ORANGE SENEGAL CONTINUES GOOD RUN AFTER REBRAND
Senegalese mobile customer numbers increased by 74% in the year to 31st March 2007, reaching 3.38m by the end of the period, giving the country a penetration rate of 27.7%. Q1 2007 was the second strongest quarter ever for net additions, as a net 397k new customers adopted mobile services in the West African market - 92.7% of these choosing France Telecom's Sonatel Mobiles.
Sonatel Mobiles was recently rebranded as Orange in December 2006, having formerly operated as "Alize", but this does not seem to have made a great deal of difference to overall uptake rates, as 83% of new customers chose the operator anyway in the year prior to the rebranding. France Telecom's sole competitor in the market, Millicom-owned Sentel, itself rebranded at the end of 2005 from "hello" to the Millicom worldwide brand "Tigo". However, after a very strong year competitively in 2005, 2006 was a very poor year for Millicom. That bad run has continued into 2007, the glimmer of hope in mid-2006 that the Tigo brand was gaining traction relative to its competitor having well and truly faded.
The share of net additions which France Telecom has gained in Senegal has outweighed its overall market share in each of the last six quarters. Mathematics dictates that France Telecom must have increased its market share over that period, which indeed it has from 59.8% to 72.7% between 30th September 2005 and 31st March 2007.
The increase leaves Orange more than two and a half times the size of Tigo at the end of Q1 2007, having been just under one and a half times the size only 18 months earlier. This ever increasing discrepancy must trouble Millicom management: as the local operator loses scale relative to its competitor, so it loses the power it has to fight back, without drastic price cutting measures or considerable assistance from its parent company.