ICT SECTOR WAITING FOR THE SALE OF ONATEL THE END OF ITS MONOPOLY

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There seems to be tremendous wealth in Ouagadougou. Entire areas of the city are being knocked down and redeveloped. Smart cars abound. The city itself now stretches right up to the airport. The main streets teem with motorbikes and there is a buzz of activity even in the intense heat.

Where does all this wealth come from? There are three main sources: agriculture and trading; development money and corruption. Burkina Faso sells agricultural goods like cotton and its inland position makes it a trade route for the interior. As one of the world’s poorest countries, it has been a major recipient of donor funds. Like Tanzania, the presence of the international donor community fuels business in many different directions.

Then there is widespread corruption around contracts in both the public and private sectors. A percentage of each contract is reserved for the person who gives the contract. The local IMF representative in his latest report stressed the need for the Government to mount "a crusade" on the issue but there is not much sign of this happening.

All this has generated wealth that is visible as you move around the city. It may be in the hands of the few but it’s there. Some mutter darkly about money laundering proceeds from smuggled arms and diamonds, a trade with troubled neighbours like Cote D’Ivoire, Sierre Leone, Liberia and Guinea. But it is impossible to establish whether this is true or not.

Two big changes will affect the market: the privatisation of ONATEL and the end of its monopoly. Bids were meant to be in at the end of last month but the potential investors have been given until the end of April to complete their bids. Six companies are bidding. Prequalified bidders. Informed sources say that Maroc Telecom, the Norwegian-owned Telenor, a Libyan company and a Dutch company are bidding. The company will be sold in three phases: 34%; 10% and 7%, giving the successful bidder a majority shareholding.

The monopoly ends in 2005 after which the regulator Mathurin Bako, ARTEL says:"All sectors will be open to competition and it will be possible to have several international portals. A licence for IP telephony would also be possible.". At present VSAT licences are limited to those running closed networks like banks. On the VOIP front, there have been confiscations of equipment and the market currently appears to be very small. ONATEL keen to stress that it’s the end of its "exclusivite" not monopoly because they already face competition from the mobile operators.

ONATEL claims 68,000 fixed lines covering most large towns and some rural areas. 24% of the population have access to some form of telephony. ONATEL is using wireless to develop its fixed network. There is an eight month waiting list for fixed lines in most places. But it can sometimes take a year in more difficult outlying places that require both radio and wireless.

For international calling ONATEL has relations with 28 operators. It uses a direct Intelsat link to many of its African neighbours but has mainly transit arrangements for the main European destinations. For American calls it uses MCI, Teleglobe and AT&T.

There are 20 million outgoing minutes a year, 8 million of which go to Europe and 1 million to the USA. And there are currently 45 million incoming minutes. It currently costs FCFA600 to USA, the larger European countries and many of its neighbouring countries. Smaller European countries cost FCFA1000 per minute.

On 1 April tariffs were cut by 50%. ONATEL was forced to make these cuts because both Celtel and Telecel were offering minutes to Europe at FCFA 400 a minute compared to Onatel’s FCFA 600 or more. However it is not clear how they managed to undercut these rates whilst still using ONATEL’s gateway. Overall international minutes are growing by 23% a year.

ONATEL is in the process of installing fibre to the border with four countries - Cote D’Ivoire, Benin, Senegal and Mali ­ and work is well advanced. Completion has been promised by July on all connections except Benin and the other three links may be commissioned by October this year. It would like to add Ghana to the list. The Mali fibre connection will give ONATEL a 25 meg connection between Ouagadougou and Bobo. These connections are being financed by the West African development bank, BOAD and built by Alcatel and Societe Mare.

Once complete, Burkina Faso will find itself in the unusual position of being an inland country with a choice of three international fibre connections. Although negotiations on price have not yet been completed, there are hopes that it will cost in the region of USD2000 per megabit compared to the current USD3000 per megabit via satellite. As Lamoussa Oualbeogo, Directeur de l’informatique et des nouvelles technologies of ONATEL points out:"It’s important to build infrastructure otherwise all the talk of developing ICT is just empty words."

ONATEL has a number of ambitious plans. It will build and experiment with a VOIP gateway this year. As part of this project it will offer DSL broadband connections ("un reseau pilot"). It wants to bring in a wi-fi service based on pre-paid cards with "hot-spots" in places like hotels and cyber-cafes.

There are three mobile operators:

Telmob: 50,000
Celtel: 107,000
Telecel: 53,000.

Telmob is the ONATEL mobile subsidiary and Celtel is part of the Celtel group (formerly MSI). As the third operator to enter the market Telecel is in the weakest position. Sold by Orascom to Ivorian-owned Groupe Alantique Telecom, it has suffered from under-investment.

There’s no regulation of tariffs but there is an interconnection agreement between the operators. The difference between operators’ rates is not great. In terms of coverage Celtel has the greatest coverage and Telecel the least. In pricing terms, Telemob is slightly cheaper than the rest.