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MTN safari reaches Rwanda
TELECOMMUNICATION
UNTIL a year ago, Rwanda was a no-man's land, never mind a place to do business. But on Friday, cellular phone company MTN won the licence to operate a cellular network in the warravaged country. The deal puts MTN on the road to becoming Africa's leading telecoms provider and follows last month's successful bid to run the second telecommunication network in Uganda. MTN's African expansion comes as the SA government is investigating the feasibility of a third cellphone licence. MTN has 47% of the 1.3-million SA subscriber market, which attaches a market value of well over R10-billion to the group. While the SA market will continue to grow, MTN CE Bob Chaphe sees enormous growth potential north of the Limpopo. "The liberalisation of economies in Africa has provided new chances for telecommunications and economic growth and MTN will take advantage of those," he says.
MTN is also bidding for a licence in the Democratic Republic of Congo and could be close to taking a 30% to 40% stake in Zimbabwe's Econet. Econet, a cellphone network created by entrepreneur Strive Masiyiwa, this week got renewed court backing by having Zimbabwe's cellphone monopoly - run by a relative of President Robert Mugabe - ruled unconstitutional. The growth of cellphones throughout Africa is opening up opportunities for SA operators. Vodacom, 50% controlled by Telkom, is bidding for licences in Swaziland and Botswana. MTN's foray into Uganda covers both cellphone and fixed-line networks. MTN has 50% of MTN Uganda with Swedish operator Telia holding 30% and Investco Uganda and Rwanda's Tristar Investments 10% each. Tristar is also the leading member of the successful Rwandan consortium, holding 46%. The country's state-owned operator, Rwandatel owns 28% and MTN 26%. The GSM cellular network is scheduled to be operational around the capital Kigali within six months. Within two years more than 60% of Rwandans will have cellular coverage. Commenting on the potential of a third cellphone network in SA, Chaphe questioned the commercial viability of the venture. "Around the world I'm not aware of many, if any, successful third entrants into the cellphone market. Why should we be different?" he said. The government has come out strongly in favour of a third licence to facilitate black empowerment and achieve greater phone penetration in poor areas. The independent SA Telecommunications Regulatory Authority is investigating the feasibility of a third operator. "We're not worried about competition. But this government cannot afford another failed empowerment initiative which a third licence could very well be," Chaphe said. He suggested that empowerment could be achieved by selling shareholdings in existing operators to black empowerment groups. MTN is in talks to find new shareholders for about 40% of its capital amid the sale of the holdings by SBC Communications and Cable & Wireless. Telkom is also said to be divesting part of its 50% in Vodacom. Chaphe said the only way a third cellphone operator would be profitable in the short term would be to offer it favourable interconnect terms and roaming rights on existing networks. "This would effectively mean that they are changing the rules and could have an adverse impact on foreign-investor perception of the country," he said. Satra is also considering the type of wireless technology suitable for a third licence. Top of page
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