Telkom SA "Planning Major Africa Transaction" Says Minister

South African communications minister Roy Padayachie has said that Telkom South Africa is ‘considering a major transaction in Africa’, Bloomberg Business Week reports.

Speaking at the company’s annual shareholders’ meeting in Johannesburg, Padayachie commented: ‘The board is busy with a major deal. Telkom will make an announcement soon. You have to be patient, Telkom will make the announcement when the time is right, but the board is busy with a deal’.

The minister was responding to questions regarding whether Telkom intended to make a new acquisition in Africa after selling its ill-fated investment in Nigeria’s Multilinks. Telkom bought its initial 75% stake in Multilinks for USD280 million in May 2007 and purchased the remaining 25% in January 2009 for USD130 million.

However, the telco cut its losses in June 2011 when it disposed of the loss-making unit for just USD10 million, to an affiliate of Helios Towers Nigeria (HTN).

Speaking at the meeting, Telkom chairman Lazarus Zim cautioned that the company needed to build a sustainable business in Africa, saying: ‘There were expensive and important lessons that we learnt in Nigeria’.

However, company spokesman Pynee Chetty distanced Telkom from the acquisition speculation, saying that the company has ‘not identified attractive acquisition targets in Africa at this juncture’ and that the group’s focus ‘is currently to improve the performance of existing businesses’.

SyncTV Partners With African Movie Channel

US-based television platform provider SyncTV has announced a partnership with UK-based video-on-demand (VOD) service African Movie Channel (AMC), to deliver hundreds of classic and new Africa-origin films to global audiences through Roku Streaming Media Players and Samsung Connected TVs.

Launched in 2006, AMC is the first and only channel dedicated to top-quality African films from the popular Nigerian film industry, Nollywood, and other major African studios.

Lola Onigbogi, co-director and founder of AMC, said the digital platform is emerging as a top content distribution channel, and AMC recognises SyncTV as an extremely valuable asset in enabling the broader exposure of Africa-origin films.

Orange Extends Closing Date For Africa Social Award

Orange has extended the deadline for submitting projects for the Orange African Social Venture Prize by two weeks until 30 September.

The prize will be awarded to three entrepreneurs or start-ups that offer solutions based on mobile networks or IT systems that are designed to address various social and welfare issues faced by Africans across the continent.

Projects may range from banking or payment services to applications in essential areas such as healthcare, education and agriculture. In addition to the prestige of winning the award, Orange is committed to financially supporting and offering expert assistance to the winning entrepreneurs or start-ups.

The three prize winners will receive an endowment of between EUR 10,000 and 25,000, and will benefit from six months of support from management and ICT experts at Orange. 

The operator has also announced that the award will be part of the AfricaCom awards, with the prize giving to take place in Cape Town, South Africa, on 9 November.

Bharti and Vodafone Struggle to Make Money In Africa

For Vodafone Group Plc, Bharti Airtel Ltd. and other phone companies with about $90 billion invested in Africa, making more money from each user in the world’s fastest-growing market is becoming the biggest challenge.

The number of operators is prompting a race to the bottom on call rates. In Tanzania, which has seven phone companies, prices have fallen 90 percent over the past 18 months. Companies also face among the world’s highest “churn” rates, with users frequently changing operators, and patchy infrastructure, all of which make returns on investment difficult.

“It is hard,” said Pieter Uys, chief executive officer of Vodacom Group Ltd., which is controlled by Vodafone and is the largest provider of mobile-phone services in South Africa and Tanzania. “You have to do business in a very different way, you have to build data networks, find other ways to grow revenue.”

Phone operators gathered at Africa’s telecommunications conference that began yesterday in Cape Town want to sell services to the 50 percent of the market that doesn’t have mobile phones. They also want to service current customers more cheaply, without losing user loyalty, while stemming declines in average revenue per user, or ARPU, by offering newer services such as mobile Internet, banking and other money transactions.

“We are now dealing with an ecosystem that’s changing very, very fast,” Andile Ngacaba, chairman of Dimension Data and Convergence Partners, said at the conference. “On the one side, we see this subscriber growth and growth in data and data applications. On the other side, we see this decrease in ARPUs. This requires new models of investment such as infrastructure sharing.”

African Growth

Operators have been lured to the continent by its promise. Africa has a mobile-phone population of about 445 million handsets, according to a McKinsey & Co. report. It took 20 years for the size of the mobile-phone population to reach 200 million, and less than three years to get to the next 200 million, according to the report.

Africa has “become the fastest-growing region in the global cellular market, going from fewer than 2 million mobile phones in 1998 to more than 400 million today,” it said.

The mobile value-added services market in Africa was worth $4.5 billion in 2009, and over the next five years is forecast to grow at a compound annual growth rate of 20 percent, generating $11.5 billion by 2014, Informa Telecoms & Media, a London-based consultant, said in its Rural Connectivity Report in Africa published this month.

Capture Opportunity

About 80 percent of the sales were from messaging, while mobile Internet contributed 14 percent and mobile entertainment such as music and television 3.5 percent, the report showed.

Internet and broadband penetration is still in single digits, Uys said.

“So the possibilities are still there but it’s what you pay for it to get it, the investment in infrastructure,” he said. “If the tariffs are driven too low for whatever reason then it might also not make sense.”

In order for mobile operators to “capture this opportunity,” the market needs consolidation, McKinsey said. “The industry structure should be rationalized, for example, because many markets, even smaller ones, have four or more players.”

Competition on the continent is fiercer now than it has ever been. In the Democratic Republic of Congo and Tanzania, mobile-phone tariffs plunged between 50 percent and 60 percent in the six months through September.

Tumbling Prices

Prices in Kenya have been slashed to such an extent that Safaricom Ltd. Chief Executive Officer Bob Collymore said India’s Bharti, which bought most of Zain’s African operations last year for $9 billion, is losing money on as much as 50 percent of its voice traffic.

Safaricom has an 86 percent share of the market and is 40 percent held by Newbury, England-based Vodafone. Bharti’s head of African operations, Manoj Kohli, declined to comment on Safaricom’s remarks. “We can’t comment on our competitors’ claims,” Kohli said.

On Aug. 18, Bharti halved tariffs in Kenya to 3 shillings, Les Baillie, a spokesman for Safaricom said. Safaricom “knew that voice was always going to become a commodity,” Baillie said. “It was not expected that it would happen so rapidly though.”

Companies are scrambling to adapt their operations to the new climate.

“We have to review our business model and make it leaner and compete on price and have more quality in our network and to have more data,” said Mickael Ghossein, chief executive officer of Orange Telkom Kenya, which is 51 percent held by France Telecom SA. “We have to enhance our quality of networks.”

Sharing Towers

In South Africa, Vodacom, which is 65 percent owned by Vodafone, is investing in data networks. Data now accounts for more than 50 percent of its traffic and is growing at more than 50 percent a year, Uys said.

The company is also pushing smart devices that are able to browse the Internet to low-end segments with touchscreen phones that retail at 499 rand ($73). Once users have an improved mobile-browsing experience, data consumption increases, Uys said

Operators are also sharing infrastructure, especially to reach sparsely populated rural areas where returns on capital invested in infrastructure are low.

Infrastructure sharing and outsourcing of towers has been punted for years. Now, faced with greater competitive pressure, companies are beginning to act.

‘Good Industry’

Last month, Vodafone signed an agreement with Eaton Towers to manage its 750 towers in Ghana. On Nov. 5, American Tower Corp. agreed to buy 3,200 towers from Cell C Ltd., South Africa’s third-largest mobile phone services provider, in a deal worth $430 million.

“We are going to see more and more of those type of deals happening,” said David Lerche, a telecoms analyst at Johannesburg-based Avior Research. “There are lots of little tower companies running around trying to position themselves as tower outsourcers. It’s quite an interesting development.”

For all its challenges, the market is still attractive, Marc Rennard, vice president of Orange Mobile for Africa, Middle East and Asia, said in an interview.

While investor interest has waned a little, “we are profitable, the big players, the five, six main players are profitable,” he said. “It’s still a good industry.”

-Bloomberg

MTN Announces Increase in Subscriber Base

South Africa-based telcoms group MTN has announced that its consolidated subscriber base increased to 134.47 million as at 30 September 2010, up 4% from the 129.21 million reported at the end of June. A company statement credited the increase to ‘high quality networks, attractive value propositions and efficient distribution’.

The South and East African region, which contributes 22% of the group’s customers, increased its subscriber base by 4.9% to 30.08 million for the quarter - mainly driven by growth in its domestic market. In South Africa, the customer base rose 3.9% to 17.77 million, helped by the addition of 616,000 pre-paid users and its MTN Zone offer, which allows MTN subscribers access to a discounted call rate if they are in an area experiencing a low volume of MTN traffic. ARPU in South Africa remained stable at ZAR152 (USD21.6).

The West and Central African region, which contributes 46% of the group’s subscribers increased its customer base by 3.4% in the three month period to 61.38 million. Nigeria – MTN’s largest single market and that which contributes 60% of the region’s subscriber base - grew its base 5.1% to 36.84 million. MTN credits the increase to ‘superior network quality and a successful distribution framework’. Elsewhere in the region, Ghana’s customer base declined from 8.72 million to 8.46 million due to the introduction of mandatory SIM registration on 1 July 2010.

The Middle East and North African region, which accounts for the remaining 32% of MTN’s consolidated subscriber base, increased its numbers by 4.1% to 43.01 million. MTN says that the growth within the region was mainly due to its Iranian operation, which contributes 66% of the region’s subscribers. MTN Irancell increased its users by 5.6% to 28.49 million. Elsewhere in the region, Syria benefited from improved brand awareness, increasing its subscriber base to 4.72 million, a rise of 6.8%.

MTN Inks Broadband Deal With Intel

South Africa's MTN Group has signed a Memorandum of Understanding (MoU) with US communication giant Intel, which will see the two companies collaborating to accelerate the deployment and penetration of broadband access in Africa and the Middle East.

The collaboration covers a wide range of initiatives, including: increased WiMAX deployment, affordable PC bundles for ordinary African consumers and entrepreneurs and the introduction of cost-effective internet browsing devices.

The statement also pinpoints a joint effort by the MTN Foundation and Intel Education's corporate social responsibility department to equip students and teachers with technology skills. Further, Intel's venture capital division, Intel Capital, and the MTN Group will also invest in emerging technology companies that are innovative and demonstrate a potential for advancing the ICT sector by developing products that contribute to solving typically African business and social problems.

Intel sales and marketing Vice President Gordon Graylish commented: ‘Strategies developed by MTN and Intel to connect the next generation of broadband users in Africa and the Middle East were a perfect fit, which is why we went into discussions to collaborate. Both companies have expertise in different aspects of ICT deployment and together we can accelerate bridging the digital divide on the continent. In this way we can accelerate Africa's entry into the 21st century knowledge and digital economy which will give its citizens economic opportunities similar to those in developed countries’.

Zain In Talks To Sell sTake to Etisalat

Kuwaiti telecoms firm Zain Group has entered into talks with Etisalat to sell a majority stake in the group to the UAE-based operator, Reuters reports, citing Kuwaiti newspaper al-Seyassah.

Without providing details about the size of the stake or the price, the report states that both firms held meetings last week to discuss the potential deal.

Earlier this month Zain completed the sale of its African assets to Indian telecoms group Bharti Airtel, in a deal valued at USD10.7 billion.

Meanwhile, though Etisalat has yet to confirm the Zain reports, the Abu Dhabi-based operator has admitted it is looking at options in India, including a 26% stake in telco Reliance Communications.

Cel C Joins Zain's One Network

Zain has announced the expansion of its ‘One Network’ platform to South Africa in a strategic partnership with Cell C, the country’s smallest cellco. Over 41 million Zain customers across Zain Africa’s 15 mobile operations may now benefit from ‘One Network’ services when visiting South Africa. The ‘One Network’ borderless mobile phone platform enables pre-paid and post-paid Zain customers when travelling to another 'One Network’ partner country to be treated as a local customer in terms of pricing, while retaining home country service functionalities. Now, in South Africa, Zain customers will be able to make calls, send SMS and access the internet (data) at local rates of the visited country and to receive incoming calls at a minimal charge.

The 15 Zain countries that benefit from this service with Cell C in South Africa are: Burkina Faso, Chad, the Republic of the Congo, the Democratic Republic of the Congo, Gabon, Ghana, Kenya, Malawi, Madagascar, Niger, Nigeria, Sierra Leone, Tanzania, Uganda and Zambia.

Orange Money Now in Senegal, Mali and Madacascar

Orange has launched its mobile payment service, Orange Money, in three additional African countries - Senegal, Mali and Madagascar - in recent weeks. These launches mark a turning point in the Group's ambition to launch Orange Money across its footprint in Africa. Orange Money is an innovative, mobile phone-based payment system that allows customers to carry out simple banking operations and transactions in total security. Such services offer a huge potential in Africa where less than 10% of the population have access to a bank account and yet over a third have a mobile phone.

The service allows mobile customers to deposit and withdraw money, to transfer money, to easily buy call credit, to pay for goods at certain retail partners and to pay bills. The service is available for all Orange customers whether or not they have a bank account. The Orange Money account is activated free of charge and without any minimum deposit. Orange Money is built around a system that guarantees transactions against the risk of theft or fraud and that is fully compliant with the regulations.

The launch of Orange Money in Senegal, Mali and Madagascar follows on from the launch of the service in the Cote d'Ivoire in December 2008 after extensive trials. Commenting on this launch, Marc Rennard, Orange’s executive director for the Africa, Middle East and Asia Pacific Region, said: ‘Orange Money is a very important part our strategy in Africa and emerging markets. Mobile payment services have the potential to bring cost-effective and secure access to banking services to people with low-incomes, who often live in rural or remote areas. By providing our customers with the means to save money, pay bills and run their businesses, we are not only reinforcing customer fidelity but we are also able to play an active role in the economic development of the country’.

Orange Money will also be launched in Niger and Kenya in the coming months, and will eventually be extended across the Group's entire footprint in Africa and the Middle East.

Mobile Money Transforms Lives In Developing World

Mobile banking has transformed the way people in the developing world transfer money and now it is poised to offer more sophisticated banking services which could make a real difference to people's lives.

Currently 2.7bn people living in the developing world do not have access to any sort of financial service. At the same time 1bn people throughout Africa, Latin America and Asia own a mobile phone.

As a result, mobile money services are springing up all over the developing world. According to mobile industry group the GSMA there are now 65 mobile money systems operating around the globe, with a further 82 about to be launched.

Most offer basic services such as money transfers, which are incredibly important for migrant workers who need to send cash back to their families.

M-Pesa in Kenya is perhaps the most famous of these and it has attracted 9.4 million Kenyans in just under three years.

Now it is ready to move to the next stage. M-Pesa, has recently partnered with Kenya's Equity Bank to offer subscribers a savings account, called M-Kesho.
 
Money Matters

It means their M-Pesa accounts will no longer be just about money transfer. Instead, they will become virtual bank accounts, allowing customers to open saving accounts, earn interest on their money and access credit and insurance products.

It is an extension to an earlier agreement with Equity Bank to allow M-Pesa customers to access their funds at ATMs around the country.

CGAP, a financial think tank based at the World Bank, was at the launch of M-Kesho.

"Kenya is sending a message to the world: poor people want savings accounts. Mobile banking is a powerful way to deliver savings services to the billion people worldwide who have a cell phone but not a bank account," said CGAP chief executive Alexia Latortue.

Meanwhile in Uganda, MTN, a mobile firm that runs a similar mobile money service has ratcheted up 890,000 users in its first year of operation. This is double what it forecast.

Richard Mwami, head of mobile money at MTN predicts the service will have 2m users by the end of the year, and 3.5m by 2012.

He admits that one of the biggest challenges of setting up the system was regulating the agents that provide the cash.

"We have had liquidity problems where customers walk into the shop and there is no money," he said.

And fraud is also a problem, running to one or two cases every couple of weeks. Some 60% of users live in rural areas, where literacy rates are low and agents are often local shopkeepers, authorised to take deposits and issue cash.  "There is ignorance about how the service works," he said.

MTN has now begun an education programme, promoting and explaining the service on national radio.
Uganda, mobile money Only 38% of Ugandan citizens have a bank account. Micro-economy

Gavin Krugel, head of mobile money at the GSM Association (GSMA) believes agents are more trusted than traditional banks.

"Banks have revolving doors and armed security guards. Consumers believe they are for the rich only," he said.

By contrast, agents tend to be trusted retailers who have been selling airtime to the same customers for the past ten years.

"Every one of the agents are trained and those that misbehave are taken out of the system," he said.

Aletha Ling, executive director of Fundamo, the platform behind MTN Uganda's mobile system, said the challenges are worth it because it is easy to see how it is benefitting customers.

"Money gets sent from the cities to the rural areas where it is required. Less cash passes hands so it is much more secure. Previously people were travelling with huge amounts of money," she said.

"In one fishing village I visited it had created its own micro-economy," she said.

In Uganda the banking population is low with only 38% having a bank account and only 7% using more than one banking product.

Mobile banking can also provide a route out of poverty, according to the newly-appointed UK International Development Secretary Andrew Mitchell.

Speaking at the GSMA's mobile money summit in Rio de Janeiro this week he said:

"Access to basic financial services - the ability to save, transfer and invest even small amounts of money - can make a huge difference to people around the world. It can help a farmer to survive a bad harvest, or provide a slum-dweller with the vital capital needed to start a small business,"

This is a view echoed by Mr Mwami.  The mobile phone is demystified. People are confident about using it and the market is there for the taking," he said.
Disruptive technology

Last year Bill Gates pledged $5m to help the world's poor access banking accounts. The Mobile Money for the Unbanked Fund is being administered by the GSMA Foundation.

It has announced the projects which will benefit from the money.

It includes Bangladesh's Grameenphone which hopes to enhance its mobile money service with services such as a mobile ticketing service for Bangladesh Railways.

Money will also go to Orange Money to introduce more advanced financial services in Western Africa, where less than 4% of the population have banking.

Safaricom, the mobile firm behind M-Pesa, will get a grant to help non-government organisations and the Kenyan government get much-needed money to vulnerable households in informal settlements in Nairobi.

In Cambodia, the majority of payroll is given in cash and Cellcard is hoping to set up money transfer, bill payment and airtime top-up to urban migrants desperate to send money home to famiies in rural areas.

Similar projects in Pakistan, India, Sri Lanka and Fiji will also also benefit from the fund.

Mobile banking is a slow burn, said Mr Krugel, but a potentially revolutionary one as long as it is born from what consumers ask for.

"In many of these markets offering a fully-fleged bank account would be a waste of time. Consumers need to understand the basics first," he said.

"At first they don't trust the system. Then they can see that it works and eventually they start to leave some money in their account. This is how they start lifting themselves out of poverty," he said.

The next stage is more sophisticated services such as funeral or hospital insurance.

"In African culture, for example, they believe strongly in respect and funeral insurance is extremely important," he said.

Traditional banks are now beginning to wake up to the threat posed by mobile services and are increasingly partnering with the mobile firms to tap the potential of a whole new market.

"M-Pesa was sufficiently disruptive that it forced the banks to respond. If the banks do see these services as a threat they will realise there is opportunity at the base of the economic pyramid and that is a job well done by the mobile industry," said Mr Krugel.

- BBC Online

Orange Money Launched in Senegal, Mali & Madagascar

Orange has launched its mobile payment service, Orange Money, in three additional African countries - Senegal, Mali and Madagascar - in recent weeks. These launches mark a turning point in the Group's ambition to launch Orange Money across its footprint in Africa. Orange Money is an innovative, mobile phone-based payment system that allows customers to carry out simple banking operations and transactions in total security. Such services offer a huge potential in Africa where less than 10% of the population have access to a bank account and yet over a third have a mobile phone.

The service allows mobile customers to deposit and withdraw money, to transfer money, to easily buy call credit, to pay for goods at certain retail partners and to pay bills. The service is available for all Orange customers whether or not they have a bank account. The Orange Money account is activated free of charge and without any minimum deposit. Orange Money is built around a system that guarantees transactions against the risk of theft or fraud and that is fully compliant with the regulations.

The launch of Orange Money in Senegal, Mali and Madagascar follows on from the launch of the service in the Cote d'Ivoire in December 2008 after extensive trials. Commenting on this launch, Marc Rennard, Orange’s executive director for the Africa, Middle East and Asia Pacific Region, said: ‘Orange Money is a very important part our strategy in Africa and emerging markets.

Mobile payment services have the potential to bring cost-effective and secure access to banking services to people with low-incomes, who often live in rural or remote areas. By providing our customers with the means to save money, pay bills and run their businesses, we are not only reinforcing customer fidelity but we are also able to play an active role in the economic development of the country’.

Orange Money will also be launched in Niger and Kenya in the coming months, and will eventually be extended across the Group's entire footprint in Africa and the Middle East.

Zain Q1 Results Excludes Details of Africa Operations

MTN & Bharti: Former Suitors Now In Face-Off As Zain Africa Is Sold

Sunil Bharti Mittal, the billionaire chairman of India’s largest mobile-phone company, spent millions of dollars and almost two years wooing MTN Group Ltd. for its Africa business. Now he’s picking a fight with them.

Mittal was thwarted twice while pursuing a $23 billion merger with Johannesburg-based MTN that would have created one of the five largest phone companies in the world. His Bharti Airtel Ltd. then courted Zain, offering $9 billion for the Kuwaiti mobile-phone company’s operations in 15 African countries in an effort to offset slowing profit growth at home.

Bharti may sign an agreement with Zain as early as this week, three people familiar with the negotiations have said. If the deal goes through, Bharti and MTN will go from being potential partners to foes. Zain and MTN go head-to-head in five countries, including Nigeria, the largest African country by mobile-phone subscribers and population. MTN is No. 1 in Nigeria, followed by Zain.

“They’ve decided to venture into the forest on their own,” MTN Chief Executive Officer Phuthuma Nhleko said. “They would have been in a better position if we were holding their hand.”

Bharti had no choice. Bharti and MTN agreed on terms in September, yet opposition from South African authorities scuttled the deal. Reserve Bank Governor Tito Mboweni said Oct. 1 that MTN “must remain a South African company.”

Knowledge

Bharti and MTN learned much about each other during their two rounds of matchmaking. Each stage yielded thousands of pages of documents containing such details as vendor contracts, supplier pricing arrangements and the costs of installing and maintaining cell-phone towers.

Those papers, plus MTN’s $3.2 billion cash hoard and its experience in sub-Saharan Africa, portray MTN as a company Mittal may have been better off having on his side, said Taina Erajuuri of Helsinki-based Fim Asset Management.

“It’s difficult now for Bharti because MTN is such a superior company, and now they have to compete with them,” said Erajuuri, who helps manage $1.4 billion in emerging markets, including Indian equities. “MTN was the first choice, and it would have been the better buy.”

MTN has a $31 billion market capitalization, 28 percent operating margins, and expects to add 20 million subscribers in 2010 to its 116 million customer base, mostly in markets like Nigeria, Ghana and Iran. Profits of 14.7 billion rand ($2 billion) last year missed analyst estimates as the rand climbed 24 percent against the dollar.  MTN shares have gained 3.1 percent so far this year compared with a 6.7 percent decline for Bharti.

African Assets

Bharti also is buying operations that MTN once coveted. Nhleko was outbid by Zain, formerly known as Mobile Telecommunications Co., in 2006 for Celtel International BV. Zain paid $3.4 billion for Celtel, compared with MTN’s $2.7 billion bid. Zain bought companies in 13 African countries, all of which it is now selling to Bharti.

Zain’s board said Feb. 16 that Bharti’s offer could yield a $5 billion profit. It ends a seven-year African adventure for the Kuwaiti firm in which it spent as much as $12 billion to win 42 million customers in an area stretching from the Atlantic Ocean to the Gulf of Aden. It only intermittently turned a profit.

Overseas expansion is the only way for Bharti to escape slowing profit growth in India, where price competition from 10 other players -- including Japan’s NTT DoCoMo Inc. and Newbury, England-based Vodafone Group Plc, the world’s largest mobile phone company by revenue -- pushed call rates below half-a-U.S. cent per minute.

121 Million Subscribers

Bharti’s 121 million subscribers, more than the combined populations of Spain and the United Kingdom, makes it India’s largest wireless provider, closely followed by Reliance Communications Ltd, which pursued a merger with MTN after Bharti’s talks failed the first time in May 2008. Price competition has meant that much of urban India already carries cell phones, while rural customers are more difficult to attract and service.

“Mittal wants to diversify and find new markets for future growth, and most of the growth is in the developing world,” said Kurt Hellstrom, former World Chief Executive for Ericsson AB and a Bharti board member in 2004-2009. “Africa is a place India understands.”

Bharti has limited overseas experience. It started operating in Sri Lanka in January 2009, and two months ago it paid $300 million for Warid Telecom, a 3-million-subscriber company based in Dhaka, Bangladesh.

MTN’s Span

By comparison, MTN operates in 21 different countries, each with its own regulatory conditions. More than 80 percent of its earnings come from outside its home market.

The company may spend as much as $10.4 billion through 2011 building phone towers, sponsoring the World Cup in South Africa this June and introducing a $20 cell phone, according to the African Alliance South Africa Securities Ltd., a Johannesburg- based research firm.

A third of that investment may be made in Nigeria, according to the report. That compares to the $1 billion a year that Mittal told analysts Feb. 25 he intends to spend on capital expenditures in all 15 countries annually.

“A lot depends on what Bharti will do,” said Brian Neilson, head of Johannesburg-based telecom research consultant BMI-Knowledge. “Even if Bharti invests aggressively, MTN will not take the challenge lying down.”

--Bloomberg

Zain. Going, Going, Gone. Bharti Readies to Take on Africa

With a deal between two emerging markets giants thought to have been concluded, the acquisition of Zain’s sub Saharan African assets represents a landmark deal for both Bharti Airtel and Zain, and for the African region itself.

Indian operator Bharti, which closed financing for the deal to the tune of $8.3bn earlier this week, will be transformed into a major global operating group becoming the world’s fifth largest operator by customer footprint.

But while Africa provides tremendous growth opportunity, entering 13 countries with very different market dynamics in one go will create a number of challenges, warns Nick Jotischky, principal analyst at Informa Telecoms & Media.

Bharti has a heritage in making network sharing and outsourcing deals work and will not be afraid of being aggressive on per minute pricing.

“Whilst it will, no doubt, be confident of controlling its costs, Airtel will aim to build up its brand equity characterised by reliability very quickly,” said Jotischky. “But reliability alone will not be enough – the newcomer will have to show itself to be innovative as well. In an already competitive marketplace, Bharti will not just be competing with other mobile operators for a share of wallet but with other brands in adjacent consumer goods sectors. This means that Bharti will be under pressure to offer services that are directly relevant to end-users and this will differ from market to market.”

For Zain, the deal represents a retrenchment of the company’s strategy as well as good value. The company may have succeeded in transforming its brand and building up an impressive customer base across sub-Saharan Africa, but it has struggled to operate profitability. “Perhaps it turned to the managed services model too late in the day and failed to leverage its supplier relationships so as to build in sufficient economies of scale – this is where Airtel will focus its efforts,” said Jotischky, adding that Zain may still look to enter new markets, but within North Africa and Middle East, which it sees as more lucrative in the longer term.

The move also has repercussions for the African region, with the likes of MTN, Orange, Vodafone and Millicom joined by a new and rather different pan-regional operator. Bharti has a heritage in making network sharing and outsourcing deals work and will not be afraid of being aggressive on per minute pricing. The company is also well versed in addressing the difficulties of serving a largely rural, high-churn, low-revenue market.

“It is quite likely that Bharti will take advantage of market consolidation by divesting some of its legacy assets and potentially looking to add new markets to its African portfolio,” said Jotischky. “One thing is sure – we can expect to see a transformation in Africa’s competitive and operational landscape as a result of this deal.”

MTN, Bharti, Zain Lead In Revenue Growth Worldwide

As part of its latest round of service provider benchmarking analysis, TeleGeography has found that 16 leading service providers have grown their revenues by an average of 45% over the last three years, equating to some 13% per annum. As could be expected, those achieving the highest growth have been focused on wireless markets in Africa, Latin America, the Middle East, India and China. Leading the growth charge are MTN, Bharti and Zain which have all more than doubled their revenues in the last three years. Despite being substantially larger companies than the top ranked three, America Movil, China Mobile and Vodafone have all recorded growth in the 45%-70% range. Of the companies covered in this research the only other to achieve similar growth is AT&T, which has achieved this via acquisition and reconsolidation of US service providers, rather than organic growth.

While it is no surprise that four of the bottom ranked five companies are incumbent operators from four of Western Europe’s largest markets, the level of their growth (or more accurately the lack of it) will surprise many: in a nutshell all five have stood still for three years. BT and NTT are locked into their highly competitive and low-growth home markets, and are also primarily dependent on wireline markets. Telefonica, Deutsche Telekom and France Telecom have all taken great strides in the past to build businesses beyond their home countries; collectively they now generate over 55% of their revenues from beyond their home markets. However, over the last three years the trio have been held back by tough competition and diminishing growth in the Western European region, and, in the case of Deutsche Telekom, difficulties growing its US operation. The results of their efforts in Latin America and Eastern Europe have not been sufficiently robust to generate substantial revenue growth for the consolidated groups.

So why does this matter? ‘Absolute scale remains an important metric, but growth often has a more direct impact on profitability and the strength of a business’ said TeleGeography’s John Dinsdale. ’The next five years will see the growth rate of telecoms markets drop to less than half of what has been experienced over the last five years. Those companies which are better equipped to meet and beat market growth rates will be more richly rewarded’ added Dinsdale.

TeleGeography’s service provider benchmarking research includes analysis of revenues, profitability, subscribers, ARPU, growth rates, geographic footprint, market share, competitive positioning and future growth prospects. It is published as part of TeleGeography’s GlobalComms Insight service which is a companion to the GlobalComms Database, a regularly updated online database of wireline, wireless and broadband competition. No other telecoms market research service rivals their collective geographic scope and depth of coverage.

http://www.telegeography.com/cu/article.php?article_id=32307&email=html

Bharti CEO Says Africa Has Potential

While explaining the rationale for buying Zain, Africa was described as a potential emerging market by Sunil Bharti Mittal, founder Chairman and Group CEO, Bharti Enterprises.


The need of globalisation for Bharti has also been explained by him as Indian operations were generating free cash flows. While defending his decision to enter into talks with the Kuwait telecom major, he made it clear that competitive intensity is low for Zain in most countries and the valuations offered are fair and reasonable.

According to Bharti officials, Africa had good growth opportunities among emerging markets, given its high population, lower mobile penetration and relatively less competition and the tariffs too, in Africa are more than 10 times India.

Mobiles Help Church Growth In Africa

A mobile phone suspended on a belt round the waist, or from the neck, is a common sight among members of church congregations in Africa. Now, church leaders are heaping praise on mobile phones, sometimes called cell phones, because they say the instruments help congregations grow.

Mobile phone use increased rapidly in Africa about 10 years ago. At that time, however, some Christians on the continent criticised the phones for being "marks of materialism". Now, that has changed.

"It is as if cell phones have come to revolutionise everything, even Christianity," says Anglican Bishop Charles Gaita of Nyahururu in central Kenya. "They are making things happen quickly."

Gaita says mobile phones make it easier and cheaper for the church to spread word about its activities, such as Bible studies and meetings. The phones also make it quicker to get information, and help improve lives.

The bishop says Kenya's mobile phone boom is inspiring creativity among Christians. They are sharing Bible verses through text messaging services (SMS). Young people are using the phones to discuss religious matters on social networks, such as Facebook and Twitter, and downloading Gospel tunes to use as ring tones.

Connecting the phones to microphones to record sermons that can then be sent to congregations in remote areas may sound strange but the churches are doing it, according to Archbishop Mweresa Kivuli, chairperson of the Kenyan Chapter of the Organization of African Instituted Churches.

"If there is a preacher the congregations consider important elsewhere, we connect them to the pastor through this means," Kivuli told Ecumenical News International. "We have at times linked our churches to overseas preachers."

Africa's mobile phone subscribers total nearly 300 million, according to latest International Telecommunication Union statistics. The figure is projected to double by 2020.

South Africa, where about 80 percent of the estimated nation's 50 million population are Christians, leads the continent's mobile phone subscription level. Nigeria is second, with Kenya third.

"The Church sees the mobile phone as a blessing and a gift from God," says the Rev. Martin Wanyoike, national secretary of the Social Communications Commission of the Roman Catholic Church's Kenya Episcopal Conference. "We must use it for the service of the world."

Recently, mobile phone companies introduced money transfer services, which some Christians now use to tithe or give offerings. The churches only need to inform the congregation of the required cell-phone number for this service.

"We get money through the mobile phones once we give out the account details. We have realised there are many Kenyans who do not earn a monthly salary. So, to facilitate their offering, we use the money transfer service," says the Rev. Wellington Mutiso, an evangelical church pastor and general secretary of the Evangelical Alliance of Kenya.

Mutiso says the phones have proved useful as a follow-up tool for converts to Christianity.

"If we do not see them in church [after their conversion] , we call them or send an SMS. The response is immediate," he says. "I can assure you they [the phones] are helping the Church to grow."

At the same time, money transfer services are providing an extra way for churches to raise relief funds. In January, for example, following the earthquake in Haiti, the Catholic Church in Kenya appealed for donations for Haiti to be sent through one of the phone money transfer services.

"The response has been good. We managed to collect 500 000 [Kenya] shillings (US$6500) in a short time. The money was sent to us through the mobile phones. This is a beautiful service," says Wanyoike.

-Ecumenical News International

MTN Silent On Dubai Relocation Claims

No comment has been made by South Africa’s MTN on the rumors regarding the moving of its headquarters from the country to the Middle East. The refusal came after it was reported that the company plans to move its group operations out of the country and eventually delist its shares from the Johannesburg Securities Exchange.

According to MTN executive director Nozipho January-Bardill in late January, the planned relocation of the technical services support team to Dubai is part of the group’s ongoing response to the challenges of the changing global telecommunications industry and it is also intended to address the logistical challenge of supporting the group’s networks in the Middle East in particular, and certain parts of Africa.

Using Dubai as a regional hub offers significant benefits to the company for tax and transport options even though MTN doesn’t have any operations in the UAE.

MTN "Could Be Planning Move to Dubai"

No confirmation or denial has been given by mobile operator MTN regarding its plans to abandon SA in favor of Dubai, a location closer to its higher revenue earners.


It has been speculated that company plans to move its group operations out of the country and eventually delist from the Johannesburg Securities Exchange. It may leave the local business as a subsidiary of the company, or even up for sale.

MTN is already registered in the Middle Eastern country which is said to be the head office for its Middle East and North African operations.

Several MTN groups operation unit has been quietly moving its operations without making any local splash about the plans.

Zain, Bharti To Sign Letter of Intent

A letter of intent (LoI) will be signed between Bharti Airtel and Zain for the proposed USD 10.7-billion deal for the African assets of the Kuwait-based firm by the end of this week.
An exclusive talk is carried out between the two companies till March 25 for the proposed deal as per which Bharti would buy Zain’s African assets except those in Morocco and Sudan.
USD 9 billion for the assets would be paid by Bharti and the rest would be towards the debt of the Kuwaiti firm.