Tuesday, 4 September 2007

Celtel to change name in huge rebranding exercise

Celtel International is considering a major re-branding strategy that would see it drop the ‘Celtel’ brand and adopt a completely new identity — Zain. The plan is expected to create unique difficulties in Nigeria and Kenya, where the Celtel brand is still quite new, as well as across all non-Arab operations. It is part of a long-term strategy by Kuwait’s MTC Group, which owns the mobile telephone operator, to re-invent itself through the launch of a global brand. MTC, which has expanded significantly through acquisitions, is seeking to consolidate recent growth under one banner. "We have a new brand that will be launched as single global brand for all our operations," Dr Saad Al-Barrak, MTC’s deputy chairman and chief executive officer, said recently. "We will start any new operation with this new global brand."

Controversy has already erupted over the brand name chosen. Critics feel Zain, leaked in Kuwait in early August, has limited appeal to cultures outside the Arab world. A recent valuation of MTC by analysts from investment banker Morgan Stanley found that Africa accounted for 70 per cent of the company’s fair value. The new logo has also been described as too dark and moody. The re-branding process has reportedly begun in Kuwait and is expected to spread to other MTC-branded operations in the Middle East. Change will come to Africa and its Celtel-branded operations from 2008. The new changes come shortly after a regional marketing blitz to announce the expansion of Celtel’s borderless mobile network to include the Republic of Congo, Gabon and Democratic Republic of Congo. The service was previously limited to Kenya, Uganda and Tanzania. The decision to re-brand will create a costly marketing and logistical challenge for the Kenya and Nigeria operations, given that the two only recently re-branded to Celtel from KenCell and V-Mobile respectively. Before that V-Mobile was known as Econet Wireless. Analysts believe the rebranding exercise will cause huge marketing problems for Celtel in Nigeria.

The change from KenCell, which began in 2004, is yet to be completed by Celtel Kenya: Many of their telephone booths — admittedly an atrophied part of the business — is still branded KenCell. Nigeria’s switch from VMobile, which began last year, will also have to be scrapped. Speaking during the Second Annual Connecting Rural Communities Africa Forum in Nairobi, Mwaghazi Mwachofi, Celtel International Vice-President for Regulatory Affairs, confirmed that discussions on rebranding were in progress. "Nothing has been decided as yet, nothing concrete," Mwachofi said when pressed on the matter. "The Celtel brand is strong and powerful and re-branding is huge task." MTC Kuwait is also expected to form a new subsidiary, MTC International, as a private company to hold all the MTC Group’s foreign assets and operations. A newspaper report on the plan several weeks ago saw the Kuwait Stock Exchange halt trading in MTC shares pending clarification of the issues raised.
A local Arabic-language daily had reported that MTC was going to form an entity with $1.73 billion (Sh116 billion) in capital as an umbrella company under which MTC Kuwait and MTC International, called Zain, would operate. The paper had also said the international unit would sell a stake — possibly 40 per cent or more — in an initial public offering on the London Stock Exchange next year. The re-branding confirms MTC’s ambitions to become one of the biggest mobile operators in the world.

According Al-Barrak, the company was looking for a global brand that would work from China to Gabon, in Rio-de-Janeiro and Madras, in Moscow and Iceland. Currently, MTC is looking to fill gaps in sub-Saharan Africa — for example Angola Ethiopia and Senegal — and eyeing Saudi Arabia’s third licence. The company is also making noises about moving its headquarters because of Kuwait’s investor-unfriendly laws. "The Kuwaiti business environment repels investment and the country’s laws are not good for a financial hub," Al-Barrak was recently quoted as saying. Kuwait has been dragging its feet on reforms to create a more transparent stock exchange.
Another Kuwaiti law imposes a 55 per cent tax on foreign investors. MTC, Kuwait’s largest publicly traded company, said last week that it could move to Dubai or Bahrain, the Gulf’s financial centres, or to Amsterdam, headquarters of its subsidiary Celtel. The firm operates in Bahrain in partnership with Britain’s Vodafone Group and acquired Netherlands-based Celtel in 2005. It has no presence in Dubai. "MTC is today thinking on the global scale... especially since Kuwait accounts for only 15 per cent of its revenue, (a figure that) will fall below seven per cent in the next two years." Incorporated in 1983 in Kuwait, MTC now has a presence in 20 countries.

The Group is a leading mobile operator in six Middle Eastern and 14 sub-Saharan African countries providing a comprehensive range of mobile voice and data services to over 29.7 million active individual and business customers. It operates in Kuwait and Bahrain as MTCVodafone, in Jordan as Fastlink, in Iraq as MTC-Atheer, in Lebanon as MTC-Touch and in Sudan as Mobitel. It also has 14 operations in sub-Saharan Africa as Celtel. These are Burkina Faso , Chad , Democratic Republic of the Congo , Republic of the Congo , Gabon , Kenya , Malawi , Madagascar , Niger , Nigeria , Sierra Leone , Tanzania , Uganda and Zambia . The company has also won Saudi Arabia’s third mobile license and is expected to roll-out a network soon. The change of identity is part of MTC’s plan to re-brand its operations across all networks in line with their "three by three by three (3x3x3)" strategy."In the first three years we wanted to be a regional company and we are already beyond that," Al-Barrak explains. "In the second three years, we wanted to be an international company, expanding beyond the Middle East and Africa, to Asia and other parts of the world. In the final stage, we would aspire to be a global company, in the big league. This is our dream." Since it embarked on going regional in January 2003, MTC has entered 19 new countries. By geographical area covered, MTC is now the fourth largest telecommunication company worldwide.
Early this year, MTC launched a programme dubbed ACE (accelerate, consolidate and expand) to help it realise the target of the 3x3x3 vision. The programme seeks to extract superior value from existing assets through acceleration of growth, consolidation of operations and further expansion of the business. Based on organic growth through ACE, MTC Group aims to serve 70 million subscribers across all the markets it operates by 2011, attain a $6 billion EBITDA (Earnings before interest, taxation, depreciation and amortisation), and emerge among the top in mobile operations in the world.

Sourced from Nigeria 2Day on Tuesday September 4, 2007

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