Angola’s Fourth Unified Licence may not be a ‘diamond in the rough’ in a country where the state still has its fingers in many pies

7 December 2017

Top Story

Vodafone Group is said to be interested in bidding for the fourth converged “Unified Global” operating licence in Angola. Oil has put what might otherwise be a middle ranking African country on steroids. However what oil gives, it also takes away when there are low prices. Russell Southwood looks at what the prospects are for the Angolan market and a potential fourth operator.

According to local news site SAPO:” Vodafone is in pole position to operate a mobile network, after the opening of the international competition for the fourth global license, which could end the "monopoly" that still exists in the sector. Better services and competitive pricing is what is expected”.

However, there is a familiar cycle with bidding for licences or the acquisition of companies. The organization trying to drum up interest gets out into the public domain the idea of interest from a “blue chip” operator. This is in the hope that others will see that there is that sort of interest and join the queue.

Angola has a population of 27.9 million, most of whom live on the coast. According to GlobalEconomy.com, there was 90% population coverage by mobile operators in 2015, which means that there are not a lot more users waiting to join the party.

Overall there were 13 million mobile subscribers in 2016 according to the regulator INACOM. Of these, there are probably more than 0.5 million LTE subscibers. Inacom says that there were 4.1 million Internet users in 2016. A useful proxy stat for Internet users is the number of Facebook users that in June 2017 stood at 3.8 million.

The mobile space is dominated by Unitel which has a 73% share of the market, the rest being taken by Movicel at 27%. Unitel has a significant shareholding from the daughter of former President dos Santos, Isabelle dos Santos, who also owns Visabeira.

With President do Santos now replaced, his daughter is unlikely to get the same level of financial advantage: a parting shot was the granting of a dam project worth US$4.5 billion to a Chinese construction company whose local shareholder is…You guessed. Isabel do Santos at 40%.

Movicel is the former state-owned mobile operator that came out of the incumbent and 80% was sold to private investors: Porturil-Investments (40%), Modus Comicare-Comunicacoes e Imagem Lda (19% ), I pang-industria de Papel e Derivados (10%), Lambda-Investment (6 %) and Novatel S.A. (5 %)

The state in Angola has its fingers everywhere. The fixed line incumbent Angola telecom has been granted the third mobile licence and will start operating in 2018. The state oil company Sonangol owns fixed line operator MS Telecom. In mid November Isabel dos Santos was sacked from being President of MS Telecom. However, what is unclear is whether this marks a separation of those involved in Government from business or merely the moment when new people from the Government get to enrich themselves.

The fixed line space (304,493) that might interest someone like Vodafone because of the FTTH opportunity is quite crowded with TV Cabo, Startel, MS Telecom and Angola. But on a fair playing field, any or all would be vulnerable to a professionally managed FTTH roll-out.

But the ghost at the feast is the terrible shape of the economy. With low oil prices and an overvalued currency, Angola has been short of dollars since 2016. The Government – much like the Nigerian Government – has sought to avoid a Kwanza devaluation that would hit the population in their pockets.

The net result is that one telecoms supplier I have spoken to was advised to buy maize and a ship to put it in and sail both south and sell them to get the dollars he was owed out of the country. There has been a modest upturn in the country’s dollar reserves but the country really needs an upturn in the oil price for the economy to fundamentally improve.

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