Zain KSA: Winning Through Caring

By Linda Xu

In Q1 2015, Zain KSA (Kingdom of Saudi Arabia) saw a 27% quarterly increase in EBITDA, totaling SAR348 million (USD93 million), with mobile broadband (MBB) customer numbers soaring by 135% in the same quarter. Hassan Kabbani, CEO of Zain KSA, recently shared his company’s transformation plan for sustaining this impressive growth, and strengthening its market position.

A transformation plan

WinWin: With intense competition in key markets resulting in lower margins, what proactive steps have Zain KSA taken to protect its substantial investment?

Hassan Kabbani: Zain KSA identified three pillars of its transformation plan, involving the operational, regulatory and capital structures of the business. We then assigned smaller teams to identify sub-plans within each of these three pillars by investing in the development of Zain network performance and providing qualitative customer experience. As a result of talking with consumers, analyzing the market and assessing our strengths and weaknesses, we found that consumers perceived that we cared more for consumers, and what’s more consumers really valued this. We are not the biggest operator, however we consider ourselves closer to our customers. Therefore, we outlined our “Winning through Caring” strategy, aiming for the incremental improvement on a daily basis of those processes that make life easier, simpler and more enjoyable for our internal and external customers.

From the operational point of view, previously we needed to spend 12 to 18 months just fixing the basic problems. Around 250 retail shops were uninviting and poorly merchandised, so we completely refreshed the look and feel of our brand, and we rolled out a new shop concept across our estate. In line with our “Winning through Caring” strategy, we introduced more kiosks and smaller stores, breaking the common market trend of mega-flagship stores.

Although we were the first mobile operator in the MENA region to commercially launch 4G LTE services in 2011, we fell behind in our deployment. Our board faced a particularly tough decision, given the company’s very challenging financial circumstances. We needed to expand the capacity and coverage of the network to keep pace with the ever increasing demand that Zain is experiencing. Therefore, we launched our “Reload Project,” worth USD1.5 billion, to improve the customer experience offered by our network. We also invested in several new innovative product offerings that leveraged our advanced 4G LTE network. These offerings were tailored to the increasing consumer demands for mobile video and data especially amongst the Kingdom’s youth.

From the regulatory perspective, the mobile termination rate (MTR) in Saudi Arabia had not changed since 2008 and was very high by international standards. Following the Communications and IT Commission’s (CITC’s) decision to reduce Saudi Arabia’s wholesale MTRs by 40% to SAR0.15 in February 2015, Zain was the first operator to announce a 45% reduction in call charges to SAR0.19/min across all networks. In a few weeks, we saw our market share and gross profitability start to increase.

A digital kingdom

WinWin: Saudi Arabia’s digital consumption is robust. How are you coping?

Kabbani: In 2015, Zain KSA has enjoyed 15% growth in subscribers and a 350% increase in data services. Saudi Arabia is one of the most digitally connected societies in the world. There are more YouTube views per capita in Saudi Arabia each day than in any other country. We have focused on ensuring that our customers receive the best mobile streaming video experience, which is key to our mission statement. We have also embedded this cultural understanding of Saudi Arabian society into the design of our packages. For example, our popular Shabab package is designed exclusively for the youth generation and provides them with one source that meets their communication needs for a weekly or monthly fixed rate. The package will offer subscribers a weekly bundle of 100 call minutes to all local networks and 1GB Internet, including unlimited YouTube browsing, for SAR30 (about eight U.S. dollars). It also offers a bundle of 500 call minutes on all local networks and 5GB Internet, including unlimited YouTube browsing, for a rate of SAR110 usable within one month.

We also increased retail presence and our distribution network, making it easier for customers to acquire our services. We’ve redesigned our device approach as well to offer greater variety and innovative technologies (e.g. Mi-Fi, Car-Fi) through all our channels. Finally, we’ve worked with ecosystem partners [e.g. Huawei’s Wakti (Arabic for “my time”) – a dedicated entertainment portal] to make it easier for our customers to acquire content such as games, music, ringback tones and video.]

Sustaining momentum

WinWin: Saudi Arabia’s telecom market is very competitive. What is your long-term goal and overall strategy to maintain sustainable development?

Kabbani: I like to use the analogy of Zain KSA being like a “boutique hotel” that personally takes good care of its guests, rather than a factory-like experience. To remain competitive in the long term, Zain KSA needs to fully embrace the digital revolution. We are currently undergoing digital transformation, and we recognize this evolution means changing our business model. In Saudi Arabia, just like elsewhere in the world, we face the challenge of keeping the customers spending as they transition their usage from voice to data services. Consumers appreciate that the services our industry provides are essential to them and they also understand that we are not Facebook or WhatsApp, but they expect to interact with us as though we are part of the digital ecosystem, not just a provider of connectivity.

Kabbani: We place great importance and value on the agility and reliability of our ecosystem partners, such as Huawei. Our customers are now using our network infrastructure for social networking through those OTT services from which we make no direct revenues. We need to ensure that we maintain the same level of revenue as we migrate customers from paying for voice services towards paying for data connectivity services. Huawei is in a unique position to help operators successfully achieving such migration. Huawei has already offered a host of top-notch solutions throughout our access network, core network and operational side. We are also working closely with Huawei to introduce new features and solutions such as carrier aggregation, smart policy control and charging (PCC) and policy and charging rules function (PCRF), content delivery platform & LTE MIMO. As CEO of Zain KSA, I greatly value the cooperative nature of the relationship between Zain KSA and Huawei.