News, views and commentary from the telecoms sector across emerging markets and developing countries worldwide

Saturday, 4 July 2009

Somalia: while daring operators turn a profit, it's the bad news that tends to reach us

Somalia - often in the news, but, sadly, this rarely seems to be for positive reasons.

Just this week, heavy fighting in Mogadishu has caused at least twenty deaths, with fierce clashes between Government forces and an Al-Qaeda-linked rebel group battling to oust the country's President. Meanwhile, Minority Rights Group International (an organisation which campaigns worldwide to protect disadvantaged minorities and indigenous peoples) has stated that Somalia remains the world's most dangerous country for minority groups.

Amidst the chaos of the civil war which has gripped the country since 1991, Somalia has sometimes gained strong praise for the surprisingly good condition of its telecommunications infrastructure. For example, Industry-watcher Paul Budde, with whom I once had the pleasure of working to create an Oceania region telecoms sector conference in Sydney, wrote in 2005 that although Somalia had "no government" and was "lawless and war-torn" with "no banking system, no national telecoms operator, no court system" and with nobody paying taxes, the country nevertheless had a thriving telecoms business.

Paul wrote about how when national operator Telecom Somalia collapsed, their employees continued to work, setting up a de facto privatised company in 1994. Paul also described his amazement at learning about how this entity and two other mobile operators later voluntarily agreed to introduce operational separation and combined to set up a separate infrastructure to be used by all three of them. He also wrote about how despite the lack of a banking and court system people pay their bills, "and even the war lords don’t interfere as they all have a vested interest in good telecoms." Paul was also surprised at broadband speeds available in the Mogadishu area and the speed with which customers could have a landline installed.

Three years later, an African Press Agency report also described telecommunications as one of the rare business successes in the strife-torn country. This report asserted that it is easier to set up a telecoms business in Somalia than in some other African countries because there is no need to get a license and there is no state-run monopoly hindering new competitors from entering the market.

As things currently stands, the mobile market is, according to the World Cellular Information Service from Informa Telecoms & Media, contested by no less than six telecoms operators, all of which have deployed GSM networks. These are (in order of estimated market share):
  1. Telecom Somalia - 37.87%
  2. Hormuud Telecom Somalia - 18.74%
  3. Telsom - 13.71%
  4. Somafone - 13.27%
  5. NationLink Telecom - 9.90%
  6. Golis Telecom Somalia - 6.52%
My understanding is that because of the way de facto control of the country is fragmented, these operators do not all cover precisely the same areas. As a nation state, Somalia exists largely in a de jure capacity. A weak but largely recognised central government authority, the Transitional Federal Government is just the latest in a series of ineffectual, externally recognized governing authorities. In reality, control of the north of the country resides in the regional authorities. Of these, Puntland, Northland State, Maakhir, Galmudug, acknowledge the authority of the TFG and maintain their declaration of autonomy within a federated Somalia, while Central, Southern Somalia and Kismayo are in the control of the Islamic Courts Union and insurgent group al-Shabab. Baidoa is currently the seat of the TFG, and Somalia's commercial centre. On the other hand, the Somaliland region in the north, with its capital in Hargeisa, has declared independence and does not recognise the TFG as governing authority. Its self-declared independence is unrecognised internationally due in part to opposition from the TFG and other countries, such as neighbouring Ethiopia, which fear ensuing secessionist movements.

This fragmentation of the country is reflected in the coverage areas of the operators, most of which offer a range of fixed-line services in addition to their mobility propositions. Golis Telecom Somalia, for example, operates in North East Somalia, offering fixed and mobile services in both Puntland and the self-declared independent state of Somaliland. Hormuud Telecom Somalia, meanwhile, describes itself as the leading telecommunication services provider in Southern Somalia.

Strikingly absent from the list of six cellcos/telcos above are any big names. No multinational telecoms group has the stomach for operating in an unregulated free-for-all and in a country whose security situation continues to be so parlous. I daresay this will not change for as long as Somalia continues to be wracked with conflict and continues to suffer from the absence of settled and fully legitimate government.

So, despite the fact that some daring, entrepreneurial operators are making a profit from providing life-improving services in this troubled country, it seems that for now, even in the context of telecoms sector news, it will largely be bad news that filters through to the outside world.

One recent example of this concerns pirate activity off the Somali coast delaying installation for SEACOM, one of three undersea cables set to deliver vast improvements to the capacity of East Africa's telecoms and Internet infrastructure. Anything which delays these improvements coming on line is highly regrettable because, as a recent Reuters report points out, while the three subsea cables and many on-land infrastructure projects are helping to boost communications, sub-Saharan Africa continues to be hampered by excessive prices for broadband and mobile services. The report features comments from Mohsen Khalil, World Bank Group Director for Global ICT who says that the typical monthly mobile bill was still USD 10-12 in Africa, while in Southeast Asia many operators run profitable operations with average bills of USD5 or less.

Another incident whose impact will be felt much less widely, but is nonetheless extremely horrible, took place in an area controlled by the insurgent group al-Shabab. According to a recent Cellular News report, a court under the control of al-Shabab has ordered four young men suspected of stealing guns and mobile phones each to have a hand and a leg amputated.

Because of the mobile handset angle, this pops up as a Somalia-related item for various telecoms sector news sources. Regrettably, it feels like stories of this kind continue to outnumber more positive items. Communications services undoubtedly improve lives in developing countries, but the good work of people in our sector will continue to be hampered anywhere where ongoing conflict prevents the establishment of the legitimate and internationally recognised rule of law.

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