Sudatel bullish after the lifting of US sanctions and wants to keep being an international operator in Africa

13 April 2018

Top Story

Sudatel is starting to talk more confidently and explore new international partnerships. The lifting of US sanctions has removed a barrier that has in the past held it back. Russell Southwood spoke to Nazar Gard Kareem Ali Arabi, Chief Strategy Officer, Sudatel about its MoU with Liquid Telecom, its fibre link to Chad and the state of its international operations.

Earlier this year Sudatel signed an MoU with Liquid Telecom to roll-out Fibre-To-The-Home across Sudan:”Basically we’ve signed an MOU and this is the first stage of the project. We need to do an exercise together (to look at how we might do it) and this is not the final agreement. We will finalise the role of each party in a few weeks and will then sign a final partnership agreement. We saw Mobile World Congress as a good opportunity to announce it at a high level”.

There are around 7.5 million households in Sudan and Al Arabi sees a large market out there:” There is huge potential and not just in Khartoum but across Sudan. Only a very small number of existing customers have fixed broadband. There will be a huge demand for family and residential broadband. We will also be doing FTTX for corporates and to buildings”.

However, the overall transition to digital still has some way to go. Al Arabi says that there is 15-20% mobile broadband penetration in a country with a population of 37 million. Smartphone penetration is 30% and at the end of last year there were 2.6 million Facebook users:”Sudan is still growing as a country and voice is still dominant.”

Sudatel is 30% Government-owned but is also listed on the stock exchanges in Khartoum and Abu Dhabi. A further 21% of shareholders are Sudanese and the remaining 49% are foreign investors, led by UAE investors. In 2015, it announced that it wanted to invest US$267 million in its operations up to 2020. According to its CEO Tarig Zainelabdein, some 30 percent of the investment will come from equity and the rest from bank loans, mainly Arab and Chinese banks

Sudatel has long wanted to position itself as the regional hub for neighboring countries. Another brick in the foundations of this idea is the link it has built to Chad from Port Sudan:”We are potentially the gateway for a lot of countries. We’ve always provided Internet (bandwidth) to Ethiopia. We now have a project to connect our backbone to Chad. Commercialization of the project is pending agreement from the other side”.

There is a (wholesale) monopoly in Chad (operated by Sotel Tchad) and Sudatel waiting to finalise everything with them. Tigo and Airtel are lining up to get services but outside of these operators, internet capacity there is very small:”It would be taking out a bottleneck and we want to resolve things as quickly as possible”.

Sudatel had four international operations: Ghana, Guinea, Senegal and Mauritania. In 2015, 30% of its revenues came from these operations but its CEO said it would like this to be 50:50. After a long process, it sold its loss-making Expresso subsidiary in Ghana:”Expresso is our international operation. We’re still pursuing that but it’s a little bit early to have a unified brand”.

“We’ll be putting more investment into the international brand and expanding the networks there. We’re doing work in Mauritania and financial performance in Senegal is improving”. It currently has a 22.4 % share of subscribers there but its next largest rival Tigo is up for sale but a dispute with the potential local buyer may give Expresso more opportunity.

The operation in Guinea-Conakry is working in challenging market conditions after Ebola and it has a small market share. Most of the market share is distributed among the top 3 operators: Cellcom, Orange and MTN:”The network needs to be modernized to improve market share and again, we’re planning to do that”.

US sanctions that have affected the company’s ability to operate were lifted in October 2017:”We lived under US sanctions for 10 years and yes, it does have an impact. Nevertheless, Sudatel has been growing - both inside and outside Sudan – and we are now seeing new opportunities. We’ve signed MoUs with both a leading European equipment vendor and Liquid Telecom that wouldn’t have been possible before and it opens the door for new partnerships. For example, we are looking at extending our data centre services and this will require partnerships, even perhaps with US companies. The removal of US sanctions will accelerate our position as the leading ICT provider in the region. It also means the end of the monopoly of Chinese equipment vendors and we can now explore opportunities with European vendors”.


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