Airtel Enters Rwanda Market

Indian telecoms group Bharti Airtel has announced it has secured a licence to provide 2G and 3G cellular services in Rwanda, The New Times reports. 

The company plans to invest over USD100 million over the next three years, including USD30 million for the purchase of the operating licence. 

It aims to bring ‘affordable services and innovative products’ to the market, and plans to expand its wireless broadband network to all major towns across the country.

 In June 2010 Bharti Airtel acquired the African assets of Kuwait’s Zain Group, in a deal valued at USD10.7 billion. The company took over Zain’s operations in 15 countries, including Malawi, Burkina Faso, Ghana, Kenya, Nigeria, Sierra Leone and Uganda.

Bharti will join two other mobile operators in the market: South Africa-based MTN Rwanda, which had a total of 2.794 million mobile subscribers at the end of June 2011; and Millicom Rwanda (Tigo), which is majority-owned by Luxembourg-based Millicom International Cellular and had a subscriber base of over 812,000 at the same date. A third operator, Rwandatel, had its mobile licence revoked in April 2011, after the company failed to meet licence obligations, such as coverage, quality of service and planned investment targets. Rwandatel is 80% owned by Libyan government investment vehicle LAP Green Networks, although telecoms regulator RURA said the decision to cancel its mobile licence had nothing to do with enforcing a United Nations (UN) resolution to impose sanctions on Libya, including the freezing of its assets, following unrest in the North African nation.

Millicom International Cellular (MIC) has announced that its subsidiary in the Democratic Republic of the Congo, Oasis (Tigo DRC), has agreed to sell 729 towers to Helios Towers DRC, a direct subsidiary of Helios Towers Africa.

As a result of the transaction, Tigo DRC will receive at least USD45 million of cash up front and will retain a significant minority interest in HTD. Additionally, Tigo DRC and HTD have entered into a long term leasing agreement whereby HTD will provide Tigo DRC with access to wireless communications towers and a build-to-suit agreement to support the company's wireless networks.

HTD will seek similar agreements with other operators in DRC. The transaction is expected to create savings in both capital and operating expenditure for Tigo DRC. The specific number of towers and final purchase price will be determined at closing. First closing of the transaction, subject to customary closing conditions, is expected to take place around Q3 2011.


Mikael Grahne, President and CEO of Millicom, said: ‘This agreement with HTD in DRC is Millicom’s third such deal with Helios in Africa and it brings us to a point where nearly two-thirds of our towers in Africa are committed to be outsourced.
 
'We view the DRC as a very attractive market for asset sharing considering its size, lower average purchasing power and logistical complexities. We are confident that this and similar previously announced ventures will continue to produce satisfactory results and improved service levels as we have experienced in Ghana since the creation of the first tower joint venture in Africa with Helios in January 2010. These agreements, and any future sale of our remaining towers in Africa, will enable us to improve both our capital and operating efficiency by focusing on our core activities of sales, marketing, branding, distribution, service innovation and customer care.’

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.”

Senegal Arrest Former Head of Regulator Over Corruption

The authorities in Senegal have arrested the former head of the national telecoms watchdog, Daniel Goumala Seck, on suspicion that he stole funds from the award of a telecoms operating licence to Sudan’s Sudatel, Reuters reports Seck’s legal representative as saying.

The one-time boss of the Agence de Regulation des Telecommunications et des Postes(ARTP) is accused of having siphoned off 2% of the USD200 million received in 2007 for himself and other unnamed ARTP officials, rather than use the funding to expand the watchdog’s operations.

Seck has yet to be charged and no word is given on whether or not it will jeopardise Sudatel’s position at all. The newcomer launched Senegal’s third mobile network last year but has so far failed to make any inroads in a market dominated by France Telecom-backed Orange Senegal with 4.61 million users, or 67% of the sector, at end-2009. Tigo Senegal, a unit of Millicom International Cellular, had 2.09 million users at the same date while Sudatel’s Expresso operation had 203,067.

Tigo Ghana Sells 750 Towers To Helios

Millicom Ghana (trading as Tigo) has agreed to sell approximately 750 towers to Helios Towers Ghana, a direct subsidiary of Helios Towers Africa. As a result of the transaction, Tigo Ghana will retain a minority interest in HTG.

Additionally, Tigo Ghana and Helios Towers have entered into a long term leasing agreement where Helios Towers will provide Tigo Ghana with wireless communications towers, including a build-to-suit agreement to support the company's wireless networks. Helios Towers will seek similar agreements with other operators in Ghana. The transaction is expected to create savings in both capital and operating expenditure for Tigo Ghana.

Mikael Grahne, President and CEO of Millicom, said: "This agreement marks our first substantial commitment to outsourcing passive infrastructure, and is entirely consistent with our strategy of improving both our capital and operating efficiency by focusing on our core activities. Operators around the world are increasingly recognising that owning and operating all of their own network infrastructure does not confer a competitive advantage. The new venture will allow Tigo Ghana to focus on areas of genuine differentiation: sales, marketing, distribution, service innovation and customer care."

The specific number of towers and final purchase price will be determined at closing. First closing of the transaction, subject to customary closing conditions, is expected to take place in approximately 90 days.

Tigo Goes Live In Rwanda

­Millicom says that it has officially started its mobile operations in Rwanda today. Millicom was awarded its license in December 2008 and will be the third operator in the Rwandan market. The service is launching with approximately 50% coverage of the population, with plans to extend coverage significantly over the next three years.

In addition, the operator has deployed 3G infrastructure in Kigali, the capital of Rwanda, and other key urban centres.

Mikael Grahne, President and CEO of Millicom, said "With a population of 10 million, mobile penetration of less than 20%, and a rapidly developing economy, Rwanda is a highly attractive market for Millicom. With our focus on affordability and our strengths in distribution and innovation, we believe we can make mobile voice and value-added services a reality for the mass market in Rwanda."

Etisalat Plans To Enter Sri Lanka

Etisalat is reported to be considering an investment in Sri Lanka now that the military aspect of its decades long civil war has largely concluded. An official from the UAE-based operator is currently visiting the tropical island meeting stakeholders, including the Telecommunications Regulatory Commission (TRC).

"I've told the representative from Etisalat that Sri Lanka is open for investments into new or existing operations," TRC director general, Priyantha Kariyapperuma told the Lanka Business. "With the war over in May, there is ample scope for investments into telecom services and infrastructure facilities, especially in the north and east," he added, referring to the area of the island nation that was most affected by the war.

Millicom International, which owns the Tigo mobile network in Sri Lanka has recently expressed an interest in selling the company. According to figures from the Mobile World analysts, the operator ended Q1 '09 with just over 2.1 million subscribers, representing a market share of 18%.

In related news, the regulator has also said that they want to see more tower sharing by the networks as they expand their networks into the former war-torn regions. The operators are rushing to expand thir coverage, and concerns have been expressed that a "forest" of towers could emerge in the region, which is still light on government administration.

There are six mobile networks operating in the country, with a seventh licensed but yet to launch services

Millicom Reports 5% Rise in Q2 Revenues

Millicom International has reported a five percent rise in Q2 revenues to US$814 million compared to a year ago but a drop of 13% in net profits of $114 million, down from the US$132 million a year ago. In Q2 09, Millicom added 1.7 million net new mobile subscribers, reaching 30.8 million total mobile subscribers, an increase of 25% versus Q2 08 as Millicom continues its focus on attracting the more loyal and higher revenue generating customers.

Mikael Grahne, CEO of Millicom, commented: "Our Q2 09 results continue to show the benefits of the actions taken in the last few quarters to focus on both margins and cash flow generation, whilst maintaining or improving our market position. Our EBITDA margin moved up to 45.6%, which is above our long term target margin for the Group, as we tighten cost controls and adapt our product offering to changing market conditions. Cash flow continues to improve, with operating free cash flow standing at 15% of revenues in Q2 09. We are also pleased to have grown our market share by 0.7 percentage points over the quarter.

In Central America, Honduras grew its subscriber base by 19% year on year, despite the entry of a third operator at the end of Q4 08. Guatemala grew its subscriber base by 18% year-on-year and El Salvador by 17%.

In South America, total subscribers increased by 17% year-on-year with Bolivia showing growth of 51%. In Colombia, the increase in subscribers was 5%, and in Paraguay it was 15%.

In Africa, the best performing markets in terms of net subscriber additions were Chad which grew by 93% year-on-year, adding 110 thousand net new subscribers in Q2 09, and Tanzania, which grew by 81% year- on-year, adding 413 thousand net new subscribers in Q2 09. In Senegal, total subscribers increased by 26% and 144 thousand net new subscribers were added in Q2 09, which is indicative of the continuing trust that subscribers are placing in the Tigo brand.

The topic of the planned sale of the company's Asian assets, Grahne added, "The disposal of our Asian assets is in progress and expressions of interest have been received from a number of parties for the three assets. We expect the disposal to be completed by Q1 2010."

Capex is expected to be approximately $750 million in 2009 (excluding capex relating to Asia of approximately $100m). The EBITDA margin is expected to be maintained at the current level for the full year. Millicom expects operating free cash flow to be in the mid teens as a percentage of revenues for the 2009 year.

Rwandatel Subscribers Hit 280K Mark

Rwandatel, the second national telecom operator has currently hit 280,000 subscribers, the company's Public Relations Manager, Cleophas Kabasiita has said.

Kabasiita told Business Times that, "The company has hit 280,000 active subscribers to date and the company will be rolling out more products, which are in transit and they will be on the market very soon in order to attract more clients," Kabasiita said.

Rwandatel which was officially launched last December has a target of 600,000 subscribers by the end of this year.

Kabasiita also said that the company has been beefing up its human resource base and optimising the network.

The company officials also attributed the increasing number of subscribers to better network and service delivery to the unexpected number of subscribers within its infancy of operations.

"This is the reason why our subscribers have been increasing very first, our network is very good and our customers are experiencing less and less dropped calls," She added.

Rwandatel is the Second National Operator (SNO) in the country after MTN-Rwanda.

TIGO which is owned by the Luxemburg based Millicom International has also received an operating licence and is yet to go commercial by the end of this year.

Kabasiita stated that Rwandatel is not worried of the prevailing competition and that is bent on providing its subscribers with the best network and competitive prices.

The company is the only mobile operator in Rwanda offering all range of Information Communication Technology (ICT) services, including GSM, CDMA and 3G mobile services.

Rwandatel is owned by Libyan African Portfolio (LAP) Green, the company purchased 80 per cent shares and promised to invest $317m (Rfw173b) over 15 years period to revamp the telecom sector in the country.

Millicom COO Becomes New CEO

Luxembourg based telecoms holding firm, Millicom International has announced that Marc Beuls is stepping down as the firm's CEO - and is to be replace by Mikael Grahne, currently Millicom's Chief Operating Officer.  Millicom operates under the Tigo brand in Asia, Africa and Latin America.

Millicom Chairman, Daniel Johannesson, said: “As the Company moves into a new phase the Board believes that our focus on operational excellence should be driven from the top. Mikael Grahne has the experience, personality and qualifications necessary for this new challenge.”

Mikael Grahne commented: “I am delighted to succeed Marc Beuls as Chief Executive. Although I take on this role in a challenging economic climate, I look forward to leading our talented and experienced management team and building on Millicom’s success.

Millicom Chairman, Daniel Johannesson added: “I know that I speak not only for the Board, but for everyone at Millicom, when I thank Marc Beuls for his leadership and substantial contribution over the last 11 years as Chief Executive. He has been responsible for leading the Company through a period of extremely high growth to create the force that Millicom is today in emerging markets. We wish him every success in his future career.”

Marc Beuls commented: “My period as Chief Executive of Millicom has been both enjoyable and immensely fulfilling. I have worked closely with Mikael and I wish him well as he now takes the helm.”

Mikael Grahne (born 1953) joined Millicom in February 2002 as the Chief Operating Officer, having previously been President of Seagram Latin America. Prior to joining Seagram, he was the regional president of a division of the EMEA region at PepsiCo and held various senior management positions with Procter & Gamble. Mr Grahne has an MBA from the Swedish School of Economics in Helsinki, Finland.

Tigo's Millicom Q4 Earnings Rise by 31%

Emerging markets mobile operator Millicom said its fourth-quarter EBITDA rose 31 percent from a year earlier to USD 406 million and revenues were up 18 percent to USD 907 million. The company, which operates under the brand name Tigo, met its target for an EBITDA margin of 45 percent in the period.

However net profit fell to USD 66 million from USD 113 million a year ago, due to a net charge of USD 55 million for tax and forex losses. Total subscribers rose to 32.0 million at year-end from 30.6 million in the third quarter. Millicom plans capital spending of USD 1 billion in the current year, down from USD 1.4 billion in 2008.

The company said it's lowering operating and capital spending due to the more challenging economic environment, and also expects a continued impact on results this year from the stronger US dollar. Millicom is also scaling back its promotions in Latin America, its biggest market, to focus more on revenue-generating customers as subscriber growth slows due to higher market penetration.

The company said its recently acquired Central American fixed-line business Amnet is performing as expected and should be fully integrated during Q1. Helped by improving margins, especially in Africa where the company plans to sell its Sierra Leone operation, Millicom expects to turn free cash flow positive for the full year in 2009.