London — Senegal would see itself as a competitive market but is actually dominated by Sonatel. Recently there have been two changes that may yet shake it up. Russell Southwood looks at the implications of these two changes and what they might mean for other markets.
For years, Sonatel has been the de-facto dominant player in Senegal. The Government had a significant shareholding in it and sat on its board. Any attempt to open the market failed. The ISP sector withered on the vine, pushed out by a fairly aggressive pricing policy by Sonatel. Electricity utility SENELEC was not allowed to wholesale its domestic fibre. Despite external interest, no one was allowed to land an international fibre cable except Sonatel.
The last big attempt to resuscitate competition was when Expresso launched in 2010. However, the Sudanese group has never found a commercially successful formula for any of its operations in Africa. Furthermore with US sanctions in place on Sudan, it has not been able to consistently deploy capital investment. If you had to take bets, this will be the next company to exit.
But suddenly after a very long process of discussion, the regulator ARTP has granted concessions to three new ISPs - Waaw, Africa Access and Arc Informatique - all of which are primarily locally owned. The three ISPs paid a combined total of US1.534 million for their concessions.
They have six months to get started and to make their lives harder, they have been given a geographic area where they must provide coverage before being able to expand into other regions of the country. ARTP sees these concessions as a way of lowering prices and improving services for customers. And by implication, getting better Internet coverage in areas that Sonatel has not gone to or has only patchy data coverage there.
Alongside this change, local money transfer operator Wari has bought the local Tigo operator for US$129 million. Money transfer is one area where Sonatel is not dominant and maybe this acquisition will start to give it a run for its money. Perhaps also it will bring a management who can see how the market is changing and who will respond quickly rather than defensively.
One implication for other markets is where existing mobile operators go up for sale or go out of business, it opens up a space which can either be filled by new operators with new ideas or it will simply allow the dominant to become more dominant.
Data use will be the key battlefield. Internet subscribers in Senegal continue to rise, from 7.3 million in December 2015 to 8.7 million in December 2016. However, over that time the market has become increasingly mobile dominated, with the share of mobile subscribers going from 94.9% to 97.4% over the same period, with ADSL lines being the main casualty.
With the Internet, Sonatel has the whip hand with a market share in December 2016 of 65.39%, followed by Tigo at 25.75% and Expresso on 8.86%. Over the period Tigo managed to take fractions of a percentage away from Sonatel but nothing more.
So what strategies might put a dent in Sonatel's grip on the market? The ISPs entering need to have infrastructure sharing agreements with the two minority players and push to be allowed to access the SENELEC fibre.
They need to encourage OTT voice use, particularly on What's App, both domestically and internationally. International wholesale voice prices are now so low that they could offer mouthwatering deals. They need to create a network of hotspots that are as widely distributed as possible and create a local umbrella brand for their use. Finally, they need to be able to offer Fibre To The Home and open up the type of content delivery services emerging elsewhere on the continent.
The new challengers need to be insurgents, cheekily challenging Sonatel where it will find it hardest to make a competitive response. The giant may not fall but there is probably an interesting 10% or more of the market that might either be created or shifted from other players. It will take significant investment and this will require international partners.
Essential reading for those in mobile VAS to anyone just interested in what African and relevant international content they can now get online. If you would like to subscribe, just send an email to firstname.lastname@example.org with Digital Content Africa in the title line. Look at a full list of past issues here: