Now that the acquisition spree seems to have come to a slowdown, Africa’s two largest telecommunications groups, South Africa-based MTN Group, and MTC-backed Celtel International, can concentrate on developing their strategies to maximise growth within their operations. Taking advantage of their widespread presence in Africa to develop new services, and of their expertise to deploy and manage effective networks, the two groups are competing head-to-head on most of the continent.
In terms of services, Celtel was first to take advantage of its regional presence by introducing its multi-country roaming offer, One Network, in September 2006 in East Africa. The service, covering the markets of Kenya, Tanzania and Uganda, proved so popular that Celtel registered a 30% increase in subscription in the region following its launch. It was only a matter of time until it extended it to other regions. Congo, DR Congo and Gabon followed in the Spring of 2007, and according to Tiemoko Coulibaly, the group’s Vice President for West Africa, it is scheduled to cover all of Celtel’s 15 operations (although to timeline has been revealed).
Not to be left out of this lucrative revenue stream, MTN joined the roaming market with a yet-to-be-named “seamless connectivity” service, to be launched first in West Africa. The group holds a strong footprint in the sub-region thanks to its acquisition of Investcom last year, which Celtel will find difficult to compete with, as it doesn’t (yet) own operations in two of the major markets that are Ivory Coast and Ghana. However, schemes like these should give the pan-African groups a huge competitive advantage over smaller operators, who cannot offer similar plans when they have operations in a small number of countries.
In terms of networks, both Celtel and MTN are also investing to both increase coverage and upgrade their networks. Their regional presence is again an advantage, as they can share expertise from one operation to the other. As Christian De Faria, MTN’s Vice President for the West & Central Africa Region, says, “we are working on creating a regional hub whereby the biggest operations will be taking care of the smaller operations”, enabling key staff to move from one operation to the next to share expertise between countries, thus improving efficiencies and reducing costs.The move to 3G and HSDPA is also under way in their more advanced markets such as Nigeria and South Africa. Adding to this, MTN is also acquiring ISP and smaller service providers, hinting to a step to triple play strategies in some of its markets. Such moves are expensive, and the groups definitely benefit from their size to facilitate investment.
What does the position of such telecoms giants in Africa say about the future of the continent’s market? Will competition remain fair in most markets? How can smaller groups react to Celtel and MTN’s strategies on the continent? These issues, and more, will be addressed at Informa Telecoms & Media’s AfricaCom event, part of the GSM 3G World Series, which will be held in Cape Town, South Africa, on 21 and 22 November. The largest communications event in Africa, it will attract 3000 telecommunications professionals (operators, service providers, regulators, investors, vendors) to discuss the business models and technology strategies for growth on the continent.