Mobile phone usage has exploded in Africa over the last decade, with 197.4 million mobile phone users in 2006, up from just 25.3 million in 2001, according to the UN’s International Telecommunication Union. The growth was so spectacular that some of the bigger markets like South Africa and Nigeria have already shown signs of consolidation. But analysts say there is still plenty of room for growth in Sudan.
Ahmed Haroun’s tiny newspaper stand in the middle of Khartoum is plastered with mobile phone posters and strings of pre-pay cards, wallpapering the back of the shack and hanging down in front of customers like festive decorations.
Outside, the street is cluttered with advertising urging passersby to sign up with state-run Sudani, South Africa’s MTN or Kuwait’s Zain. Even the rubbish on the pavement is littered with bent and used up mobile phone scratch cards, most of them in the smallest denomination of five Sudanese pounds ($2.50). It is a scene repeated endlessly across Sudan’s dusty capital, on street corners and roadside shacks, each of them a front line in the fierce battle for mobile phone customers currently raging across Africa.
Sudan, the sixth biggest African country by population, came to the growth game relatively late. It missed out on much of the early days of the telecom boom, thanks to the turmoil of more than 20 years of civil war, compounded by an illiberal telecom market and crippling economic sanctions imposed by the US.
The world’s telecom companies, encouraged by a welcome liberalization in the national market, have been rushing into Sudan to scoop up as many new customers as they can get their hands on. There are now three established players in Sudan — Sudani, MTN and Zain.
Canar, a fixed-line group owned by UAE’s Etisalat, has also been negotiating for a fourth national mobile license over recent months. The market has become so crowded that Zain’s chief executive in Sudan warned that the granting of yet another license would force him to reconsider a huge expansion package. “We definitely think that the market can continue to grow,” said Andrawes Snobar, senior research analyst at Jordan’s Arab Advisors Group.
“The presence of three mobile operators in the market right now means there is plenty of competition. That will lower prices and increase the number of services offered to new subscribers. And that will increase the number of subscribers. “The mobile phone penetration is also very low in the country compared to regional standards and absolute levels.” Devine Kofiloto, principal analyst at UK-based Informa Telecoms & Media, agrees. “Sudan is a very interesting case, based on the parameters of low penetration and high population,” he said.
Near virgin territory for operators
At the end of 2006, just over 13% of Sudan’s 40 million-strong population had access to a mobile phone, according to the latest figures released by the Arab Advisors Group. Investors would have to search far and wide to find an equally sizable market and attractive penetration statistics elsewhere in the region.
Three out of Africa’s six biggest countries by population — Nigeria, Egypt and South Africa — already have mature mobile markets. No outside operators are allowed into Ethiopia, where the huge and inefficient Ethiopian Telecommunications Corp holds a state monopoly. That only leaves the Democratic Republic of the Congo — with its 60 million inhabitants, of which only 9% have mobiles phones, according to Informa — to rival Sudan in the investment stakes. Analysts thus concur: There are plenty of opportunities for expansion in the country.
Khartoum may have plenty of handsets and mobile phone masts. But huge areas of the country — from Darfur in the west, to the Red Sea coast in the east, remain near virgin territory for operators. If new mobile licenses prove hard to come by, there are always other ways in. Sudatel floats on the Bahrain and Abu Dhabi stock exchanges.
Another largely untapped opportunity lies in South Sudan with two mobile licenses of its own, currently held by the tiny operators Gemtel and NOW. Both could be tempting acquisition targets. Big names that are still on the sidelines without a stake in Sudan include the Anglo-South African Vodacom and Egypt’s Orascom Telecom.
Guilt by association
As in all markets, there are also risks. One of the biggest, especially for any operators with ties to Europe or the US, is the possibility of getting tainted through association with the festering conflict in Darfur. Human rights campaigners have mounted huge publicity campaigns against foreign companies suspected of propping up the Sudanese government or supporting atrocities in Darfur. German engineering giant Siemens, which has a sizable telecommunications division, pulled out of Sudan last year citing “moral and political” reasons. France’s Alcatel-Lucent has also been forced to defend its business interests in Sudan, following campaigns by divestment and human rights groups.
Most affected of all has been Sudan’s own national operator Sudatel, controller of the Sudani mobile brand. The company was one of 31 Sudanese groups barred from doing any business with US companies last year, after the White House accused it of “contributing to the conflict in Darfur.” But even that exclusion from the world’s biggest economy has not prevented Sudatel from finding its own opportunities for growth. In December, it snapped up a 70% stake in Intercellular Nigeria Limited. Three months before that, it spent $200 million on a mobile phone license in Senegal.
When Sudatel’s CEO Emad Ahmed was asked by reporters what impact America’s sanctions were having on his business, he replied: “The sanctions do not affect Sudatel at all. We are still dealing with the main builders of telecommunications … except American companies. The technology is available everywhere: it is available in Europe, it is available in the Far East and China, especially in China.”
