LETTER FROM BURKINA FASO

Mergers, Acquisitions and Financial Results

I live and work in Burkina Faso and of course use internet access and have been excited to see the arrival of DSL to the capital , Ouagadougou, and access to the SAT-3 fiber optic link to the outside world. All of this seems to have been driven by the push to privatize but this is working out in interesting ways.

About 3 or 4 years ago there were several new ISP's that opened up here in Ouagadougou. Then about 2 years ago one of those CFAO Technologies began to offer wireless internet access for buisness clients. At the time a 64K leased line with ONATEL cost 1,000,000 CFA a month. CFAO was offering a wireless 64K connection - with a service garentee - for 300,000 CFA a month. This service was a big success and many businesses and NGO's signed up. About a year later there were some problems though. CFAO seems to have developed an untapped market and once ONATEL saw how successful they had been the opened a compeating service. A second problem was that CFAO over-sold their access and the quality of the connection degraded significantly. Third ONATEL is reported to have refused to renew CFAO's commercial assured bandwidth contract. They were only allowed to have access to a "best effort" connection . Fourth, ONATEL then started a new wireless fixed telephone service, only they chose to use the exact same equipment and frequency that CFAO had been using for their wireless service. This caused interferance with the CFAO service in a number of locations. The price of the ONATEL 64K leased line has now dropped to 150,000 CFA and CFAO has matched that price for thier wireless connection , however the leased line connection is of far better quality since ONATEL seems to give the "first slice" of thier bandwidth to their primary clients and then access to what is left to other ISP's.

Even though ONETAL is supposed to be a "private" company now there have been other interesting developments: Compeating ISP's in the capital say that ONATEL continues to refuse to sell commercial access to ISP's, thus there is no margin for thier profit and they always seem to get the lowest priority for access to bandwidth. Many of these ISP's had been holding out for privatization hoping to see a level playing field created , when actually the monopoly tactics have gotten worse since the start of privatization. Now many are looking at leaving the ISP market - there seems to be a very real chance that within a year the only ISP left in Ouagadougou will be ONATEL.

Another interesting development has been the decision of SONAPOST to open a series of highspeed Internet cafe's. These cafe's have access to the new DSL serivce from ONATEL. Of course this places SONAPOST in competitaion with all the small internet cafe's across the capital.

Just recently employees at the BIB bank were switching from CELTEL and TELECEL to TELMOB - the cellphone company owned by ONATEL. The reason for the change? It seems that the BIB has set their internal phone system to block all calls to CELTEL and TELECEL and will only allow calls out to TELMOB. The officials at the BIB have told their employees that they are blocking CELTEL and TELECEL to save money. Employees spend too much time talking to family and friends leaving the BIB with the bills. The new policy is that only calls to fixed lines and TELMOB are now allowed. I asked my friend if TELMOB had a lower charge for connection and they said , "No I think that actually it is more expensive than CELTEL, but it seems there is more to this than the reasons given in public"

Apparently there is an unwritten rule that all governement employess should only use TELMOB. Since each service has it's own two digit exchange number - TELMOB starts off 70 and CELTEL starts off 76 - it is easy to see which service you use. While the government may have gotten a good deal for offical accounts , the pressure applied to employees is about private phones.

The move by BIB to block all calls to CELTEL is rumored to be a trend among other large companies in Ouagadougou. But that had not been confirmed at this time. More news as it emerges....