Wednesday, July 8, 2009

Zain Africa Sale Could Pose A Rebranding Challenge

Europe's largest entertainment group, Vivendi of France, has reportedly won the race for Zain Africa with a reported bid of $12 billion, according to a Ugandan daily. The Daily Monitor reports that "although officials at both companies and their transaction handlers declined to confirm the deal, sources familiar with the transaction said it had been recently completed, clearing the way for a new owner for the local operation".
Zain operates in 22 countries with over 15,000 employees providing a range of mobile, voice and data services to over 63.5 million active individuals and business customers by end-year 2008.  Its area of operations include the six countries in the Middle East: Bahrain, Iraq, Jordan, Kuwait, Saudi Arabia, and Lebanon (as MTC touch), and in 16 countries in Africa: Burkina Faso, Chad, Democratic Republic of the Congo, Republic of the Congo, Gabon, Ghana, Kenya, Madagascar, Malawi, Niger, Nigeria, Sierra Leone, Sudan, Tanzania, Uganda and Zambia. It has 40 million subscribers on the African continent, with the Nigeria network, which has 15 million subscribers, contributing the most
But its African operations contributed only 10 percent of profit, last year, though with 65 percent of its customers. The company in Nigeria recently trimmed its workforce significantly, apparently in preparation for the sale.
The African operators were re-branded from Celtel to Zain less than twelve months ago.  Media experts expect a change of name, which they said will necessitate a re-branding exercise, which for the Nigerian network alone could cost as much as N1 billion. If this happens, they said, the company will become an international reference point in corporate re-branding. Zain Nigeria has in the past seven years been owned by different operators and had changed names severally.
It had transformed from Econet Wireless Nigeria to Vodacom, then to V-mobile, again to Celtel and to its current name, Zain. Experts said that in the course of such a re-branding exercise, a company would have to pull down all its visual communications including ID cards, letterheads, internet website, out door advertising, colour scheme shops, recharge cards and more.
A number of its other African subsidiaries, including Kenya and Ghana,  were established through acquisitions of existing operators.  According to Akin Adeoya, managing director/CEO of Marketing Mix, a media and branding communication firm based in Lagos, "If they are going to have a re-branding which will encompass a change of name, it will be a case study internationally. One would not have thought it would have survived so many changes… almost on a yearly basis.
"It will go to prove that if the business proposition works, the branding challenge will also work. The brand already represents a multiplicity of contrasting images to the customer. Some people still call it Econet, some call it Celtel.
"The brand is challenged. There is need for some level of stability. My own advice, if possible will be for the owners to retain the brand name, rather than change it immediately".
Charles Otudor, managing director of Adstrat Consult, a brand and marketing consulting company, noted that "the constant change in corporate identity of Zain creates top-of-the-mind brand identity crisis and distortion. It is critical for brands to retain consistency in feel, look, and language. Also of critical importance is the brand behaviour.
"Most consumers purchase or invest in brands based on the perceived brand promise. Consistency remains a key component of that purchase and it is mostly a result of trust. That trust can only be achieved via consistency. Besides the perception issue, there is also the economic cost of the new brand implementation. Most brand identity implementations always cost a premium."
"Coming on the heels of the global financial meltdown, when most organisations are scaling down costs, this identity change is worrisome, but I guess the board has a reason", he said.

Perhaps, Zain Nigeria's ability to hold on to its subscribers through the identity changes has not been by happenstance. A source noted that "Zain, since it started eight years ago as Econet Wireless has managed to engage its publics positively and win their loyalty even through a handful of re-branding exercises.

"It has maintained admirable quality of service over the years and during the inception of GSM services in Nigeria, Zain, then Econet, had the lowest denomination of airtime recharge cards and this endeared it to its publics who could recharge their phones for a token. Also, the company has proved itself to be a socially responsible and responsive corporate citizen."
Continuing, the source said, "It is further said that through its re-branding exercises, Zain has challenged and enriched the media and branding sector in the country and created media crisis and branding experts of its own."

1 comment:

Anonymous said...

How credible are the sources of this story as no official from either Zain of Vivendi have confirmed any of this?