Umnia sold to Batelco for 415 million dollars

Umnia
Amazing news this morning. Umnia has been sold to Batelco (Bahrain Telecom) for 415 million dollars. Not bad for a company that is only one year old. Also not bad for Michael Dagher, the Lebanese American entrepreneur, who came to Jordan originally to head up Fastlink and who is a major shareholder in Umnia.
Batelco
This kind of huge corporate acquisition is another example of the amazing cross-border investment activity happening in the Arab world today. I wonder what the late Arab Nationalists leader Jamal Abdelnasser would think of such deals: A Lebanese guy, starts a company in Jordan (with the help of Kuwaiti money from Al Ghanem group and Global Investments), uses low cost Chinese equipment (from Huawei) to quickly deploy a national communication network.. then sells the company to Bahrain’s national telecom company. Long live Arab unity :)

Batelco Jordan

What is also interesting is the possible connection with Batelco Jordan (which is being alluded to in the press release). Batelco Jordan has been the most aggressive in positioning itself as a new alternative national telecom in Jordan. It has been lately promoting bundled broadband and cheap international calling services and has been promoting its Dunia branded calling cards.

The tie-up with Umnia means that Batelco-Jordan can start offering mobile and internet services (including IP voice services, of course). Umnia also has a strong retail presence through its network of distributers, which Batelco Jordan lacks.

If Betelco-Jordan can crack the bandwidth nut and get cheaper bandwidth independent from Jordan Telecom, then it will be in a strong position to start offering the kinds of services that telecom liberalization is supposed to bring. Jordan’s telecom market has been liberalized for 18 months and we still have not seen many results.

Internet usage is still low (but growing). I think that it is REALLY time for someone to offer higher, more reliable access speeds for low prices. Bundling VoIP phone services as well as other IP services on top of an affordable internet will surely have an effect on internet adoption in Jordan.

Finally, what will happen to the brands involved. Batelco-Jordan, has undergone two ‘rebranding’ efforts over the past two years. The original Batelco name is uninspiring (sounds like: ‘Battle’ Co). It is quite well known in Jordan as an ISP. The latest rebranding is probably helping shift the perception to ‘comprehensive telecom’ rather than ‘ISP’.

The Umnia brand, on the other hand, is quite something. It is Arabic, which makes it accessible to a large number of people. It means ‘wish’. It has the potential to be an aspiration lifestyle brand. It has made inroads in the youth market. It has distribution and recognition.

Despite the conceptual strength of the Umnia brand, I see it as highly unlikey that all Batelco activities in Jordan will be Umnia branded. Nonetheless it will be something interesting to watch how things unfold from the perspective of branding and bundled service provision.


19 Responses to “Umnia sold to Batelco for 415 million dollars”

  1. Basem Says:

    What’s far more interesting Ahmad; is the premium Batelco paid to acquire Umniah, the whole of Umniah’s CAPEX is in the order of $200 mil! Almost the double, no doubt “محمد داغر” is a hell of an entrepreneur, Umniah can go bankrupt for all they care now, they (original owners) already made almost a 100% return on thier initial investment.

    What will fry everyone’s noodles soon after is who’ll be next on the buy-out spree… I can tell you this much: Global Investment will be buying-in another operator to the dismay of skeptics!

    On another note, Batelco (The mother company) already announced it’ll keep both operations in Jordan (Batelco Jo & Umniah) as separate entities, but you’ll never know, the synergy of the Umniah brand might trickle back to Bahrain!

  2. Humeid Says:

    We can always count on the “non-sheikh” for an extra dose of telecom analysis :)

    Enlighten us: what is a CAPEX exactly?

    Thanks Basem.

  3. Pheras Says:

    Well, Batelco did purchase NETS before and they did rebrand it under Batelco’s name. I guess it all depends on the mother company, though I don’t think it’s the best of ideas to rebrand anything, both companies are still relatively young; I think it’s best to leave things as they are.

    Dagher is fond of starting up telecommunication operators then selling them, as he did with Fastlink we he eventually sold it to MTC Group, we all saw this coming.

    Batelco always wanted to enter the telecommunications segment, they’ve acquired a license from the Telecommunications Regulatory Commission. Also with their VoN prepaid cards (Dunya) Batelco certainly have plans to do everything that JT hasn’t done; obviously they’re trying to avoid direct competition with JT.

    I think Ahmad that this proves that the Jordanian market is certainly the strongest and most profitable market for Telecommunication hot shots.

  4. Mariam Ayyash Says:

    so poeple come in, make business with other people’s money, to later sell it to bigger companies? no wonder this land lacks creative solutions, the good brains are after a very old invention called MONEY! remember that business that makes lots of money, is a tried out business… business that makes lots of money for lots of people (a whole nation), is first of its kind usually.

    side note, i hope they never change the name “umniah”, dispite the rumour that it was named after Michaels wife “Amani,” (hehe, heheheh!) it is one hell of a name for a mobile company… simply superb.

  5. Hamzeh N. Says:

    I have a question that I hope one of you guys would be able to answer.

    I’m not good in economics and finances, but I want to make the following observation:

    if prior to this deal, Umnia’s CAPEX (capital expense) was in the order of $200mil, and now it’s become almost double that, what does this mean for the prices Umnia is going to be charging its customers? How’s Umnia going to compensate for the added cost of $200mil?

  6. Basem Says:

    I think I misused the term CAPEX (CAPital EXpenditure), what I meant is that its net assets are in the order of $200 million… so the sellers probably made a cool 100% (give or take) return on their initial investment.

    Pheras, when NETS was bought by Batelco, it kept the brand for a while for the InteraNet that they had successfully running on FirstClass client. I’m not sure if this service is still up, I think It’ll be nice to bundle the whole of Batelco service into the hip triple-play Umniah package as its becoming common among operators, examples :

    JTC will be bundling all its services (landlines, Mobile, Internet) under the brand “:Orange” in line with its mother’s company strategy by year end.

    The upcoming UAE operator du is a triple-play operator along with Itisalat (the incumbent) who’s an existing triple-play provider (by default).

    STC (in Saudi) is a triple-play provider (also by default) but they don’t seem to quiet understand how to present themselves as such, instead they have separate “business units”: Jawwal, SaudiData & Al-Hatif along few others.

  7. Faisal Says:

    “I wonder what the late Arab Nationalists leader Jamal Abdelnasser would think of such deals”

    He would probably be thinking: “Latin America: Here We Come!”

    Today Arab countries are for sale. Going, going, gone! Congratulations (Uncle) Sam.

  8. n@simjo >> Umniah sold out for Batelco >> Says:

    ... Many questions, no answer so far. My concern is that Batelco won’t damage dagher’s once upon a time Wish, or better said “Umniah”.

    Read more about this topic from Ahmad Humeid….

  9. Mariam Ayyash Says:

    Faisal! Well-said man!

  10. Humeid Says:

    Well said Faisal??

    People, this is INTER-ARAB investment. What country is for ‘sale’ here? What does this have to do with uncle sam. Please people.. THINK a bit.

  11. Faisal Says:

    Humeid,

    I think you did not understand the meaning beyond the literal – Uncle Sam here is Capitalism buying and selling ruthlessly, not knowing borders, and always driven by profit. I can hardly categorize this sort of Inter-ARAB investment as realizing the Arab dream (anyway, as Nasser saw it).

  12. Tamer Says:

    Guys… think of this .. batelco is gonna be a new provider for fixed line service, so offcrouse they would need to also be a cell phone operator. The return on this small investment is huge as jordan is the largest and fastest growing cell phone market. Bedsieds the misrable state Owned sold Jordan crap telecom needs tough competition to shape up. Have you tried calling there 1212 operator and see how rude they are? what about the crap advertising wasted money they pay for this one ad agent… looool I think now they will start believing they are no longer a MONOPOLY but are in a tough competitive market. Way to go batelco… kick their ass and you will gain a lot of customers… I will be the first to switch to batelco… imgine they sell u adsl, land line and cell phone… hey Fastlink.. ur making a big mistake not going into the land and ADSL business… and last… man we wont have to suffer any longer from those Jtelecom ads in the paper that are cut and paste zero creative messages. i bet J telecome would lost half their biz year 1

  13. Humeid Says:

    Tamer,

    It seems you are misinformed or something.

    1. Jordan is in no way the ‘largest’ cell phone market. Iraq is already bigger, just for example.
    2. JT is no longer state owned. THe majority is owned by France Telecom and Arab Bank. Only a small share remaions in gov hands.
    3. Their 1212 has greatly improved. I tried this myself.
    4. Fastlink already is in the adsl market. They fully own the ISP called link.

    Thanks

  14. Humeid Says:

    Faisal,

    THe Capitalism that know no borders you are talking about is bringing oil money, investing it in Jordan, creating middle class jobs for young jordanians, and putting cheaper mobile phone services in the hands of taxi drivers, manual workers, students and everyone else.

    What is a better way of achieving the ‘arab dream’. Forcing military coups in various Arab countries and forming fake unions between arab countries or tying up Lebanese, Jordanian, Kuwaitis and Bahrainin with shared econmic interests.

    Aren’t the Arab nationalists alway calling for Arab economic integration.

    I really urge you to braoden your view beyond the labels of capitalism, etc.

  15. Tamer Says:

    Houmadiah:

    1. Service at JT still has the state owned culture and touch – that is what I was implying.
    2. 1212 is still crap, I think you are comparing us to GHANA, I suggest you compare us to the US AT&T operator. Dude I call them and they sometimes say they have too many calls try later … come on!
    3. Jordan is the fastest growing market in the ME or one of the fastest’
    4. I never heard of this LINK from Fastlink, most be targeting certain clinetal and not mainstream.
    5. I think this Batelco thing is great to improve local service and prices and also to have a real player against Fast link.
    4.

  16. Moey Hyperventilating Says:

    [...] head up Fastlink and who is a major shareholder in Umniah Network. more info on 360 east [link] and everyone also knows that Fastlink is Kuwaiti and owned by MTC (Mobile Telecommunications [...]

  17. Faisal Says:

    I see you censor what doesn’t suit you. Aftert all its your blog – but remember this: what is more dangerous is not ignorance, it is the illusion of knowledge. Top open your mouth about topics that blood was spilled over and say they are labels is the utmost illusion of enlightenment.

  18. Humeid Says:

    dear faisal,

    if you browse around the site you will find many many comments that differ with my opinion and even attack me. I only sensor abuse or personal attacks and accusations of other people.

    I sent you an email asking you what exactly did i censor. I might have deleted something by mistake. But i cannot recall deleting any of your comments.

    Yes it is my blog and I have the right to edit it the way I see fit. But I wanted to set this story straight.

    thanks

  19. Mo3ath Al-jawawdeh Says:

    Hey guys, what do you think of the VoIP service? is there any company that is willing or going to offer it? I mean Jordan is growing fast from telecommunications point of view and a service like this may be a huge thing and a big success if it is introduced to homes and offices exclusively especially with no monthly charges as long as you have internet access.

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