QMobile Europe says it will launch 4 CDMA operations in Africa but needs further investment

Mergers, Acquisitions and Financial Results

QMobile Europe’s CEO André Vorster says that he has plans to launch CDMA operations in four unnamed African countries and that he has been able to overcome the traditional barrier to CDMA use, the cost of the handset. The latter has been achieved by “despeccing” the handset and thus bringing the price down to US$20.

Vorster maintains that the group's plan, which involves a three-phased roll-out across 15 countries, will cost a fraction of what a similar GSM service would take to establish. The roll-out is planned to happen in three phases, with four countries in the first phase. It would include three new networks and the acquisition of one smaller operator. Vorster says the company will be building new networks as well as acquiring existing operators to speed up the roll-out.

"The main reason for acquiring multiple licences in Africa is to meet my vision of a large footprint in Africa, as I see value in CDMA in a group environment rather than value in individual licences owned." We're focused on delivering more than just a pure voice service. Because CDMA is capable of providing high speed Internet access from day one, we expect to be able to supplement voice revenues with data and even advertising revenues," Vorster says.

"We've also been able to negotiate favourable terms with a handset manufacturer, allowing us to get the landed cost of a handset down to around the $20 mark. That will make it truly affordable to those at the low end of the market." Vorster says that by stripping out many of the features not considered necessary in a phone and by negotiating with the manufacturer, the company has been able to get costs down.

With QMobile still operating in stealth mode, Vorster isn't prepared to say which four countries it's going to launch in. However, Wills comments that while he's heard of similar plans before, they've typically fallen flat due to a lack of funding.

Vorster replies that the group has secured in principle the capital required for phase one through a deal with African Heritage Investments. "We currently hold in excess of $100m in equity and only require the balance of capital needed for phase one - after which phase two will become partly self-funding or will require a lower level of capital. However, agreements in principle aren't the same as cash in the bank and only once QMobile begins generating revenues will the true potential emerge.