Today, I applaud ZAIN and its board for offloading the African beast, and finally delivering value to their shareholders, and in unison pity Dr. Saad for his shattered island of dreams.
Under the management of the vigorous Dr. Saad the company launched its expansion plans, aggressively targeting to achieve a prestigious global position. The company rebranded itself with a new theme- A wonderful world. However, this theme fell short from expectations as its no longer wonderful for Zain, nor its stakeholders. Throughout the journey, Zain’s shareholders were always inline and ready to inject money to support its future expansions plans. Through two market offerings, Zain was able to secure $6.79 billon ($2.3bln in November 2005 and $4.49bln in September 2008). Thus, with the successful completion of its capital increase came shareholder dilution.
In 2009, Zain’s net income fell 39% to 195 million dinars, or 51 fils a share, from 322 million dinars a year earlier. Out of its 72.5 million active customers, Zain has lost or “sold” 41.9 million for a $3.3 billion profit that it plans to distribute to its shareholders. According to Mr. Asaad Al Banwan “While the profits from the sale of Zain Africa will be used in support of dividends for the coming financial years, which are expected to not be less than the cash distributions for the current year.” It plans to distribute a special cash dividend of 170 fils for 2009. I certainly don’t agree and think that its extremely vital that it keeps an extra cushion of cash at such uncomfortable times, as the company is dry on cash and without a clear outlook. Going forward, Zain will no longer be competing in 24 countries. It will be focusing on the remaining highly penetrated markets it competes in and try to survive as long as possible.
On a side note, I wish Mr. Asaad would use some of the profits from the sale of Zain Africa into the restructuring of all of Zain’s customer service departments and try to retain whatever customers they have left.
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Loading ...Tags: Bharti, Bharti Airtel, Zain, Zain Africa, Zain sale
Great title
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Well said Sal, your conclusion for Zain (Title) is on the dot.
Am afraid it was a ‘zain deal’ but not a ‘zain future’ !
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Sal Reply:
April 5th, 2010 at 11:59 am
I concur, and Al Kharafi are still looking for a buyer! Zain was the only good thing about Kuwait, and it no longer is. Just like politicans are draining Kuwaits cash surplus, blocking infrastructure projects and investments and throwing cash at voter to please them. Zain is throwing cash at the shareholders to temporarily satisfy their hunger.
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Alkhorafi is the worst thing that happened to corporate culture in kuwait
you seriously think that Assa`d AlBanwan would care for the future of this company? He is the Chairman just because he married Don Nasser Al Khorafi’s daughter
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Sal Reply:
April 5th, 2010 at 12:56 pm
Not only Al Kharafi is to blame, because no one can resist dividends in Kuwait.
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@sal: the desire for dividends is very natural for a no- growth country like ours.
This is not the Issue, however!
I was talking mixing curroption, politics, and business to achieve what they have achieved.
I thought it was obvious!
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