“I think at this point with the economic crisis, it would be the best time for each giant and medium-sized operator to rethink about merging with others. To survive within the region, I imagine that in the coming few years the number of giant operators will decrease. I would really expect something to happen within the coming year or so with a big announcement,” stated Ahmed Bin Ali, Etisalat’s vice president of corporate communications, at the SAMENA Telecommunications Council’s Convergence to Jordan conference.

With such bold predictions coming from the UAE’s Etisalat, 2009 could shape up to be a thrilling year with respect to the consolidation of service providers across emerging markets. While acquisition flow has been strong in the last few years throughout the SAMENA (South Asia Middle East and North Africa) region due to market liberalisation and expansion of national players, mergers of larger entities have proved a little less successful. Failure by Indian providers Bharti Airtel or Reliance Communications to come to an agreement with pan- African behemoth MTN Group in July is one such example.

With Etisalat’s determined ambition to become one of the top-10 global operators by 2010, Zain targeting to triple its customer base to 150 million subscribers by 2011, and Qtel’s ambition to reach a top-20 position by 2020, it is clear that significant acquisitions will be necessary for these operators to reach their stated goals. Other companies that are likely to come into the fray with respect to the potential creation of emerging market super operators include MTN Group, Bharti Airtel, Orascom Telecom, and STC.

Alex Shalaby, head of business development and board member of Orascom Telecom, and chairman of its Egyptian mobile subsidiary Mobinil, confirms that companies such as Orascom are likely to be involved in any significant consolidation set to take place in the SAMENA region.

“At the end of the day, the question I am interested in is whether it would be better for us as regional operators to talk
together about consolidation and merging, or invite global operators into the region and give them the access? I think it’s a fair question and one that should be given some thought to,” Shalaby said. “If we don’t hang together, we hang separately.”

Alex Shalaby believes Orascom Telecom could potentially be involved in a regional merger in the near-term. He believes consolidation of the regional market is inevitable

Shalaby notes that while the focus is on Middle East operators, some service operators from amongst these ranks can already be considered global operators, with a number of players venturing into India and the sub-continent, South East Asia, North America and Europe.

“I think there will be some consolidation because the smaller operators that might have difficulty in raising financing may find it easy to team up or be nurtured. I believe we can expect some of this due to the current situation,” Shalaby said.

Joseph Hanania, CEO of Umniah in Jordan, which is 96 per cent owned by Batelco Group, remains optimistic that merger-mania in the sector could take place in the near-term.

He believes the Middle East in particular would benefit from the consolidation of regional peers by ensuring a greater proportion of wealth was retained within the region. Such activity would also help in the wider distribution of wealth, Hanania suggests.

“If you open up the region in a constructive way, you could balance it better,” he asserted. “However, I seriously question
if a merger would happen in this day and age, because there has been no precedence at such a level before. I would like to see a true merger occur within the region because so far we do not have it.”

Hanania believes that any assets that can be consolidated will be in the year to come, and identifies Batelco as one of the companies that might be an early target. STC’s Hamoud Al Kussayer, vice president of regulatory affairs forecasts a delay in large-scale mergers and acquisitions in the sector as a result of the global economic downturn.

Umniah’s Hanania believes the Middle East would benefit from consolidation of regional peers by ensuring a greater proportion of wealth is retained within the region

“For sure, synergies between regional operators are much better than with anyone from outside. This financial crisis is hurting everyone, and I don’t think international operators will be in a better situation than regional ones. So I support regional operators coming together,” Al Kussayer commented. “However, I believe because of the financial crisis it will be slower rather than faster, as operators will tend to wait and see.”

Orascom’s Shalaby believes it is every operator’s prerogative to try and weather the current economic storm through
innovation, controlling costs, development of new business models, the introduction of novel services, and imaginative tariff structures. He believes that while operators may not have access to the capital necessary to continue expanding networks and growing horizontally, product, service and tariffing initiatives can help keep the top line relatively strong.

“What we’re seeing in the financial markets is going to hit us and our business requirement because we will need to go to those financial institutions,” Shalaby said. “We may have some difficulty raising the capital that we would need to continue our expansion, as high growth requires high investment. As an industry we will experience some difficulties in 2009, depending on how soon the financial institutions stand up on their own feet or start to operate normally again.”

Ross Cormack, CEO of Nawras in Oman highlights that with the mobile operator’s initial public offering process underway, senior staff met recently with the company’s investment bank for advice on the potential value of Nawras. The following day, the investment bank lost 25 per cent of its market value, showcasing just how volatile the market is at this point in time.

Hamoud Al Kussayer of STC believes the global financial crisis is likely to slow down the pace of deal-making in the telecoms sector in the region
 
It is clear that whoever has the cash and the net profits will be in a much better position, and STC’s Al Kussayer believes that while some operators will continue to invest in their network and acquisitions in the current climate, others will be more cautious in their approach to organic and inorganic growth.

Etisalat is one company that shows no sign of slowing down its aggressive investment strategy. The operator is reported to have US$3 billion in its coffers, which it is seeking to invest in opportunistic investments that are likely to arise in the new year.

“We are confident of the good position Etisalat has,” affirmed Bin Ali. “We have the ability to expand, we have the good credit ratings, we have enough reserve in cash and we have the know-how to go further. Everything is possible.”

Likewise, Zain announced last month that it intends to make up to five acquisitions worth up to US$4 billion within the next two years.

For some operators the pressure being exerted on their operations are much more localised with Orange Jordan’s CEO Mickael Ghossein acknowledging that a pricewar already exists in his local market, a situation that is affecting margins substantially.

“This is a big problem for operators because a price war is killing our gross revenues, which are now flat. The price war is very good for the customer because it will make everything accessible, but this is attacking our business,” Ghossein stated.

He believes that retail prices in Arab countries are too low compared to prices globally, where regional Arab ARPU is around US$20, but in Europe it is twice that amount.

“I believe it is the right time now in Jordan to stop this price war. It is my hope and my wish that other operators will work together to stop this price war,” Ghossein said.

Ahmed Bin Ali of Etisalat believes the company is in a good position to continue seeking out investment opportunities

It comes as no surprise that Hanania of Umniah agrees that the price war in Jordan is counter- productive, though Umniah is known to be the most price-competitive player of all the operators in Jordan. While Hanania applauds the beauty of an open market with respect to free competition, he believes once a price war results in the erosion of a company’s business model, then this could potentially lead to a slowdown in investment and innovation, which in turn negatively affects the entire sector.

“I think consumers are benefiting, and everybody wants the consumers to benefit, but there are business models that need to be sustained and need to grow. You can innovate in many ways – you can innovate not only in products, services and the differentiation you provide. You can innovate in the way you collaborate with your suppliers and with other partners in the
market. Innovation can go across the board, including optimisation of your expenses and everything else you support. But there’s a limit to how much you can produce out of that optimisation,” Hanania stated.

Ordinarily, the telecoms industry is much less associated with the theme of sustainability than many other so-called “heavy” industries such as energy, chemicals or automotive. An obvious explanation for this is that the telecoms industry is much less carbon-intensive, and consequently could be seen as greener. However, appearances can be deceptive

It is a mistake to equate “sustainability” with “green” – sustainability is more encompassing than green, comprising not only environmental issues but also social, marketplace and quality of life issues. As any telecoms executive can testify, the industry has to cope with plenty of sustainability issues, such as digital divide or inclusion, security, privacy and responsible content. Various initiatives have been undertaken in this regard, such as the Global e-Sustainability Initiative (GeSI), a partnership of information & communication technologies (ICT) companies that promotes technologies for a sustainable development.

Telecoms players are also well positioned to help other industries cope with sustainability challenges. Telecoms provide not only a medium of communication but also function as an enabler for several customer industries, including healthcare, education, public services, transportation, building, and agriculture – particularly within developing economies.

In this article, we will provide a brief perspective on how to address these two questions:

How can telecoms companies tackle their own sustainability challenges?

How can telecoms companies enable and enhance the sustainability of other industries, and thus open up new market space for their own products and services?

Tackling telecoms’ own sustainability challenge

Sustainability issues in the telecoms industry have four common drivers:

Reduction of operational expenditure – as the operation of a mobile network is a significantly energy-intensive process, a large percentage of the OPEX for a telecoms operator is sunk into the energy cost of running the transmission network; a
projected rise in energy costs leaves these operators exposed to higher energy prices and reduced margin

Rapidly evolving legislation and regulation – while the ICT industry has thus far largely avoided environmental scrutiny, legislation and regulation are evolving quickly to bring the industry on par with other energy intensive industries

Product creation and revenue development – Swiftly evolving technology and historically fast churn are beginning to compete with consumer attitudes towards sustainability; ICTs are looking for alternative streams of revenue and clever business models to address sustainability issues

Consumer preferences and predominance of the social dimension – Lifestyles of Health and Sustainability (LOHAS) consumers are pushing manufacturers and service providers to offer a broader portfolio of sustainable products. In a recent Arthur D. Little consumer survey, more than 50 per cent of the respondents indicated that a greater availability of green products would increase their overall purchases of green goods. Understanding these drivers is essential to managing and coping with sustainability issues in a strategic manner. A strategic approach to sustainability focuses on what a company can do in order to convert risk into opportunity, rather than simply managing or avoiding risk. Telecoms companies must shift from a risk-driven to an opportunity-driven approach.

Enabling sustainability in other industries

Telecoms has a powerful role to play in enabling and enhancing the sustainability of other industries. Through the provision of new products and services, or the innovative application of existing ones, telecoms companies can support firms in other industries transform sustainability issues into new sources of revenues and competitive advantages, while at the same time providing benefits to the recipient industry, society and the environment.

A four-step approach has been established to support telecoms companies in identifying and realising these opportunities:

Step 1: Select the most promising target industries. An ICT company’s adjacent industries often offer opportunities for technology innovation both at product or process level; identifying a match between another industry’s ICT needs and
one’s own knowledge base and capabilities will help deliver sustainable technological innovation.

Step 2: Identify the target industry’s most relevant sustainability issues. Sustainability issues within the target industry must be identified, analysed and prioritised in terms of relevance and business impact. After the most relevant sustainability issues have been prioritised, it can be determined what opportunities exist for telecoms to best address these issues – either through the innovative use of existing products/services or through the development of new products and services.

Step 3: Analyse and prioritise opportunities. Criteria must then be established for screening and ranking identified opportunities. “Attractiveness” versus “feasibility” is a good starting point in assessing the match between targeted opportunities and a telecoms company’s capability to implement adequate solutions. By applying the criteria, a shortlist of opportunities is then established.

Step 4: Select the opportunities that maximise the mutual benefits for all stakeholders.

This step selects those opportunities that will have mutual benefits for the telecoms sector, the targeted industry, the environment and society. Obviously, the nature of the benefits will vary based on the stakeholder, but through quantifying the potential benefits, business cases can be prepared and opportunities selected that will maximise the potential impact.

Examples of ICT-driven solutions in other industries:

It is no surprise that within the healthcare industry, the demand for ICT-enabled solutions is strong. The application of ICT can make the healthcare system more efficient by reducing the trade-off between quality and cost of service. Many European countries have collaborated to establish an “eHealth Plan”, aimed at supporting national health systems in reducing treatment costs and enhancing treatment quality.

Summary

Consumers attribute increasing value to the environmental and social performance of products and services and, consequently, to the companies that produce them. Consumer preference is increasingly being driven by environmental friendly and responsible lifestyle and consumption attitudes. Likewise, investors are directing their monies with an eye on the value of sustainability.

The telecoms sector has a profitable opportunity and is in a strong position to impact sustainability on two levels: by addressing the sustainability issues within its own industry, and functioning as a vehicle to support other industries in coping with their own sustainability challenges. Telecoms companies should shift from a risk-driven to an opportunity-driven approach, that is, move from a defensiveness and compliance stage to a strategic one by reframing social and environmental issues not as risks, but rather as sizeable and tangible market opportunities. By doing so, optimising corporate performance and sustainability is not a zero-sum game – both the company and society can win.

This article was contributed by Zoran Vasiljev, director of Arthur D. Little, Middle East & South East Asia

Africa Com 2008 was the event’s 11th annual outing in Cape Town, South Africa, celebrating industry developments across the continent. Having participated at 10 previous events as speaker, moderator or delegate, Michèle Scanlon, principal consultant of Green Giraffe Communications opened the conference with a brief synopsis of how quickly some developments have come to market, while in others cases, how slow things are to materialise

In 2000, prepaid roaming was a focal point of the  agenda of the annual African telecoms conference, then known as GSM Africa. Six years on in September 2006, Celtel (now Zain) launched its One Network in East Africa providing transparency of roaming charges as well as cross-border top-ups for prepaid customers. In August 2008, Zain extended its One Network to link all its properties in Africa and the Middle East, and competing products have emerged from other East African networks as well as a panregional service from MTN.

In 2001, mobile banking was first discussed by MTN South Africa, and in March 2007, Safaricom launched its M-PESA service in Kenya, which has become the de facto benchmark globally for domestic mobile money transfer services. The service has catapulted mobile financial services onto centre stage, becoming a key point of discussion at the 2007 Africa Com event. This year, Zain announced its Zap! brand for its new mobile money service currently being piloted in East Africa.

In 2002, African operators discussed how to maintain profitability with declining ARPU levels and how to drive loyalty in markets susceptible to high churn. Six years later in 2008, these same operators are tending to their cost models as they look to work with competing operators on shared network infrastructure. Operators are also finding ways to lower network OPEX through initiatives such as the reduction of diesel consumption through the adoption of green energy and sustainable power solutions.

Extending coverage to rural areas was a competitive differentiator in 2007, but now the focus is increasingly on service differentiation, and the establishment of aspirational brands. On August 1, 2008 Zain’s pan-regional rebrand across all its African properties was certainly one of the most ambitious rebrand strategies ever witnessed on the continent, and this year’s Africa Com delegates were left in no doubt over the passion that Chris Gabriel, CEO of Zain Africa, has for the brand. With such leadership, one can expect further exciting brand reaffirmation in the coming year.

“Bridging the digital divide” was an industry focus point in 2004 with governments recognising that growing penetration of mobile phones could lead to a positive economic impact in developing markets. Today as mobile penetration in Africa tops 30 per cent and continues to expand, the term has morphed to “digital inclusion” with the industry focusing on increasing Internet penetration and specifically broadband services, primarily through wireless-enabled technologies such as WiMAX.

Investor strategies are also mirrored in the evolution of the Africa Com event with Orascom being the only featured network operator back in 2000, while MTN, Orange and Zain have become regular features in recent years. A new player announced its regional strategy at this year’s event. Michael Foley, CEO Africa, Essar Communications Holdings, introduced the company’s Yu brand, which is set to be launched in Nairobi, Kenya before end of November 2008. Essar plans to expand to a further 5-6 markets in Africa in 2009. Foley highlighted his interest in “distressed properties that were short of cash”. Similarly, Zain’s Gabriel announced that following the recent refinancing of Zain, the operator was “shopping” in Africa, declaring that South Africa was always of interest to Zain to enter should the opportunity arise.

A year ago, the event moved its technology focus from GSM to all telephony services reflecting the vertical expansion of mobile operators in becoming ISP and wholesale players, as well as the emergence of CDMA players in the traditional mobile environment. New greenfield players, especially WiMAX entrants, were singled out at the 2008 event as being potential victims of the current economic climate in that they could be subject to limitations on capital funds for new ventures. However, Noel Kirkaldy, Motorola’s director of broadband services in the region, dispelled such comments insisting that a greenfield WiMAX operation could acquire a licence, network infrastructure and be operational all at a fraction of what a traditional mobile operator would pay for just its licence.

The continuing liberalisation and privatisation of fixed-line operators across the continent has opened up new avenues for such players, which have traditionally been seen as bureaucratic and slow-tomarket. It will be interesting to track the progress of Telkom South Africa at next year’s Africa Com event given it will represent the telco’s first year of separation from Vodacom. Representatives for both Vodacom and Telkom were conspicuously absent from this year’s speaker list.

In 2005, the industry was fixated with lowering access device price points, and the GSMA’s Ultra Low Cost Handset (ULCH) initiative, which was dominated by Motorola in Africa. In 2008, almost every presenter continued to highlight access device pricing as a continued barrier to entry. Tim Lowry, VP Southern and East Africa, MTN Group and MD, MTN South Africa indicated that MTN was sourcing US$10- US$12 handsets from China, while Dubai-based mobile phone manufacturer, Mi, generated lots of interest at this year’s event with its low cost handsets that are especially tailored for the African market with retail price points at US$17-US$35.

In summary, the key themes to emerge from the 2008 Africa Com include:

Further developments are sought to lower barriers to entry, especially handset prices.

Alternatives to diesel-fuelled BTS are being sought to lower network OPEX as well as promote green energy initiatives.

The global recession has yet to impact the African telecoms market, with regional investors highlighting continued expansion plans with acquisition of cash-strapped networks. Operators continue to invest heavily in fibre deployments with discussions of shared infrastructure at infancy stages in many markets.

Michèle Scanlon is principal consultant at Green Giraffe, an independent South Africabased telecoms consultancy focusing on commercial & technical strategies for emerging market operators with 11 years experience of the African market. Michèle can be contacted at michele.scanlon@greengiraffe.cc.

With more than 140 million people, broadband penetration of less than 10 per cent, and Internet and data revenues expected to grow 35 per cent annually, Russia’s broadband scene presents a sizeable opportunity for would-be investors. As the Russian Investment Roadshow stopped off in Dubai last month, Michelle Mills considers the elements involved in investing in Russia’s telecoms sector.

Russia is the world’s ninth most populous country, with a mobile penetration rate in excess of 120 per cent; making it one of the most dynamic mobile markets in Europe. However, 3G and mobile broadband services were only introduced in the country earlier this year by market leader MTS and third mobile operator MegaFon, and uptake has been strong with seven million subscribers having already been added during the course of the year. Internet penetration of households remains relatively low at just 36 per cent, with broadband penetration accounting for less than 10 per cent of the Internet market.

Non-voice revenues accounted for 14.5 per cent of total revenues of all Russian mobile operators in 2007, according to PMR, a European consultancy and market research firm. By 2012, PMR forecasts that income from 3G-based services will rise to 20 per cent of operators’ revenues.

Dubai-based telecoms consultancy and private equity company Delta Partners, has been early to capitalise on the opportunity to provide broadband Internet connectivity across Russia, having collaborated with Richard Branson’s Virgin Group to establish a broadband, voice and value added services provider known as Virgin Connect. The Russian operator is currently deploying a WiMAX network in 32 Russian regions including main cities such as Moscow and St. Petersburg.

“This is a positive investment for us since we came into the company at an early stage and so far the investment thesis has been confirmed,” stated Kristoff Puelinkx, managing partner at Delta Partners.

Puelinckx believes the Russian communications market offers huge potential given the latent demand for high-speed Internet access across the country, and the low service levels of existing providers. This has resulted in a huge opportunity for growth and Puelinckx believes wireless broadband is highly suited to the Russian market.

“A lot of the fixed-line networks are old, often obsolete networks, not equipped to provide new data and broadband-based services. Neither fixedline nor mobile operators currently have the luxury to budget for extensive CAPEX investments as capital is limited. This is why smaller broadband operators like Delta Partners’ portfolio company Trivon have a great opportunity to build out their wireless broadband networks and take market share in the next couple of years when competition is expected to be lower and slower than what was initially anticipated,” Puelinckx commented.

Andrei Terebenin, vice president of corporate communications at leading mobile operator MTS, which serves over 62 million subscribers, agrees that data will be an important revenue driver in the immediate future and that MTS is investing heavily in mobile broadband and 3G services.

Before the brunt of the financial crisis, MTS’ market capitalisation stood at US$30 billion, but by early November this valuation had tumbled by 67 per cent to almost US$10 billion. Terebenin says that the operator’s priorities for the coming year will be to sustain its level of growth in the Russian market, while also considering international expansion and acquisition of financially distressed companies.

“We are becoming more experienced, we know how the synergy works, we are ready to extract more money for our shareholders, and I think prices will go down,” Terebenin stated. “Our two major criteria for investment are that market penetration should be quite low at less than 50 per cent, and that there should only be a certain number of players so that it is not too crowded.

It should also be a growing country and that is why we are looking mainly at Africa and South East Asia.”

Internet penatration of homes in Russia remains relatively low at just 36 per cent, with broadband penetration accounting for less than 10 per cent of the Internet market

MTS is not alone in its quest for overseas expansion. In late November, it was reported that VimpelCom, MegaFon as well as MTS were all in talks with Syria’s government over the offering of a third mobile licence. VimpelCom and MegaFon had also earlier expressed interest in the third mobile licence in Iran, of which the winning bidder is due to be announced within the next month. In July, VimpelCom signed a joint venture agreement to launch a GSM network in Vietnam and acquired a 90 per cent stake in Sotelco, a company holding a GSM licence in Cambodia. Meanwhile, MTS’ parent company Sistema upped its stake in Indian CDMA subsidiary Shyam Telelink to 73.71 per cent in June.

Delta Partners’ Puelinckx says the investors in Virgin Connect are open to analysing organic and inorganic expansion opportunities during the economic downturn, including the acquisition of smaller and larger players in Russia and the CIS (Commonwealth of Independent States), as well as “carve outs” of specific broadband operations out of larger players. To this end, Delta Partners is continuing to explore these opportunities and raise capital to fund such ventures.

Having studied the Russian telecoms market in some detail, Puelinckx warns that while there are many attractive investments opportunities available at the moment, new investors to the market will need a lot of nerve given the steep decline of Russian equities in recent months.

“Valuations are extremely cheap at the moment, with multiple valuations across sectors running as low as even two to four times earnings. Investors need to be wary in order to assure they bet on the right horses. The financial crisis has started to trickle down in the real economy, even though oil revenues and recent government intervention should be able to somehow buffer this trend,” Puelinckx said.

“Russia should be seen as a mid-term growth market, and as such, investors should focus on those companies that can be best positioned for driving and benefiting from growth in the sector,” he advised.

Category: Best new entrant
Winner: Warid Telecom Uganda

Warid Telecom Uganda launched nationwide GSM services in  February and received strong consumer response, crossing the one million customer mark within its first nine months of commercial operation.

Warid Telecom was originally awarded the licence in Uganda in March 2008 and commercially launched the service 11 months after securing the concession, launching in 30 districts across Uganda.

The operator soon expanded coverage to 40 districts and now offers services in all major towns/cities across Uganda, providing seamless coverage on all major highways.

Warid’s target audience in Uganda comprises small and medium size enterprises, rural consumers, youth, and businessmen/traders. Given the competitive nature of the market in Uganda, Warid has been keen to manage ways in which it can differentiate itself from the other operators.

Brand differentiation. As a fourth operator Warid created a strong brand and undertook a pre-launch campaign (New Year New Network). The brand positioning was ‘we care’ and its activities were centred on this position; be it the network, customer care centres, or services.

Services differentiation. Warid offered innovative yet simple services from inception. The operator offered two tariff plans with five friends and family numbers.

Promotions such as “Bang KB” where a customer can talk for two minutes (onnetwork) and the rest of the call is free and “Megabonus”, where a customer could receive additional on network calls at no additional charge for 24 hours after recharging, were introduced.

Warid also launched various new services on its IVR platform, including musicon-demand, and Gamezone. Such is the uptake of Warid’s voice and non-voice services that revenues have showed an increase of over 20 per cent month-on month in recent months.

Category: Best network quality
Winner: Cell C, South Africa for its WOZA 0 campaign

In June 2007, Cell C launched a campaign (called WOZA 0) that provided free talk time to subscribers on weekends. The intention of the campaign was to introduce the market to an offering that had never before been seen, and the growth for the network was forecasted at 30 per cent. This prediction was catered for, and an additional safety margin was added as well. The uptake of this campaign, however, was massive, and far greater than expected – which provided a challenge for the networks team.

The core switching network at the time consisted of Release 99 Siemens MSC’s, and by the end of July 2007, these had been expanded to their limit. In order to relieve the congested network on weekends and to cater for additional traffic, a decision was made to upgrade the core network and to consider the option of next generation architecture.

On July 30, 2007, four weeks after the campaign launch, an RFP was issued for the core network. On September 12 the tender was awarded to Huawei for the supply and installation of its Release 4 media gateways and servers. Integration and customisation of the Huawei equipment for Cell C began immediately and by October 31 (just seven weeks after the tender award) the first call was made on the new network.
Over and above the core network hardware that was required, transmission and radio capacity was also upgraded during this time.

After intensive testing, traffic started being cut over to the Huawei core in December, and weekend after weekend, the customer experience began improving. The cut over involved physically breaking the connection between the access network and the Siemens core equipment, reconnecting the access network to the new Huawei core and then performing extensive testing on the live network.

Category: Best marketing campaign
Winner: Zain for its rebranding from Celtel International

On August 1, 2008 Zain Group rebranded its e ntire African operations from Celtel to Zain. This exercise encompassed all of Zain’s 14 African operations including: Burkina Faso, Chad, the Republic of Congo, the Democratic Republic of Congo, Gabon, Kenya, Madagascar, Malawi, Niger, Nigeria, Sierra Leone, Tanzania, Uganda and Zambia.

The purpose of the rebranding was to bring together Zain’s African and Middle East operations under a single, strong and unique identity.

The rebranding of Celtel throughout Africa was the single largest branding re-launch to take place in Africa. The rebranding was innovative since the rebranding events took place simultaneously across the company’s 14 African markets and were linked by an ambitious live satellite link-up.

Additionally, the rebranding concerts were attended by some of Africa’s senior diplomats, VIPs, artists and celebrities in all 14 countries who witnessed live speeches through an hour-long live satellite feed that linked all countries to each other.

And to mark the launch of its new identity across Africa, Zain also announced the creation of the world’s first crosscontinental borderless network, extending and linking its ‘One Network’ service between Africa and the Middle East.

Category: Most innovative service
Winner: Ericsson, for its MTN Zone product

MTN South Africa in association with Ericsson launched the MTN Zone on February 6, 2008. MTN Zone is a prepaid-per-second billing price plan that offers potential discounts of up to 95 per cent on mobile phone calls for MTN prepaid subscribers making on-network calls.

MTN Zone has a flat rate of R2.50 (US$0.25) across all time periods. Discounts are driven by dynamic demand determined by the caller’s location and the time of day. The service is intended to break the rigid peak and off-peak tariff structures and provide customers with more convenience, choice and control over their cost of making calls.

Category: Best solution for rural services
Winner: Safaricom, Kenya for its M-PESA service

Safaricom launched the M-PESA money transfer service in  Kenya in partnership with Vodafone in March 2007. M-PESA provides a fast, safe and affordable way to transfer money by phone conveniently, anywhere in Kenya. To register for M-PESA, all a customer needs is their Safaricom SIM and National Identification document; they do not need a bank account. This opens access to money transfer services to the many Kenyans who do not have access to formal financial services, many of whom live in rural areas. The M-PESA virtual money account is associated with the customers mobile phone number, is PIN protected, and is accessed through a SIM Tool Kit menu, which sends instructions to M-PESA via encrypted SMS.

M-PESA agents register customers and use a special handset to assist customers to deposit or withdraw funds.

The M-PESA service has registered over 3.7 million customers since its launch in March 2007, and grown to a network of over 3,500 agents countrywide. Over US$700 million has been transferred from one person to another, in low value transactions of approximately US$45, with a high proportion of this being transfers to and from rural areas.

According to a study carried out by Finaccess 2007, mobile phones have penetrated the market in rural areas of developing countries in the last five years more successfully than traditional banks have been able to over the past 100 years. M-PESA service targets rural unbanked communities in order to provide them with an e-money account, while overcoming challenges posed by lack of access to financial services.

Category: Customer service provider of the year
Winner: Warid Telecom Uganda

Warid launched commercially in February 2008 and the brand sign off was ‘we care’. This was reflected in all key activities including its customer service strategy.

Warid offered customers a comprehensive IVR menu for self-service options that were a first in Uganda. The operator launched with a franchisee concept where each franchisee is expected to sell products as well as provide services. Warid
now has 37 franchisee outlets covering almost all districts, offering similar services across Uganda. All the outlets have benchmarks they are required to adhere to in terms of size, location, quality of manpower, and so forth.

There has been a strong customer orientation at Warid Telecom Uganda with the aim of delighting the customer by offering services such as automatic birthday greetings to customers, automatic complaint resolution by SMS, and was the first in East Africa to launch an interactive queue management system.

Category: Best enterprise solution in Africa
Winner: Wana Enterprises for its WanaOne product

Wana Enterprises is a dedicated partner to enterprises in Morocco and was previously known as Maroc Connect, which has operated in the enterprise business since 1999.

In 2008, Wana Enterprises launched its WanaOne triple play product aimed at enterprises. WanaOne allows enterprises to access traditional fixed telephony networks, so as to make and receive calls and faxes nationally and internationally. The solution also provides a high-speed Internet connection that includes several value added options.

WanaOne’s voice and Internet services are delivered on a converged network that relies on IP transport of all the data and voice flows, with customers benefiting from the cost
reduction due to the shared access technology.

WanaOne is composed of several packages so as to allow enterprises to select the best functionalities in terms of voice and Internet traffic.

The latest addition to the WanaOne package offers enterprises in Morocco a converged offering of voice – fixed and mobile – with an Internet access for the first time. Enterprises benefit from free inter-site calls based on the same rate plan regardless of the used lines (mobile or fixed).

The converged triple play offer comprises a unified management of the customer relationship with:

A unique point of contact: Enterprise Customer Support

A unified bill: multi-sites and multi-services, smoothing the process of archiving and following the telecoms budget for enterprises

A state of the art extranet portal, called Mywana, allowing customers to manage their voice lines and check for live call details in real time.

Category: Best pan African Initiative
Winner: Zain for its One Network

One Network is the world’s first borderless mobile telecoms network service launched by Zain in Africa in September 2006. The original countries that benefited from this service were: Kenya, Tanzania and Uganda. By November 2007, a further nine African countries Democratic Republic of the Congo, Republic of the Congo, Gabon, Burkina Faso, Chad, Malawi, Niger, Nigeria and Sudan became connected offering over 400 million people in twelve countries across east, west and central Africa the opportunity to communicate freely across geographical borders without roaming call surcharges and without having to pay to receive incoming calls, enjoying the benefits of being treated as ‘local’ customers in any of these countries.

On April 14, 2008, the service was extended and introduced to Zain’s operations in Bahrain, Iraq, Jordan and Sudan where over 14 million Zain customers also enjoy the same One Network benefits. The service is available to over 75 million inhabitants of these 4 countries, which reached over 100 million after Zain commenced operation in Saudi Arabia in August.

On August 1, 2008 Zain linked two continents with One Network with Bahrain, Iraq and Jordan connecting to the 12 African One Network countries. On August 26, Saudi Arabia joined the One Network with the launch of commercial services.

Category: Changing lives award
Winner: Safaricom, Kenya for its M-PESA Concern Worldwide Pilot

M-PESA Concern Worldwide Pilot project was a partnership between M-PESA and Concern Worldwide charitable organisation aimed at assisting selected households in Kerio Valley to meet their household needs and find a path to recovery by distributing cash through the M-PESA money transfer system, following a period of post-election violence in Kenya which left this community homeless and with no access to food or other basic needs.

Kenya experienced conflict following the announcement of the
results of the general elections early this year. For over three months, lives were lost and property worth billions of shillings destroyed, and people were displaced from their homes.

Humanitarian relief agencies stepped in to assist but because of resource constraints could only meet the short-term needs of internally displaced persons in formal camp situations. Concern Worldwide partnered with M-PESA to provide aid, focusing largely on those outside the formal camp situation. Kerio Valley, a rural community in Kenya, suffered more, in addition to the adverse effects of the post election conflict, they had experienced drought which had disrupted the crop production cycle.

Households did not have shelter or money to buy food and other basic household necessities. Many households in the affected area were cast into deeper and more challenging levels of poverty than they had experienced before.

570 households were assisted and were thus better able to meet their basic needs pending return of normal economic situation.

Providing assistance in the form of cash rather than food ensured that a diversity of beneficiaries’ needs were met, giving people in poor, rural areas direct control over their finances.

An evaluation carried out after this intervention found that beneficiaries who received cash felt a greater sense of empowerment and dignity than if they had received an equivalent amount of food.

Mobile handsets that were given to the beneficiaries to facilitate the M-PESA money transfer are now being used to stay in touch with distant friends and family and have provided the community with a means of communication.

A confluence of factors in India’s telecoms sector during 2008 has ignited a frenzy of activity that is changing the landscape irrevocably. With the licensing of 2G spectrum, preparation for the award of 3G spectrum and the floodgates having been opened with respect to foreign direct investment, 2009 and beyond is set to propel India rushing up the table of cellular penetration levels across emerging markets

Confirmation last month that Japan’s foreign investment-shy operator, NTT DoCoMo had acquired a 26 per cent stake in Indian operator Tata Teleservices (TTSL) for US$2.7 billion is arguably one of the most significant investments in India’s frantic telecoms sector. This is so, not because of the financial size of the investment or the percentage stake acquired by Japan’s top operator, but because of the calibre of the investor.

DoCoMo, despite being a domestic market leader some way, and one of the most, if not the most innovative mobile operator in the world, has been reticent about embarking on an international acquisition trail. Thus for India to be identified by DoCoMo as a foreign market worth venturing into is a significant endorsement of the potential that exists in the world’s second most populous nation.

In August TTSL said it planned to spend INR80 billion (US$2 billion) over the next two years on its new GSM network and existing CDMA operations, in a bid to grow its subscriber base six-fold by 2011 to 155 million.

Approximately INR60 billion is to be spent on a new GSM network, which the operator’s managing director, Anil Sardana, expects will garner 55 million users within three years.

The remaining INR20 billion will be utilised to upgrade the existing CDMA network with the view to counting 100 million CDMA subscribers on the network by 2011. TTSL also has plans for the development of a WiMAX network covering 15 cities by 2009.

The merger talks earlier this year between South Africa’s MTN Group with India’s Bharti Airtel and then subsequently Reliance Communications only went to confirm the profile of India’s telecoms sector as one seeking to create value both domestically as well as regionally, with the emphasis of scale being a recurring sub-text.

At the end of October, perennial emerging market investor Telenor announced its acquisition of a 60 per cent stake in Unitech Wireless, an Indian GSM licensee with concessions to roll out its network to all 22 telecommunications circles in India. The cost of the stake was US$1.07 billion.

At the time of the deal it had been suggested that perhaps Telenor had paid somewhat over the odds for the stake especially in light of the state of the global situation. However, in comparison to the US$900 million Etisalat paid just a month before in September for a 45 per cent stake in fellow GSM licensee Swan Telecom, which only has licences extending to 13 of India’s 22 circles, Telenor’s investment looks like shrewd business.

However, the impact of the global economic situation has had an impact on Telenor, and will likely continue to do so on investors looking to raise finance in the near-term.

Telenor is the second largest foreign operator in Asia after Vodafone, and following the announcement to finance the deal through a rights issue, its shares tumbled 15.4 per cent. Shares in Unitech Ltd, the parent company of Unitech Wireless and India’s second-largest listed real estate firm, rose as much as 10 per cent on the day.

Telenor’s CEO Jon Fredrik Baksaas said that India Telenor could “replicate its experience” from Pakistan where it became second largest in terms of market share within four years.

Valuations in India continue to remain fluid, in particular with respect to greenfield opportunities. For example, the GSM licences that the likes of Telenor and Etisalat have participated in were offered at a fraction of the price that they were deemed to have been worth. So much so that earlier this year India’s regulator was accused by the finance ministry of selling 2G spectrum in January at onequarter of the market value, thereby losing approximately INR250 billion (US$5.7 billion) in income in the process.

The Department of Telecommunications (DoT) awarded the pan-India 2G spectrum in January to new licencees at what was alleged to be a price equivalent to the price of the spectrum in 2001amounting to INR16.51 billion.

The finance ministry had earlier opposed the move to sell 2G spectrum below market rates, saying the additional INR250 billion would have relieved as much as 60 per cent of India’s revenue deficit in the 2008 financial year.

“The fact that the companies that were awarded the 2G licences command such high valuations even without start-up spectrum, infrastructure or customer base, nine months down the road, demonstrates the huge error in judgement made by the government,” stated member of parliament, Nilotpal Basu in August.

Datacom Solutions, Unitech, Loop Telecom, S-Tel and Swan Telecom are some of the companies to have bought spectrum at the discounted prices, with Telenor’s acquisition of Unitech immediately valuing the licensee at US$1.78 billion, and Etisalat’s stake in Swan Telecom valuing the licensee at US$2 billion.

Before Qtel does any acquisition, we always ask ‘why don’t acquisitions work?’ Plenty of things have been bought by plenty of people that have not worked out,” stated Qtel’s chief strategy officer, Jeremy Sell. “With that in mind, then how has Qtel come to expand and bought 10 companies in two years?”

Sell believes it is the Qatari operator’s prudent approach to expansion that has revolutionised the company into a regional success story. At the beginning of 2005 it was a monopolistic operator in a tiny Gulf nation of less than 800,000 inhabitants, but now serves 55.7 million subscribers in 13 countries across the MENA, Indian subcontinent and Asia Pacific regions. It has invested more than US$7 billion in the process.

“Back in 2006 we had a mandate to expand. There was a risk of being consolidated, which might have been good news for shareholders, but our belief was that it was better to be a consolidator not a company that is consolidated, at least until we were a certain size and had achieved a certain amount of value,”

Sell recalled. “Risk minimisation was a key strategic imperative. It’s not all about money and what you buy, but what it does for the rest of your business, and creating value.” Sell says the investment in Nawras has been one of Qtel’s most successful, where in March 2005, the second mobile operator launched in Oman through a partnership with Danish operator TDC. Nawras now enjoys a healthy 43 per cent market share. The Omani operator’s market position is set to be further bolstered by its recent award of the country’s second fixed-line concession.

However, Sell believes it is the acquisition of Kuwait-based Wataniya Telecom in 2007, and Qtel being given the green light to raise its stake in Indonesia’s Indosat from 40.8 per cent to 65 per cent in October, which have been the defining deals in the company’s history.

“When Wataniya was available and ready to move, we acquired that at an acceptable price. We have done better deals financially, but we’ve never done such a good deal strategically. This transaction has been the driver of the transformation of the Qtel Group,” Sell asserted.

Qtel also acquired a strategic stake in managed data services provider NavLink in partnership with AT&T, and has launched WiMAX services though Wi-tribe in Jordan, Pakistan and Philippines; a partnership with Middle East conglomerate ATCO and global broadband provider, Clearwire International.

Qtel’s rapid, yet carefully staged expansion strategy has also paid significant dividends for its stakeholders, with the company’s board having approved the distribution of a cash dividend of 100 per cent of the nominal value per share last month.

Comparing Qtel’s growth rate in terms of subscriber numbers, revenue and EBITDA from first half 2007 to first half 2008, the telco significantly outperforms its peers – Orascom Telecom, MTN, STC, Etisalat and Zain. Subscribers grew 446 per cent from nine million to 51 million during the period, revenue grew 102 per cent from US$1.1 billion to US$2.2 billion, and EBITDA grew 92 per cent from US$600 million to US$1.1 billion.

“What we have done though is spent a lot more money than them, so we have bought these results,” Sell acknowledged.

Sell also accepts there were several acquisition opportunities that Qtel did not take, such as the acquisition of Investcom, the mobile provider in countries across Africa and the Middle East, whichwas acquired by MTN Group instead. Qtel also missed out on the acquisition of V-Mobile in Nigeria, a WiMAX licence in Bahrain, the third mobile licence in Egypt, Hutchison in India, and fixed and GSM licences in Saudi Arabia.

Looking ahead, Qtel has set itself the target of a net present value of US$1 billion within five years for its investments to date, as well as its longer term goal of becoming a top 20 telecommunications company in the world by 2020. Qtel is betting on both WiMAX and HSPA technologies. Its acquisition targets remain in emerging markets, with a focus on consumer mobile, consumer broadband and corporate managed services.

“Vodafone has now received a fixed and a mobile licence and is coming at us with all guns blazing. We know exactly what to expect, they are absolutely a class act. Vodafone, with Orange, are the reference companies in the world,” conceded Sell.

Qtel’s Jeremy Sell says that despite the prudent acquisitions and exponential growth of the company, these factors are yet to be reflected in its market capitalisation

However, Qtel’s challenge remains to have its acquisitions and growth prospects reflected in its share price. Despite an enterprise value of US$9.2 billion, the telco’s market capitalisation stood at just US$6.4 billion as of August 28.

“It doesn’t matter how good you are post-acquisition, if you buy the wrong thing at a wrong price, you won’t gain value,” Sell warned. “And secondly, if the market doesn’t believe you, whatever you buy, you will not receive value.”

Saudi Arabia’s STC has also been active in acquisitions since belatedly joining the overseas investment game in June 2007. In that time it has managed to retain its value, said Sa’ad Ahmed Demyati, vice president of the wholesale business unit. He said even after the significant drop in stock markets globally, STC’s market capitalisation remains around the US$30 billion mark. The telco’s investments now see the company represented in Malaysia, Indonesia, India, Turkey, South Africa, Lebanon and Jordan. STC also owns a 26 per cent stake in the Kuwait’s third mobile company, Viva, which will launch officially on December 4.

“Interest is beyond our expectations,” claimed Demyati. “We introduced the service unofficially, and intend to launch it officially on December 4. Our customers are encouraged, because we have started with a distinguished company, and even with the lack of an [independent] regulatory body, we are in a good shape.”

Demyati is a strong believer in customer-centricity, recounting how from 2006, customer focus had become a core strategy. STC has experienced extraordinary growth since 1998 when it counted 600,000 mobile subscribers and two million fixed-line users. The telco now boasts a combined 23 million mobile and fixed subscribers and one million ADSL users across the kingdom.

STC has also laid 80,000 kilometres of fibre optic cable, rolled out 10,000 base station towers and its mobile coverage reaches 98 per cent of the population. STC’s network in Saudi Arabia is also moving quickly towards IP and next generation network.

“We handle hundreds of millions of calls and SMS each day during the busy period of Hajj,” Demyati said.

Etisalat’s chief corporate affairs officer, Nasser Bin Obood, believes that future growth will be driven by the demand for mobile broadband, electronic and mobile financial services, and optical networks laying the foundation for smarter homes and offices. This would be in addition to Etisalat’s aggressive inorganic growth programme; with Bin Obood reaffirming that Etisalat would seek further acquisitions during the difficult financial times ahead.

“Thanks to the good financial position that Etisalat is in we are exploring new opportunities. These conditions reduce the cost to enter markets, and to acquire and to seek new opportunities, with costs that are far below what they were a few months ago. We hope we have enough cash because the opportunities here are unlimited,” Bin Obood said. 

Etisalat’s Nasser Bin Obood would like the UAE’s regulator to relax some of the regulatory constraints, now that second operator Du, is posting a profit

In the first nine months of 2008, Etisalat achieved the same profit as for the whole of 2007, amounting to AED7.3 billion (US$1.8 billion). The telco’s revenues topped AED19.1 billion over the same period.

Etisalat’s most recent acquisition was in India, a US$900 million acquisition of a 45 per cent stake in GSM licensee Swan Telecom. Bin Obood believes this investment will be well placed to continue Etisalat’s growth story, with the world’s second largest market in terms of population looking like a strong prospect for solid progress. These factors are a prerequisite for successful operations and the deployment of a network will be far easier under such conditions, Bin Obood suggests.

“We would love to have a more supportive regulatory regime. Our competitor Du is making a profit, so now the time has come to release some of the constraints,” Bin Obood stated, with respect to competition development in the UAE.

Du became profitable in just 19 months of operation, having launched in February 2007, and by the third quarter of 2008, counted 2.6 million mobile customers representing a 27 per cent market share.

Osman Sultan says Du is continuing to build its own backbone in the UAE and is contemplating WiMA X as a complement to AD SL in less populated areas

“We announced a net profit of AED31 million in the third quarter,” stated Osman Sultan, CEO of Du. “What about financing? Because of the faster than expected growth, in April of this year we secured a AED3 billion debt facility. Imagine what shape we would be in if we had to go and secure that AED3 billion now.”

“Du was perhaps the first telecoms start-up that was launched without the backup of an existing established operator. The major challenge was at the level of the human capital, finding the right resources and building the proper modus operandi in rolling out the necessary operations,” Sultan said.

Sultan attributes Du’s success to operational excellence and attractive pricing propositions, combined with the trends of strong population growth, macroeconomic growth, and the increasing appetite for telecommunications services in the UAE.

“We wish to have a real unbundling of the local loop. We are building our own backbone. Having two backbones [in one country] is not really a luxurious thing from a disaster recovery point of view; from a risk management point of view it makes sense. In addition, we are contemplating WiMAX as a complement to ADSL in rural areas,” Sultan said.

Africa’s pre-eminent telecoms players assembled in Cape Town for the 11th annual Africa Com event last month, concerned whether the global financial crisis is likely to affect the business in Africa. What became apparent after two days of networking and conversations was that m-banking, falling ARPUs and broadband expansion are that factors that operators on the continent are really concerning themselves with, while the tightening of liquidity is likely to spur further consolidation

However, even operators with the firepower of Zain are finding market conditions hardening, with the Kuwaitlisted operator having seen billions of dollars wiped off its market capitalisation over the last six months as financial markets lose appetite for stocks.

Zain’s reduction of its subscriber target for 2011 from 150 million to 110 million, representing an adjustment of 27 per cent, is another indication that market conditions going forward are likely to remain challenging as competition for greenfield as well as existing investments is likely to remain fierce.

The success of Safaricom’s M-PESA money transfer system has raised the prospects of the successful extension of banking services to previously unbanked members of society. Safaricom CEO Michael Joseph has previously indicated that as a standalone service, M-PESA offers the operator very thin margins, but as a service that drives differentiation and marketing, as well as a reduction in churn, it is a highly effective service.

Zain is in the process of developing its own m-commerce platform, which is branded Zap! It facilitates transactional banking and is in the process of being introduced in East Africa first. It will be available on low cost handsets, with the plan being to extend it to other Zain territories over time.

MTN Group’s Tim Lowry, who acts as VP for southern and East Africa, and MD of South Africa, said the company’s vision to become a leading communications operator in emerging markets began in 2004, and its path to achieving this has been rapid and impressive.

Last year, MTN added 20 million customers, with six million users being added in Iran in the first half of 2008 alone. No doubt spurred on by innovations such as Zain’s One Network, MTN has been modernising its tariffing structure, having introduced its MTN Zone product, which offers customers significant discounts on calling rates depending on how busy or empty the network is.

“Affordability, simplicity, clarity, and flexibility are the premise of MTN’s offering,” Lowry said. “The theme of my keynote is telecommunications beyond barriers and borders, and in order for this to be achieved effectively in Africa, issues around the pricing of devices, submarine cable investment, and transmission networks need to be addressed.”

Lowry revealed that MTN had a team in China earlier in the month charged with looking to purchase mobile handsets at as little as US$10-US$12 a unit, with markets such as Uganda and Zambia having the capacity to sell as many as 5,000-6,000 low cost handsets a week.

The expansion of broadband access across Africa is clearly a significant opportunity, with numerous incumbent and start-up service providers looking to capitalise on the low broadband penetration and pent-up demand for access technologies.

According to Mark Newman, chief research officer of Informa Telecoms & Media in the UK, while WiMAX had been a strong potential bearer of wireless broadband technology across the African continent, greenfield build outs utilising WiMAX are likely to be curtailed by the global economic downturn.

“We think that the financial crisis will have an impact of the greenfield investment in WiMAX and as such we have revised the number of WiMAX subscribers we expect to see coming
to market in the next few years,” Newman said.

Noel Kirkaldy, Motorola director of wireless broadband services in the region, remains a tireless advocate for the suitability of WiMAX in the deployment of wireless broadband networks, citing the decisions by South African service providers such as Sentech, Neotel and i-Burst to utilise the technology.

Sustainability was a topic of discussion at Africa Com, as operators sought ways to reduce OPEX, while at the same time expanding networks to more remote areas

“The reason to deploy WiMAX is data,” Kirkaldy said. “There is a real renaissance of the fixed-line globally, and in Africa that is no different. I think deployment of nomadic WiMAX networks is what we are talking about in the African context and the business case is improving all the time given developments of in-building solution and availability of multimode devices,” Kirkaldy added.

As for Newman’s forecast that the credit crunch would negatively affect the launch of greenfield WiMAX networks across the globe, Kirkaldy is of the opinion that it is not just start-ups that will be affected, but also the operators and investors behind them. He offered the examples of Atheeb Communications in Saudi Arabia, which is backed by Batelco amongst others, and Wi-tribe in Jordan and Pakistan, which is backed by Qtel, as backing players that would also need to adapt to the current economic climate.

The global economic situation has also wreaked havoc with one of the most anticipated initial public offerings of a telecoms operator in East Africa – Safaricom. On June 9, shares Safaricom began trading on the Nairobi Stock Exchange, in the largest IPO ever in sub-Saharan Africa. The listing of 25 per cent of the company owned by the Kenyan government—raised US$800 million and valued Safaricom at around US$3.2 billion.

However, Safaricom’s share price has fallen by 20-25 per cent since the IPO, and in hindsight the company’s CEO, Michael Joseph, describes the timing of the IPO as unfortunate.

“I think too many shares were offered too cheaply, and perhaps what ought to have been done is for fewer shares to have been offered to the public, but at a higher price,” Joseph suggested. “The performance of the IPO has definitely affected the brand name of the company.”

Away from the stock market woes, Safaricom remains a formidable company, counting a subscriber base of 12 million, which represents a market share of nearly 85 per cent. Given the intensification of competition with the entrance of Orange and Yu (Essar Communications and Econet Wireless), Safaricom can expect its market share to be affected, though Joseph is of the belief that his company will remain in a commanding
position in the future.

Zain CEO for Africa, Chris Gabriel said the operator was now targeting 110 milion subscribers by 2011, not 150 million as originally forecast under the ACE strategy

“I forecast that Safaricom will still be able to retain a market share of between 65-70 per cent in three years time,” Joseph said. I believe network coverage is the first significant differentiator. After that is service quality followed by brand loyalty.”

The competitive temperature in Kenya is definitely rising, and on September 17, Orange became the commercial brand for Telkom Kenya, following France Telecom’s acquisition of 51 per cent of the telco’s capital in December 2007.

The launch of a GSM network, alongside new mobile and broadband Internet offers under the Orange brand constituted a decisive step in Telkom Kenya’s development. Initially, broadband Internet and mobile offers were available in Nairobi and Mombassa only, but are progressively being extended and rolled out across the whole country. Additionally, with the arrival of undersea cables planned for 2009 and a pricing policy adapted to the country, Telkom Kenya is setting itself up to adopt a leadership position in broadband Internet.

At launch, Orange’s ambition was to increase its customer base to 1.5 million customers within a year (from 500,000 fixedline customers), through high quality services and the strength of the Orange brand.

“Orange Kenya has done some stupid things,” Joseph commented, in relation to the French operator’s market entry strategy for the mobile space. “The operator now has 50,000-100,000 subscribers depending on which media source you follow.” Thus Joseph remains confident of securing Safaricom’s future in the face of a growing number of global brands participating in the Kenyan mobile market.

The massive rebranding exercise undertaken by Zain in the middle of the year also impacted its operation in Kenya; though for all the high-profile campaigning, Joseph claims the effect on the market dynamics in the country have been negligible.

“Churn in Kenya for Safaricom did not change when Zain rebranded aggressively,” Joseph declared. “Even when number portability is implemented, we will have to go along with it, although it has not been successful anywhere in the world and we do not believe it will make any difference in Kenya.”

Given the emphasis that has been placed on branding in Africa’s telecoms space of late, a growing number of operators are re-examining their own brands and considering how best to strengthen their market image. Atlantique Telecom is one such operator, having been acquired by Etisalat in April 2005. Having originally purchased a 50 per cent stake in the company, Etisalat has since built that stakeholding up to 82 per cent.

Atlantique Telecom operates in seven markets in Africa, and under several branded names that are specific to the market. A partial rebranding has occurred incorporating the company’s various operational entities under the ‘Moov’ brand, though given Etisalat’s presence on the African continent directly, there remains an opportunity to tie all networks together under a single banner.

“We are examining whether to consolidate under one brand,” said Abdul Aziz Al Mutawa, CEO of Atlantique Telecom, Cote d’Ivoire. “We ought to have a decision on this by the end of the decade.”

With the tender for 3G spectrum appearing on Jordan’s horizon, Mickael Ghossein, CEO of Orange Jordan is eager for his company to secure the first slice of the 3G pie in 2009. Gaining the first licence would give the telco at least a 10-month head start on its competitors. Ghossein shares his beliefs on why MVNOs will not work in the kingdom’s already crowded telecoms market place, and how non-voice services have driven growth for the integrated operator in 2008

The tender to allot a long overdue 3G licence in Jordan opens mid- December with bids for the available 3G spectrum closing on January 27. The Telecommunications Regulatory Commission (TRC) has set the reserve price of JD25 million (US$35.3 million) for a paired block of 5MHz spectrum, while a concurrent tender will also take place for additional 2G spectrum. Mickael Ghossein is quietly confident of Orange Jordan’s bidding position.

“3G is a maturing of your mobile service. You should never think of 3G frequencies as just another licence,” states Ghossein. “Today you have voice, you have speed on your network with EDGE 2.75 generation, then you move to 256 Kbps, and finally, 3G brings even more speed. It is a natural evolution.” Ghossein adds: “We are lucky we have cash because most operators do not have cash.”

Jordan’s telecoms scene is one of the most competitive in the Middle East with three GSM operators as well as iDEN operator Xpress. The TRC has also awarded two reseller licences, the first to i2, a leading mobile retailer in the region and the second to Friendi Mobile. Neither reseller has reached a commercial agreement with a host operator, although Friendi is on track to become one of the first two MVNOs to launch in the Middle East, having secured an agreement in Oman. This will likely serve as a test case for virtual operators in the rest of the region. Ghossein, however, remains adamant that he does not see MVNOs working in Jordan given the number of service providers already present in the market and the country’s relatively small population of just six million.

“In France they have 65 million people and only three operators. Instead of giving more licences they authorised between 10 and 20 MVNOs. In this case, if an operator were charging 10 piastres (US$0.14) a minute, then an MVNO would charge eight to12 piastres per minute. But when an operator in Jordan is charging one piastre a minute, then what is an MVNO’s position?”

“If they were to work in the niche market model, then perhaps they could cater to the Lebanese community or to the north of Jordan, for example. But to be what? To be low cost? We are low cost. To add value? They would not add much value in my opinion. Perhaps if you were paying JD10 today and they offered more music for JD20, maybe you would, but it would be a very narrow market.”

While it has been suggested that the regulator is putting pressure on operators to hold discussion with prospective MVNOs, Ghossein insists a financial decision ought to be left to operators.

“The final decision is ours because we would be the ones investing. The regulator can not oblige an operator to accept an MVNO. If it wants to push us to put an MVNO on our network, then it should give us the money.”

Reflecting on the three arms to Orange Jordan’s business – mobile, fixed-line and Internet – Ghossein says the strategy of integrating three separate companies into the unified Orange Jordan operator last year, is now paying dividends with the generation of diversified revenue streams as the market matures.

“At the moment the mobile market is stable and maturing, fixed is a declining market, but the data side is growing considerably,” Ghossein says.

Orange Jordan’s results for the first nine months of 2008, showed fixed-line revenues declined by 4.2 per cent, mobile grew by 6.6 per cent, while Internet soared by 34 per cent. “Data is starting to compensate for the fixed losses. This was a key strategy and part of why we did the integration.”

SeaChange International is a provider of software applications, services and integrated solutions for the management and monetisation of video-on-demand (VOD), digital advertising, and content acquisition. The company recently attended GITEX in Dubai, believing the GCC region is ripe for the introduction of IPTV and real VOD services.

“Somebody else will offer video services over the top of your network, reducing you to being the dump pipe, and they will then command the relationship with the content owners and with the advertisers”

The initial market for SeaChange’s technology was in cable linear ad insertions, and that is a market which we command now and is very active because of high definition (HD) content, which is being inserted into cable networks.

Following on from that we focussed on VOD and this was in two areas. One was hardware technology play outs in relation to the VOD servers, and the second piece was in relation to the end-to-end software and integration issues, and standards associated with putting it all together.

So it was very much a US cable play, but a key feature to what we are doing is around standards and establishing an environment for multi-vendor, multi-play technology VOD, which would allow the whole business to expand rapidly. And that is exactly what happened in the US market.

So we have a very strong hardware component to our business but we are really very focussed on the software side in terms of making it all fit together and provide a high quality of experience for the consumer. So we now look at how content fits into that and everything else.

Going forward we are focussing what we do across the entire video spectrum, and this is high-quality, professional video – not YouTube video – and so IPTV is an obvious area that we have been concentrating on. At GITEX we announced a partnership with Argela, which is a subsidiary of Turk Telecom, and is a more traditional data IT company and we bring video
into the mix. Turk Telecom will be the first customer for a next generation IPTV platform, built around Argela’s service delivery platform. Over the last two years we have seen a fair amount of IPTV, but it has very much been science projects built either by telcos or by start-up technology firms. An example is in France, where a lot of the technologies are home-grown, likewise in the UK with Home Choice.

On the other hand there are a number of small players in the market who provide standalone IPTV platforms, but for telcos that creates another silo, in terms of another service going onto
the network that has to be managed separately with different skills sets. There is also a strong push now from the telco or the broadband data community for service delivery platforms that allow much greater economy of operation, of support and maintenance, of delivery, of billing, customer management, and so forth. And that is what we are doing with Argela. We are bringing video, IPTV into the whole carrier-grade service delivery platform environment, which we think is quite unique. There are a number of companies that come from the telco/ vendor side of the business that are trying to bring video in; we are coming from the video side of the business, which is why the partnership with Argela is very important.

That is everything associated with back-end, real-time technology on the video serving side, the software for managing play out and quality of the experience, as well as the frontend electronic programme guides and applications, which
makes for a very compelling consumer experience. On top of that we have a wholly-owned subsidiary called On Demand Group, which is a content aggregator and service manager, and On Demand Group manages the entire VOD service for Virgin Media, the cable company in the UK with 3.5 million customers. As a result ODG has three key areas of world-leading expertise. One is in content acquisition and ODG formed a joint venture with Sony Pictures and Disney to provide a VOD movie service in the UK. So we have great calibre inside ODG on the content side.

Then the next piece is really about user experience and sales and marketing. If you have got transactional content, if you have high-value content on an interactive platform how do you sell it? How do you bring the expertise of a Walmart or Waterstones and apply that to digital media on IPTV and VOD platforms? That is where ODG has tremendous experience and is one of the main reasons why SeaChange bought it.

The third part of ODG’s key expertise is in operational workflow – how to run and manage a VOD and premium transactional content business. So between us we have quite a far-reaching expertise in terms of delivering this from the core economics through to operations and workflow, through to core technology. And we want to bring that to the GCC market.

I think every single major telco in the world has an active plan to introduce IPTV onto their networks, and what I said at GITEX is that if telcos do not, they will die. Somebody else will offer video services over the top of your network, reducing you to being the dump pipe, and they will then command the relationship with the content owners and with the advertisers. These are the three major, constituent parties and unless you have a very positive, pro-active strategy around introducing high-quality video on your network as a telco, either somebody else will or consumers will churn away.

Simon McGrath is chief marketing officer of SeaChange International