16 June 2017

Comoros: Second Operator Telma Shakes Up a Former Monopoly Market With Low-Entry Smartphones and Cheaper Data and Voice Calling

London — The implementation of an interconnection agreement between Comores' new second operator Telma and the incumbent Comores Telecom last week has opened up the market to a new level of competition. Russell Southwood looks at what's happened since the agreement was signed.

After much traditional foot-dragging behavior of the kind incumbents everywhere display, the interconnection agreement signed between Telma and Comores Telecom at the end of May has finally been implemented. The incumbent put the delays down to technical problems.

Even before the interconnection agreement was implemented Telma had launched in December 2016 and was offering international calling to France and neighboring island Mayotte at domestic rates. The Comores regulator ANRTIC sent a letter to Telma asking it to increase its prices, possibly a first for an African regulator. The letter was leaked to the press, which as one local observer said "went down like a lead balloon." The then CEO Alain Brillard left shortly afterwards although Telma said this had been planned as he was only there to implement it5s network roll-out.

Telma bundles range from FC500 (US$1.14) for 15 of everything for a day (minutes, SMS messages, MB of data) to FC30,000 for 600 minutes, 500 SMS, and 5 GB of data (US$75.22). It also offers unlimited night time calling from FC1,000 (US$2.27) to FC20,000 (US$45.59) for a month. It offers 1 GB of Internet for FC5,000 (US$11.39) over a month.

All this is offered over a network that was implemented as a 4G/LTE network from the start and its base stations (150 between three islands) already cover 60-70% of the territory of this small island. It is planning to introduce a mobile money package soon. It has been promoting low-cost smartphones in the market and the number has gone up considerably:"I think that there's much higher use of the Internet. There's no statistics but I think it has gone up exponentially."

Telma would have liked to share infrastructure with Comores Telecom but was not allowed to do so by the regulator. However, it remains open to the idea of infrastructure sharing.

Without the implementation agreement, Telma had launched anyway and by the beginning of May it had passed 100,000 subscribers in an island of just over 800,000 inhabitants. According to ITU statistics for 2016 there are a total of 460,000 mobile subscribers, giving it a 21% market share and rising.

As a local observer told me:"When there was no interconnection agreement, people held on to their Comores Telecom SIM. Now there is an interconnection agreement, they may go back to having one SIM card." This situation may mean that the overall number of mobile subscribers is over-stated.

The World Bank formally cleared the disbursement conditions for the FLY-LION3 cable on 30 April which will give up to US$12m to the cable's consortium. The cable will initially connect Moroni and Mayotte but may eventually be extended to Madagascar. Workd Bank financing was meant to ensure that the landing station was spun off as a separate SPV in which the Government, Comores Telecom and Telma would all become shareholders. This hasn't happened yet but may well do so in the future.

The impact on Comores Telecom has been fairly decisive. It has laid off 1000 of its staff but it's hard to know how many are left as it is fairly secretive about its payroll:"By any measure of comparison, it is grossly overstaffed."

"It was relatively slow to react to the threat of competition and for all the legal challenges and obstacles it's put up to the interconnection agreement, it hasn't succeeded in undoing or reversing it."

Worse still it took a US$31 million loan to build a fibre cable (Avassa) across three islands from Grande Comore to Anjouan and Mayotte. The loan came from the Chinese to finance Hengtong Marine Cable System Co. and Huawei Marine Networks Co to build it.

Comores Telecom was supposed to have been privatized but political opposition has meant thus far it has not gone ahead. But whilst the few who work for it may suffer in the future, for the rest of Comores' citizens increased competition can only really be described as a good deal.

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