JOHANNESBURG-South African companies are poised to play a major role in telecommunications as the privatization and deregulation process, which began in the early 1990s in Africa, moves rapidly ahead.
But the march is not likely to be an easy one as top international companies are casting their nets rapidly to invest in telecommunications, one of the most lucrative and fastest-growing sectors in Africa.
Statistics from the International Telecommunication Union (ITU) paint a grim picture of current under-investment in Africa. On average, fewer than 1 in every 100 people have access to a telephone line across the continent. South of the Sahara, that figure can be as low as 2 in 1,000. The ITU believes that 70 percent of all Africans have yet to make their first phone call.
One of the main goals of the continent’s decision makers is to raise sub-Sahara teledensity to 1 percent by 2000. The ITU places the price tag for fulfilling this project by conventional fixed-line means at US$7.4 billion. This astronomical sum is beyond the dream of cash-strapped, debt-laden governments.
Cellular mobile and other wireless systems funded partially by private capital seem more promising as a low-cost solution to Africa’s telecommunication needs. Africa was slow to come to the cellular party, but has rushed to catch up. There were only 23 systems planned at the end of 1995; two years later, most nations have at least one system.
South African companies are gearing up to fulfill the continent’s needs.
Network operator MTN has moved aggressively in the Great Lakes region and has been awarded the second network operator license in Uganda, valued at about US$100 million annually. MTN holds a 50-percent stake in the consortium, which includes Swedish Telia Overseas AB (30 percent), Investco Uganda (10 percent) and Rwandan-based Tristar Investments S.A.R.L. The consortium checkmated competitors Utelnet, an affiliate of Portugal Telecommunications International, which bid US$500,000 less to MTN’s US$5.6 million.
Rwanda then followed, with MTN receiving a license to operate a GSM (Global System for Mobile communications) network along with local shareholders Rwandatel, the provider of telecommunications services in Rwanda (28 percent); and Tristar Investments S.A.R.L. (46 percent).
MTN is further negotiating in the Democratic Republic of Congo for a GSM license and is planning to take over 40 percent of shares in the Zimbabwean third cellular operator Econet, which recently was granted its license. Kenya and Burundi are next on MTN’s agenda.
But the game is not quite so easy all the time. Both South African cellular companies Vodacom and MTN lost out in Botswana. They were edged out by Mascom, a joint venture between Portugal Telecom, TS Masiyiwa of Zimbabwe and DECO Holdings, a Botswana company and the winner of the second license, Vista, a consortium involving France Telecom and five local companies.
Vodacom and MTN lost out in Mozambique, too, where a license was granted to a consortium of the local operator TDM and the German Detecon.
In Swaziland, however, they are back in the game and both MTN and Vodacom have been short-listed for a GSM cellular license, taking off the chessboard 11 other bidders, which include Portugal Telecom and Detecon.
Vodacom already runs a small network in tiny Lesotho.
But the biggest catch of all will be in South Africa itself, as all eyes of the world are focused on the potential third cellular operator. The two current operators within a period of three years have managed to attract 1.5 million subscribers. The third operator will find it equally as lucrative. A team of consultants presently is drawing up the tender documents for the third operator. The tenders officially will be released later this year.
The impact of this South African tender will have a phenomenal impact on the rest of Africa because it likely will indicate the digital technology that will be deployed across the continent.
Different consortia are being drawn up, and equipment already has been shipped to South Africa. Supporters of the European standard GSM 1800, currently been tested locally by Vodacom, believe GSM is a prerequisite for South Africa. CDMA (code division multiple access) supporters, including Motorola Inc., believe the technology is ideal for rural penetration. CDMA currently is being used in Zambia.
Japanese companies are rallying to introduce PHS (personal handyphone systems) and are forming consortia with local investors. PHS is already on trial in Zimbabwe for the country’s wireless local loop rollout.
The contest is likely to be fierce, but the outcome certainly will change the “pulses across African telecom lines.”
