The award of the second Tunisian GSM licence to the Orascom-backed consortium has reinforced its concentration of activity in Northern Africa. The licence was awarded after the first attempt did not produce high enough bids. The second attempt to auction the licence saw Orascom and partners win the licence with a bid of USD 454 million against bids from Telefonica Moviles and Kuwait's NMTC (Wataniya Telecom GSM network in Kuwait).
The award of the second GSM licence in Algeria to Orascom Telecom at a price of USD 737 million was an expensive acquisition by the operator but an essential part of its newly focused strategy: to maximise its resources in the Middle East, North African and Indian sub-continent. It will be in fewer but larger markets, divesting its interest in its sub-Saharan African operation, Telecel.
Vodacom entered the DRC through the acquisition of a 51% stake in CWN and is set to be Zambia's fourth GSM operator. Other targets include Ghana (with Telekom Malaysia's imminent withdrawal) and the Republic of Congo. MTN's recent move into the Nigerian market could mean it may be less able to raise the cash needed for expansion for the moment.
Econet Wireless has adjusted its focus after problems in Nigeria when it failed to pay for its share of the costs of its shareholding. Econet's stake has been reduced to 5% in the network. It now plans 'affordable' investment rather than controlling stakes. It has also moved into New Zealand with GSM and UMTS licences.
MSI currently holds 14 GSM licences in the region. The networks are located in promising markets but currently have relatively small subscriber bases.
MSI and Econet Wireless may face regulatory hurdles if they intend to invest in Telecel due to the crossover of their operating footprints. European operators may be wary of raising their exposure in 'risky' markets to the extent of Telecel's operations. In the case of the licence auction for Algeria's second GSM licence, Orange bid USD 422 million against Orascom's winning bid of USD 737 million. Orascom defended the high fee citing the huge potential in the market and its experience in similar markets.
Millicom, the Luxembourg-based operator, has been increasing its presence in MEA, hoping to exploit moves by African countries towards liberalisation, and their attempts to attract foreign investment through GSM licences.
Mozambique, Mali, Malawi and Nigeria are currently being watched as plans are made for their licence auctions. Mozambique is in the process of relaunching the auction process, as the bids were deemed too low to conclude a sale for the two nationwide GSM-900 licences. The licences have been altered to be more attractive to bidders and the first licence winner will have a two-year exclusivity period with mCel the incumbent GSM operator. In Mali, France Telecom has been announced the winner of the GSM licence auction, increasing its footprint to 12 markets in the region.
Other opportunities for investors are also arising in privatisation plans undertaken by governments in the region. Future markets to watch for further GSM licence auction plans include Morocco and Kenya. Both of these cellular markets are very competitive with two operators in the market. Competition has already driven tariffs down and subscriber numbers up. The impact of further competition is likely to manifest itself through differentiation between networks in terms of quality and service.
