With $12bn Zain bid abandoned Etisalat should focus on competing with du
Posted on 20 March 2011 with no comments from readers
Etisalat has decided to drop its proposed $12 billion bid for Kuwait’s Zain mobile telecommunications company due to regional unrest and problems with due diligence. The UAE’s telecom giant says it will look elsewhere in the world for acquisitions. But really it should be focused on its domestic competition from du.
Mention the name of du to many local residents and they colour with anger. If you want to see the nearest thing to social unrest in the UAE then visit a du showroom on a busy day and watch the tempers flare. Poorly trained staff, incompetent management, simply growing too fast, all are advanced as reasons for this state of near chaos.
Bad customer service
Du is closer to a Third World company in style than most Dubai companies. Indeed, some like Emirates Airline and Dubai International Airport set global standards and do not struggle just to provide their services as advertised.
Etisalat ought to be sensing an opportunity here to fight back to win back market share. And in fact many users who deserted Etisalat for du are switching back. That is if they can get the du company to disconnet their phones and stop billing them.
Du billing is also notoriously hard to understand with credits and debits here and there. Etisalat is straightforward and simple. It could easily start a campaign ‘Do you really like du?’ and the response might be overwhelming, where customers do actually have the choice between networks.
Don’t cry over Zain
As for the Zain takevoer perhaps few tears should be shed. There was always the fear in the market that Etisalat was overstretching itself with a hard-to-manage, far flung network of mobile phone companies and overpaying for it. Maybe the unrest of the past two months in the region just reminded managers what they might be getting into. Africa is hardly a stable continent.
Some Zain shareholders will be very unhappy at the billions now slipping through their fingers. The optimists among them will be pleased because they thought Zain was a precious asset being sold too cheaply. Well, time will be the judge of that.
However, to refocus on core assets and make them sweat by beating the opposition ought to be the Etisalat management’s new objective, unless the world nose dives into a huge recession and it can assemble a telecoms empire on the cheap. You never know, not having spent $12 billion might then look a stroke of genius.
