Vodacom Targeting Angola, Uganda, Ethiopia

South Africa-based mobile group Vodacom has confirmed that it is ready to expand its operational footprint across Africa, and is on the hunt for small-scale acquisitions. Vodacom, which is majority owned by the UK’s Vodafone Group, currently operates in five countries in sub-Saharan Africa, and chief executive Pieter Uys told Dow Jones Newswires that the company is looking to make a series of acquisitions in the USD100 million range.

Uys noted that Vodacom will focus on countries that offer a stable political environment, have densely populated cities and offer room for growth. As such, the CEO pinpointed Angola, Ethiopia and Uganda as likely targets. Announcing its FY11 results earlier this week, Vodacom noted that the financial year ended March was the first time that its operations outside South Africa have contributed positive cash flow. As a result, Uys told Dow Jones: ‘We feel more comfortable that we have the recipe to be successful outside South Africa’.


In March 2012 Sifiso Dabengwa, CEO of Vodacom’s chief rival MTN Group confirmed that his company was interested in lining up so-called ‘bolt-on’ deals in new African markets, once again naming Angola and Ethiopia. In the former, a third mobile licence has been expected for some time, with state-run incumbent Angola Telecom keen to secure an international partner to assist with its entrance to the sector. Meanwhile, Ethiopia is one of the few countries in Africa still operating a monopoly in the wireless sector, with state-run Ethio Telecom the sole licensee.

Elsewhere, Uganda is overcrowded by comparison, boasting six active wireless operators, with another, Sure Telecom Uganda, waiting in the wings. Of the country’s cellcos, Uganda Telecom Ltd and Warid Telecom Uganda are plausible targets, with the ownership of both companies coming under scrutiny in recent years.

New 4G Rules Favour Safaricom Over Other Networks

The government has changed the telecommunication licensing rules in a way that promises to lower the cost of acquiring high-speed delivery platforms and give one operator control of the market.

The new rules that among other things requires those bidding for the 4G spectrum licence is hinged on the Public Private Partnerships (PPP) model and are aimed at avoiding the battle over the pricing that dogged the issuance of the 3G licences.

Tender rules that were published on Tuesday indicate that unlike in the past when the licence was awarded to each operator, the 4G will be controlled by a consortium of players who must have at least 20 per cent local ownership.

The requirement locks out Airtel and Essar's Yu, leaving Safaricom and Telkom Kenya in the race for the tender.

The two are the only holders of the Network Facilities Provider Tier 1 category (the technical reference to mobile phone operators' licence) and with a 20 per cent local shareholding.

The government, through Treasury, has 49 per cent stake in Telkom Kenya while Safaricom is owned 40 per cent by the UK's Vodafone, 35 per cent by the Government of Kenya and 25 per cent by the public through the Nairobi Stock Exchange.

Airtel Kenya has a five per cent local ownership, after businessman Naushad Merali - the sole local partner -- sold 15 per cent of his stake in the firm last year.

Essar's Yu is 100 per cent owned by India's Essar Communications, which bought the 20 per cent stake that local firms Capital Africa, CrossLink and Startnet held last year for an undisclosed sum.

Rene Meza, the Airtel managing director, questioned the transparency of the tendering process and promised that his firm will be seeking clarification, especially on the 20 per cent rule as Airtel intends to fully participate in the tendering process.

"We will seek clarification on the requirement of 20 per cent ownership. We believe it is sufficient that an operator is licensed," said Mr Meza. "Because there is no structure for the tender proposal, evaluation of the bids by the Ministry of Information may be subjective to the extent that undermines transparency and fairness."

4G refers to the fourth generation of wireless telecommunication technology with a larger capacity to deliver data and facilitate high end of market services such as video conferencing and gaming.

Kenya's telecom operators see ownership of the technology as critical to future revenue growth with the continued decline in earnings from the voice business.

Prospective bidders are also questioning the requirement that the government becomes part of the consortia that will be competing for the 4G licence while at the same time participate in evaluation of the tenders. [Read: State to withhold licence for 4G frequency rollout]

On Thursday, the government said it will not bend the 20 per cent local ownership rule, arguing that Yu and Airtel chose to sidestep the local shareholding requirement.

"The two don't meet the 20 per cent rule and do not have national infrastructure that can be upgraded to 4G," said Bitange Ndemo, the Information permanent secretary.

Dr Ndemo said the 20 per cent rule is a policy requirement that Airtel and Yu should make an effort to comply with.

People familiar with the policy position on the matter said the ultimate goal of the tendering is to open a window for the government to ride on operators with national coverage to reduce the cost and time of deploying the 4G network in readiness for use in e-voting in 2012.

"An individual firm will have to spend not less than $4 billion to roll out the infrastructure but the model we have proposed will cost an average of $100 million and take less time," said our source.

Telecoms sector ownership rules require foreign companies to have a 20 per cent local shareholding.

It, however, gives foreign investors three year grace period to look for suitable partners.

Econet Wirelesss International, which held the third mobile license was the first beneficiary of this rule that helped it survive a protracted court battle with its local partners, the Kenya National Federation of Farmers.

Econet ultimately sold its shares to Essar Communication, a subsidiary of India's Essar Global four years ago.

He acquired and immediately sold the Vivendi stake in 2004 at $250 million remaining with his 40 per cent.

Kuwait's MTC then bought Celtel out of 16 African countries in 2005 and three years later, Mr Merali sold half of his stake to Zain putting 80 per cent of the firm in foreign hands.

Last year, Mr Merali sought exemption and was allowed to sell an additional 15 per cent of his stake - a move that has now come back to Bharti Airtel, the current owners.

The tender specifications have also locked out infrastructure providers such as Kenya Data Networks, AccessKenya, Jamii and Wananchi Group who do not fall within the licence category specified on the tender notice.

Joshua Chepkwony, the chairman of the Telecommunication Network Operators said that while having an open access 4G network was positive, the manner in which the tender document has been structured shows that the government has a pre-determined candidate.

"There is need to call for a stakeholders meeting to explain the desired composition of the consortium because as it is the tender document locks out operators who are not in the tier 1 category but fall within the telecoms ecosystem," he said.

The LTE -- commonly known as 4G --offers subscribers access to mobile internet at much faster speeds, making it a cutting edge tool for companies offering their services on the medium.

The government says it will offer 4G license to a consortium of players that will implement and manage it to avert disputes encountered with the issuance of the 3G licences to the late entrants.

Safaricom paid $25 million for the 3G license fee, only for the government to lower the fee to $10 million for Airtel and Telkom Kenya or 60 per cent less than Safaricom.

Under the new model, the consortium members will be composed of government (the owner of the national spectrum), equipment suppliers such as Huawei, Nokia Siemens Networks, Alcatel Lucent and Ericsson who must team up with telecommunication firms such as Safaricom, Telkom Kenya for expertise and equipment needed for the rollout.

The move comes as mobile operators shift their focus to data, with competition in the voice segments getting stiff and revenue starting to decline with deep tariff cuts that have since August last year lowered the cost of voice calls by 50 per cent.

Vodacom Could Re-brand To Vodafone Colours

According to Times Live, South Africa-based telecoms group Vodacom is poised to unveil its new corporate colours at the Orlando Stadium in Soweto on Friday night.

Although Vodacom has yet to confirm the details, mounting press speculation indicates that the firm will be re-branded in line with the red and white colour scheme used by parent company Vodafone, which secured a controlling stake in Vodacom in May 2009.

Vodacom, which also has operations in Mozambique, Tanzania, Lesotho and the Democratic Republic of the Congo (DRC), has reportedly budgeted a sum of ZAR200 million (USD29 million) for the re-branding exercise. However, Vodacom is expected to retain its name after the transition, despite Vodafone's global strategy to re-brand all operations in which it has a controlling stake. 

Vodafone, which holds a 65% stake in Vodacom, intends to increase its connection to Vodacom, by rotating executives among its foreign units and allowing Vodacom to leverage its global supply chain as well as introducing in new services pioneered by Vodafone elsewhere.

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

Telecom Egypt Mulls MVNO Option

Egypt’s fixed line incumbent Telecom Egypt (TE) is reportedly mulling the option of setting up a mobile virtual network operator (MVNO), according to Reuters, citing local press reports.

hile TE already holds a 45% stake in the country’s second largest cellco by subscribers, Vodafone Egypt, it is believed that it is considering the MVNO venture as a way to become more involved in the country’s mobile sector, prompted in part by continued fixed to mobile substitution.

TE had earlier this year looked to increase its stake in Vodafone Egypt, but the cellco’s UK-based parent company, Vodafone Group, ended negotiations in June 2010 over a possible divestment of its interest in its Egyptian subsidiary – little more than two weeks after the parties first began discussions.

TE had approached the British group in April 2010 to sound out the possibility of a possible deal, which had been valued at between GBP3 billion and GBP4 billion (USD4 billion-USD7 billion).

Egypt Approves Tripple-Play Service

The Egyptian telecoms regulator, the National Telecom Regulatory Authority (NTRA), has given the go-ahead for two consortia to provide triple-play services to residential compounds in Cairo’s suburbs which contain between 50 and 5,000 housing units, Reuters reports. The announcement follows the NTRA’s revelation that it was making two geographically-restricted triple-play concessions available last October. As previously reported by CommsUpdate, in April 2010 two bids were received for the concessions, and commenting on the latest development, Amr Badawi, NTRA CEO, said: ‘The committee has finished its work, and we had two bids, and both bids were accepted.’ It is understood that of the two consortia, one is led by LINKdotNET Egypt, which was recently sold to mobile network operator Egyptian Company for Mobile Services (MobiNil), and includes affiliates of local telecoms group Orascom Telecom. The other licence-winning group is believed to include Vodafone Egypt.

Alongside the announcement that the triple-play concessions had been awarded the NTRA also announced that it had appealed against a court ruling which overturned a ruling it made in September 2008 lowering interconnection rates. Last month it was revealed that a Cairo court had reversed the NTRA’s ruling following an appeal by MobiNil. ‘We've appealed that, and our decision is still on... We believe that we have a just case and we will prevail at the end,’ Badawi said of the matter.

Orascom In Bid To Acquire Polish, Serbian Operators

Orascom Telecom Holding chairman Naguib Sawiris has told Egyptian state-owned newspaper, al-Ahram that his company is looking at acquiring Polish mobile phone operator Polkomtel and Serbia's Telekom Srbija. Sawiris did not reveal details of either acquisition.

Polkomtel is currently 21.85% owned by Poland's largest power group, PGE, while oil refiner PKN Orlen and copper miner KGHM Polska Miedz each hold 24.39%. Polish state-owned coalminer Weglokoks has 5%, while Vodafone Group holds 24.39% of shares. Telekom Srbija meanwhile is 80% state-owned, but in March the government announced plans to sell half its stake. Greece's Hellenic Telecommunications Organisation (OTE) owns the remainder.

Orascom Telecom itself is majority owned by Rome-based Weather Investments. Sawiris and his family own the majority of Weather, which owns 51% of Orascom Telecom Holding, plus Italian cellco Wind Telecomunicazioni and Greek telco Wind Hellas.

Zain Kenya Gets 3G Licence

Kenyan mobile operator Zain Kenya has been awarded a 3G licence by the Communications Commission of Kenya (CCK) for a fee of KES815 million (USD10 million). The CCK cut the price from USD25 million earlier this month in order to boost competition. Zain and rival cellco Orange had sought the reduction for some time. CCK managing director Charles Njoroge said that the purchase of the 3G concession by Zain would ‘increase competition in the telephony industry, and ultimately benefit the consumers’.

Back in 2007 Vodafone associate and Kenya’s largest wireless operator by subscribers Safaricom paid USD25 million for the country’s first 3G licence. It is now planning to seek a partial refund in the wake of the CCK’s decision.

MTN Mobile Money Helps Revolutionise Money Transfer

Few Ugandans have access to a bank branch or an ATM. But most do have a cellphone within easy reach - and this reality is driving the world's fastest-growing mobile payments service, MTN's Mobile Money.
Launched in March 2009, the service has attracted 890 000 MTN subscribers, says MTN Uganda's head of mobile money, Richard Mwami. The number of users will hit 2m by year-end and 3,5m - more than one in six MTN Uganda subscribers - by 2012, he predicts.

MTN's benchmark is UK mobile network operator Vodafone's M-Pesa service, offered by Kenyan operator Safaricom. With 9,5m users - 40% of Kenya's adult population - M-Pesa is described by GSM Association, the global mobile network operator body, as the world's most successful mobile payments service.

After one year, adoption of MTN Uganda's payments service exceeds that of M-Pesa at the same stage, says Reg Swart, senior vice-president of Cape Town-based Fundamo, technology supplier to MTN's project. Over US300m in transactions have already been processed, he adds.

A key factor in the Uganda success is marketing through 2500 representatives, says Mwami. Direct contact and educating subscribers are critical to growing the service. Also vital is easy access to cash remitted to users, or enabling them to convert cash into e-money, he says. This is achieved through agents such as village shop owners. Mwami says it is "a good proposition" for agents. He explains they earn commission on transactions and receive liquidity management assistance from MTN's banking partner, Standard Bank's Stanbic Bank Uganda unit.

Vodafone Considers Pulling Out of Egypt Subsidiary

British mobile group Vodafone is understood to be examining the possibility of selling its controlling stake in its Egyptian subsidiary, the Financial Times reports. According to the broadsheet, citing people familiar with the matter, Vodafone has already started initial negotiations regarding the potential divestment of its 55% holding in Vodafone Egypt, with fixed line incumbent Telecom Egypt (TE) mentioned as the interested party in a deal that could be worth up to GBP3 billion (USD4.3 billion). Despite claims that talks have been ongoing for around a month though, Vodafone declined to comment on the matter, while TE said that it was unaware of any discussions.

The revelation comes after Tarek Tantawy, CEO of TE, which already owns 45% of Vodafone Egypt, said that the fixed line operator was mulling its options for a full entry into the domestic mobile sector; it is believed that if no agreement is reached between Vodafone and TE that the latter may consider trying to secure its own wireless licence, should the government as rumoured offer a fourth mobile concession in the future.

Additionally, should a deal be reached it would also underline the willingness of Vodafone Group CEO Vittorio Colao to streamline his company’s portfolio, in line with comments made by the executive earlier this month stating that the group was looking to focus on developing its European units, alongside its interests in sub-Saharan Africa and India.

Protests Over Mobile Services InGhana

Thousands of people took to the streets of Ghana's capital city of Accra last week to protest at the alleged poor quality of mobile phone networks in the country. As part of the protest, the Consumer Protection Agency (CPA) lead a call for mobile phone users to switch off their phones on Thursday morning as part of the protests.

The demonstrators, mostly students, danced and sang as they passed through the main streets of the capital city with placards, some of which read "we are tired of your poor services", "stop tricky promotions" and "MTN, Tigo, Kasapa, Vodafone and Zain, the value is the same."

The protest ended at the premises of the Ministry of Communications, where the head of the CPA, Nana Prempeh Aduhene presented a petition to the deputy communications minister, Dr Nartey Siaw Sapore. He in turn assured the protesters that the government would look into the petition and take necessary actions.

Prempeh Aduhene told the Xinhua news agency that the response they got from the public during the demonstration was an indication that Ghanaians were indeed fed up with the poor services of the telecom companies.

Local media estimated that the six-hour switch-off protest would lose the mobile networks around US$6 million in revenues.

Vodafone & CWN Take Case To Belgium

 It was announced yesterday that warring shareholders Vodacom of South Africa and its partner Congolese Wireless Network (CWN) had been unable to reach an agreement concerning their joint venture in the Democratic Republic of Congo (DRC). Now arbitration proceedings will be lodged under International Chamber of Commerce rules in Brussels. Bob Collymore, chief officer corporate affairs with Vodacom South African said, ‘We stand ready to fund further expansion and are hopeful that the arbitration process will bring a positive result.’

The disagreement between the two companies was exacerbated in recent months when Vodacom proposed a capital injection of USD484million, which would have diluted CWN's shares in Vodacom Congo. CWN refused the injection point blank and instead, earlier this week, proposed a liquidation or sell-off to a third party of Vodacom Congo, which Vodacom in turn rejected.

Vodacom Congo, which began operations in 2002, is 51% owned by Vodacom, the African mobile network operator majority owned by Vodafone Group PLC, and the remainder by CWN.

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.”

Ghana Halts Issuing of New Licences

Ghana’s telecoms regulator the National Communications Authority (NCA) has made public that going forward, it will not issue any new operating licences to new players, the Business Guide reports.

NCA director general Bernard Forson made the announcement to parliament last week, during a Public Accounts Committee scrutiny into the regulator’s audited report for 2005. Explaining the decision, Forson said that the country’s limited spectrum resources had already been allocated to the country’s six incumbent mobile operators, and therefore there was no room for market entrants.

Although Glo Mobile has yet to launch its operation, the other licensed cellcos - MTN, Vodafone, Zain, Tigo and Kasapa – are said to be ‘competing fervently for customers’. Despite the apparent lockdown, the director general did say that there was room for new companies wishing to offer data-only services which, Forson noted, would help to drive up the proliferation of the internet in Ghana.

Egypts Bans Ban On Skype Calls

Egypt’s National Telecommunication Regulatory Authority (NTRA) has confirmed that the country has begun enforcing a ban on international calls made via mobile internet connections, Reuters reports.

The ban applies to all three of Egypt’s mobile network operators – Egyptian Company for Mobile Services (MobiNil), Vodafone Egypt and Etisalat Mirs – and is expected to provide a much-needed boost to the fixed line revenue of monopoly landline provider, state-owned Telecom Egypt (TE). Clarifying the situation, Amr Badawy, executive president of the NTRA, said: ‘The ban is on Skype on mobile internet, not on fixed, and this is due to the fact it is against the law since it bypasses the legal gateway.’

Under existing regulations all international calls must be routed via TE’s network. Despite mentioning Skype by name, it is understood that the regulator may extend the ban to other services, with Badawy noting: ‘We are targeting any illegal voice traffic on the mobile (internet). Any traffic outside the international gateway is against the law.’ It remains unclear however whether such a restriction will be extended to fixed line internet connections.

Vodafone Signs Deal With Libya's Al-Madar

 Vodafone says that it has signed a non-equity cooperation deal with Libyan state owned mobile network, Almadar Aljadid (Al-Madar) to offer Vodafone branded services in the North African country.

Under the terms of this agreement, Almadar Aljadid will have exclusive access to Vodafone's range of products, devices and services in Libya. In addition, Vodafone will be able to use Almadar Aljadid's network to offer its customers a range of services, which utilise 'home' network capabilities as well as extended coverage within Libya.

The partnership will also enable multinational companies located outside Libya and with local operations to meet their needs for unified communications, centralised customer care and Vodafone services using Almadar Aljadid network.

Commenting on the agreement, Colin MacDougall, Vodafone Partner Markets director for Africa and the Middle East, said: "We are delighted to partner with Almadar Aljadid in order to better serve our business customers' communications requirements as they look to grow their operations in Libya."

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

Ghana Court Adjourns Vodafone Case

Ghana’s Supreme Court yesterday announced its decision to adjourn to 9 March 2010 the case concerning the sale of national PTO Ghana Telecom (GT) to the UK's Vodafone Group. The decision was taken by a nine-member panel which ruled the High Court, which handed the case to it, had not fully complied with the rules of the court, GNA reports. In a statement the Supreme Court said: ‘We find that the trial High Court did not comply with rule 67 of CI 16. We hereby order the High Court to comply within 14 days.’

In October 2009 CommsUpdate reported that the committee set up to investigate the sale of a 70% stake in GT to Vodafone recommended that the government consider renegotiating the Sale and Purchase Agreement. At the time, Dr Valerie Sawyerr, the Deputy Chief of Staff of the committee said that Ghana’s government should in particular reconsider Parties to the SPA; compliance or otherwise of the SPA with the laws of Ghana, particularly the NCA Regulations and the Internal Revenue Act 592; value for money/ Transaction consideration; retention of the National Fibre Optic by the Government of Ghana as a strategic national asset; decoupling of the Ghana Telecom University from the transaction (already done); and return of GT investments to the Government of Ghana such as the Telecom Emporium.

Earlier the same month a leaked Ghanaian government report claimed that last year’s sale of the incumbent fixed line operator was ‘unconstitutional and illegal', and did not represent good value for money.

"The Vodafone Way" Introduced In Ghana to Make Staff More Customer Focused

“The Vodafone Way”, a new business model has been launched by Vodafone Ghana to create a significant shift in the work culture of employees and partners of the telecom giant to make it more customers oriented.
According to Isaac Abraham, Corporate Communications Manager of the Company, new business model was designed to make the company’s customers’ expectations real by investing in programmes that would help it understand what motivated customers and it will ensure that Vodafone, its staff and partners do business with speed, simplicity and trust.

The service is also expected to assist in making the company the number one communications network in the country not only in terms of total mobile numbers but in terms of quality of voice and data services and finding solutions to telecommunications problems.