Zain South Sudan Cuts Operations, Fires Staff to Survive War

  • Unit of Kuwaiti mobile provider says survival is priority
  • Company focusing on major towns, targets 1 million subscribers

Zain South Sudan, a unit of Kuwait’s largest mobile-phone provider, has reduced operations and cut the number of its expatriate staff in an attempt to survive an economic crisis in the African nation spurred by more than two years of civil war.

The company is focusing operations on major towns, limiting some of its coverage elsewhere, and has reorganized its 88-strong workforce by cutting the number of foreign staff and hiring more locals, according to Daniel Deng Lual, the senior director for administration and corporate relations. Its parent, Kuwait’s Mobile Telecommunications Co., won’t provide more than the at least $500 million it’s already invested in the venture because the unit has failed to make a profit, he said.

“Now we are only at a level of survival,” Lual said in an Aug. 23 interview in South Sudan’s capital, Juba. “There’s no investor who is ready to put more money, but we have to be self-dependent -- we have to do everything possible to make us survive.”

A conflict that erupted in December 2013 has claimed tens of thousands of lives and caused economic ruin in what was already one of the world’s 20 least-developed countries. Landlocked South Sudan has sub-Saharan Africa’s third-largest crude reserves yet is pumping as little as 120,000 barrels a day, about half its output just before the war began. The International Monetary Fund projected last year that South Sudan’s economy would contract 5.3 percent, while inflation exceeded 660 percent in July.

Major Towns

A transitional government to end the conflict was thrown into turmoil in July when violence flared again in Juba. Hundreds of people were killed and rebel leader-turned-Vice President Riek Machar and his forces fled the city. Sporadic fighting has since rocked the north and east of the country.

“We are now concentrating on major towns which can sustain our financial conditions,” said Lual, naming Juba and the state capitals of Yei and Bor as well as northern Upper Nile, where South Sudan’s largest oilfields are located. He said buying and transporting fuel to power Zain’s infrastructure in more remote and dangerous areas has been complicated and expensive. The operation has a total of 288 network sites, according to Lual.

“If there is insecurity, people need communication and it is for Zain just to keep the name and the network working,” Lual said.

The provider competes with the South Sudanese unit of South Africa’s MTN Group Ltd., which said in June it has cut jobs and made changes to the way it sells airtime to ride out the crisis. Zain targets building its subscriber-base to 1 million from about 711,000, Lual said. The country’s population is about 12.3 million, according to the World Bank.

“Having a phone has now become a luxury,” Lual said. “If you look at the whole population, there are about 4 million who can afford a phone and this is where we are now competing, and profit has been minimal in the business.”

MAP: South Sudan
MAP: South Sudan
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