Zain KSA: Winning Through Caring

Zain KSA explains its commitment to quality-centric transformation.

By Linda Xu
2015.09

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In Q3 2015, Zain KSA (Kingdom of Saudi Arabia) saw a 15 percent quarterly increase in EBITDA, totaling 441 million Saudi Arabian riyals (US$109 million), withover2.8 million new customers joining the quality 4G network in the same quarter. Hassan Kabbani, CEO of Zain KSA, recently shared his company’s transformationplanfor sustaining this impressive growth, and strengthening its market position.  

A transformation plan

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

Hassan Kabbani: Zain KSA identified three pillars of its transformation plan covering the operational, regulatory, and capital structures of the business. Wethenassigned smaller teams to identify sub-plans within each of these three pillars by investing in the development of Zain network performance and providingaqualitative customer experience. As a result of talking to consumers, analyzing the market, and assessing our strengths and weaknesses, we found thatconsumersperceive that we care more about them, which they really value. We’re not the biggest operator, but we consider ourselves to be closest to ourcustomers.Therefore, we developed our Winning Through Caring strategy, aiming for incremental, daily improvements on processes that make life easier, simplerand moreenjoyable 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 of our retail shops were uninvitingandpoorly merchandised, so we completely refreshed the look and feel of our brand, and rolled out a new shop concept across our estate.  In line with ourWinningThrough 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 deployment. Our board facedaparticularly tough decision, given the company’s very challenging financial circumstances. We needed to expand the capacity and coverage of the network tokeeppace with the ever-increasing demand that Zain was experiencing. Therefore, we launched our Reload Project, worth US$1.5 billion, to improve thecustomerexperience offered by our network. We also invested in several new innovative product offerings that leveraged our advanced 4G LTE network. Theseofferings weretailored 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 internationalstandards.Following the Communications and IT Commission’s (CITC’s) decision to reduce Saudi Arabia’s wholesale MTRs by 40 percent to 0.15 Saudi Arabian riyalsin February2015, Zain was the first operator to announce a 45 percent reduction in call charges to 0.19 Saudi Arabian riyals per min across all networks. In a fewweeks, wesaw 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 enjoyed 15 percent growth in subscribers and a 350 percent increase in data services. Saudi Arabia is one of the most digitallyconnected 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 thatour customers receive the best mobile streaming video experience, which is key to our mission statement. We have also embedded this cultural understanding ofSaudi Arabian society into the design of our packages. For example, our popular Shabab package is designed exclusively for young people, and provides them withone 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 alllocal networks and 1 GB Internet, including unlimited YouTube browsing, for 30 Saudi Arabian riyals (about US$8). It also offers a bundle of 500 call minutes on alllocal networks and 5 GB Internet, including unlimited YouTube browsing, for a rate of 110 Saudi Arabian riyals, which is 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 wellto offer greater variety and innovative technologies like Mi-Fi and Car-Fi through all our channels.  Finally, we’ve worked with ecosystem partners such as Huawei’sWakti [which means “My time”, and is a dedicated entertainment portal]. This makes it easier for our customers to acquire content such as games, music, ringbacktones, and video.

Sustaining momentum

WinWin: Saudi Arabia’s telecom market is very competitive. What’s 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 customers spending as they transition their usage from voice to data services. Consumers appreciate that the services our industry provides are essential to them; 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 connectivity provider.

WinWin: What are your expectations for Huawei, as a strategic partner, to help realize such ambitious goals?

Kabbani: We place great importance on the agility and reliability of our ecosystem partners such as Huawei. Our customers are now using our network infrastructure for social networking through OTT services from which we receive 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 achieve this type of migration. Huawei has already offered a host of leading solutions throughout its 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,  policy and charging rules function, content delivery platform, and LTE MIMO. As CEO of Zain KSA, I greatly value the collaborative nature of the relationship between Zain KSA and Huawei. 

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