Zain, Essar network sharing deal is a paradigm shift for emerging market players

The deal signed between Zain Kenya and Essar Telecom Kenya is a move that indicates operators in developing markets are following the lead of those in Europe by striking agreements to produce opex and capex savings.

Zain and Essar have agreed to share 300 base stations over 15 years in Kenya.

Significantly, this move is almost certainly an indication that Zain will look to strike more infrastructure sharing deals in some of the 21 other countries in the Middle East and Africa where it operates.

And while the Kenya sharing deal is modest, reportedly covering base station running costs, it is a sign that operators in emerging markets are just beginning to look at how combining on infrastructure can save opex.
This will have major significance for all operators in the region, because, like their peers in Europe, it means that they are now beginning to shift their focus from operating networks to selling services.

This extent of this shift in mind-set is clear when it’s remembered that late August a network-sharing deal between Zain Zambia MTN broke down because of fears by the operators that they couldn’t guarantee quality – even though the country’s regulator had strongly recommended sharing to speed up rural network coverage.

Following on from the major infrastructure sharing deal struck by Vodafone and O2 last month, it wouldn’t be surprising to see two regional operators, such as Zain and MTN striking a deal to work together closely on network sharing in the markets where they both operate.

Network and infrastructure sharing has come a long way. A few years ago operators were not only focussed on operating networks; they saw the complications to agreeing the legal aspects of sharing too much of a barrier to enter into deals.

While it’s true that the economic downturn is leading operators to broker deals that may in the past have broken down, the timing of it coincides with the change in operators’ priorities. As such, Zain and Essar’s Kenya sharing deal is a sign of things to come.

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