Cellphone subscribers -- new booty in post-war Congo
Monday October 13, 7:31 pm ET
By Dino Mahtani
KINSHASA, Oct 14 (Reuters) - Willy Mbanga, a 24-year-old sociology graduate, dreams of the day he will escape the tedium of selling phone cards on the streets of Kinshasa.
With war ending in the Democratic Republic of Congo, donor money and foreign investment are starting to trickle in, but for many youngsters finding work remains near impossible.
"It's not exactly lucrative, but at least selling cards offers me daily survival, because there are no other jobs," said Willy, handing a cellphone to a customer eager to make a call.
After five years of war in which foreign armies and rebels fought over Congo's mineral riches, overseas telecommunications firms are battling for a cut of one of its fastest-growing industries.
From a total subscriber base of just 50,000 three years ago, Congo's telecoms industry has grown to more than 800,000 subscribers.
London-based investment banking firm Afrinvest predicts the market will top 1.2 million next year. Others say that figure could be as high as 1.6 million.
The World Bank expects the telecoms boom to be a major source of growth as the divided country of more than 50 million stitches its economy back together.
For phone card vendors like Mbanga, street traders who rely on cell phones and businessmen who call into, out of and across the country, the advent of GSM phones has been a boon.
FALSE START
The vast country, then called Zaire, was one of the first in Africa to introduce mobile telephone communications in the early 1990s.
But at nearly three dollars a minute, and with little network coverage outside the capital Kinshasa, mobile phones were the preserve of the political and business elite.
Today operators offer prices under $0.25 a minute.
Two service providers have the lion's share, controlling some 90 per cent of the market. Each has invested in the region of $150 million, heartened by the prospect of reunification.
Celtel, owned by Anglo-Dutch consortium MSI Cellular which operates in 14 other African countries, paid $17 million for a GSM licence in late 2000 and began its rollout two years ago.
Vodacom, South Africa's largest mobile operator and owned by Telkom SA (TKGJ.J) and Vodafone (London:VOD.L - News), paid $39 million in October 2001 for a 51 percent stake in Congolese Wireless Networks (CWN), the country's first GSM operator.
Celtel has some 450,000 subscribers today, leading Vodacom with an estimated 350,000. Both hope to keep their share of what analysts expect to be a three million-strong market by 2007.
Both have quickly established networks across the country this year, even reaching towns such as Goma, the seat of what used to be the largest, Rwandan-backed rebel group. That has brought them into competition with the 30,000-subscriber SuperCell, a company with links to MTN (MTNJ.J) unit RwandaCell.
Not even the northeastern town of Bunia, the heart of Congo's latest ethnic conflict, is beyond the reach of the two companies, who have capitalised on the large United Nations presence as an important customer base.
With the race to sweep up customers wanting national coverage, the tactic has been to spend first and recoup later.
"We are growing very fast, first building sites and then linking them up later to pull in the customers," Gaston Maduma, Vodacom's marketing chief, told Reuters.
Vodacom has moved fast to catch up with Celtel, building 46 service localities, four switching centres, 180 base transceiver stations, and six satellite stations in a year and a half. It is planning to install microwave transmission, which significantly reduces the cost to the company per subscriber.
Celtel has nearly completed its microwave facilities in the east and west and plans a $40 million link between Kinshasa and the southeastern second city, Lubumbashi.
DIMINISHING RETURNS, SHAMBOLIC INFRASTRUCTURE
But despite the ballooning subscriber base, analysts are less bullish Congo can offer the same kind of bottom-line growth, given the huge costs of operating with Congo's shambolic infrastructure and diminishing revenues per additional user.
But while increasing the network's reach attracts custom, new subscribers in more remote towns tend to spend less than their city-dwelling compatriots.
"The level of usage of each additional subscriber becomes less, but we continue to build to protect the existing service base and offer higher numbers of locations," Celtel Managing Director Robert Gelderloos told Reuters.
Public power supply is often unreliable or nonexistent and operators have had to install generators in some areas.
There is also competitive pressure on prices thanks to rivals Congo-Chine Telecom, 49 percent owned by the government, and Belgian Sait Telecom's network Oasis, which hopes to reach all provinces of Congo, which is the size of Western Europe.
Poor infrastructure means GSM coverage will not reach all areas, but considering the relatively cheap sums paid for the GSM licences, analysts say the two main operators have room to invest more to expand their geographical and customer base.
Some industry experts predict as many as three million subscribers by 2007, but telecoms analyst Vaughan Henkel at JP Morgan in South Africa says it is not simply about numbers.
"As long as each additional subscriber can still add value, the network the operators maintain will remain marginally profitable," he said, adding the key was to maintain profits.
"Market expectations are low for the DRC, so we can adopt a wait-and-see attitude for the time being."
(Additional reporting by Arthur Asiimwe in Kigali) |
