Issue no 450 17th April 2009

top story

  • Safaricom started its M-Pesa service in April 2007 with a first year target of getting 0.5 million users. It passed this target within six months and in February 2009 clocked up an astounding 5.8 million customers. Both in Kenya and elsewhere on the continent its competitors have been putting in place their own competitive M-Money products. But things seem to be going somewhat more slowly outside of the Kenyan market for these innovative service. Russell Southwood looks at what’s happening and tries to identify what makes a good M-Money market.

    It has been estimated that 90% of Kenya’s 37.9 million population is unbanked. In February 2008 M-Pesa users transferred KS14.5 billion and cumulative total of money transferred since the launch two years ago has been KS118 bn. However, M-Pesa transfers are relatively small alongside total bank transactions.

    But Pauline Vaughan who heads up the service says it is not competing with the banks:”The banks didn’t really understand what we were doing. We’re not paying interest. The money (transferred by M-Pesa) is not touched by us but held by trustees”. Indeed the Kenyan Treasury put out a note at the end of January 2009 on mobile money transfers which she sees as “re-assuring.”

    The service has 7,512 agents countrywide. People with bank accounts were amongst the first users but very quickly its appeal was almost universal. Penetration rates are higher in urban areas but there are also high-use points in places like remote refugee camps. As Vaughan told us:”There’s some really remote agents and we want to encourage the service to go rural.” One of the keys to the service’s success seems to be its extensive network of agents. Each has to invest between KS50,000-100,000 and there is still considerable interest from people looking to start a new business.

    There will be two further developments of the service this year: firstly, international transfers will be added (“…some time in 2009…) and the menu item Buy Goods will be implemented through a partnership with Pay Bill. The international transfer service will be done in partnership with money transfer giant Western Union and the final contract is being drawn up. Although it has been reported that there have been legal and regulatory hurdles, Vaughan says “there are no specific issues” that look likely to be hurdles.

    Vaughan believes that there may be as many as 7-8 million more potential customers that would bring the total customer potential to around 13 million. However across the border in Tanzania the Vodacom M-Pesa service has had a much slower take-off, in part accounted for by its distribution network.

    Its main mobile competitor Zain has launched its own M-Money service called Zap but is finding it hard to get a foothold in the market. In a straw poll of people I spoke to during my stay not one mentioned the Zap service. It costs subscribers a flat rate of US$0.1 (KShs10) for each transaction. A minimum of $0.63 (KShs50) and a maximum of U$443 (KShs35, 000) can be transacted with a limit of 25 transactions for one subscriber in one day. Zain has partnered with Standard Chartered Bank which holds a trustee account for the service. Other banks and companies need to have an account in Standard Chartered to enjoy the service. It can be used to pay bills and send and receive money from bank accounts.

    Although the service seems to have a low profile, it already has over 3,000 ZAP agents spread across the country and the company claims that 40% of its subscribers are using the service.

    Another of Kenya’s new entrants, Essar, has bought a share in Obopay and it seems likely that it will launch its own M-Money service before too long.

    M-Money services are now spreading rapidly with a range of initiatives in very different markets:

    * The GSM Association has a global initiative to promote M-Money services with a trial called 'Pay- Buy- Mobile Initiative'. It is calling for full Near Field Communications (NFC) functionality - including the standardised 'Single Wire Protocol' interface - to be built into commercially available mobile handsets from mid-2009.

    * Orange announced the commercial launch of ‘Orange Money’ in Ivory Coast in alliance with BNP Paribas earlier this year and has extended the service to Mali. This is the Orange group’s first mobile-based payment and money transfer service in Western Africa. Orange customers do not need a bank account to subscriber to the service which is activated free of charge and without any minimum deposit. Customers will be able to deposit and withdraw money from the Orange Money account, transfer money from one person to another, purchase call credit 24 hours a day and pay bills. BNP Paribas’ Ivory Coast subsidiary BICICI is in charge of issuing and guaranteeing the electronic money.

    * In January 2009, Cameroon’s Mobile Money ( launched a mobile payment platform that allowed mobile phone customers to transfer money and pay bills. The product was launched in December at the Promote 2008 exhibition in Yaounde by Express Union, an existing money transfer operator in Central Africa.

    Mobile Money is delivered through a network of partners including micro-finance institutions, companies that provide cash for fund transfers and other physical outlets. These outlets have an electronic payment terminal that communicates in real time with a central server.

    * Last month MTN announced the launch of its own M-Money service in Uganda. It is estimated that 80% of Uganda’s 29 million population are unbanked. The service is provided in partnership with Stanbic. Shortly after the launch it announced that it would launch M-Money trials in Benin, Congo Brazzaville, Guinea Bissau, Guinea and Liberia.

    The speed of take-up may not be as dramatic as M-Pesa’s growth in Kenya for it will take time for people to have trust in the new services. Two factors seems to have played a part in Kenya’s success: the trouble after the last elections seems to have actually accelerated use as people avoided going out to make payments and the extent of Safaricom’s agent network. The latter is already over twice the size of its nearest rival Zain.

Telecoms, Rates, Offers and Coverage

  • - The Nigerian mobile market’s bullish growth showed no signs of abating in Q4 08. Quarterly net additions of 7.15m took the total number of customers over 60m, with a year-end figure of 62.99m, while the annual gain stood at 22.59m. By comparison, Q4 07 saw an increase of 3.39m and the 2007 boost was 11.92m. Meanwhile, the latest figures from Nigerian regulator the NCC show that at the end of January the total had risen to 64.16m.

    - Calling rates across Kenya’s networks could stabilise at Sh9 a minute as the mobile phone industry moves to implement a fresh round of interconnection agreements. The agreements - a set of minimum rates reached by mobile companies -will see pricing in the industry fall by 15 per cent as the last review of calling rates between firms is finalised.

    - Following an emergency meeting convened by the national telecommunication commission (NATCOM), GSM operators in Sierra Leone have finally agreed to the commission's request to reverse the latest increase in top-up card prices to their initial cost.

    ­The Kenyan market saw some major developments in the second half of 2008: in Q3, fixed operator Telkom Kenya launched a mobile network, and in the last quarter of the year, Econet Wireless finally managed to get up and running, more than five years after it was first awarded a licence. At the end of 2008, there were 15.90m mobile customers in Kenya. Annual net additions stood at 4.55m, up from 4.08m a year earlier, but proportionate growth fell from 56.0% to 40.1%. Fourth-quarter net additions increased from 0.65m in Q4 07 to 1.37 in Q4 08.


  • Outremer Telecom says that last month, it tabled an application for a mobile licence for Mauritius with that island’s regulatory authority, the ICTA, for the deployment of GSM and 3G networks by 2010. The application has been tabled by City Call, a Group subsidiary that has been present in fixed telephony in Mauritius since 2005.

    The company said that the application for a licence is part of the development strategy implemented by the Group in the Indian Ocean, after it launched its mobile telephony services in Mayotte in December 2006 and in Reunion in April 2007.

    David Mignot, Groupe Outremer Telecom’s General Manager for the Indian Ocean zone, says: “Outremer Telecom’s activities in the Indian Ocean represent real growth potential for the Group. Following less than two years of presence in this region, in mobile telephony, our Only sales brand already benefits from substantial awareness thanks to a competitive pricing policy and dynamic and innovative offers. At 31st December 2008, our market share in Reunion and Mayotte already stood at almost 9% of the mobile market.”

    ICTA’s decision is expected before summer this year.

    Cellular News

  • New entrant Orange (which bought HITS Telecom) has urged the Uganda Communications Commission (UCC) to permit the use of number-portability. Market newcomers like Orange would obviously gain from its introduction as it would allow existing subscribers to migrate to their service without changing their number.

    Edouard Blondeau, the Orange Telecom interconnect manager, said it would free subscribers from the burden of carrying several mobile phones with numbers from various operators.

    Patrick Masambu, the UCC executive director, assured industry players they would consider the issue, adding that an earlier study by the regulator had recommended the service be implemented after the sector had attained 10 million telephone users. "We have a provision for number-portability. This service can even be offered by a third party," Masambu said, adding that operators were aware of this.

    This was during the release of a report: Telecom interconnection, retail costing and pricing in Uganda by PricewaterhouseCoopers at the Kampala Serena Hotel last week. The service was introduced to promote competition in the heavily monopolised telecom sector in the earlier days of the industry. However, the audit firm said there was no need for urgency to introduce the service in the country yet.

    Meanwhile, Masambu said the telecom industry had developed greatly in the past few years, which had benefited subscribers. He said Internet users had increased to 2.5 million, while mobile Internet accounts had reached 220,000 and fixed internet subscription was at 22,000. He said mobile telephone subscribers were over nine million, while fixed lines had increased to 168,481. Masambu said telephone penetration level in the country was about 30 lines per 100 inhabitants.

    New Vision

  • Customers say communicating on MTN and Orange networks has become a nightmare. The country has been rendered almost incommunicado during the past three or four days. Customers of the two main mobile telecommunication companies, MTN and Orange are finding it difficult to talk to each other. Ask any of them what the trouble is and he or she will tell you, “network problem”. This blanket phrase is being used by almost all the customers of the two companies when they find themselves in a difficult communication situation.

    “You promised calling me last evening making me to postpone an important appointment”, Mathias, one of the customers in Yaounde angrily scolded a friend. “No, Mathi, I did all my best to call you but network problems. I can’t understand what is happening”, the friend responded.

    Not only have people missed several appointments, some of which are extremely important to their livelihood like Mathias, many have seen their businesses significantly affected as a result of lack of communication. In effect, the so called network problems manifest themselves in several ways. The phone rings briefly and then goes to answerphone. Sometimes, it gets through but the quality of communication is extremely poor. In some disturbing circumstances, the line goes through; one of the communicators gets his voice across to the other, but is unable to hear the person being called.

    Unlike in the past when authorities of the two companies published press statements explaining to the public the reasons behind the situation, no such explanation has been made so far. However, in response to a phone call last week, Melvine Akam, the official in charge of communication at MTN, described the situation as mild and endemic to specific regions. “This is a minor situation and should not be generalised as a network problem”, he said.

    Akam blamed the situation on unsteady supply of electricity which affects MTN equipment thereby having an impact on the network. “Like I say, this is not a general network problem. Once there is a problem, our team of technicians quickly goes to the field where they immediately regularise the situation. Last week, officials from Orange were not responding to calls from the Cameroon Tribune.

    Cameroon Tribune

  • Nokia East and Southern Africa has cautioned its costumers in the region against buying counterfeit Nokia handsets and called for urgent enactment of the law on counterfeit to curb the malpractice. Speaking in Dar es Salaam recently Nokia East and Southern Africa Devices and Software Manager, Mose Onchwati said the market in the region was now full of counterfeit handsets that trade as genuine Nokia brands.

    He said the company would start educational radio programmes throughout East and Southern Africa region to educate its customers on how they can detect counterfeit and substandard Nokia handsets.”We are now planning to come up with radio programmes to educate our customers so that they can not be cheated. We hope with this campaign our customers will be in a better position to differentiate between fake and genuine handsets,” he said.

    He said that his company was putting its trust in the regional anti-counterfeit bill which is now in the process of being passed in Uganda and Tanzania and which is due to become operational in June. “We hope the law would kick counterfeit mobile phones out of the market,” he said. adding,

    “Although Kenya already has anti-counterfeit law that restricts infringement of patent rights and bars counterfeit products from the market; still there is a long way to go as neighbouring countries of Tanzania and Uganda have no such a law. We appeal for speedy mechanism to enable the law become operational in June in both countries,” added Onchwati.


  • - Mozambique has began the search for a new mobile operator, paving the way for a third mobile communications company to enter the market, state media reported.

    Regulators were meeting Thursday in Maputo to begin the process of launching a tender for the country's third mobile operating license, said Noticias newspaper.

    - According to the Wall Street Journal, India's state-run Bharat Sanchar Nigam Ltd. is likely to bid for a telecom license in Tunisia, its first overseas bid, along with another state-run Telecommunication Consultants of India Ltd (TCIL).

    - Zimbabwe’s inclusive government faced its sternest challenge this week when the Prime Minister Morgan Tsvangirai warned he would not accept President Mugabe's unilateral decision to strip the Information and Communication Technology Ministry of its control over the contested communication portfolio.

    - UK-based Vodafone Group has rebranded Ghana Telecom almost a year after acquiring a 70% stake in the national incumbent.

    - The country's biggest mobile phone operator, Econet Wireless, is reported to have secured frequencies for its 3G service from the Postal and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ).

    - Chief Executive Officer of Group Algerie Telecom (AT), Moussa Benhamadi announced that a new organization chart will be set up soon to achieve further performances. "Actions of re-organisation are being undertaken by AT to move ahead to more operational organization based on three poles. A new organization chart was submitted to the Board of Governors which should validate it by the end of April," Benhamadi said in an interview to APS. This new chart aims at upgrading AT, the national operator, into an "operator that comprehends value-added services producer and supplier," he underlined.

    - The Communications Commission of Kenya (CCK) has invited the telecommunications sector to forward suggestions on how to implement the Universal Access Fund, introduced this year under the Kenya Communications (amendment) Act.

    - A pilot initiative to provide rural community health workers, nurses and doctors with advice on diagnosis and treatment via mobile phones is to launch in Ghana later this year. The project will enable rural health workers to call specially-trained doctors at a call centre, providing the daily support that health workers in richer countries take for granted.


  • WACS will link countries in southern Africa, Western Africa and Europe, with high capacity international bandwidth.

    The WACS consortium and Alcatel-Lucent have signed today a turnkey contract valued at several hundred million US dollars, to deploy a new submarine cable network that will provide the first direct connection between southern Africa and Europe. Named the West Africa Cable System (WACS), this 14,000km-long submarine network system will bolster Internet and other communications capabilities to and from the African continent.

    The 11 parties that form the consortium are Angola Telecom, Broadband Infraco, Cable & Wireless, MTN, Portugal Telecom, Sotelco, Tata Communications, Telecom Namibia, Telkom SA, Togo Telecom and Vodacom.

    WACS will enable the landing countries to be served by a new system offering greater capacity and lowering the cost of broadband access. With commercial service expected in 2011, this new submarine cable system will also offer route diversity and bandwidth availability, and the first global submarine fibre connection to Namibia, the Democratic Republic of Congo, Togo and the Republic of Congo.

    Under the terms of the contract, Alcatel-Lucent will provide connectivity between South Africa and Portugal. With a minimum design capacity of 3.84Terabit/s, WACS will connect South Africa to the UK with landings in Namibia, Angola, the Democratic Republic of Congo, the Republic of Congo, Cameroon, Nigeria, Togo, Ghana, Côte d'Ivoire, Cape Verde, the Canary Islands, and Portugal.

    “WACS has brought together a multitude of nations and some of the world's most influential telecommunications players in a joint effort to use state-of-the-art technology in linking more people more efficiently than ever before. WACS will enable these countries to improve communications and Internet services that are crucial for a social and economic development,” said Kobus Stoeder, Chairperson of the consortium's management committee.

  • NetAfric Internet Services, a subsidiary of Maybach Strategic Investment Limited, said it's working hard to register one million subscribers in Nigeria within the next twelve months. "We want to offer what Yahoo is offering internet users,"said Company Representative, Olu John.

    He said that they had successfully and efficiently test- run the service for twelve months, and have now decided to introduce the products (web hosting, email accounts, data transfer bandwith) first to the business community, non-governmental organisation, professional bodies and then to individuals in Nigeria.

    " We have the sole franchise from a group of companies in the United Kingdom through our parent company Maybach Strategic Investment UK Limited, to offer Internet services to subscribers in the whole of Africa. Accordingly, NetAfric is starting operation from Nigeria, and after we have attained one million subscribers mark, will introduce our services to other Africa countries such as Ghana, South Africa and the Gambia and Angola," he said.

    On what the company is offering that's different to competitors, he declared: "As part of efforts to meet the challenges of industry as well as the needs of IT community, our Group decided to come up with a package that is uniquely different from what other related products in the Nigeria IT market.

    For instance, while competitors elsewhere allow subscribers to pay a monthly or yearly fee, subscribers on NetAfric, pay ten thousand Naira once, and that is all. Subscribers that already have domain address, he stressed, will pay about ten thousand Naira for life, while new domain address attracts an additional N2,500 for creating new domain.


  • The South African National Broadband Forum will hand over a proposed broadband policy framework to the new Minister of Communications at the first sitting of Parliament after the South African elections of 22 April 2009, to emphasise the importance of high-speed Internet access to all South Africans as a “national priority”.

    The Forum is a coalition of four organisations which share the common goal of creating cheaper and affordable access for South African citizens, namely the Shuttleworth Foundation, SANGONeT, South Africa Connect, and the Association for Progressive Communications (APC).

    A draft framework has been developed with input from business, non-profit and education stakeholders and serves as a basis to build a comprehensive all-inclusive broadband strategy to boost economic and social development, and in particular education in South Africa.

    Steve Song, Telecommunications Fellow, at The Shuttleworth Foundation, says the election of a new government provides an opportunity to look at the policy framework with a fresh approach.

    “Around the world governments are moving from centralised, hierarchical structures to more responsive and interactive modes of operation that are enabled through affordable broadband access,” he adds.

    Unfortunately, Song says, for the last five years the telecommunications industry has provided very little growth in the economy because the South African Government has failed in its liberalisation efforts. Progress was marred by politics, cronyism and infighting, which stifled competition at the cost of the consumer.

    “As we transition into a new Government, we see the opportunity to mobilise public opinion of all sectors of society to communicate that broadband is a critical requirement for South Africa’s development.

    “All South Africans should have affordable broadband access to the Internet. In fact, broadband should be recognised as an essential right, in line with other basic infrastructure such as water, sewerage and electricity,” says Song.

    The Forum proposes that current fibre and wireless broadband infrastructure in urban and rural areas should be maximised in an equitable and environmentally responsible manner by operators.

    It proposes that high-speed broadband access will in turn stimulate the creation of commerce and digital broadband content by content providers, such as educators, so that Government’s mandate of affordable learning and teaching can be fully realised. Other sectors, such as health care, government services and job creation will also benefit.

    The South African National Broadband Forum aims to see affordable broadband access in every town and village in South Africa by 2014, to claim its place as number one in terms of broadband penetration on the continent.


    - Vodacom South Africa has not picked up any trouble with its data services over the past few months, says the local mobile giant. This is despite consumers alleging they are running out of data faster than usual and not being accurately monitored by the company's supplied usage tracker. However, Vodacom says there have been no irregularities in data and the usage tracker should only be used as an indicator and not an accurate reflection of Internet usage.

    - In South Africa uncapped ADSL used to be reserved for businesses and rich individuals, but prices are starting to drop. Vodacom Business recently unveiled its uncapped ADSL pricing, starting from R899 for an uncapped DSL384 account. An uncapped DSL512 service is priced at R1 299 while a 4Mbps uncapped ISP account costs R2 399. Vodacom Business' pricing is more aggressive than most other internet service providers (ISP), but even better deals can be found for those that are willing to shop around.


  • Computer maker, Dell is partnering with Xavier Group, a local consultancy firm which has started an initiative that will see university students and tertiary institutions in Uganda get low-priced laptops.

    The initiative, which kicks off this month will see 35,000 laptops going for pocket-friendly prices. East African Business Week Correspondent Paul Mwijagye talked to the Chief Executive of Xavier Group, David Magezi about the project and the power of this partnership

    Q: Why did you come up with this initiative?

    A: Being a researcher, I know the importance of computers and Internet in keeping students and their lecturers informed of what is happening in the academia. Students and lecturers in Uganda are disadvantaged and I felt that for us to produce competitive students who would be relevant in today's world of technology, we needed to provide them with pocket friendly laptops. Having studied in the US and England where I had a 24-hour Internet connection, it helped me a lot with my research.

    Q: How did Dell come to partner with Xavier Group in this initiative?

    A: I am the one who came up with the idea and approached different computer manufacturers such as Acer, Dell and HP. I asked them if they could design a price-friendly laptop for students and staff in institutions of higher learning in Uganda. Dell agreed to design the laptop at $350 (UShs700, 000). Dell also had a similar initiative in South Africa where they gave out over 50,000 laptops at the University of Johannesburg. Uganda will be the second country in Africa to benefit from this programme. They were planning to do the same project in Angola but I convinced them to come to Uganda.

    Q: How many partners are you working with in this project?

    A: The partners involved in this project include Xavier Group, the National Council of Higher Education (NCHE) and Mitsuni (Dell partners for East Africa). I have approached uganda telecom to put up hotspots in universities where students can access cheap and faster internet. I also approached Stanbic Bank to provide loans for students who want to purchase the laptops. The bank will pay Dell and then students will service the loans in about 4- 5 semesters.

    Q: How will students get the laptops and how much will it cost?

    A: There will be forms for universities interested. I am working with NCHE who have mobilized these institutions. NCHE will also organise a meeting with university chancellors, vice chancellors and headS of IT departments in all universities and tertiary institutions registered with the NCHE. Dell senior executives will also make a presentation about the project to the stakeholders. Thereafter, Dell staff will go to universities that will participate to train students. It will only take less than 7 weeks for a student to get the laptop after filling the forms and each laptop will cost only $350 (Shs700, 000). These laptops would cost $900 (UShs1800, 000) if they are not discounted.

    Q: How are students going to benefit from the initiative?

    A: This project is going to help students become competitive in their careers. They will get brand new original laptops which will help them do their research using the internet. It will also ease communication for them since it is cheaper compared to the cost of sending an SMS. Nowadays university students are required to type their coursework and instead of spending money at a secretarial bureau, the laptops will help in that area. Above all, it will help prepare students for their work places since there is no job now that does not require computer skills.

    East African Business Week

  • Nigeria's formal computer sector sold 407,621 laptop and desktop computers in the year 2008, according to a report from IDC. This figure broke down into 211,499 desktops and 196,122 laptops. Industry sources put the average cost of a desktop computer in the formal market at N70,000 and the average cost of a laptop in the same market at N100,000. At these estimated costs, the total cost of computers (laptops and desktops) sold in the country in the year 2008, come to about N34.4 billion.

    Although there are no official figures for computers sold in the informal market, it is estimated that for every computer sold in the formal market, about 15 are sold in the informal market. Most of the computers sold in the informal market are secondhand and cloned products and industry sources put the average cost of a computer in the informal market at N40,000. If 15 computers are sold in the informal market for every one sold in the formal market, that would indicate that about 6.1 million computers were sold in the country's informal market last year. With the average cost of a computer in the formal market at N40,000, the total cost of computers sold in that sector would then amount to about N244 billion.

    According to the new IDC report, 154,042 desktops were sold in the country's formal market in the year 2007, while 77,966 laptops were sold in the same period. According to figures from the same source however, the ratio narrowed in favour of laptops (in 2008) with 211,499 desktops and 196,122 laptops sold in the country's formal sector.

    IDC observed however, that sales of computers in the country slowed down noticeably in the last quarter of last year, on account of the global economic meltdown. "Corporate organisations are still the biggest buyers of computers, with banks accounting for a good deal of the numbers. As the impact of the meltdown became more tangible, banks slowed down on computer purchases. Expansion of bank branches was not as aggressive. There was caution”.

    Business Day

  • State IT Agency (SITA) chairperson Zodwa Manase is expected to testify today in the Pretoria High Court in a lawsuit against a business consultancy that purportedly owes the state-owned organisation R5 million.

    The case stems back to 2005, when SITA was planning to establish the Office of the Ombudsman to probe allegations of fraud and corruption within the organisation and its tender processes. Tedaka Business Consulting, a consultancy headed by BEE management consultant Teddy Daka, was brought in to advise and was allegedly paid R5 million for its services.

    However, in court papers filed at the Pretoria High Court in 2006, SITA alleged Tedaka Business Consulting did not provide the services it promised. But Tedaka has argued it delivered consultancy work for the project and that the payments it received were above board.

    In addition to the dispute, sources close to SITA have once again pointed fingers at Manase and questioned her role in the matter, saying the work was awarded to Tedaka without issuing a tender.

    At the time, Daka admitted in several media reports that his company did not tender for the contract. Instead, he said, his company was approached by Manase, who was nearing the end of her first stint as SITA chairperson, to participate in the establishment of the Office of the Ombudsman. It is not known whether this allegation will be investigated.

    Manase also came under fire earlier this year, when sources within SITA questioned her suitability to lead an organisation in light of having been convicted of late payment of employee tax. She received a 12-year suspended sentence in 2004 for failing to comply with the Income Tax Act, Act 58 of 1962, as amended.

    Manase, in her capacity as CEO of audit firm Manase & Associates, was charged in the Durban Magistrate Court with, and pleaded guilty to, 12 counts of failing to pay employee tax to the South African Revenue Service.

    She was sentenced to 12 months on each count, suspended for five years, on condition she repays the outstanding amount of R1.4 million - broken up into instalments of R300 000.

    SITA's claim against Tedaka Business Consulting came in light of an investigation, instigated by Minister of Trade and Industry Mandisi Mpahlwa, in 2006, into tender irregularities within the agency.

    It was reported that SITA's management approached Mpahlwa to intervene after an auditor-general and internal forensic investigation found financial irregularities amounting to more than R120 million. SITA would not comment this morning, saying the matter is sub judice. Daka could also not be reached for comment.


  • - South Africa and Uganda are to strengthen their co-operation in areas of science and technology. South African Science and Technology Minister Mosibudi Mangena and his Ugandan counterpart Ephraim Kamuntu will sign a bilateral agreement to pave the way for both countries to deliberate in areas of mutual interest in this field.

    - All teachers in Uganda will be computer literate in five years' time thanks to the partnership between the Ministry of Education and Microsoft.

    - The Federal Government has said it supports the Digital Awareness Project, DAP, and other initiatives being out in place by the Nigerian Communications Commission, NCC, to ensure that Internet and broadband services are taken to semi urban and remote areas of the country to ensure that all citizens benefit from the potentials and resources so the global digital economy.

    - Unidentified thugs have broken into the Faculty of Computing and Information Technology at Makerere University in Uganda and vandalised over 230 computers, before making off with memory chips and processors.

    - The Tanzania Port Authority (TPA) has computerized its operational system to enable the port work efficiency, its Assistant Director Happiness Senkoro said yesterday in Dar es Salaam. Computers will be used to process documents instead of paper.

Digital Content

  • Online shopping portal Digital Mall aims to increase turnover fivefold in the next two years as mobile shopping becomes a reality in SA and on the continent. Yaron Assabi, CEO of Digital Solutions Group, said yesterday that the company's Digital Mall concept had naturally grown from having an online presence to becoming available on cellphones.

    The group, of which Digital Mall is a subsidiary, develops software for use in the mobile, online and logistics arena. Assabi said Digital Mall and the group had a symbiotic relationship that allowed company-developed software, created for the mall, to be sold to other clients. The mall, which has been open for 10 years, retails items that range from George Foreman grilling machines and Apple Macs to music and Verimark's products.

    Assabi said the mall had doubled turnover each year over the past three years and, with a move to mobile, expected to increase turnover fivefold. He said mobile communications were huge in Africa, with Google indicating that 80% of searches from Africa were either through cellphones or 3G data cards. "Africa is getting connected," he said.

    Assabi's future vision is to have Digital Mall embedded on cellphones, so that it can be accessed as a menu item. The company is also investigating low-cost options for Africa. However, said Assabi, Africa offers logistical challenges, such as clearing a small item through customs, the cost of air freight and the lack of road infrastructure.

    But the continent offers great potential as there is far more demand than supply. "We want to fill that gap," said Assabi. Digital Mall, as a result, is undergoing a reinvestment with the aim of serving the consumer better, said Assabi. The online portal is backed up by a 24/7 call centre that also offers people assurance, he said. He believes this was key to the site's success.

    Business Day

Mergers, Acquisitions and Financial Results

  • After recent claims that it had offered to extend the deadline to 15 April for its enforced stake sale in Egyptian cellco MobiNil to France Telecom (FT), Orascom Telecom has said that the French company has failed to complete a deal within the timeframe.

    In a statement Orascom noted that ‘France Telecom has failed to pay the purchase price as required by the terms of the arbitral award issued by the International Court of Arbitration of the International Chamber of Commerce (the ‘Award’) and has failed to comply with its obligations under Egyptian law to make a public tender offer on the same terms as the Award.’

    FT has countered the claim however, stating that it had submitted all necessary details to the relevant Egyptian authorities for the deal to go ahead, with Reuters reporting that FT has also denied the existence of the extended deadline. Orascom has also announced that, at the request of Egypt’s Capital Market Authority (CMA), it will not issue any further press releases on the issue.


  • Eastern and Southern African countries have failed to develop their ICT infrastructure to enhance communication in the region, according to Kenyan President Mwai Kibaki, also the chairman of the Common Market for Eastern and Southern Africa (Comesa).

    This week at the North-South Corridor infrastructure development conference in Lusaka, Kibaki said that more achievements have been realized in telecom policy and regulatory harmonization than in physical telecom infrastructure development in the region.

    Comesa wants to develop the region's telecom infrastructure through a broadband telecom project dubbed Comtel in order to boost communication. However, the project has over the past four years failed to take off, despite member countries making efforts to harmonize telecom policies and regulations to pave way for Comtel project connections.

    Comesa is a regional economic bloc based in Lusaka, Zambia, whose objective is to accelerate the regional economy. Comesa, East Africa Community (EAC) and the Southern Africa Development Community (SADC), known as “the tripartite”, want to promote the development of joint regional telecom infrastructure in order to enhance efficient communications in the three regions.

    "Indeed, telecommunications infrastructure has enormous potential in opening up remote communities and boosting trade by facilitating the flow of information," Kibaki said.

    Kibaki said the development of telecom infrastructure and services is vital. However, the Comtel project -- whose goal is to enhance telecom access and affordability across 21 countries in eastern and southern Africa including Zambia, Zimbabwe and Namibia -- has failed to take off.

    The proposed multinational broadband project was supposed to interconnect Comesa member-country networks. Kibaki claimed that most member countries have already harmonized their telecom policies and regulations at the request of Comesa in order to participate in the project.

    Comtel was supposed to have been operational by 2007 at a cost of US$30 million. National telecom operators (NTOs) from the 21 countries agreed four years ago to coordinate pricing and network infrastructure through Comtel in order to lower the region's high telecom costs. The progress on the Comtel project stopped after the Enderberg-Ericsson consortium withdrew from the project in 2005. The project never found a new equity partner.

    Comesa however, is still hoping it will still be able to source money from banks and donors to finance the project can go ahead even without an equity partner. The North-South Corridor conference was aimed at getting donor funds to finance telecom, energy and road infrastructure projects.

    It is curious that the Kenyan President is complaining about the non-implementation of a long-dead project when there are a considerable number of bilateral fibre links being built.

    Computerworld Zambia

  • Dimension Data’s Internet Solutions (IS) is set to up the ante in South Africa telecommunications by pumping many hundreds of millions of rand into new fibre infrastructure as it steps up the fight with Telkom, Vodacom and MTN.

    IS, the country’s largest corporate-focused supplier of Internet services, is investing a fortune in:

    - Building fibre-optic lines to its 220 largest customers, thereby reducing its reliance on Telkom;

    - Investing in the West African Cable System (Wacs), a new, high-capacity submarine telecom cable that will link SA with Europe;

    - Constructing two new data centres, one in Johannesburg, the other in Cape Town, to cater for anticipated demand as broadband prices fall.

    The data centres are secure, air conditioned facilities crammed full of servers that host online services and websites on behalf of clients. Many companies are choosing to outsource management of these services to data centre providers, which are better able to guarantee system up-time.

    IS’s new investments will allow it to compete more aggressively with the incumbent network operators. IS, which was previously only entitled to provide services on other providers’ infrastructure, can now build its own network.

    IS CEO Angus MacRobert is keen to take advantage of this to reduce the company’s reliance on Telkom. But it is also on a collision course with mobile operators MTN and Vodacom, both of which want to corner the data centre market. MTN recently acquired Verizon Business in a deal believed to be worth about R1,4bn; and Vodacom has launched Vodacom Business as a greenfield project.

    Neotel is also investing more than R100m in two data centres. And Telkom, which has lagged in data centre services, has identified it as a critical growth area: it has restructured into three new divisions, one of which is data centre operations. Telkom has indicated it is keen to make an acquisition in the space.

    MacRobert says there has been little let-up in demand for data centre services, despite the tough economy. “We sold more data centre capacity last year than in the previous 10 years combined,” he says. Growth has continued strongly into 2009, he adds. Though most of this can be attributed to a trend by companies to outsource, MacRobert says Eskom’s supply problems have also helped IS.

    He is reluctant to reveal precisely how much IS is investing in new infrastructure, saying this information will be released with Didata’s interim results, expected in May.

    MacRobert concedes that despite the big investments being made by IS, the company will remain heavily dependent on Telkom. He says relations between IS and Telkom have improved - previously, the two had a fractious relationship, with IS frequently accusing the fixed-line operator of abusing its dominant position. “Telkom has understood the need to have a clearly defined wholesale strategy,” he says.

    Financial Mail

  • Econet Wireless Holdings (EWH) held a stormy Extraordinary General Meet-ing (EGM) in Harare last Friday where a proposal to acquire equipment worth about US$94 million from Econet Wireless Global (EWG), a company owned by founder, Strive Masiyiwa, was tabled for consideration by shareholders.

    In this Question & Answer with The Financial Gazette Reporter Munyaradzi Mugowo (MM), chief executive officer Douglas Mboweni (DM) speaks on this and other issues.

    Q: Why did the company choose to buy the equipment from Econet Wireless Global (EWG) instead of a third party supplier given that Strive Masiyiwa, who controls EWG, has an interest in Econet Wireless P/L?

    A: The equipment facility is valued at US$93,9 million. We have not been able to identify a bank or an equipment supplier willing to take the financial and political risk for such a large facility to a Zimbabwean company. Secondly, EWG is the majority shareholder, and parent company of EWH in Zimbabwe.

    EWG has operations and interests in 14 networks in Africa, Asia, and Latin America.

    EWG is therefore in a better position than EWH to negotiate equipment facilities on favourable terms and prices. This is standard practice in any industry.

    The fact of the matter is that EWH would not have been able to survive as a business during the worst phase of the Zimbabwe economic and political crisis had it not been for EWG's consistent support.

    EWG did not participate in the voting, which was supported by the overwhelming majority of those people who attended the EGM. We strongly believe that the proposed financing structure is the best option available to us.

    The horizons for businesses to get credit from the financial markets are limited. This is especially so for Zimbabwean companies. The perceived country risk, in the opinion of offshore lenders, ma-kes it hard for us to raise capital on the international markets. With EWG, we are also able to negotiate terms that are to our advantage on a number of accounts; Firstly, the fixed monthly payments allow us to plan ahead, managing our cash flows, which is absolutely critical.

    Second, and as indicated to our shareholders, the provision allowing EWH to purchase the equipment ensures ownership of the assets, which will still have productive life beyond the tenor of the instalment sale and depreciation period. Third, a cash sale -- which really is what we would have got from the open market because of the reasons I gave earlier -- would have required us to commit a significant, single cash payment.

    Q: Shareholders raised concern about the pricing of the equipment alleging that an open market deal would cost less than the US$94 million charged by EWG? What is your take on this?

    A: The Econet network is supplied by only two suppliers, and the prices offered under the EWG arrangement are consistent with the prices from these suppliers over the years, and in many instances better. It was alleged by the dissenting shareholders, and widely circulated by Zfn, that it would have been cheaper for us to source 'base stations' in Zimbabwe than to import.

    This is an extraordinary claim. Base stations are only manufactured in a small number of countries, notably places like the USA, China, Sweden, Finland, France, and Germany. Even countries like the UK, Italy, and South Africa, do not have the technical expertise to develop a base station. We can only surmise that such allegations are driven by malice. Any clarification sought by the shareholders at the meeting was given.

    Q: You mentioned in your circular to shareholders that part of the payment for the equipment will be in the form of new Econet Wireless Holdings (EWH) ordinary shares. How many shares is the company planning to issue?

    A: The transaction will result in 8,464,628 EWH ordinary shares being issued to EWG.

    Q: How will it alter the company's issued and authorised share capital?

    A: As a result of the transaction, issued share capital will increase from 169,292,579 to 177,757,207, while authorised share capital will not change from 300,000,000.

    Q: Why did Econet directors choose to settle part of the transaction in Econet Wireless Holdings ordinary shares instead of pursuing other credit options?

    A: The incorporation of the share component into the pricing of the shares was intended to ease the burden on the company's cash flows. EWG should rather be commended for accepting consideration in the form of shares instead of cash because equity based funding structures are preferable to other structures in uncertain times such as these.

    Q: Had the deal been approved, how would it disenfranchise Old Mutual and other shareholders?

    A: The transaction was in fact approved. There are many companies with the words "Old Mutual" in their name. Some of them are our shareholders, others are not. Any shareholder that submitted a proxy in respect of shares that they own was allowed to vote on their shares. However, there is an asset management company that wanted to vote using shares belonging to other people without the knowledge or authority of such people.

    We rejected those votes because they were not votes by our shareholders, but votes by imposters who want to stop the growth of the company for no valid reasons. In any event, their votes were not even enough to stop the transaction. We cannot comment specifically on a single shareholder. It is important to really explain the rationale behind this important transaction and the benefits to shareholders.

    Our low penetration level in Zimbabwe, at 9 percent compared to the regional average of 40 percent, presents huge potential for growth. This is what we are trying to exploit, by expanding capacity to mop up this massive demand.

    We will be in a position to add 500,000 new subscribers and at the same time adding the switching capacity of the network to handle an additional 2,000,000. In essence, this is the basis for the entire transaction; to increase the number of subscribers, improve quality of service and therefore get higher volumes of traffic through the network. The result is an increase in the average revenue per user and therefore increased profitability, which is basically what the shareholder expects.

    Q: What reasons did Old Mutual and other shareholders give for turning down the proposal?

    A: The majority of the shareholders voted for the transaction, and a minority did not. Therefore it is not correct to speak of the transaction as having been turned down when it was approved with the requisite majority. Those who voted against would have their own reasons. What is important is that to the extent that any such reasons were stated, they were disregarded by the majority, excluding EWG.

    Q: Econet revealed plans to launch GPRS a long time ago, but so far nothing has happened. What has delayed the launch of the new technology and when should your clients expect it?

    A: You will be glad to know that, after the success of the test period, we have begun a phased launch of the GPRS service. This week, we began billing customers on the test panel. This is in preparation for a launch to all our customers at the end of this month.

    Q: What challenges are you encountering as an industry and when do you expect to see an upturn?

    A: The major challenges that telecommunications companies, Econet included, continue to face are the continued erratic supply of power to our key installations, such as base stations, and also the heavy burden arising from duties and other fees. We commend very much government's reduction on VAT, and we are hopeful there will be further reviews on other fees.

    Q: What is your response to subscribers' concerns that pre-paid and post-billed tariffs are too high given that disposable incomes in the country are severely low?

    A: The tariff on our popular Buddie package is 23 cents/minute (26c including VAT). We believe that this is largely at par with regional tariffs. That said, we at Econet continue to seek out new ways of easing the burden on our customers. Since January, we have introduced several services and products specifically focused on the needs of the consumer. This will continue to be a key area of focus for us.

    Financial Gazette

  • - Telkom South Africa and US-based AT&T signed a memorandum of understanding (MOU) that will see the operators collaborate in sub-Saharan Africa. The local telecoms giant explains the crux of the deal would be that AT&T would provide services for international customers across Telkom's networks in Africa.

    - Converged communications player Westcon signed an agreement with Cisco that will see it become a global distributor. The deal means the subsidiary of locally-listed Datatec will provide Cisco greater access to the emerging markets, including Africa and the Middle East, South America and Asia.

    - The JSE will get its first new listing worth R2bn this year, when Galela Telecommunications, owner of iBurst, is reverse listed into S&J Land Holdings in June. S&J Land Holdings is a shell with only R12.8m cash. The terms of the deal will be announced only after auditor, Ernst & Young has completed its audit but the new company will have two major assets: 86% of iBurst Africa and 28,7% of iBurst SA.


  • * Telkom South Africa has named the second of three top-level managers under a new structure it introduced at the beginning of April. Weeks after appointed Nombulelo “Pinky” Moholi to the newly created position of MD of Telkom SA, it has hired long-serving Telkom executive Thami Msimango as the MD of its new Telkom International business unit. The appointment is effective immediately.


    13-17 April 2009, Arusha, Tanzania

    Under the theme "Securing Africa’s Internet Infrastructure”, the AfTLD annual African ccTLD event for 2009 will include a detailed three (3) day technical training workshop on Attack/Disaster Contingency and Recovery Planning(A/DCRP) for technical managers and staff of ccTLDs. AfTLD. The event is jointly organized and generously hosted by the Tanzania Communications Regulatory Authority (TCRA) and the Tanzania Network Information Centre (.tzNIC).


    28th - 29th April 2009, Park Hyatt Hotel, Dubai

    The third annual TelecomFinance Middle East & Africa Conference will offer true Middle Eastern & African coverage and will feature one full day on each region with overlapping themes throughout. Backed by years of high quality reporting on emerging markets telecom financing in its eponymous monthly magazine, TelecomFinance has the network and the know-how to provide the best insight into the developing Middle Eastern and ever more attractive African markets.

    * Elearning AFRICA 2009

    4th International Conference on ICT for Development

    27-29 May 2009, Dakar, Senegal

    eLearning Africa 2009 will welcome nearly 300 speakers from 50 countries to Dakar, Senegal. The programme, which is now available on the eLA website, will feature state-of-the-art presentations and interactive workshops, together with practical demonstrations and cutting-edge debates on key issues in the field of eLearning for the African continent. A range of new initiatives will also be presented.

    * Mobile Banking & Financial Services Africa

    20-22 July 2009, Southern Sun Grayston Hotel, Johannesburg

    Building on the highly successful inaugural event last year, the conference will again deliver timely insights into the key business, technical and security considerations that all players in the mobile banking and payments industry in Africa must address.

    For more information and to book your place now, call +44 (0)20 7017

    * MMT 09 - Mobile Money Transfer

    26-27 October2009, Dubai.

    MMT 09 is a 'must attend' event for anyone who is serious about remittances. Over 350 mobile network operators, microfinance institutions, money transfer networks, banks and technology providers will converge at MMT 09 to discuss the best ways to make money from mobile money transfer. Nowhere else in the world will you find so many MMT project leaders all gathered in one place.


    3rd infoDev Global Forum on Innovation & Business Incubation.

    The 3rd infoDev Global Forum will be held in Florianopolis, Brazil on October 26-30, 2009 and will integrate the 3rd infoDev Global Forum with ANPROTEC's 19th Brazilian National Seminar on Science Parks and Business Incubation (more details about the 3rd Global Forum here).The Task Manager will work closely with the infoDev Team based in Washington, DC, as well as with infoDev’s partners in Brazil. S/he will be a core member of infoDev’s Innovation and Entrepreneurship team, and will be responsible for the managing the preparations and delivery of the 3rd Global Forum.

  • Libya Telecom and Huawei - Libya

    Huawei Technologies Co., Ltd. has secured a FTTH (fiber to the home) network deployment contract from Libya Telecom and Technology (LTT), announced the Shenzhen-based telecom network solution provider lately. In detail, Huawei will deploy FTTH networks for the households at the 800 buildings on the Airport Road in Alzohor District, Tripoli, in the first phase, and expand the network coverage to other districts in the second phase, according to the contract inked by the two sides previously.

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