MOVING TOWARDS DIGITIZATION REGIONAL MARKET DYNAMICS
At the end of 2018 there were 656 million active mobile connections across the Middle East and North Africa (MENA), representing a penetration of 107% and a year-on-year (YoY) growth rate of 1.5%. Despite the growth in mobile connections, revenue declined by 0.6% due to the intense competition as well as the challenging political and economic conditions faced by operators.
With the stabilization of macroenvironmental factors, total connections in the MENA region are expected to grow above the global average at a compound annual growth rate (CAGR) of 2.9% between 2018-2025. Revenue is likely to grow at a CAGR of 2.1% during this period as more countries roll out or expand their 4G networks and as mobile operators continue to monetize data traffic by expanding their portfolios into digital and enterprise solutions.1
Given the lack of wide coverage of fixed broadband infrastructure, mobile broadband has played a pivotal role in regional development. At the end of 2018, mobile broadband connections recorded a YoY growth rate of 12%, accounting for 59% of the total connections in the region. Looking forward, with greater adoption of 4G and 5G, mobile broadband is forecast to grow at a CAGR of 8% between 2018-2025, accounting for 90% of the total mobile connections by 2025. According to the MENA Telecom Forecasts published by Analysys Mason in July 2018, the growth in data connectivity for fixed and mobile broadband will fuel the growth in telecom revenues over the coming years, as will demand for enterprise solutions.
1 Connections and penetration data from GSMA
KEY TRENDS IN MENA REGION
5G
2018 saw several 5G trials across the region, particularly in the Gulf Cooperation Council (GCC). Beyond the trials and commercial launches, mass deployment and service uptake will rely on spectrum availability and maturity of consumer and enterprise use cases in the region.
Internet of Things (IoT)
The number of IoT connections across the MENA region is forecast to triple by 2025, reaching 1.1 billion and a market value of USD 55 billion. Currently, the consumer and industrial IoT segments have equal share of total IoT connections, but industrial IoT is where most of the growth is forecast to take place due to an increase in smart utilities, smart retail and smart city deployments.
Digital Ecosystem
The MENA region has experienced rapid uptake of digital trade, driven by growth in mass connectivity and mobile device penetration. Operators in the region have already started to transform their operations digitally and provide digital services through partnerships and joint ventures.
Fixed Broadband
Fixed broadband penetration is forecast to continue growing in the MENA region, supported by national broadband plans and competition. Such programs offer service providers opportunities to grow their revenues in mature markets where the demand for high-speed data is growing exponentially.
ZAIN’S JOURNEY TO BECOMING A DIGITAL SERVICE PROVIDER
Zain is one of the leading telecom companies in the region working towards becoming a full-service provider of digital offerings to consumers and businesses. In the last few years, Zain’s strategy has centered on digital transformation, seeking growth in enterprise solutions, and expanding beyond standard telecom services to diversify revenues and create value.
ONGOING TRANSFORMATION
Zain has been carrying out various initiatives to reinvent, transform and enable the core digitally; optimize operations and re-engineer customer experience. Zain’s digital transformation can be summarized in the following themes:
Digital First: Zain operations have been diligently working on redefining and modernizing customer experience by introducing new digital channels for customer service. Examples of this include the new and improved mobile app in Kuwait, Saudi Arabia, Bahrain and Jordan. Zain Kuwait and Zain Bahrain further launched zBot, the all-interactive and smart chat-based customer care solution. There are ongoing efforts to enhance and expand digital service channels as well as revamp omnicare channels (app and website) to produce a consistent feel and functionality as traditional channels. These efforts are coupled with back-end internal transformation of systems and automation and processes. From a sales standpoint, Zain is building its network of digital e-stores in different markets in addition to introducing flagship shops that provide a truly digital and interactive experience to customers. This is the case with the recently inaugurated Zain Kuwait store at the Avenues Mall, a showpiece for visitors. This transformation journey will enable Zain operations to grow awareness and appeal of new channels by ensuring full availability of products and services on digital channels.
Optimization and Simplification: As a foundation to achieving a truly digital customer experience, Zain operations are embarking on a journey of simplification. The journey starts with simplifying customer-facing tariffs and product portfolios, making the selection and purchase process for customers easier. Simplification in the back-end requires revamping processes by streamlining network and IT infrastructure (virtualization, NFV, SDN and SON, OSS/BSS transformation).
Monetization of Passive Infrastructure: Zain Group has been exploring and applying various optimization options in network investment including network sharing and smart CAPEX. Following an agreement with IHS in October 2017 to sell the towers of the operation in Kuwait, Zain Saudi Arabia agreed to an offer to sell and lease back 8,100 towers to IHS Holdings for approximately USD 648 million. This divestment creates shareholder value as it reduces debt obligations, and unlocks capital and resources, allowing for greater focus on core operations and customer service. Moreover, the agreement will help expedite the deployment of additional sites in the Kingdom.
Analytics & Artificial Intelligence (AI): Zain is building an ecosystem of decision-making that is based on analytics and AI. Expanding on the existing customer value management (CVM) machine deployed in all Zain operations, customer data is used to implement proactive and predictive analytic-based CVM. AI is used to provide enhanced customer experience and innetwork optimization, and Zain is exploring opportunities for customer data monetization of third-parties in areas such as digital advertising (in Saudi Arabia and Jordan) and credit scoring in fintech services with Zain Cash in Iraq and Jordan.
DIVERSIFYING REVENUES
In order to fulfil its vision of becoming a comprehensive provider of digital services, Zain brings the latest content and solutions to our customers. The company continues to integrate and expand several platforms such as its API platform, Zain Cash and smart homes (Zain Life), with additional functionality. As part of our commitment to contributing to the welfare and development of the societies in which we operate, Zain has also introduced a new suite of micro-insurance and e-health services. Recent achievements include:
Expanding our Broadband Network : Zain is providing customers with the best and latest broadband connectivity. In Saudi Arabia, Jordan, and soon in Bahrain, Zain offers fiber-to-the-home (FTTH) services, whether by deploying our own fiber network or by securing access to national or third-party assets. With fiber connectivity, customers can enjoy dedicated broadband access featuring very high throughput speeds and excellent quality of service. Zain Kuwait launched BEAM, a pioneering high-speed wireless Internet service that uses advanced wireless broadband technology. Zain is the first telecom company to offer this revolutionary technology in Kuwait, which provides high-speed Internet with performance that matches fiber optics speeds, in a move forward towards 5G network adoption.
Zain Cash : This platform currently offered in Iraq and Jordan offers users a secure and convenient means to conduct financial transactions and process monthly payments. Customers can use their mobiles to pay bills, transfer money locally, top-up mobile accounts, and buy prepaid Internet and voice bundles conveniently.
- Money Transfer: Using Zain Cash Money Transfer services, customers can send and receive money to and from other individuals via their mobile phones in a highly efficient and secure manner.
- Cash In and Cash Out: Customers can deposit or withdraw money from their mobile wallets as they require at a Zain Cash agent.
- Recharge Zain Postpaid and Prepaid Lines: Using the Zain Cash service, customers can recharge Zain prepaid and postpaid lines anytime and anywhere directly over their mobiles. This alternative means of recharge is unique in the industry.
- Online Payments: Customers can shop online from leading e-Commerce websites and enjoy a one-click checkout experience with Pay with Zain Cash.
- Buy E-Cards: Now, Zain Cash holders can instantly buy and receive e-cards through “Zain Cash App” and enjoy online shopping with their favorite stores.
Digital content : Zain is one of the first operator groups in the Middle East to launch an open API at Group-level in order to connect multiple digital service and content providers to our operations leveraging on the scale and footprint of Zain. DoCoMo Digital with its large and popular gaming portfolio was launched in Kuwait and Saudi Arabia with more partners set to join during 2019. This platform allows Zain to differentiate itself as a digital service provider by offering the latest gaming services to its customers. With regards to digital entertainment, Zain Kuwait is the first telecom operator in the Middle East to provide Amazon Prime Video content to its customers, having also made Bein Connect available for customers watching World Cup matches in 2018 as well as offering Anghami subscriptions for streaming and downloading music.
Zain Life :Zain Kuwait launched the Zain Life platform, which enables customers to enjoy a smarter life by staying connected. Zain Life allows our customers to enjoy a smart home by providing various smart solutions that include home security devices, home control, and automation solutions. Additionally, Zain Life enables customers to enjoy a healthy lifestyle by providing wearables and health and fitness products. Additionally, it enables a smart and efficient business sector empowering the New Kuwait 2035 Vision.
NXN : Zain’s strategic investment in the UAE-based smart city consulting and digital services provider is reaping rewards on multiple fronts as NXN grows and partners with governments and businesses to enable and accelerate the digital transformation of cities and enterprises. Providing custom-built digital services for example through its award-winning DNX platform, NXN enables digital transformation across various industries. DNX is an open digital platform enabling all individual services to run in a cohesive environment. It draws synergies across applications, fusing data and analysis to provide a 360-degree platform view for digital service development, management, and operations. It integrates with existing systems, capitalizing on cloud infrastructure, data orchestration, IoT, and advanced technologies such as AI and Blockchain. The technology has been architecturally orchestrated and integrated in a way that allows NXN to provide organizations with dashboards and data analytics that add value to decision-making processes.
Enabling start-ups in the region : ZINC Kuwait was launched to connect Zain to the start-up ecosystem in Kuwait. Zain established a partnership with a local incubator (Erada) along with the Kuwait National Fund for SMEs, delivering two training programs in 2018. touch Innovation Program was launched in Lebanon in association with Arabnet and Antwork. The program sees touch support the growth of the local startup ecosystem in Lebanon. ZINC Jordan’s success story grows with every passing year, as does our partnership with regional and international venture capital funds such as MEVP, WAMDA, Earlybird and Colle Capital that allows Zain to keep an eye on new startup opportunities.
Zain is strategically committed to enabling entrepreneurs across the region, and we are constantly looking for the right opportunities to invest in or partner with.
The company is also keen to provide opportunities and exploit its talented workforce. Zain launched an internal employee innovation program to foster creativity through a program titled Zainiac. Hundreds of applications were received, and several ideas have been provided financial backing by Zain, with two teams from our operations expected to commercially launch in the first half of 2019.
