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Mauritian mobile operator Emtel installed the first mobile network south of the equator and the first UMTS network in Africa. In 2004, both Emtel and its larger rival Cellplus made quite a healthy profit. But in 2006 they could face a new challenge to their dominance with arrival of a new CDMA network. Mauritius is also one of the few markets worldwide where mobile termination fees are considerably lower than fixed line termination fees.

The bigger mobile operator on the island of Mauritius is Cellplus, the mobile subsidiary of the fixed line incumbent Mauritius Telecom (MT). Operating a GSM network since 1996, it claims 400,000 subscribers. From a turnover of MR1.8 billion MR in 2004, it generated a net profit of MR600 million. "The start of prepaid services in 1999 really boosted the market", according to Cellplus-Manager Kresh Goomany: "92 percent of our customers are on prepaid plans. We expect a market penetration of around 65 in 2008."

Cellplus' 183 employees (full time equivalents) operate a GSM network with over 160 sites on Mauritius (98% pop coverage including six sites on Rodrigues). The company is currently trialling UMTS. Cellplus' parent company MT, which is government owned and said to be the most profitable company in Mauritius, is thinking about starting mobile networks in other countries, namely Madagascar and Burundi.

Emtel will go into the history books as the company which deployed the first cellular mobile network south of the equator. It was a TACS network in 1989. A member of the Mauritian Currimjee-entrepreneur family had the dream and happened to meet a Millicom manager. The rest is history. Today, Emtel is a joint venture of Millicom (50 percent), and the local group Currimjee-Jeewanjee Co Ltd. The management is purely local. While Cellplus was not allowed to start a GSM network until 1996 (seven years after Emtel's TACS start), Emtel was not allowed to start GSM until another three years later.

With the introduction of GSM by Cellplus, mobile competition really began; prices started to fall considerably and international roaming became possible. The number of mobile users started to grow from a mere 8.000 analogue users to over 600.000 today. It upgraded to GPRS in November 2004.

At that time Emtel also started the first UMTS network in Africa. 95 sites provide a population coverage of 95 percent on Mauritius. Rodrigues, which is home to about 30.000 of the 1.2 million Mauritians, is not covered by Emtel. "The addressable market is very small. We believe we will not be able to recover the costs", Emtel CFO Sahoud Edoo told us, "But we may provide coverage for travellers going to Rodrigues next year." So there's hope for competition for Rodriguans after all.

"We sell a contract with 1 GByte traffic allowance per month for MR750. But our biggest obstacle are handset prices (which cannot be subsidized at the given tariff)", said Emtel CEO Shyam Roy, "We hope to have more and more affordable handsets at the end of this year." With his UMTS network Emtel, of course, targets the top customers with high usage. With 160 full time and 10 part time employees Emtel made a net profit of MR285 million in 2004, which is a plus of 112 percent over 2003. The company's turnover was more than MR849 million (+27%). It is serving about 200.000 customers.

So both networks make a net profit of about a third of their turnover. That's extremely good. However, a CDMA license has been issued to MTNL, which wants to provide both wireless and fixed wireless services in 2005. "They could start a price war or give mobile phones away", fears Goomany. Roy said: "They have a very difficult business case as they don't have the (GSM) roaming business. But we're afraid they might (price) dump."

The incoming roaming market is indeed a big source of income for the GSM network operators. Tourists leave about MR600 million a year (depending on exchange rates and numbers of tourists), which is probably almost equally split between Cellplus and Emtel. This means, that more than every fifth Rupee earned by the two established mobile operators comes from incoming roaming.

Emtel's Roy is one of the few industry members in Mauritius, who openly criticizes the Cyber Island Strategy: "It's more or less and empty slogan. There have been some efforts, but it needs more: A long term strategy, that starts at the school level." Roy points out that there are mainly call centres at the Cyber tower, "but the IT competence is not there." He also deems the 8 Million MR he has to pay every year for his wireless licenses too high. What's more, he sees a "not well managed liberalisation. Of eight international operators (that have come to Mauritius), four will go out of business soon." According to Roy, that is because of the licensing and frequency charges, but also because dispute settlements are not running smoothly and some court cases have lasted more than eight years.

There are at least two rather odd things about the Mauritian mobile communications market: Mobile termination fees are lower than mobile->fixed termination fees - MR0.90 versus MR1.25 (fixed->fixed is MR1.50). And, from 1997 to September 2003, Emtel and Cellplus had to pay MT for incoming (!) calls, which was levied on the receiving users. For the time from Mid-1998 Emtel and MT agreed on a settlement procedure and Emtel only provisionally paid 50 percent of that fee. Until today, the settlement has not been signed. Emtel still has to provide for over MR162 million it's financial planning. Cellplus, however, paid the full amount to its parent company MT.