Issue no 263

top story

  • For years credit cards have failed to penetrate developing nations the way they have impacted the rest of the world. This is down to the fact that many merchants and traders in these countries do not accept card payments, only cash or cheques. Conventional card payment processing terminals are expensive and most African merchants simply cannot afford them. However, with the rapid growth of wireless technologies new options to bring electronic transaction authorisation to non-traditional locations worldwide are being created. Convenient mobile payments and transactions are allowing merchants to process card payments anytime, anywhere and more importantly, cheaply. Soon cards could be accepted in open-air markets and even in taxis, writes Mapara Syed.

    WAY Systems Inc is a provider of cost-effective innovative mobile payment transaction solutions that transform low-cost GSM mobile phones into secure wireless point of sale (POS) terminals using General Packet Radio Service (GPRS) networks. “Using GPRS, an electronic payment hits an IP network, which encrypts the transaction and then routes it to the bank host for processing,” explained General Manager of WAY Systems International Markets, Terry Hsiao. WAY Systems’ latest product is the Mobile Transaction terminal (MTT), which is a mobile phone designed for merchants with a secure integrated adaptor that accepts both magnetic stripe and smart cards. The secure, encrypted, end-to-end mobile platform consists of a wireless gateway server that authenticates connections, establishes an encrypted wireless communication channel and provides a remote terminal management application. There is also a payment processing gateway server that integrates with existing payment processing systems.

    The actual hardware includes a mobile phone, a secure access module (SAM), embedded mobile merchant payment application and a battery-powered printer. “The device comes as an integrated terminal so merchants cannot simply buy the card swiping adaptor and attach their own mobile phone. It comes all in one,” said Hsiao. “The price of the MTT can vary. The typical retail price is just under USD1000. If it is bought in volume then the price can decrease to a USD400-USD500 range. Alternatively, local requirements can influence the pricing of the MTT so whether the more advanced features of the device are needed of not can bring the cost up or down,” he added.

    As the MTT ingeniously merges widespread GSM/GPRS mobile phone technology with the capabilities of a POS terminal, it has the potential of opening up fresh market opportunities. Recognising this, Visa International, the world’s leading payment brand, formed a strategic alliance with WAY Systems last year. Through the alliance, the companies have been working together to identify innovative card acceptance solutions for merchants in need of secure, on-line mobile payment methods.

    “Building our relationship with Visa accelerates WAY Systems’ reach in the growing market of mobile merchants,” said President and CEO of WAY Systems, Will Graylin, late last year. “Everyday we encounter new merchants worldwide who are unable to process card transactions due to current market inhibitors. Our partnership with Visa International gives WAY Systems the opportunity to extend card acceptance into a completely new market.”

    The MTT has already been making its way into developing nations in the Far East and Indian subcontinent, where mobile networks are surpassing fixed-line grids. It has been reported that Visa International’s retail volume and applicant base in India grew by more than 50 percent last year. “At the moment we are targeting the bigger markets like Europe, North America, South America and Asia, specifically China,” said Terry Hsiao. “However, we have had demand from South Africa so we are considering entering the African market. This will not be in 2005, though, but in the future,” according to Hsiao.

    GPRS or 3G in Africa which is needed to use the new POS device is now available in a number of North Africa countries, Kenya, Nigeria and Mauritius. Networks in Ghana, Uganda and Tanzania have announced plans to introduce it this year.


  • Spacefon’s new parent company Areeba has insisted that all its networks must offer GPRS so its Ghana subsidiary has been testing it both technically and with a small number of trial customers. However, it has held back from a full launch because it has serious network problems (see In Brief below). Mobitel is also set to install GPRS, using Huawei as its supplier.

    Kasapa Telecom Limited has signed a contract with ZTE Corporation of China to supply, build and manage a digital network for the company. At a news conference in Accra this week, Kasapa Telecom Managing Director Robert Palitz said that with this new nationwide digital network, Kasapa will provide affordable voice and data telecommunications solutions for mobile, home, and business.

    Kasapa expects the first shipment of network equipment to arrive in Ghana this week and anticipates it will launch digital service in its present coverage areas of Accra, Tema, and Kumasi in less than three months, followed immediately by a program of nationwide expansion.

    Kasapa will deploy CDMA2000 1X, one of the 3rd generation family of cellular technologies. This digital cellular technology, developed in the United States, is used by over 256 million customers in 78 countries worldwide. Leading networks in the USA have received accolades for the quality of service and features that CDMA has enabled them to provide.

    Mr. Palitz added that when the digital service is launched, the present analogue system will be shut down but noted that “Kasapa pledges not to leave any active customer behind.”

    Kasapa Marketing Manager Clement Asante explained that almost all active customers are using dual mode handsets that will switch automatically to CDMA as soon as the new network is launched. Those handsets will then sport new features and much improved battery life. Active Kasapa customers will be able to exchange their functioning analogue handsets for new CDMA models of similar type. All Kasapa customers will be offered trade-in discounts on new models, if they so desire.

    Mr. Asante continued, “CDMA2000 1X phones are available in all shapes and sizes, with basic phones at affordable prices as well as highly advanced and fashionable models. And only Kasapa will give you the choice of phones using Kasapa chips or phones that require no chips at all.”

    Kasapa is a subsidiary of Hutchison Telecommunications International Limited.

  • Eskom Enterprise Division, one of six shareholders in South Africa’s start-up second national operator (SNO), says it is confident that the new telco will have customers making calls over its network by Christmas.

    Eskom director Brian Dames told CityPress that the SNO partners were close to finalising shareholder agreements and a business plan, and would be applying to telecoms regulator Icasa for its operating licence by the end of this month.

    South Africa’s fixed line market it currently dominated by Telkom SA and the government is keen to introduce a competitor, but its attempts to launch an SNO have dragged on for years.

    It eventually approved the operator’s shareholders in January, but it was not until March that the six parties finally sat down to formulate a business plan after black empowerment group Nexus Connexion, which owns a 19% stake in the venture, withdrew its application for a judicial review into the licensing process. Nexus had applied for the injunction over concerns that the Telecoms Minister Ivy Matsepe-Casaburri had exceeded her authority in awarding shares in the SNO to Two Consortium and CommuniTel. Both groups had come up short in their applications for a controlling stake in the new operator but were nonetheless awarded 12.5% each in the SNO. India’s Tata Group is a strategic equity partner in the business.

  • Moroccan regulator ANRT has announced that three operators have lodged bids for new fixed line licences, following a tender launched in late February to introduce competition to the market, which is dominated by incumbent Maroc Télécom.

    The three contenders for the concessions are domestic cellco Médi Télécom, local ISP Maroc Connect and Egypt’s Orascom Telecom.

    Originally, 33 companies had expressed interest in the concessions, which cover services including wireless in the local loop (one licence per region – 'Northern', 'Southern' and 'Central' including Rabat and Casablanca) and local mobility (one licence per region, permitting the provision of mobile services within a local area up to 35km in diameter).

    Also offered in the tender were two national backbone operating licences and two international gateway concessions. Maroc Télécom was forbidden to participate in any of the tenders and GSM operator Médi Télécom was not permitted to apply for the local mobility licences.

    ANRT generated further interest in the tender by adding a clause to allow one new licence holder to receive a 3G mobile concession upon fulfilling the conditions of its fixed licence.

    The regulator stated that a national UMTS licence will be granted to the licence holder subject to compliance with three conditions: obtaining a local area mobile licence for all three regions offered, fulfilling its service commitments for the first 18 months of the licence, and expressing its interest in providing 3G services when submitting bids for the regional concessions.

  • Econet Wireless has filed papers in the Federal High Court in Nigeria, asking a judge to re-appoint the international arbitration panel, so that it can complete the arbitration process over the shareholder dispute in Vee Mobile, formerly Econet Wireless Nigeria, which had been stopped because of lack of jurisdiction.

    A spokesman for the company said all papers for the application were filed last week, as required by the Federal High Court.

    “Our lawyers have requested the court to consider re-appointing the same panel initially appointed by the Permanent Court of Arbitration, which was subsequently found not to have jurisdiction over the case,” the spokesman says.

    “This process has been going on now for nearly two years, and, to avoid further delays, we think it will help everyone if the same panel is appointed, as they have already heard the substantive matters,” he adds.

    The Nigerian judge has the power to appoint the same panel, or to appoint a completely new three-member panel.

    The Econet spokesman says that he does not know how long the process will take.

    “Until the panel has been appointed we will not know how long it will take to complete, but it could be another year. Given that the issue to be considered by the arbitrators concerns pre-emptive rights, it means that no third party can acquire shares in Vee Mobile until this matter has been resolved,” he adds.

    Justice Shuaib of the Federal High Court in Lagos issued an injunction on 10th January 2005 ordering Vee Mobile to refrain from taking any measures that would prejudice the rights of Econet.

    “That injunction, which still stands, means that the directors of Vee Mobile cannot transfer shares to any third party until the shareholder dispute has been resolved,” the spokesman says.

  • The International Telecommunication Union (ITU) has launched a new development drive designed to bring access to information and communication technologies to the estimated one billion people worldwide who are still without access to a telephone. Called 'Connect the World', the initiative is designed to encourage new projects and partnerships to bridge the digital divide. By showcasing development efforts now underway and by identifying areas where needs are the most pressing, the ITU believes its Connect the World project will create a critical mass that will generate the momentum needed to connect all communities by 2015.

    At present, the ITU estimates that around 800,000 villages - or 30 per cent of all villages worldwide - are still without any kind of telecoms connection. Connect the World has 22 founding partners, including leading telcos such as Alcatel, Huawei, Intel, Microsoft, KDDI, Telefónica, Infosys and WorldSpace. Partners also include governments and government agencies including Egypt, France, Senegal and Korea.

    Also supporting the initiative are regional and international organizations including UNESCO, the European Commission, the International Telecommunication Satellite Organization and RASCOM, as well as a range of organizations from civil society including Télécoms Sans Frontières and Child Helpline International.

    "It is time to stop regarding access to ICTs as a privilege available to the rich few within a country, and the rich few countries in the world," said ITU Secretary-General Yoshio Utsumi. "ICTs now underpin just about every aspect of modern life. They are basic infrastructure, as necessary to economic and social development as postal services, banks, medical centres and schools."

    At present, the 942 million people living in the world's developed economies enjoy five times better access to fixed and mobile phone services, nine times better access to Internet services, and own 13 times more PCs than the 85 per cent of the world's population living in low and lower-middle income countries.

    "It is not ICTs that will solve the problem of the digital divide, it is people and especially people working in partnership. So while Connect the World is about harnessing the power of ICTs, it's also about harnessing the power of people working together to connect the unconnected," said Utsumi. "Every Connect the World partner is currently working to make a real difference. I applaud their efforts, and hope the projects they are showcasing within this initiative will serve to stimulate new partnerships and inspire others to join us and to launch their own development activities."

  • Talks between Cell C and the Virgin Group are going well, and the companies expect to soon sign a deal that will see them launch a 50/50 partnership.

    According to Cell C's head of strategy, Jonathan Newman, Virgin will enter the South African market as an enhanced service provider, rather than a mobile virtual network operator, as many have previously speculated.

    “Because the deal is a joint venture (JV) process, we have jointly taken a decision not to make any public comment until after the agreements are signed and a date has been set for the launch,” says Newman.

    “What I can say is that the negotiations are ongoing and have been progressing well and we expect to be able to launch within the next few months.”

    It is anticipated that Cell C will leverage the partnership to allow it to chase the more affluent consumers and business users who have traditionally shied away from the third cellular operator.

    According to Andre Wills, a telecoms analyst at Africa Analysis, it is a deal that will be good for the country, as it will increase competition in the telecoms arena.

    “It is not surprising that Cell C is trying to tie up a deal with Virgin, as it is a strong and well recognised global brand which the operator will be able to leverage off of,” says Wills.

    “It must also be remembered that Virgin will not own its own network, it will increase its market share through a stratified range of products, as its forte has always been the prepaid market.”

    Asked whether he thought the advent of mobile number portability (MNP) – which had been mooted as occurring before the end of the year, although this appears to have since been delayed – would help the Cell C/Virgin joint venture to capture customers from the other operators, Wills says it is possible.

    “However, one needs to remember that MNP works both ways, so it is also possible that the joint venture will be the one that loses customers.

    “MNP hasn't fundamentally changed most markets where it has been instituted, with the net gains and losses not being very big for operators in these regions. It has, however, allowed greater choice for customers, which is the most important thing.”

  • - Senegal's second mobile operator Sentel has now 530,000 subs.

    - The telephone service in Ghana is not much improved since our last visit two years ago. Spacefon’s mobile subscribers have expanded rapidly but its network has not kept pace with the new demands. Frustratingly, it will tell you that you have dialled a wrong number or the subscribers phone is switched off when neither are actually true. An although Ghana Telecom has invested heavily in its network, it too is struggling to keep pace with the new mobile demand and is experiencing difficulties with its fixed line network. The situation is further worsened by the fact the company is currently experiencing some financial difficulties and has been putting a hold completing some of its network investment.

    - Initially the DRC regulator decided to put a 50% tax on international call revenues. Then it was overruled by the Ministry that decided the tax should be split three ways between itself, the regulator and OPCT, the almost non-existent incumbent.

    - 2005 annual growth in subscription numbers for MTN Nigeria could exceed 100% as a result of MTN Group's recent decision to restate its active subscriber definition for some of its markets (including Nigeria), extending the activity criterion from 30 days to 3 months, as it has already done in South Africa. Prior to MTN's change in policy Informa Telecoms & Media forecast a 66% growth in MTN Nigeria's subscription base for the year from 31 December 2004 to 31 December 2005. As of March 2005 MTN Nigeria had 4.39 million subscriptions but, based on the new counting policy, the figure is inflated by 27%, bringing the customer base to 5.57 million. Thus the forecast subscription base of 6.47 million for December 2005 could reach 8.22 million under the new counting policy if also increased by 27%.

    - Incumbent operator Uganda Telecom (UTL) has predicted steady growth in the country’s fixed line sector for the next four to five years. The telco’s head of marketing, Hans Paulsen, expressed his optimism for the upcoming period, based on the company’s USD125 million investment in mobile, data and internet infrastructure over the last four years. Paulsen claims that UTL is stepping up its network expansion to rural areas of the country, utilising CDMA-based WiLL technology to provide both voice and data services.

  • - UAE-based satellite operator Thuraya has tied up with satellite telecom distributor Afrospace and fixed line incumbent Ethiopia Telecommunications Company (ETC) to launch services in Ethiopia. The government hopes that the new service will help provide services for people living in places which are inaccessible to the existing wireless networks in the country.

    - Nigerian mobile operator Vee Networks, which trades under the brand name V-Mobile, says it has launched GPRS services. V-Mobile, currently being courted by Vodacom and Virgin Mobile, says it is now offering a range of internet, MMS and data services via GPRS under the ‘VActive’ banner.

    Also Netcom's 3G mobile broadband wireless service offering, using the IPWireless-based Axity3G non-line-of-site (NLOS) broadband wireless access solution, will become commercially available in Nigeria in next month. Initial coverage of the urban centres within Lagos, Nigeria's most populated state, beginning in mid-July, will be soon followed by roll-outs in other key markets, including Port Harcourt, Kano and Abuja, the nation's capital. The system will cover a total population of over 15 million, making it one of the largest broadband wireless deployments of its kind in Africa.

    The service offering, branded MyNetcom, will be available to the end user both directly through of Netcom and through the company's exclusive network of resellers, with a limited number of moderns being made available in mid July for those wishing to be among the first to subscribe to the service. The timeliness of this initial deployment was made possible by the commitment and dedication of Netcom, Axcera and IPWireless to meet the aggressive deadlines set forth to bring the system on line. Axcera's IPWireless-based "Axity3G" solution will allow Netcom to offer services never before available in Nigeria.

    - Telephone landline service in some districts of Ghana's Upper East Region including the Bolgatanga Municipality, have been improved, following the expansion of the networks in those areas. A new exchange with a capacity of 9,000 lines has been installed in Bolgatanga to replace the old one which was capable of serving only 3,000 subscribers, while the number of lines for Bawku has also increased from 500 to 5,000.

    - Mobile operator Celtel, has introduced a service that would enable subscribers to track their callers when their phones are switched off or are out of reach. The service dubbed "Who Called?" will enable subscribers to receive an SMS with all numbers of the calls missed while their phones were off or out of reach. The service is free.

    - Zimbabwean mobile operator NetOne has expanded its rural network following the installation of seven additional base stations around the country. NetOne managing director Mr Reward Kangai said the base stations were installed in Buhera, Chirundu, Filabusi, Makuti, Nyamandlovu, Nkayi and Nyika, bringing to 35 the number of base stations in rural areas.


  • Mauritius is about to become the world's first country to deploy a complete nationwide high-speed wireless network. The government calculates that the new network will make the beautiful island a hub of cyber business activity, expanding the small nation's economy beyond tourism and fishing. Navini nomadic broadband wireless access will offer covergae of the entire island, part of it rather mountainous and rugged, addressing the residential, business, and recreational needs of the island's population and year-round visitors. The deployment will take advantage of next-generation 802.16e-based WiMax.

    Navini's system is a non-line-of-sight (NLOS) WWAN solution featuring smart antennas. The technology provides a wide range of coverage, extending miles from the base station. Since it is a zero-install solution within the area of NLOS coverage, customers will have no problem to get it going. In conjunction with this island-wide WiMax deployment, the government of Mauritius announced it was becoming an e-government: By the end of the year every Mauritian will be able to conduct any and every business related to the government online and wirelessly throughout the country. Citiziens ordering services on-line will be able to access these services the same day the service is ordered. The entire network is being installed by ADB Networks the main Internet Service Provider in Mauritius.


  • GS Telecom has gone into a joint venture with Benin’s telco incumbent OPT through a local partner Universelle. It has installed a Huawei 2000 CDMA wireless local loop (operating at 850 mghz) system on an 8 year build and transfer basis with 14 BTs across the whole of southern Benin and 9 BTs in the north of the country. The three organisations split all international revenues after the capital costs have been amortised. Universelle offers the Dialog pre-paid calling card.

  • The long-awaited Ghana IXP was installed and started operating this week from the Kofi Annan Centre. The first four ISPs connected were: Busy Internet, Ecoband, K-Net and Teledata (which does Ghana Telecom’s pre-paid platform). Ultimately there is supposed to be a 60-metre mast to create wireless connections to potential members but while that is being built Ecoband has put in place a temporary arrangement allowing itself and two other providers that co-operate on their wi-fi networks to get connected. Four other organisations – Internet Ghana, Netplux, IDN and Third Rail – are due to join shortly.

    Ghana Telecom is to be commended for approving reduced cost ‘copper’ line rental to the IXP for only USD50 a month.

  • Internet Ghana is going to arbitration with Ghana Telecom over its disputes with Ghana Telecom and its broadband offer. The dispute is complex and Internet Ghana has many different points of complaint. However, Ghana Telecom’s initially responses show them admitting fault on a number of issues and making some rather interesting admissions.

    Internet Ghana had alleged that Ghana Telecom (GT) was poaching its clients. In a letter dated 14 April, GT admitted that it had migrated 12 clients without their permission:”Ghana Telecom admits rerouting (12 of) Internet Ghana’s clients.” It had turned their Internet Ghana broadband service off and when the clients complained had switched them to their own product, Broadband4U.

    Internet Ghana’s contract with GT was based on a rewritten version of a local loop unbundling contract used in Norway minus certain clauses. Internet Ghana maintains that the admission that it rerouted clients is a fundamental breach of this contract. They also maintain that there have been four other separate areas where breaches of contract have occurred.

    Under pressure from the Parliamentary Caucus on Communications (to which local ISP association GISPA made submissions), GT made a clear commitment (with the support of the regulator, the NCA) to separate out its broadband subsidiary by 1 January 2005. This is important because GISPA maintains that GT is using predatory pricing on broadband to crush independent ISPs. On the current basis, the wholesale price of its bandwidth to its broadband operation l;ooks as though it is being subsidised. A separate subsidiary would not allow the broadband operation to get pricing not offered to others.

    Internet Ghana maintains that because GT has failed to make the separation, the NCA ought to have stopped the service. GT says in its letter to Internet Ghana of 14 April that the restructuring process is a gradual one and that in order to convert the broadband operation to a separate unit, it would need to “establish its viability”. This is a staggering admission as it implies that it launched without first establishing the business case and therefore it had not established what a market price might be.

    Lastly it established what its pricing would be in July 2004 and then offered the service on a “try it and see” basis to a wide range of people. This created the clear perception that this was a free, special offer and that it would be charged for later. Naturally many users faced with paying their monthly bills to a supplier like Internet Ghana or getting a “free” service for several months chose the latter. GT maintains that problems with its billing system forced it to adopt this approach.

    All these issues and more go to the arbitration process set up by the NCA under the 2003 regulatory framework which covers issues of fair competition. Under article 152, if there is a dispute, the two parties each choose an arbitration panel member and those two panel members choose a Chair. There is also provision for further appointments to the panel if parties cannot initially agree. The panel then assesses the issues and its conclusions are binding on the two parties. Thus far so simple except for the time and cost implications of going through the dispute process for a small business like Internet Ghana.

    But the parties to the dispute have the right to appeal to the Minister of Communications and if they are still dissatisfied, they can they apply for a judicial review. Since most court cases of this kind take 2 years to get a hearing, it is not difficult to see that GT’s strategy would be to wear down Internet Ghana by taking the dispute the whole distance that might take upwards of three years.

    The issues are complex but important ones and deserve to be heard. But it is important for both sides in the dispute get a quick resolution if this is not to cast a pall over future ISP relationships with GT which in many other ways had begun to improve. As Leslie Tamakloe, CEO of Internat Ghana told us:”When a small company like ours is being abused, there is no short-term remedy.”

  • After several weeks of rumours about a high-profile public servant being involved in setting up an ISP, the truth finally came out and was much simpler than first met the eye.

    Engineers of one ISP noticed a mast being built and enquired who it was being built for. Their fellow engineers replied that they they were working fir InfiniteStream. The NCA had no records of the company or a licence for it. and the issue was raised at a GISPA press conference. The NCA and the Minister said they would investigate what was going on.

    After investigation, it emerged that there was a registration but in the name of Value Data, a company that had registered as an ISP 3 years ago and it had decided to change its name. And hey presto, it emerged that the new operation was being run by the brother of the current Minister of Works and Housing, Owusu Agyeman.

    InfiniteStream is installing 5 base stations and is being supported by the South African company, WBS.

  • - Africa Online Ghana is to launch a wireless broadband service at the end of July. It is looking at offering 256K to residential (USD85 per month), small home office (USD155 a month) and corporate (USD254 per month). The difference between each service is not the bandwidth offered but the level of contention rate. The service is likely to be slightly more expensive than GT or Internet Ghana and is aimed at migrating existing users who are currently spending broadly similar amounts of money. CEO Ato Sarpong told us:”We are projecting migrating 40-50% of existing subscribers.”

    - Ghana’s Busy Internet has just connected to SAT3, whilst retaining a satellite connection for redundancy.

    - There may be fibre from Cotonou to Parakou but this may be less impressive than it sounds. Users report that the route is actually down for about 20 days a year.

    - Now that Ghana’s ISPs are paying USD4000 per mbps, are Camtel’s customers in Cameroon paying USD15,000 per mbps and Angola Telecom’s customers USD10,000 mbps? Answers on a postcard to the SAT3 consortium, c/o Telkom SA.


  • African banks are caught in a vicious cycle: lack of infrastructure and weak technology mean poor service and high costs. Few customers can access bank services, so savings levels remain low and businesses cannot borrow to expand.

    But new computer, smart-card and telecommunication technologies are changing the face of banking, bringing faster, more efficient services to many people who could never before afford to hold a traditional bank account.

    Mobile telephones let customers carry their banks in their pockets. Hundreds of retailers for beverages from Zambian Breweries now pay delivery drivers by sending text messages on mobile telephones. In South Africa, MoPay has launched a service allowing payments to be sent and received via 'SMS cheques'. Participants pre-register their bank details, and a password. When a payment request is received, computers verify the user and transmit the funds to the right account.

    In Kenya, the number of new credit and debit cards issued grew by 40% for the year ending June 2004. Mozambique reported a 52% increase in cards issued with a 213% growth in card transactions, including ATM withdrawals. Although much of the increase comes from issuing cards to existing bank account holders, Kenya's greater use of electronic banking has boosted the growth of bank customers from 6% to 11% of the population in the past four years.

    New technology can cut costs. High banking costs are the result of paper-based payment systems, high labour costs and markets too small to enjoy economies of scale. Introduction of electronic payment systems can cut transaction times and staff levels bringing more money into the formal financial environment, according to a report by the Commonwealth Business Council and Visa International. New technology can speed the growth of banking services as it does not require construction of new bank branches, the report says.

    New technology, including electronic and cell phone banking, also speeds up the circulation of money through an economy and can accelerate GDP growth, according to research by Econometrix, a South African consultancy, and Visa International. Electronic banking in many African countries not only helps savings, but reduces the bundles of cash people have to carry, especially in countries which have suffered years of hyperinflation, says Anthony West of Visa Southern Africa.

    Banks are still educating customers as to the benefits of using debit cards at a point of sale terminal. In South Africa this makes up only 7% of debit card transactions. But fear of crime is causing many customers to carry plastic.

    'I like it that I can use the card at Checkers [grocery store] then I don't have to get money from the bank and I don't have any extra money in my pocket which I will spend. I think it is also safer than carrying money on the taxi,' said Lindiwe Ndlovu, a domestic worker in Johannesburg.

    Sometimes, fairly low technology leads the way. Much as mobile phone users load pre-paid airtime, debit or charge cards with an embedded computer chip can be loaded with money. Users then spend the funds by swiping the card at point-of-sale machines. A shop owner simply needs a machine that can read the card and update the chip. The retailer downloads the information to the bank at the end of the day or week, reducing its calls to the bank a hundred fold.

    This pre-paid, bank-on-a-card system became common in Lagos, Nigeria, several years ago even though credit and debit cards linked to bank accounts are still rare there because of fraud, lack of ATMs and poor communications links. In October 2004, international payment organisation Mastercard, in partnership with low-end retail bank Capitec, launched the first pilot project for these cards in South Africa. If the pilot is successful it will be rolled out across South Africa with the intention of introducing it to the rest of Africa.


  • African ICT market analyst, BMI-TechKnowledge, has released its latest report - 'The South African IT Services Report and Forecast, 2004 - 2009', which shows that the SA IT services market reached R18,4b, showing a year-on-year growth of 5,3%, and accounted for 40,9% of the total IT expenditure in SA.

    Market value is forecast to grow from R18,4b in 2004 to R27,5b by 2009. This reflects a compound annual growth rate (CAGR) of 8,4% between 2004 and 2009. BMI-T expects to see market growth for 2006 and 2007 in the region of 7,8% and 8,1% respectively.

    Natalie Bryden, senior analyst at BMI-T, says: "The IT services outsourcing (ISO), together with deploy and support foundation markets, will continue to generate the largest amount of revenue over the forecast period, while the software as a service (SaaS) market will remain the fastest growing sector of the services market."

    The key issues affecting this sector include the following:

    * In 2004, most of the services spending growth came from cost-cutting initiatives; however, in 2005, more growth is expected from more optimistic initiatives around how to increase revenues.

    * Consolidation continues in the IT industry. Mergers and acquisitions dotted the landscape in 2004, with companies such as EOH and KPMG merging and CS Holdings being bought out by Bytes Technology Group. This trend will continue in 2005.

    * Vendors have had to consolidate and focus on internal issues over the past few years. Mid-tier players will be under the most competitive threat from their much larger competitors, and need to consider acquisitions of smaller firms or mergers with similar rivals in order to remain competitive. An increased rate of consolidation may reduce overall market growth, as remaining vendors rationalise and further commoditise their offerings.

    * There is a shift to shorter, smaller, and best-of-breed deals. The number of megadeals, as well as the average size of such arrangements, has shrunk in the past couple of years. In 2005, for the purposes of risk management and spending control, enterprise decision makers will continue to 'chunk' projects into smaller pieces, with defined outcomes that tie directly into appreciable results.

  • The Namibian Cabinet has approved N$2 million from the Social Security Commission's (SSC) Development Fund to assist 323 unemployed youths obtain information and communication technology (ICT) qualifications.

    This follows an undertaking by the Education Ministry to assist the youth in obtaining ICT skills to make sure unemployed youths were more marketable and employable. Forty-one per cent of young Namibians are unemployed.

    The training will primarily target the rural areas and 323 youths will be trained annually until five per cent of Namibians acquire a recognised ICT qualification.

    The Ministry of Education's National ICT Skills Scheme aims to significantly increase the ICT skills of Namibians, especially unemployed youths, so that those undergoing training can obtain internationally recognised qualifications and that rural Namibians are given equal access to skills training.

    The youths will be offered the following certified qualifications: the International Computers Driver's Licence (ICDL) - a qualification in basic ICT skills, an A+ qualification for ICT technical staff to enable them to maintain computers, and a Java programming certificate.

    The Development Fund of the Social Security Commission has received financial contributions from the Ministry of Labour in recent years.

    Currently the total reserves is estimated at N$49,2 million, of which N$3 million accrued during the last financial year has been earmarked for the National ICT Skills Scheme.

  • - It’s like the old saying about waiting for buses:’You wait hours for one and then four come along all at once.” Having waited nearly five years for public ICT policy documents, Ghana now has four, including one that looks specifically at telecoms policy that suggests that SAT3 should run by the regulator, the NCA. Predictably Government is split on how to pursue the recommendations. UNECA – which was involved in helping the Government with the policy process – is said to be might unhappy with the Government over the fiasco of the organisation of the WSIS prepcom and doubtless the Government blames UNECA for the problems experienced.

    - Hewlett-Packard has won the USD6.268m contract to supply, install and implement Uganda's Integrated Financial Management Systems (IFMS), Robina Rubimbwa of the finance ministry said on Monday. IFMS is an IT-based budgeting and accounting system.

Digital Content

  • Children who download pornography easily and cheaply on their cellphones will have their fun cut short when Vodacom makes blocking available.

    This was what Alan Knott-Craig, group CEO of Vodacom, told the portfolio committee on communication in parliament on Tuesday.

    Knott-Craig was one of several officers of the country's three cellphone operators, Vodacom, MTN and Cell C, who made presentations to the committee on the Convergence Bill.

    He said that from September Vodacom would have parental control systems available on its network to keep the downloading of pornography out of children's hands.

    These systems would give parents better control with the problem.

    This step would be a first in the cellphone industry worldwide, he said.

    Knott-Craig emphasised that there were no regulations forcing the group to make this decision.

    Dot Field, the group's corporate communication spokesperson, said Vodacom's decision had been made because they "wanted to do the right thing".

    "There are no regulations that can force one to do the right thing. We are merely fulfilling our social responsibility."

    Knott-Craig's comments follow complaints by several MPs in the committee about cellphone pornography that lands in young children's hands and pornographic advertisements under the "please call me" messages.

    Ruben Mohlaloga, African National Congress MP, peppered the operators with questions, especially about these advertisements.

    Mholaloga said that, as a young married man, he was offended by getting such advertisements underneath his personal messages.

    Some of the operators apologised for this and said that these advertisements under the "please call me" messages would have to be looked at.,,2-7-1442_1724904,00.html

  • - A website has been launched by a group of Nigerians, to deter former military dictator, General Ibrahim Babangida from making a come-back. The website,, has as one of its main features a listing of Nigerians tagged "Public Enemies," for promoting or working for the aspiration of Babangida to rule Nigeria again, come year 2007. It said the website is a project by concerned citizens determined to stop Babangida from managing the affairs of government again in Nigeria. The website features several interesting sections as "Babangida's scandals", which featured, among several others, the Gloria Okon Story, brutal reaction to the SAP riots, Dele Giwa's murder, and the BCCI cover-up; among others.

    * Malick Gueye has been replaced as the head of the Senegalese regulator ART. His replacement is Daniel Seck, former Sales Director of Afripa Telecom. Senegal has the chair of WATRA, the West African regulators association and Seck will take over that role.

    * Arrow Networks CEO Kwaku Boadu found himself in the middle of a PR storm this week. His company has been contracted to track the launch of a rocket by NASA. Feeling rather pleased that it had attracted the contract, Arrow not unnaturally wanted to trumpet its success. It issued a press release that used the phrase ’Ghana takes part in space launch’ as a hook for journalists. Before it knew what had happened there was one Ministry wanting to call a press conference to say that companies and individuals could not claim credit on behalf of the country, only Government could do that. It was even rung up by the Meteorological Service of Ghana asking why it was not included in the project. Arrow pointed out tactfully that the “project” consisted of nothing more than tracking and recording the rocket’s initial flight for six and a half minutes.

    * Compuware has announced that, effective immediately, Philippe Llorens is the new vice-president for Compuware's Southern, Middle East and Africa region, while Jorge Borralho leads the SA operation. Llorens has been with Compuware for over four years, while Borralho has spent overthree years with Compuware during his 25-year career in IT.

Mergers, Acquisitions and Financial Results

  • Acquisitive African mobile operator, MTN has apparently agreed to purchase stakes in two more cellular operators. At the same time, it is reportedly being lined up to replace Turkcell in Iran. The South African-based mobile company has been linked with operators in Zambia and the Ivory Coast and, should it go ahead with the purchase of a stake in each, its total subscriber base will rise to around 16 million mobile customers.

    MTN informed the South African Stock Exchange that it intends to buy a 51% stake in Ivory Coast’s Loteny Telecom (known as Telecel Cote d'Ivoire); it will also buy out the entire share capital of Zambia’s Telecel Zambia.

    The short statement sent to the share-dealing centre read “We are very pleased with these transactions, which are in line with the MTN Group’s expansion strategy of consolidating our position on the continent. We are confident that the two transactions hold very positive growth prospects for the group.” The company has yet to comment on press speculation lining it with Iran, where it is believed by some that it may be invited to take over the mobile company set up by Turkcell.

    Telecel Cote d'Ivoire has around 800,000 mobile customers and a market share of 46% and MTN’s purchase has already been cleared by the government of the Ivory Coast. The company’s acquisition in Zambia will not be quite so straight-forward and is subject to regulatory and competition authorities’ approval.

    MTN already claims to be the largest mobile operator in Africa, with operations in Nigeria, Cameroon, South Africa, Uganda, Rwanda and Swaziland.

    Shares in the group rose 1.52 percent to 46.70 rand, outperforming the JSE Securities Exchange's blue-chip Top-40 index which was 0.33 percent weaker.

  • Vodafone, the giant British mobile phone company, could soon take a controlling share of Safaricom - the largest cellular phone company in East Africa.

    Confidential documents revealed that, away from the limelight, Vodafone - one of the biggest mobile phone companies in the world - has quietly placed a cash offer of a whopping Ksh 7.7 billion ($100 million) on the table for an additional 11 per cent stake in Safaricom.

    The size of the offer means that Vodafone - which already controls the management of the company under a 1999 shareholders' agreement and, therefore, has an insider's understanding of its financial strength - is stipulating an enterprise value of nearly $1 billion for 100 per cent of the company.

    The fact that Safaricom has in five years grown into a billion-dollar company is one of the sensational revelations of the transaction - given that the company itself has done little to advertise the fact.

    If the government accepts the offer, the transaction will not only be Kenya's largest privatisation deal ever, but also the single-biggest inflow of foreign direct investment into the country in recent years.

    Well-placed sources said that the offer by Vodafone has been sitting on Finance Minister David Mwiraria's table for the past three months.

    With neither the minister nor Vodafone willing to comment publicly on the matter, it is also not clear whether the government has officially responded to the offer or even given a counter offer.

    The government, through Telkom Kenya, indirectly owns 60 per cent of Safaricom, meaning that, in the event that the proposal is accepted, the British company will immediately assume a 51 per cent shareholding in the company, permitting it to consolidate its control over what is by far the strongest brand in the mobile telephone market in East Africa.

    Details of the offer are still scanty, but it has been confirmed that the proposal by the British investor stipulates that:

    * Vodafone pays the $100 million in cash to the government;

    * Vodafone gives an undertaking that it will support a listing on the Nairobi Stock Exchange of the 49 per cent shares that remain in the hands of the government;

    * Part of the proceeds of the deal will be used to clear debts that Telkom Kenya owes Safaricom in respect of an interconnect agreement between the parties; and

    * A new shareholders' agreement will be signed between the two parties to reflect the changed shareholding structure.

    On the face of it, and in light of the scanty details on the proposal so far, the offer by the British investor is attractive in several ways.

    In the first place, it will provide Telkom Kenya with a $100 million cash injection to strengthen its balance sheet, enabling the cash-strapped parastatal to reduce its outstanding debts, including obligations to the government and tax authorities.

    And with the controlling shareholding in the company shifting from Telkom to Vodafone, the local company will immediately graduate to the league of companies with access to international capital markets. It will then be able to refinance its debts portfolio and declare dividends for all shareholders, including Telkom.

    The undertaking Vodafone has made to support an initial public offering (IPO) of Safaricom shares remaining in the hands of Telkom, should also be attractive to the government.

    Under the shareholders' agreement, Vodafone has pre-emptive rights over the shares of Safaricom Ltd, meaning that the government cannot sell the shares of the company without the consent of its joint-venture partner.

    With the foreign investor having given an undertaking that it will waive its pre-emptive rights, the government now has a window through which it can make it possible for ordinary citizens to own shares of the profitable company.

    Indeed, what is planned will by far be the biggest IPO ever witnessed on the Nairobi Stock Exchange. The big question is whether the NSE as it is presently constituted has the capacity to absorb an IPO of even 25 per cent shares of Safaricom: which, going by the value of the proposed deal, works out at $250 million (Ksh19.2 billion).

    Nevertheless, investment bankers and stockbrokers will be salivating at the prospect of clinching the contract for advisory services for such an IPO.

    A capital markets analyst said that the size of the transaction may indeed require that the issue be designed to allow the shares to be sold throughout the region, making it the first East African IPO.

    According to Safaricom's audited financial statements, revenues from mobile cellular services have increased sharply over the past four years, from Ksh2 billion ($25.9 million) in 2000/2001 to Ksh18.8 billion ($244 million) in 2003/2004.

    The growth is mainly attributable to the increase in effective connections from 54,000 lines to more than 2.5 million lines over the period. Profit before tax has increased from Ksh3.1 billion ($40.2 million) in 2003 to Ksh5.1 billion (66.2 million) last year.

  • Westel's parent company Western Wireless International of Seattle has been bought by Altel. Western Wireless has had two ill-fated investments in Africa: the SNO in Ghana and Comstar in Cote d'Ivoire. As a result Ghana's Westel may be put up for sale.

    The Ghanaian SNO Westel is in dispute with the Government over its being fined for failing to meet its roll-out targets and for the lack of investment promised by its Ghanaian partner. Apparently there is a wide range of agreement between the two parties but "the devil is in the detail."

    MTN has made several "scouting" trips to Ghana and this has led to rumours that it was interested in buying Westel. The company denies these rumours.Interestingly if the company were re-capitalised it plans to build a dual platform GSM network for both fixed and mobile.

    With just under 3,000 subscribers, the company acts largely as a wholesaler. Outsiders say that its core business as an international gateway must be suffering as two of the mobile operators - Spacefon and Mobitel – have both acquired their own international licences. However Westel says its business has grown as the overall market has increased in size. It is estimated that there are between 60-70 million mobile minutes a month coming into Ghana.

    In an unfortunate turn of events, the top floor of Westel’s building recently caught fire after what was suspected to be electrical circuitry being chewed through by rats. The fire took three fire engines to extinguish but undaunted, the company was quickly back on its feet and operating again.

  • - Ghana Telecom is to be privatised in the next two years and Ghanaians will be encouraged to buy a 30% stake in the company through a share placing on the Ghana Stock Exchange. Apparently agreement has been reached on a process for settling the price for the Telekom Malaysia shares although getting to the actual price will be a longer process. The unsuccessful state fibre parastatal Voltacom is also due to be privatised. The Minister has also said (and it appears in the latest clutch of policy documents) that SAT3 will be operated independently of Ghana Telecom.

    - The government of Rwanda has sold a 99% stake in national telco Rwandatel to IT services provider Terracom Communications. The USD20 million deal wraps up a privatisation process that began in February 2004. Terracom, which beat two other bidders to take control of the operator, specialises in deploying low-priced fibre-optic networks and wireless solutions. It says it intends to reduce prices for fixed line customers and expand the country’s existing fibre-optic and wireless infrastructure; Rwanda has one of the largest fibre backbones in the region, extending to approximately 1,000km.

    - Cellphone service provider Cell C has been given permission to reduce the percentage of its shares that lie in black hands, in a move that paves the way to selling 15% of its business to Saudi Arabian investors. Licence conditions that forced the company to be 40% black-owned are being amended to set a far smaller threshold of 25% black ownership. The change has been approved by the Independent Communications Authority of SA (Icasa).



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