12 February 2016

South Sudan: MTN Becomes the Number One Player in Africa's Newest Country Market

London — When South Sudan became independent from Sudan it looked like a golden opportunity for operators. Then came the disastrous civil war and things went rapidly downhill with a falling oil price. However, a ceasefire agreement is rolling very slowly into place and things may change. Russell Southwood talked to MTN's CEO Philip Besiimire about the prospects for the market.

There are four mobile operators (my estimate of their market share in brackets):MTN (37%); Vivacell (35%); Zain (<30%%); and Gemtel (<5%). Gemtel is owned by the Libyan investment vehicle Lap Green and has therefore struggled to hold its place in the market. Last year MTN took over from Vivacell as the market leader. There are 3 million SIM cards but about half of those are people who have more than one SIM.

The market for wholesale bandwidth is largely satellite but MTN has fibre to the South Sudan border and a microwave link to Juba. VSAT capacity is used for back-up. There were operator plans to build a fibre link to Juba but these were canned by the civil war.

MTN's 2G coverage goes in a crescent from the east to the west of the country and then up the western side of the country. Originally MTN South Sudan was part of MTN Sudan and it did not have an extensive network. A decision was made to expand the network but the civil war started. However, since the equipment was already in the country, they decided to go ahead anyway.

Coverage reaches around 20% of the population:"We've leapfrogged our competition and it's been investment driven." It grew from 135 base stations to 360: 175 of these are 3G, mainly in the central area around Juba and in several of the state capitals including Rumbek.

The South Sudanese have not been slow to take to data and Facebook is widely used along with news sites and businesses use social media to publicise themselves. MTN spent 2015 focused on getting handsets into the country (200,000 of them) and marketing them, with the cheapest smartphone in the US$30-35 price bracket:"The market is data hungry." 25% of its subscriber base owns a smartphone and Vivacell probably has a slightly higher percentage.

MTN has recently opened an enterprise business unit selling dedicated bandwidth to hotels supplying hot-spots to their customers. These are usually 2 mbps connections or less so the corporate market is not huge. MTN itself has 250 mbps coming into the country, of which it uses close to 200 mbps. There no metronets and all the connections are by microwave.

There used to be around 20 ISPs but the contracting economy (with the fall in the price of oil and the civil war) has seen many exit the market, leaving among others IPTec, RCS and Sawa Sat. The majority of SMEs use satellite bandwidth.

All the infrastructure is plagued by a significant number of problems. If there's a break in the microwave link to Juba, it can't be repaired until the next day because security issues make it impossible to travel at night. Almost all power is supplied by generators and there are frequent power outages. With no income coming in, the South Sudan Pound has gone down in value and there is almost no forex available for business. Security forces on both sides of the conflict often ask for a base station to be closed down and this often has the knock-on effect of closing others.

Becauuse there is no forex, the business has often had to borrow money and interest rates have gone from 3.68% to 24%.

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