MALI SPECIAL - COMPETITION BEGINS TO HAVE AN IMPACT ON SOTELMA

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Even small African markets like Mali are beginning to experience the impact of competition. It’s slow and uneven but it’s beginning to happen. State incumbent Sotelma bowed to the inevitable recently and dropped its international rates by 50%. The Government has announced that it will be privatised by the end of 2004 but it was supposed to happen at the end of this year. Local industry gossip is that Sonatel may then buy it, making France Telecom significant owners of both major players in the market. Russell Southwood reports after a recent visit.

The Malian incumbent Sotelma was created in 1990 from what was a department of Government. Its subsidiary Malitel handles its mobile phone operation. It claims that the country had a phone density of 1% in 2002 up from a low baseline of 0.4% in 1999. Mali, with a population of just over 11 million citizens, has approximately 80,000 fixed and 180,000 mobile phone lines today. Sotelma has 70,000 GSM subscribers and 60,000 of these are pre-paid. Its overall number of employees has increased from 1352 in 1999 to 1533 in 2002.

It has a wireless local loop covering Bamako and the vicinity with 356 lines. It also has two data transmission networks: x 25 (MALIPAC) with 22 customers and LX25/111 with 192 circuits. It has recently signed a deal with Chinese-American-owned UTStarcom to buy its IP-based PAS (Personal Access System) solution. (see Telecom News - Issue 169)

Over the course of several quarters, Sotelma intends to deploy approximately 50,000 lines of UTStarcom’s iPAS system in the capital city of Bamako, with an option to expand into several other cities in the future for a total of 100,000 lines.

Earlier in the year Sotelma bowed to the inevitable and dropped its international rates: from CFAF700 to CFAF 300 per minute to ECOWAS countries (-57%); from CFAF1385 to CFAF 600 to France (-56%); and from CFAF3000 to CFAF 1195 to the USA (-60%). There used to be a call-back market but these price decreases have made the two quite close in price.

The price of local calls has been rebalanced and although Sotelma has been claiming reductions, the reverse has actually happened. The "unite de base" has been adjusted from from five to three minutes.

The Malian government has announced that it will privatise Sotelma but it has been say it will do so "by the end of the year" for several years. The latest date is by the end of 2004. The issue is politically sensitive because a large number of its employees will probably be made redundant if the company is to operate effectively. The delays in privatising have meant that the company has not been able to invest and it is therefore vulnerable to the newcomer in the market, Ikatel. The UTStarcom deal allows them a technology solution that may allow them to up capacity at a lower cost.

Ikatel is partly owned by France Telecom and with 102,000 mobile subscribers easily outpaces Malitel. Local sources report that it has better service but that its coverage only currently extends to two cities outside Bamako. By contrast, Malitel’s investment uncertainty means that it is running its 70,000 subscribers on far too little capacity with an inevitable impact on service. Ikatel has a full service licence but has not yet rolled out fixed line service. Once it starts competing across a wider range of services and with the access to the fibre link (see next section), Sotelma will be quite vulnerable.

(During the inevitable interconnection row between Sotelma and Ikatel, local street entrepreneurs were selling phones equipped with two SIM cards as a "workaround".)

There is considerable discussion locally in industry circles as to whether Senegal’s Sonatel will bid for Sotelma when it’s finally privatised. It can argued that Sonatel is only 46% owned by France Telecom and therefore is still a Senegalese company. But if this actually happened, France Telecom would be the majority in both of the main companies in the market, a position that would not be much altered by the mooted licensing of a third mobile operator.

FIRST TO THE MARKET ISPS SUFFERING FROM MANAGEMENT PROBLEMS

As in several African countries, USAID’s Leland Initiative played a key role in setting up the first national gateway for ISPs. It has also helped create a network for the University of Bamako which has no central campus. It is probably one of the first wireless networks in the country. (The University has 240 computers and each department has a separate facility for students and teachers.) Therefore its 9000 students have access to e-mail and internet. USAID’s new programme (USD5 million) will run through to 2007 and it will focus on the creation of 13 community learning information centres.

Mali has 15 ISPS, a large number for a market of this size. These include: Afribone, CIFAB, Datatech, Spider, Malinet, Burotic (the local IBM representative) and Arc. The total number of subscribers is somewhere between 4-6000 and has not grown much in the last year. There is a "numero nationale" but there is not much business outside of Bamako.

Afribone with 1600 dial-up and 54 wireless customers is seen by everyone as the biggest player in the market. The other two larger ISPs are CIFAB and Datatech. Afribone charges CFAF20,000 a month and is the most expensive ISP in the market but can justify the premium charged because of its bandwidth and service.

Both Malinet and Spider are suffering from management problems and seem to be losing clients. It appears to be the classic problem of "techies" without the necessary management or marketing skills: one customer recounted how he found it difficult to get a bill out of one of them. Spider has recently been bought by a Canadian company called Experco.

There is an ISP association which has been in existence for over a year but it is not very effective as a lobbying body. There are no current discussions about setting up a local IXP. The supply and cost of bandwidth is a big issue for all Malian ISPs.

The incumbent Sotelma has a monopoly on the sale of international bandwidth so all ISPs are compelled to buy bandwidth from it. However this is not the whole story: all ISPs buy VSAT capacity which is formally illegal. For a number of reasons, the regulator turns a blind eye to this practice. Also banks and international NGOs openly use VSATs.

(As with VSAT, VOIP falls into a similar grey area. It is illegal but not mentioned in the country’s constitution and Sotelma is not actively seeking to police ISPs and cyber-cafes.)

As a landlocked country, Mali suffers from only having access to satellite bandwidth. A comparison given by one local ISP illustrates the scale of the difficulty. Senegal’s Sonatel, which has access to the SAT3 submarine fibre cable, offers 1 mbps at CFAF 1.3 million whereas Mali’s Sotelma offers only 64 kbps for CFAF 1 million.

As reported in issue 168, SONATEL is developing an international gateway that will provide a fibre link to Gambia, Mauritania and Mali. The Mali section was laid along the power lines to the dam at Manantali and this connects to Dakar via the Region Fleuve. Traffic is expected to flow shortly once the rates have been agreed between SONATEL and the two Malian operators. There is also a planned fibre link from Cote D’Ivoire to Sikassou but the current political situation is not entirely favourable.

CYBER-CAFES - LARGE NUMBER IN BAMAKO BUT VERY HIGH TURNOVER

There are a considerable number of cyber-cafes in Bamako but they come and go with considerable frequency. Most are small but there are 3-5 larger cafes (for example I & D, Technolab). Datatech operates three cyber-cafes: one in a Mobil service station. Most small and medium-sized towns outside Bamako have at least one café and sometimes more. They suffer many connection problems and are expensive.

But as Ousmane Berthe of Datatech observed:"The internet depends on electricity, telecoms and a computer. Outside of Bamako, these constitute the main blockages."

In Bamako it costs CFAF500-1000 per hour. Outside Bamako, in a town with several cafes it usually costs around CFAF 2000 per hour. In small communities with only one cyber-café it is not unusual to pay CFAF 3000 per hour because there is no competition. Most cyber-café users are young professionals and they use it mainly for e-mail. Students use it for research purposes.

Prices are high because Sotelma charges CFAF 1200 an hour and until that comes down it is hard to see how prices will change much. Sotelma has two companies it buys international bandwidth from: Lyman Brothers, a gateway in Utah (one of the providers under the Leland Initiative) and the Canadian Teleglobe. It has 6 mbps in and 4 mbps out.

Because the market is so small there are few companies that specialise in web site design alone. One of the few of them ­ COCAN ­ designed the African football championship web site.

The .ml domain is run by Sotelma and by all accounts is rather time-consuming to deal: many ISPs report offering frustrated clients .org or .com as speedier alternatives.

Wireless networks look set to take off if the licensing problems can be resolved. Sine Traore who runs ImpactDev has connected five wireless sites:"It costs about CFAF 1 million per site. We use Alvarion technology." There are still discussions over licensing for them as the regulator wants to charge a high fee to cover them.