INCUMBENT SUDATEL FACES NEW COMPETITION FROM SNO CANARTEL

There are four main operators: Canartel, Sudatel, Areeba and Mobitel. The latter two are GSM mobile operators and are described in the section below. The incumbent Sudatel is now a public company quoted on the Dubai and Khartoum stock exchanges. The Government still has 26% of Sudatel but is likely to sell this. Two of the key local shareholders are the Dal Group (a local company that has the agency for Mitsubishi and Coca Cola) and Advanced Technologies (which among other things does copper wire assembly and GIAD car assembly).

Sudatel is seen by other operators as having a good fibre network and it extends to most of the main centres in the country (including Al Fasher in the west) and internationally to Egypt and Saudi Arabia. Its international fibre connections mean that it is buying international bandwidth at between US$1-2,000 per mbps per month.

Because it borders so many countries and is connected to the Middle East, it would like to develop a role as a regional hub and is going to be one of the bigger investors in the EASSy project. (We also heard that Canartel are interested in investing). However the existing fibre route south stops short of the country’s southern border Kadugli because of the civil war. If the peace holds, it will now be extended down into Uganda and another route will connect up to Ethiopia. At the end of this process, it will have three or more international connections. Both mobile operators (Mobitel and Areeba) use its backbone network but Mobitel has said that it will build its own unless interconnect prices fall (see below).

Meanwhile the regulator is trying to persuade the National Electricity Corporation (which has 3,000 kms of fibre) and some locally-owned oil companies to “outsource” this capacity to existing licence holders so that they can sell it to others.

However Sudatel’s former management,  like quite a lot of former incumbents, were engineers and are not good at marketing this capacity to other operators. Although the new CEO of Sudatel (who was formerly the Chair of Mobitel and used to work for GIAD) is credited with having vision, he will have to move quickly if this lack of marketing is not to become SNO Canartel’s opportunity.

Sudatel depends heavily on voice whereas newcomer Canartel has a strong emphasis on data. This is much needed in the business sector that will look to it for VPNs and Internet access. It will offer fibre to the office and wants to do IP-TV to the home in the medium to long term. It sees this as having huge market potential. But for two years at least it will probably rely on Sudatel’s backbone infrastructure.

In order to stay in the game, Sudatel has put together a CDMA voice and data service called Sudani which it publicly announced before it had sorted out a licence for it. The regulator NTC has now given it a vertically-defined, “unified” licence which means that it can offer all services including mobile at a cost of $230 million. Since Canartel paid US$53.7 million for a licence that excluded mobiles, the value of the mobile element can be read from a sum akin to the difference between these two licence prices.

The big four operators are the only ones allowed to operate international gateways. ISPs have to buy their international bandwidth through these companies.

Sudatel has a fixed line capacity of 2 million but currently only has 1.1 million active subscribers. This number is decreasing and once disconnected, subscribers hardly ever reconnect. In one instance there is a switch that has capacity for 50,000 users that is only used by 4 subscribers.

The regulator NTC has stopped cross-subsidy in tariff regimes and there are now only two tariffs: national and international. The rationale for the national tariff is that if all the backbone is fibre and soon most of the calls will be IP-based, then distance should not be seen as a factor for charging.

Sudatel is hoping to have gone over to a packet-switched network by next year. It is also trying to set up a fibre-based metropolitan area network in Khartoum using Huawei as the vendor. But informed sources say that the interfacing on the network has not been good and as a result the company are now going back to Siemens,

THE SNO Canartel is setting up a completely IP-based network using CDMA and is offering both voice and data. The offer is what is described as fixed mobile which means that subscribers can use their phone within only one cell in the network (up to 1.5 kms). The handover protocol is disabled. Since Etisalat missed getting the second mobile licence, insiders believe that it will either seek to buy out Areeba or purchase a unified licence based on whichever turns out to be cheaper. Whichever way it goes, it will simply have to activate the handover protocol and its fixed mobile subscribers will become mobile subscribers. Thus technology developments are already making a nonsense of service licences based on technologies.

Canartel has in its first month already attracted 18,000 subscribers. Industry sources say that it is experiencing problems with network coverage and CDMA handset supply. Whilst the company is keen to emphasise that it is quality and service that it’s selling, it is cheaper than the incumbent’s fixed offer and adds in limited mobility: approximately 3 dinars against 4 dinars. However, according to the regulator, when monthly charges are included, the costs per minute are identical.

Nevertheless these fixed prices compare very favourably with the mobile operators whose average per minute price is 26 dinars a minute, a shade over five times the fixed price. And those of you who think mobile prices in Africa are too high, might ponder what the market would look like if existing mobile operators had to compete at this “fixed mobile” price level.

The regulator NTC has a Universal Service Fund and there is a five year plan to build 2,500 Knowledge Centres and 5,000 computer labs in schools.

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