The following summary reviews current state and strategy of the seven major telecommunication operators from the DS100 list of Top 100 Companies in the OIC (Organziation of Islamic Conference) markets: Zain , Saudi Telecom , Etisalat , Orascom , Maxis ,Turk cell, and Telkom Indonesia.
Zain has successfully completed its capital increase that will provide the company with the liquidity necessary to continue its expansion strategy. Etisalat, which this year has received positive ratings from Moody's, Standard & Poor's and Fitch, and new expansions in Iran and India is expected to continue its strong position onto international expansion. Saudi Telecom is expecting that the mobile markets in Turkey and South Africa will be witnessing huge growth where it operates and the company is seeking more international partners in line with its new FORWARD strategy. Orascom is also expanding its operations in North Korea this year in a bold move. Maxis, is seeing growth in its 3G users and is expanding its services in India. Turk Cell, with its strong cash flow, is positioned for the new era with Mobile Number Portability (MNP) and 3G license. Telkom Indonesia is seeking loans for its future expansions in 2009.
All in all, the underlying theme to be found is that there are expansion plans for all seven in Asia and Africa.
Zain
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Zain is already considered
the 4th largest mobile network in the world,
being available in 22 countries in the Middle
East and Africa. It has further ambitious
expansion plans.
Zain invested heavily in both
licence acquisitions and network upgrades
in two continents to meet targets of 150 million
customers by 2011 and USD 6 billion EBITDA
(Earnings before interest, taxes, depreciation
and amortization). As of September 2008, the
company is providing mobile voice and data
services to 56.3 million active customers.
In 2008, the company achieved major successes,
highlighted by the launch of services in the
Kingdom of Saudi Arabia, the rebranding of
African operations and the 'One Network' expanded
to link two continents. On September 20, 2008
Zain announced the successful completion of
its capital increase raising USD 4.5 billion
(KWD1.2 billion), with 99% of all shareholders
subscribing. |
Q3-2008
Key Performance Indicators |
| Total Managed Active Customers |
56.3 million |
| Consolidated Revenues |
US$ 1.887 billion |
| EBITDA |
US$ 763.6 million |
| Net Income |
US$
326.6 million |
| EPS |
US$
0.09 |
|
As of October, third quarter
(Q3) of 2008 results showed significant growth
in revenues, and net profits.
According to Zain's website, Dr. Saad Al-Barrak, Zain's Chief Executive Officer said: "Despite financial turmoil across the globe, we are delighted to have succeeded in raising USD 4.5 billion through our capital increase. Additionally the launch of services in the Kingdom of Saudi Arabia has been very successful given we have acquired one million customers in less than two months notwithstanding the fierce competition in that market."
One of the major announced projects is the 'One Network' service, linking two continents that play a pivotal role in customer acquisition. This service connects two continents, abolishing high roaming rates. On August 1, with the launch of the Zain brand across the African continent, Zain extended the 'One Network' service to connect Africa and the Middle East offering up to 500 million people favorable rates for cross-border communications. Zain plans to roll-out One Network in all its operations, subject to regulatory approvals.
According to the Annual Report, the Kuwait operation continues to contribute considerably to net profit. Meanwhile, the integration of the acquired Iraqna operation in Iraq has been successfully completed and the rewards are expected in near future.
On Africa, Dr Al Barrak noted "Our Nigerian operation is witnessing exponential customer growth based on the heavy investment in network upgrades and expansion. In East Africa, our Madagascar, Tanzania and Uganda operations focus on customer acquisition is paying off, all three recording impressive results. We expect our revamped Kenyan operation to follow suit as the new management team is now totally geared to the challenges ahead with concerted Zain Group support on all fronts. Our Ghana operation will commence mobile services by the end of 2008."
STC is the leading national provider of telecommunication services in the Kingdom of Saudi Arabia KSA, and in the last two years, STC has expanded its local borders to the international markets, in a number of GCC countries and Asia and Africa. The company has subsidiaries in Kuwait, India, Indonesia, Malaysia, Turkey and South Africa. STC is seeking more international presence in accordance with its FORWARD Strategy.
In the last year, STC has won 3 awards: the King Abdul Aziz Quality Award, granted by Saudi Arabian Standards & Specifications Organization (SASO), the Transparency Award for Saudi Stock Companies, granted by BMG Financial Consultations Firm and the Best Telecommunications Company Award, granted by Arabian Business Magazine.
Saudi Telecom (STC) reported that their second-quarter 2008 net profit beat forecasts to rise 24 percent, on higher income from foreign ventures as well as domestic mobile and broadband services.
STC, the second-largest Arab telecom provider by market value, made a net profit of 3.84 billion riyals (USD 1.02 billion) in three months to June 30, compared to 3.1 billion riyals in the same period a year earlier, it said in a statement on the Saudi bourse website.
The company began consolidating the Turkish and South African businesses acquired for $2.56 billion this year through a 35 percent stake in Oger Telecom. According to the Maktoob business website, Saudi Telecom Company (STC) and Oger Telecom signed the final agreement for the purchase of a 35% interest in Oger Telecom for a net price of USD 2.56 billion in November 2008. Following this latest investment, STC will nearly double its reach to over 70 million subscribers in Saudi Arabia, Turkey, South Africa, India, Malaysia, Indonesia and Kuwait.
Etisalat stands 140th among the Financial Times Top 500 Corporations in the world in terms of market capitalization, and is ranked by The Middle East magazine as the 6th largest company in the Middle East in terms of capitalization and revenues. As growth in new customers at home slows, Etisalat has been moving into new markets to diversify its revenue sources.
In the third quarter of 2008, Etisalat has announced many new products, services and initiative, which include:
- An agreement with BT and Khalifa University for Science, Technology and Research to establish the Etisalat-BT Innovation Lab in Abu Dhabi.
- The launch of BlackBerry Bold - Etisalat is the first operator in the Middle East to introduce the productivity tool; and the launch of a special BlackBerry applications portal
- Launch of global interconnect and voice trading platform named E-Globe Interconnect from Etisalat Carrier & Wholesale services
- Launch of 3.5G wireless USB modem, the E170
- Etisalat received inaugural ratings from Moody's (Aa2), Standard & Poor's (A+) and Fitch Ratings (AA-)
- Launch of E-Support software to support home Internet users with answers to common problems
- Etisalat announced its acquisition of 45% of "Swan Telecom" for USD 900 million, which will provide services in India.
According to the itp publication, Etisalat Chairman H.E. Mohammed Hassan Omran said in a statement, "Our acquisition in India has opened yet another key market, which will help power Etisalat's growth. We are also delighted to have received our first ratings from Moody's, Standard & Poor's and Fitch Ratings - which places us in a very strong position to continue our international expansion."
Etisalat posted a 19 % rise in third-quarter 2008 profit (ending September 30 of 2.1 billion dirhams/USD 571.7 million), meeting analysts' forecasts, as it added more users in a saturated home market and expanded abroad.
Etisalat posted profit in the three months ending September 30 2008 of 2.1 billion dirhams (USD 571.7 million), it said in a statement. The earnings were supported by a 23.8% rise in revenues in the quarter to 6.6 billion dirhams (USD 1.8 billion)..
According to NetworkWorld, Etisalat launched a GSM service in Nigeria in March 2008. The Nigerian market is crucial for Etisalat, which plans to become a global brand by 2010. It already has an 82 percent stake in Atlantique Telecom -- based in Côte d'Ivoire, with mobile networks in Benin, Burkina Faso, Central African Republic, Gabon, Niger and Togo -- and a subscriber base of 2.9 million at the end of 2007. The company operates in the Economic Community of West Africa States (ECOWAS) under the brand name "Moov".
In Dec 2008, France Telecom and UAE telecoms operator Etisalat had signed a deal to cooperate on digital home services. Under the agreement Etisalat will acquire a 16.6 percent stake in SoftAtHome, a joint venture launched by Thomson SA, Safran unit Sagem and France Telecom to develop software for triple-play services.
Orascom has GSM operations in seven emerging markets in the Middle East, Africa and South Asia. Orascom Telecom operates GSM networks in: Pakistan ("Mobilink"), Egypt ("MobiNil"), Tunisia ("Tunisiana"), Iraq ("IraQna"), Bangladesh ("Banglalink"), Zimbabwe ("Telecel Zimbabwe"), and Algeria ("Djezzy") ( Liquidated in November 2008)
Orascom Telecom suffered a 4 % drop in net profits in the first half of 2008, as seen in its latest financial results. Orascom Telecom has posted a nine months net profit of USD 345.3 million, or 37 cents per share, down from USD 1.3 billion or USD 1.56 per share in the year-ago period according to Greenwhite.org
Mobilink (in Pakistan) suffered one of the major drops as it earned USD 378.9 million in consolidated EBITDA, a drop of 5% from USD 398.3 million in the year-ago quarter.
Wireless Federation has stated that Orascom Telecom will sell OrasInvest for USD 180 million (Egypt) in November 2008. Orascom Telecom has given consent to vend its service company OrasInvest to Abu Dhabi Investment for USD 180 million. Chairman of Orascom Telecom, Naguib Sawiris, said, "The sale of OrasInvest, which was decided in early 2008, will also result in a significant profit for the company and in significant value creation for our shareholders."
During the same month, Telecom Egypt and Orascom Telecom have decided to liquidate the Algerian venture Lacom . Telecom Egypt and Orascom Telecom agree to liquidate their Algerian joint venture, 50% owned by both. Both the operators have been complaining about the state owned Algerie Telecom is getting greater preference in comparison to their venture Lacom, so now they both plan to exit the Algerie mobile market.
Most interestingly, Orascom Telecom was granted the first commercial license to provide national mobile services in North Korea using W-CDMA technology at the end of January 2008. The company said that the license was granted to its subsidiary CHEO Technology JV Company, which is controlled by Orascom Telecom with a 75% ownership, the remaining 25% being owned by the state-owned Korea Post and Telecommunications Corp. The duration of the license is 25 years with an exclusivity period of 4 years. Orascom Telecom will invest up to USD 400 million in network infrastructure and a license fee over the first three years to deploy rapidly a high-quality network and offer voice, data, and value-added services at accessible prices.
Maxis started its operation in 1995 in Malaysia and has 11 million customers today. According to the Wireless Federation, Maxis Mobile is aiming to reach the target of two million 3G subscribers, having achieved the figure of 1.3 million by the end of March 2008. Maxis chief executive, Sandip Das said: "As 3G services are increasingly being offered globally, we hope to see the prices of 3G handset devices falling. With that, we hope we will be able to cross the two million mark very shortly. Most of Malaysians buying new phones now are buying 3G-enabled phones, and that gives us a very big opportunity."
In June 2008, Maxis won the award for Mobile Operator of the Year in Malaysia at the Asian Mobile News Awards 2008.
Maxis results for the third quarter ending in September 30 2008, show a rise of 51% to USD 603.8 million in net profit. This was driven by a revenue increase of 19.3% to US$2,055.9 million compared to Q3 2007 (US$1,722.8 million).
In May of 2008, Maxis had said it would spend €2.5 billion (USD 4 billion)-€3.1 billion (USD 5 billion) in India by 2009/10 to expand its network. Unlisted Aircel has nearly 11 million subscribers in India.
In July of 2008, Maxis invested RM 30 million (USD 8.5 million) in Sabah -located in Malaysia -via improved network coverage, customer service and affordable communications. The company launched 'Maxis Hotlink Coverage campaign,' which encompasses 3 key initiatives to advance service quality. As part of its plan to provide more convenience to its customers, Maxis will be reaching out to outer urban and rural areas with 20 Hotlink vans so that customers have easy access to Maxis products and services.
As of March 31, 2008, with its 35.1 million subscribers, Turk cell became the third biggest GSM operator in Europe in terms of subscriber numbers. Turkcell's founding shareholders are Sonera Holding, formerly known as Telecom Finland Ltd. and currently owned by TeliaSonera, Çukurova Group and MV Holding.
According to Boston news, in November 2008, Turkcell won a tender for the country's third generation mobile phone license. Turk cell offered $ 462 million for an A-Type 3G mobile phone license, the highest bandwidth from a total of four that were auctioned. The company outbid rivals Vodafone and Avea.
A published statement of Koray Ozturkler, Turkish Operator Chief Corporate Affairs Officer, states that the company can finance mergers and acquisitions where Turkcell is well placed if there is a consumer slowdown." Company has been active in the Central Asian markets and will import the Life brand from Ukraine, where it has had great success. The Company sees earnings per capita higher in Belarus than in Ukraine, and has identified it as a key market as well.
Telkom, valued at USD 18.7 billion, is considered Indonesia's largest listed company. According to the Wireless Federation, Indonesia's mobile market has grown rapidly with the number of subscribers heading for 120 million in 2008, up from 90 million in early 2008, - having grown by nearly 40% in 2007. There is vast opportunity for market expansion in Indonesia when compared with some of its Asian neighbors.
However, for strong growth to continue, the sector must take advantage of the government's regulatory changes and find ways of attracting more foreign capital into the market place. At the same time, increasing competition among operators and the entrance of new rivals is expected to push margins down.
According to Reuters in November 2008, Telkom Indonesia hedged 24.8 % of its foreign debt in a bid to limit its exchange rate exposure. As of Sept. 30, the firm's foreign debt stood at 28 percent of 17.94 trillion rupiah (USD 1.46 billion) total debt, the company said.
For the Q3 2008, July-September its net profit fell to 2.62 trillion rupiah (USD 246 million) from 3.19 trillion rupiah a year ago, according to Reuters' calculations based upon first-half results. Also, their third-quarter revenue fell 4.75 % to 14.4 trillion rupiah, based on Reuters' calculations.
According the Wireless Federation website, in November 2008, Telekomunikasi Indonesia (Telkom) looked for loans worth USD 756 million from local financial institutions for its expansion plans in 2009.
An example is Telkom's plan to acquire a stake in Iran's Telecommunication Company of Iran (TCI). 5% of TCI was sold by the government through an IPO and intends to sell stakes further to an overseas operator. "Telkom is ready to become its strategic partner. It is not yet certain how many shares we will acquire but if they (Iran) are willing to release up to 20% it is not impossible for us to participate," says Telkom's chief commissioner, Tanri Abeng. Telkom plans to buy stakes through its subsidiary PT Telkom Internasional Indonesia TII. 'The establishment of TII is part of the company's strategy to go international to increase its non-organic income growth,' Tanri says.
Global Outlook & Conclusion
According to analyst Informa Telecoms & Media, from the end of 2007 to the end of 2013, the global mobile market will see huge growth, increasing in size by over half (56 per cent.) "Reductions in voice tariffs, the option of very low-denomination prepaid top-ups and the greater availability of cheap 2G and 2.5G handsets will open out mobile services to low-income, low-ARPU (Average Revenue Per user) subscribers who have never previously owned a mobile phone," said Chris Stamatakis, research analyst at Informa.
Informa forecasts more than 78 per cent of global net additions between 2007 and 2013 will come from markets in Asia Pacific, Africa and Latin America, which will drive organic growth over the next five years. And nearly half of the forecast 1.9 billion global net subscriber additions will come from just five markets - India, China, Indonesia, Brazil and Russia.
Indeed, Zain, Saudi Telecom, Etisalat, Orascom , Maxis ,Turk cell, and Telkom Indonesia are all poised to emerge as truly global brands given continued global demand and their presence in the fastest growing markets in the world.
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