And the name Changing Continues.
India’s largest telco Bharti Airtel yesterday said it has tied up $8.3 billion from a clutch of foreign banks and State Bank of India (SBI) to fund the acquisition of Zain telecom’s African assets, for which both the companies are in exclusive talks till March 25.
“Bharti Airtel is pleased to announce that the entire financing requirement of $8.3 billion for the proposed acquisition of Zain’s African unit (Zain Africa BV) has been successfully tied up,” the company said in a statement. ”Financing was oversubscribed, with major international banks committing to underwrite the total amount,” the statement added.
Bharti’s lead-arranger and lead-advisor Standard Chartered Bank has committed the highest amount at $1.3 billion followed by $0.9 billion by Barclays, sources close to the development said, adding both have more capacity to underwrite, if required.
Zain operates in 16 countries in Africa: Burkina Faso, Chad, Democratic Republic of the Congo, Republic of the Congo, Gabon, Ghana, Kenya, Madagascar, Malawi, Niger, Nigeria, Sierra Leone, Sudan, Tanzania, Uganda and Zambia. It has 40 million subscribers on the African continent, with the Nigeria network, which has over 15 million subscribers, contributing the most..
But its African operations contributed only 10 percent of profit in 2008, though with 65 percent of its customers. The company in Nigeria recently trimmed its workforce significantly, apparently in preparation for such a sale.
Media experts expect a change of name, which they said will necessitate a re-branding exercise, which for the Nigerian network alone could cost as much as N1 billion. If this happens, they said, the company will become an international reference point in corporate re-branding. Zain Nigeria has in the past eight years been owned by different operators and had changed names severally. It had transformed from Econet Wireless Nigeria to Vodacom, then to V-mobile, again to Celtel and to its current name, Zain.
Experts say that in the course of such a re-branding exercise, a company would have to pull down all its visual communications including ID cards, letterheads, internet website, out door advertising, colour scheme shops, recharge cards and more.
Akin Adeoya, managing director/CEO of Marketing Mix, a media and branding communication firm based in Lagos said:”If they are going to have a re-branding which will encompass a change of name, it will be a case study internationally. One would not have thought it would have survived so many changes, almost on a yearly basis. “It will go to prove that if the business proposition works, the branding challenge will also work. The brand already represents a multiplicity of contrasting images to the customer. Some people still call it Econet, some call it Celtel.
“The brand is challenged. There is need for some level of stability. My own advice, if possible will be for the owners to retain the brand name, rather than change it immediately”, Charles Otudor, managing director of Adstrat Consult, a brand and marketing consulting company, noted that “the constant change in corporate identity of Zain creates top-of-the-mind brand identity crisis and distortion. It is critical for brands to retain consistency in feel, look, and language. Also of critical importance is the brand behaviour.
“Most consumers purchase or invest in brands based on the perceived brand promise. Consistency remains a key component of that purchase and it is mostly a result of trust. That trust can only be achieved via consistency. Besides the perception issue, there is also the economic cost of the new brand implementation. Most brand identity implementations always cost a premium.
“Coming on the heels of the global financial meltdown, when most organisations are scaling down costs, this identity change is worrisome, but I guess the board has a reason”, he said. It is further said that through its re-branding exercises, Zain has challenged and enriched the media and branding sector in the country and created media crisis and branding experts of its own. As regards financing of the purchase for Bharti, the rest of the co-advisors.