17 March 2017

Benin: Waiting for a Fibre Upgrade and Price Drops Before Its Users Make the Big Move to Digital Services


London — With certain notable exceptions (Cote d'Ivoire and Senegal), Francophone countries in Sub-Saharan Africa have been slow to move to greater data use. The legacy of monopoly state-owned telcos has acted as a brake on this transition. Russell Southwood spoke to Robert Aoud, Founder and CEO, Isocel Telecom about the upgrades he has planned.

When did you start the company and why?

We started our first commercial activity in 2008. At this time, there was only DSL from Benin Telecom and its distributor ISPs. It was very limited and only accessible to those with a fixed line so we started a wireless local loop service.

What services do you offer?

It's mostly connectivity to SMEs, corporates, residential and other operators. We're a 10% shareholder in the local landing station for the ACE cable along with the state, Benin Telecom, MTN, Etisalat and three other ISPs. We sell landing station capacity to international companies wanting to come into Benin. International capacity currently sells at around US$100 at an STM 1 level.

We also have the only carrier neutral data centre. At 60 sq m it's small but it's for our own use and we have clients like SITA and the Government agency GUFE.

You're upgrading your service to SMEs and households?

We've started deployment of fixed broadband LTE and have an investment plan for the next two years. We've started phase one with the ordering of equipment and phase two is the roll-out across 60 kms of fibre in Cotonou. It's an access network based on Benin Telecom's existing metro fibre network. It's been upgraded and we're buying dark fibre from Benin Telecom.

How many subscribers have you got?

We have 300 high-end corporates and 3,000 SME and residential customers. There is a 1 mbps offer at US$25 per month but when the upgrade is completed we will be offering 3-5 mbps for the same price. We're aiming to give residential customers download speeds of 5-10 mbps and SMEs 10-20 mbps. We have a lot of capacity on the international cable.

So what's the overall size of the market?

Benin is not a big country. It has a population of around 10.7 million people. 20-25% live in the Greater Cotonou area which stretches from the Nigerian border to the city and a little bit to the north of the city. There's access to power in this area and there are both higher and lower middle class people who can afford devices like smartphones. There's not high usage of Internet because of the cost. We reach 80% population penetration with voice but mobile data is probably not more than 10%. There's no fibre-to-the home because the market's not yet mature enough.

There are around 8 million mobile subscribers and the main players are MTN and Etisalat. It's really a duopoly but the State is willing to reduce it by having a third player. (Government-owned) Libercom is completely down. It's functioning but its users are mainly state employees. Glo is a different story. It seems that Benin is not a priority and it's not investing. Both Etisalat and MTN have 4G licences but Glo did not bid for them and it's not even offering 3G. Overall voice revenues are declining. Benin Telecom does fixed LTE with SIM cards that are not tied to mobile numbers.

Does Benin Telecom have a monopoly on national transmission?

Benin Telecom has a monopoly on fixed national transmission. The GSM operators do microwave national transmission.

There was talk of privatizing Benin Telecom. Is that still the plan?

They've been talking about it since 2008. I heard recently that they want to create national asset company and have a private operator come in and run the national backbone.

What about its other assets?

You've got Libercom, the passive infrastructure and the DSL but the DSL is obsolete. It deployed an LTE network 2 years ago and it's very limited. They've been stuck by that investment.

Who's your competition?

The GSM operators because they do Internet over Mi-Fi devices and modems. There are 10 licensed ISPs but only half are operating. There's also Benin Telecom but its service levels are below average. We see our current service as average and the LTE will enhance our service to above average.

Who's using what apps in Benin?

Very few apps are being used. Mobile money services are being offered by MTN and Etisalat but they have not been the success they have been elsewhere. It's still a cash economy. What's App is the number one followed by Facebook with 800,000 users. There are no services like Jumia or Uber.

You provide support to start-ups?

We've provided connectivity support to Blolab and Open SI. Jokko Labs has an incubator here and it's still going. We used to support them. TechXL is another incubator. The main start-ups offer mobile and web application development. They include: Pikizi, Chaperone and Qweezly.

Why's the transition to digital services not yet happening in Benin?

The ecosystem is not ready yet. 80% of the revenues are still coming from voice. There's very little from VAS and OTT. Very few people are using things like Netflix.

What will make it happen?

Real affordable broadband networks. That will be the game changer. Then there will be a real ecosystem of app developers. It's the same in all the Francophone countries with the exception of Cote d'Ivoire and Senegal.

Who will have the competitive advantage in the future?

Those who know how to bring things the consumer needs at the best price. Price is still an issue here. We can't reduce our prices because our network can't take any more subscribers. We will reduce our prices by two-thirds to 70% when we complete the LTE upgrade.

So what are your future plans?

There's a big need for us to go outside Cotonou to places like Porto Novo and to the second city Parakou. There's also other cities both on the east and west sides of the country further north of Cotonou. When Benin Telecom completes the roll-out of its new fibre network, we can roll-out nationally. It's supposed to happen by the end of this year or early 2018. That will also be another game changer.

The service from Benin Telecom is all sub-optimal. We need to see them finalise the national asset company and find a private partner.

Have we missed anything?

There's a new regulatory authority and we're expecting a lot of things to happen, particularly for them to push investment in the sector and attract other investors. There's also a Presidential Digital Council which meets every three months, bringing together a range of experts. We're expecting some positive actions but we haven't yet seen the results.


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