Zain outsources East Africa to NSN

African and Middle Eastern carrier Zain streamlined its East African operations this week, with the announcement Thursday that it has awarded three network outsourcing deals to Nokia Siemens Networks (NSN).

Under the agreements, NSN will pick up a five year management contract in Kenya, Tanzania and Uganda, with an eye to optimising, modernising and managing 3,000 plus multi-vendor mobile sites catering to nine million customers. Upgrades to energy efficient technologies and off grid power solutions will be a key component of the deal.

This contract marks NSN’s biggest multi-vendor outsourcing case in the region and is also one of the first such deals of its kind in Africa. As part of the agreement, approximately 350 Zain employees will be transferred to NSN.

The move should free Zain Africa up to focus on its core business in the region, where sub par performance is weighing on the group’s profits. Earlier this month Zain reported that net profit for the nine months to the end of September fell 17 per cent year on year to KWD195.7m ($677m), although revenues for the period were up 24 per cent year on year to KWD1.78bn. Africa is causing much of the company’s financial pressure, with the intensive expansion of Zain’s network in key operations such as Nigeria, Zambia, Sudan, and Iraq, resulting in increases in fixed costs from depreciation and amortization, with the company being further burdened by increases in financing costs.

Read our recent Q&A with Chris Gabriel, CEO, Zain Africa

In late September, confusion reigned as a consortium of buyers that included Indian operators BSNL and MTNL were thought to be carrying out due diligence on Zain in a bid to acquire some or all of Zain Africa. But nothing came of the supposed interest and at the recent Africa Com 2009 event in Cape Town, South Africa, Chris Gabriel, CEO of Zain Africa repeated a number of times that “Zain Africa is not for sale. We are focused on our objective to become a top ten player by 2011 and we still have an appetite for expansion,” he said.