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Most agreed that when Mali’s SOTELMA cut its international call rates by 50% earlier this year that it had driven out call-back and cut illegal VOIP traffic. But SOTELMA seems determined to stay one step ahead in its fight with those offering VOIP calling. It has recently signed agreements with four companies allowing them to offer international VOIP calls. Meanwhile the long awaited privatisation continues to drag on with a number of important issues still unresolved. Just back from a recent visit Russell Southwood reports on events.

Almost surreptitiously, SOTELMA has signed commercial agreements with four companies allowing them to offer international VOIP calls. There was no open process of selection and a number of local companies you might have thought ought to have been involved were not. The agreements make the four companies in effect retail VOIP sellers, using SOTELMA for their bandwidth at an agreed rate.

A similar strategy was employed by Sonatel in Senegal. It called the larger illegal operators around a table and offered them a deal. However within six months, a new generation of illegal operators had sprung up and were undercutting the newly legalized operators. The same is likely to happen in Mali as the rate agreed with the new VOIP operators probably offers enough space for illegal operators to undercut them.

Meanwhile the privatisation of SOTELMA lumbers forward as the Government and the company seek to clear a number of hurdles. Apparently the World Bank objected to the less than transparent sale of shares in the company’s mobile arm, Malitel and put pressure on it to divest these local shareholders. They bought their shares for 400 FCFA and sold them back at 2 billion FCFA. A nice return if you can get it. These same investors have now put their money into Ikatel.

The Government has decided to sell 61% of the company, 51% will go to an external investor and 10% to the workers of the company. Someone has to pay for the 10% shares to the workers and the Government is expecting the external investor to do so. In other words you pay for 61% of the equity but only get 51%. There is also "un plan social" to take care of workers made redundant from the company that has still to be funded. Company sources indicate that the company is likely to sell for around 50 billion FCFA. They maintain that the number of fixed lines could be doubled with outside investment.

So who will buy? The company is looking for someone with both fixed and mobile experience in a developing world context. When we asked the Director of the regulator CRT, Mobido Camaro who might bid, his list was as follows:" Arab countries like Morocco or Tunisia, South Africa, French power utility companies and MCI."

Local rumours suggest that France Telecom will bid using Sonatel thus securing ownership of both the main players. Will this be allowed to happen? According to Camara:"That’s not going to be possible because it’s a shareholder in Ikatel." (see full interview in the next issue)

A World Bank mission is coming this month to negotiate the funding of the privatisation package and to seek to resolve some of these issues. No-one will give an exact date for the sale but 15 months plus seemed to be everybody’s best estimate. Throughout this period Ikatel (with its powerful parent) will have a free run at taking apart SOTELMA in the market place while it has no serious sources of investment to respond. The fibre to Senegal is one indication of how the rules of the game have shifted.

The fibre cable to Senegal is owned by a consortium of three companies: SOTELMA (55%), Sonatel (15%) and Mauritel (30%). SOTELMA will open four E1s on a test basis "in one or two weeks time." Despite having the majority shareholding, SOTELMA as the incumbent now finds itself in a weak position. As France Telecom owns both Sonatel and Ikatel in Mali, SOTELMA is saying that it is offering transit rights that are so expensive that it still makes sense to use satellite. The implication is that Ikatel is getting a much better rate.

As ever in regional disputes of this kind, there is no clear mechanism to arbitrate the dispute so there the matter rests. SOTELMA talks optimistically about the alternative plan for a fibre route to Cote D’Ivoire but this is still on the drawing board and would take two years to build. And it would find itself dealing with Cote D’Ivoire Telecom which is owned by? You guessed it: France Telecom. It would be easy to feel sorry for SOTELMA but to a great extent it and the Government have made their own bed and must now expect to lie on it.