NIGER ISSUES CALL FOR INTEREST AS IT GOES FOR MARKET LIBERALISATION

Telecoms

A week ago, the Multi-sector Regulatory Authority of Niger (ARM) published a call for interest for the provision of various telecommunication services in the country. Rémy Fekete from the French law firm Gide, Loyrette and Nouel, which advised on the bidding process for the recent provision of new telecommunications licences in Mauritania, explained to Isabelle Gross why the Niger regulator is taking a further step towards opening the telecommunications market.

According to Fekete, mobile telephony in Niger has still not left much of a mark, with a penetration rate of only 3.42% at the end of 2006. Calling charges to national and international destinations remain also much higher than in other countries in the sub-region. Although Niger started the process of deregulating its telecommunication sector very early, by granting three mobile licences to Celtel, Sahelcom  and Telecel, and later by privatising Sonitel, the national incumbent, nowadays growth in the country’s telecoms sector seems to be held back by lack of competition among existing  players in the market.

A closer look at the market share of operators in Niger, based on the number of subscribers, shows that at the end of 2005 Celtel held 69% of the overall market. Sonitel’s subscriber base went down from 24,145 to 23,954 between 2004 and 2005. Shahelcom and Telecel each had a little more than 38,000 subscribers at the end of 2005. In terms of revenue, the market looks more like a duopoly, with Celtel’s activities accounting for 48% of the overall revenue and Sonitel, which is owned at 51% by ZTE and a Libyan company, generating a further 38% of the total telecommunications revenue.

To stimulate a new wave of growth in the telecommunications market, the government of Niger is considering granting one or several telecommunications licences for the roll out of new networks and services. The move will cover mobile telecommunications, routing of international communications, roll out and management of international links, roll out and management of inter-city links, roll out and management of local loops, and the roll out and management of a pre-paid card service for local, national and international calls and the provision of internet access.

According to the notice published by ARM, the aim of this expression of interest notice is to “allow the contemplated call for tenders procedure to take into account the nature of the interested operators and the terms and conditions of their interest.” The deadline for this call for interest is February 20th 2007 and further information can be found on the regulator’s website at  www.arm-niger.org

The scope of this tendering exercise initiated by the Niger regulator is very wide, but as Fekete explains, nothing prevents an existing operators from taking part. The rules would not prevent the current players from making an offer, and rather than leading to the entry of new operators, the process of granting new licences could in some cases simply result in an upgrade to the existing operators’ licences, or the issuing of global licences. Further he adds the whole tendering process should be completed by the end of June this year, and he is confident that transparency and efficiency will prevail, as was the case with the Mauritanian bidding round earlier last year.

On April 14th 2006, following a call of interest published in March, the regulator in Mauritania, the ARE, issued a call for tender for the provision of new licences. The Mauritanian regulator received five offers before the closing date and two additional offers came in after the deadline. The latter offers were returned to the bidders without being opened. When the ARE evaluated the technical aspects of the five offers on the table, it rejected the offer of Access Telecom SA on the basis that the company didn’t meet the technical requirements as specified in the rules of the tendering process. The successful candidates were selected after a further selection phase based on the merit of their financial offers. The highest bidders won the licences they bid on. Orange Mauritanie (France Telecom) which was bidding for a mobile telephony licence lost in favour of Chinguitel SA (Sudatel) which made the highest offer. They offered 26.6 billion UM ($99.7 million) while Orange Mauritanie offered 9 billion UM ($34 million) and Wataniya Mauritanie (Wataniya Kuwait) proposed 8.1 billion UM ($30.5 million).

Fekete did not want to guess amounts in terms of Niger’s bids but he reckoned that the Mauritanian results were above their expectations at that time ($100 million).

Telecommunication licence tenders are delicate matters both during the bidding process and later on when new entrants have to face the reality on the ground. So far, Niger has set rules to carry out a smooth bidding process that should in return yield a fair amount of interest among national and international investors.