knees.
Perhaps, the most important cause of the loss of form at the once leading GSM company is the caliber and behaviour of its Arab management. Aside the fact that there was a glaring mismatch between the African and the “invading” Arab cultures, the Arabian messiahs took their job too seriously and treated the Nigerians with contempt and disrespect. Because they lacked the required experience to run such a massive operation, they brought in myriad of consultants who were doing their day-to-day job, and through which foreign exchange was siphoned out of the operation in the name of fees. The Commercial function was the worst hit under the clueless leadership of Shamel Hanafi and Mostafa Younes. The duo were so glaringly incompetent that Zain slid rather sharply from the second to third position.
According to sources, while Hanafi was busy traveling back and forth between his home country, Egypt, and other Middle Eastern destinations, Younes was plotting to unseat him sometimes and at other times screaming and yelling at his colleagues. His very aggressive behaviour and condescending manner of talking to Nigerian employees have earned his several monikers including “mentally unbalanced”. The other Arab topguns in the company at least pretend about their disdain for Nigerians and generally tolerate them. The tale is not any different in Networks and other areas where the Arabs bestride like a colossus.
At the moment, Zain Nigeria is not doing well. The finances are in a sorry shape. MTN and Glo have run away with the market share, and even newcomer, Etisalat is “stealing” away Zain’s customers. The banks are said to be waiting and watching to pull the plugs, if the Bharti transaction fails. We gather that most of the new products and services launched over he past year have been major disasters, and the marketing campaign are rather unimaginative. Bharti must, therefore, hasten to take full charge if the deal sails through
As the Indians take over the company, they must watch out for the Arabs and the negative vibes and legacies they are leaving behind. Of course, the Arabs MUST go, if Bharti is to succeed. Unsourced reports suggest that employees are anxiously awaiting the approval of the transaction and arrival of the new owners. The general feeling is that the new owners will break the cycle of broken promises which Zain made over the years. “As a matter of fact”, said one employee, “Zain deliberately and systematically frustrated the employees by downgrading the old staff, withdrawing several of their perks and making it difficult for them to enjoy their work”. Bharti will do itself a favour by expunging the Arabs and immediately confronting the people issues that have rendered the Nigerian company almost mirthless.
Usman contributed this piece from Kaduna.
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