Foris Telecoms and Smile Telecom join the ranks of Africa’s insurgent challengers with a Ugandan WiMAX voice and data offers

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This week and next sees the launch in Uganda of ISP Foris Telecom, a subsidiary of the Israeli Foris Group and Arab-backed Smile Telecom. Both are making use of WiMAX to open up new markets with the arrival of cheaper international bandwidth. They join other challengers in the African market who are all hoping that WiMAX will help them find new voice and data niches in competition with the mobile incumbents. Russell Southwood looks at what’s happening.

Foris Telecom has already opened in Mozambique using WiMAX and has ambitious plans to roll-out in a number of other markets across the continent but also elsewhere in emerging markets. It is consciously choosing to focus on household customers who until recently have not really been a significant part of most ISP’s customer base.

According to Moshe Mitz, CEO of the company: “This Internet business has mainly catered for the corporate environment but our vision as a company is to bring to life the information revolution that is enjoyed across the world to all people irrespective of their economic status,

Winston Agaba, the Marketing and Sales Manager of Foris Telecom in Uganda said the company’s main targets are the residential sector and students. It has the difficult task of pricing competitively in a market where prices have already begun to go down: some estimate that since the fibre has arrived, the fall has been as much as 50%. Its biggest competition is currently 3G but it believes it will be able to deliver faster and more reliable download speeds in a market where current expectations are low. It anticipates being able to offer WiMAX dongles for laptop users at around US$90. In terms of its business model, it believes that it has a distinct cost advantage in connecting subscribers in CAPEX terms, particularly in denser urban areas.

It is using Alvarion 16e equipment to provide coverage in the capital Kampala before rolling out to five other cities. It will also offer wi-fi hot-spots in the future and will start opening up niche international and local voice calls once the Internet service is established. Currently it believes that the Internet market is probably somewhere between 10-20,000 subscribers but that it will grow to ten times that amount in 3-5 years time.

TMB Uganda launched its WiMAX offering in Uganda in July last year under the Broadband brand. It is backed by PME Infrastructure, a UK-listed investment company and Norwegian shareholders. (Some of those working for it used to work for Telenor when it was offering management services.) Its business model is to build its own network and operate it entirely itself. It sees its core business in broadband, whether household or corporate, although it may also add voice as a value-added service.

It is using WiMAX 16e supplied by ZTE and has base stations covering the capital Kampala but will extend coverage to Entebbe and Jinja. It has six hot-spots using wi-fi. Its planned target for subscribers is somewhere between 5-7,000.

Why is there a broadband opportunity in Uganda? According to CEO Arvid Knutsen:”The Uganda market is not a huge market but it has room for an operator who provides quality, consistency and behaves professionally. The business is growing steadily. There are a lot of SMEs and SOHOs coming up and all are using Internet and VoIP for their businesses.” It is doing VoIP but it’s not yet been fully commercialised. By Q2 it will offer cheap international and on-net calls to other Broadband subscribers. In terms of laptop dongles, ZTE have said they will provide them at US$70 and they are also looking at the possibility of sourcing from Zyxel.

Knutsen says:”It’s currently a mass market battle between big operators. You take that market by quality, stability and service.” Mobile challenger Warid also set out to take the data market by storm with a Wi-MAX offer but it never really was fully launched before the company was sold to Essar.

The company behind Broadband bought into CDMA player Dovetel in Tanzania and rebranded it Sasatel. Using EVDO Rev A, it launched the same time as Broadband in Uganda and has attracted 20,000 subscribers for both voice and data in Tanzania’s main city Dar es Salaam. However, it believes that this number could rise to 50,000 in 12 months under the right circumstances. Customer CPE costs around US$50. It is using Wi-MAX for a small number of corporate customers.

Launching today (1 April) on April Fools’ Day, Smile Telecom has what it sees as a unique strategy. Its main target is reportedly to provide a quality network but so cheap and reliable that Ugandans without phones will be able to own one. Set up by former MTN manager Irene Charnley (now also Chair of public broadcaster SABC), it is backed by Arab funds.

According to General Manager Carrington Phillip:“We intend to keep our expenditure low so as to put our money into a service which is affordable to all. We do not want any Ugandan to remain without a phone.” The aim is to offer a “plug-and-play” service to those left out of Africa’s telecoms revolution. One of the packages Smile Telecom brings is a phone that does not have a line and can be used by people close to each other as in a family. “Every person in the family gets their own pin code so that they just simply log in when they want to use the phone,” Carrington explained. The company also says it will offer a mobile phone product, details yet to be clarified. It has been sharing masts with Warid mentioned above.

The company has its eye on other African markets (Tanzania, DRC and Nigeria) and is currently testing its services in the Eastern Cape and KwaZulu Natal in South Africa.

With EASSy scheduled to launch in Uganda in June this year, international bandwidth will get even cheaper and this should form the basis for more innovative household products and services.