Zain, Nokia sign employee swap deal

• Pact comes with the transfer of management of mobile operator’s network to Nokia

Mobile phone operator Zain Kenya is transferring more than 100 of its network service engineers to telecoms infrastructure provider Nokia Siemens in a unique employee swap programme that analysts said signals the intensity of competition for skills in Kenya.

The transfer comes with the outsourcing of Zain’s network management to Nokia, a move that should help the mobile phone firm to significantly reduce its operation costs and give outsourcing a new meaning in Kenya’s telecoms market.

If successfully executed, the initiative could help the telecoms industry resolve the acute shortage of network engineers it has been facing with the entry of new players in the market and the rapid growth of demand for network capacity to run the business.

“We plan to modernise Zain’s network with our state-of-the art equipment for a sustainable robustness that has the required capacity to capture high customer growth in the next five years,” said Joerg Erlemeier, the head of the Middle East African region for Nokia Siemens Networks.

Rene Meza, the managing director of Zain Kenya, said beneficiaries of the staff swap will ultimately work for Nokia Siemens in the region and for other local operators to help ease the shortage of network specialists.

“A third of Zain’s 350 network maintenance employees being transferred are from Kenya. Our expectation is that they will use their expertise and support to enhance the quality of our network and sharpen our competitiveness in the market,” he said.

Telecoms market analysts said the deal has effectively helped Nokia Siemens to sidestep the big recruitment hurdle it was bound to face in its quest for a strong presence in Africa’s rapidly growing telecoms infrastructure industry.

In recent months, the balance of power in Africa’s telecoms infrastructure market has been tilting in favour of Asian firms such as Huwaei, who are aggressively pursuing big deals in the region.

The swap deal will release up to 350 highly qualified technical specialists from Zain’s Africa operations into a pool that Nokia can use to serve its clients in the region, helping the European infrastructure operator to recapture market share.

“This deal should enable us to capture strategic market share in managed services and strengthen our position in the business,” said Mr Erlemeier. “It is also unique in its being the first mobile network outsourcing contract in East Africa.”

Zain’s decision to handover the management of its network to Nokia Siemens, a Finnish infrastructure specialist, is the second major realignment of its workforce in the last nine months.

The company embarked on the payroll trimming exercise early this year with the retrenchment of 141 employees of its then 550-person workforce.

The operator further parted company with another 29 workers before announcing the outsourcing deal.

With the outsourcing network management, Zain has taken a leap of faith in the running of its business.

It effectively places a key component of the mobile firm’s operations — its network — in the hands of a third party.

Its success could offer Zain insights into new outsourcing opportunities for enhanced cost management in the highly competitive telecoms market.

For Zain, the biggest premium is that the deal has the potential to ease its access to cutting edge technologies such as 3G capacity to deepen its foray into the emerging wireless internet market and improve the quality of its network, which has been declared Kenya’s clearest and most reliable.

For Zain, which has capped nearly 10 years of operation in this market, the move presents the opportunity to re-evaluate its product offering and emerge from the loss-making territory where it has stayed in the past four years.

Zain Kenya’s revenues dipped marginally during the first nine months of 2009 to stand at $117 million compared to $121 million during the same period last year, according to the group’s latest results posted on the internet early this week.

The firm also lost subscribers but maintained its market share despite the entry of two new players in the market — Essar and Telkom Kenya — as well as the continued dominance of the market by Safricom.

Zain has 2.1 million subscribers compared to Safaricom’s 14 million, Essar’s 800,000 and Telkom Kenya’s 1.8 million.

The staff deal with Nokia Siemens will see the infrastructure provider manage Zain’s network for five years.

It places the mordernisation and management of Zain’s 3,000 multi-vendor mobile network sites in Kenya, Tanzania and Uganda in Nokia Siemens’ hands.

Zain has a combined customer base of nine million in the region.

Nokia Siemens Networks described the deal as the biggest multi-vendor outsourcing case in the region and one of the first supplier swap managed services deals of its kind in Africa.

As part of the agreement, approximately 350 Zain employees who work on network operations in the three East African countries are being transferred to Nokia Siemens Networks.

Existing contracts

Terms of the transfer are expected to remain similar to existing contracts and will be backed with development and training in the latest wireless technologies.

Chris Gabriel, CEO of Zain Africa, said he was confident that the outsourcing agreement will have a far reaching impact on the company and its customers.

“Choosing Nokia Siemens Networks to help operate our networks in East Africa fits perfectly with our ‘Drive11’ business objectives of improving efficiency and the quality of our networks and operation,” he said.

“As a result, we will be in a far stronger position to dedicate resources and assets to our customer-facing activities, continuing to improve customer support, developing and launching new products, services and mobile applications.”