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.END
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