Orascom Telecom: continued resistance to Canadian market entry and changes at the top

Shaw Communications: joining the opposition to Orascom's Canadian market entry

A recent DevelopingTelecomsWatch article reported on the challenges faced by Orascom Telecom-backed nascent Canadian cellco Globalive Wireless as it seeks to intrude upon what its CEO has described as the "oligopoly" of incumbent players Rogers Wireless, Bell Mobility and Telus. We noted that the Wind-branded operator has fallen foul of foreign ownership despite Orascom Telecom supremo Naguib Sawiris having been, in the words of Terence Corcoran of the National Post, "led... into bidding for spectrum and a major role in the Canadian wireless market" only to have the carpet pulled out from under his company.

As debate rages about how poorly consumers might be served by keeping Globalive out of the country's wireless market, Telus, which is estimated by WCIS to account for around 29% of Canadian mobile subs, is urging Industry Minister Tony Clement not to overturn the CRTC ruling which has stymied the prospective new entrant's plans.

According to Steven Chase, writing today for the Globe and Mail, Telus is arguing that a relaxation of the foreign ownership rules would be unfair "because other companies stayed within existing ownership rules when bidding for frequencies in the 2008 wireless spectrum auction." Telus, which also offers wireline telephony, broadband and TV services, has joined forces with another telco headquartered in Western Canada, Shaw Communications, to publish an open appeal to Mr. Clement in the press.

Chase writes that the two operators are asking the Minister to ignore calls to reverse the October 29th decision by the CRTC. It would send "a very bad message to companies that complied with the Canadian ownership laws as they were required to do in the auction and spent over $4-billion bidding - that the rules can be changed at any time in the game," Michael Hennessy, Telus's SVP of Regulatory and Government Affairs, said in an interview.

The CEO of Rogers Communications, meanwhile, has made it clear how the wireless arm of his business would respond if the Orascom Telecom-backed startup is indeed unable to launch. The market-leading mobile operation would look to acquire the unused spectrum.

"Spectrum is a very valuable asset," Nadir Mohamed said last Friday after a speech to the Toronto Board of Trade. "It's the real estate of our business, so Rogers would be for sure interested in picking it up. I'm sure others would be."

I sense a few more twists in this tale before it becomes clear what is to become of Orascom Telecom's planned foray into North America. Meanwhile, the overall expansion strategy - of which entry into Canada's surprisingly under-penetrated mobile market was meant to be a part - will continue to be guided by Naguib Sawiris. Orascom Telecom recently announced changes to the management structure which will see Group COO Khaled Bichara promoted to the CEO role and Sawiris taking on the position of Executive Chairman.

"The telecommunication business is continuing to grow and evolve at a rapid pace, and we're reshaping OTH to be a leader in this transformation. Our strategy leverages our core strengths and capitalizes on vastly emerging trends to drive growth and profitability. Khaled is dynamic, energetic and will be able to draw on his... experience... to gear the Group into a more aggressive period of growth and transform OTH into a more innovative, integrated and agile global company," Sawiris said. "I will also remain involved in the businesses with more focus on steering the Group’s strategic growth while guiding and supporting the activities of the senior management team. I believe that the telecom market will see massive consolidation during the coming years, and with the new structure I will be able to devote more time and effort in this direction," he added.

With Sawiris now free to focus more sharply on growth opportunities, it will be interesting to see if the group will continue the taste for adventurous enterprises suggested by its decision to invest in North Korea. Koryolink is a W-CDMA operator in which Orascom Telecom holds a 75% stake. Having launched services in December last year, the company now has around 70,000 subscribers according to Cellular News.

For a glimpse inside the secretive and isolated country, this clip about the launch of the Orascom-backed MNO makes interesting viewing, even if the commentary is impenetrable to non-Koreans:

Orascom Telecom: continued resistance to Canadian market entry and changes at the top

Zimbabwe's troubles deter (most) big telcos from investing

I seem to have been writing about the world's trouble spots rather a lot of late. Continuing in that vein, let me now turn my attention to Zimbabwe, the unhappy scene of human rights abuses and economic mismanagement leading to hyperinflation and general impoverishment. A hotly disputed election and an outbreak of cholera have added to the myriad woes of the southern African nation.

The country's parlous economic condition has naturally affected telecoms operators.

On January 28, Global Mobile Daily reported that Zimbabwe's Econet Wireless had resumed post-paid services, after they were withdrawn in November due to foreign currency shortages. The resumption of post-paid services was made possible by the Government's “belated decision to allow operators to bill subscribers in foreign currency”.

That decision, however, seems to have led to price rises large enough to alarm the Zimbabwean telecoms regulator (POTRAZ), which, according to a recent Cellular News article, has now revised telephone tariffs downwards by up to 40% in a move meant to make services more affordable. This seems to be an interim measure, pending the completion of an ongoing review apparently intended to balance the affordability of services for consumers with the viability of operators.

Given the famously poor state of the country’s economy, it is not surprising that Zimbabwe remains a laggard in terms of mobile penetration, even in the context of Africa, which is itself the continent with the lowest cellular teledensity. According to the World Cellular Information Service database maintained by Informa Telecoms & Media, Zimbabwean mobile market penetration stood at just 12.26% at the end of last year, compared to a 37.73% penetration rate for Africa overall.

This difficult market is contested by three cellcos. Econet Wireless is the dominant player, with 59.61% of the market by December 2008. Last month Global Mobile Daily reported that POTRAZ had invited Econet Wireless and its two existing competitors to apply for 3G licenses. The market-leading MNO has reportedly been ready to offer 3G services since summer 2007, but the commercial launch has been delayed by the lack of necessary frequencies that can only be allocated by the regulator, according to the GMD article.

The other two players are state-owned NetOne Cellular (25.51% share) and Orascom Telcom-backed Telecel Zimbabwe (14.88%). Willingness to Invest in countries whose political and economic climates are not to the taste of other telcos is something of a recurring theme for Egypt's Orascom Telcom. The company made headlines last year by offering mobile services in secretive international pariah North Korea. Other large international groups, however, are strikingly absent from the Zimbabwean scene. None of the bigger African mobile empire-builders - MTN, Zain, Vodacom, Orange - have made a move on what is a decent-sized market with a population of over 13 million. My feeling is that it will not be until there is a serious improvement in the country's overall prospects that any other major groups will be tempted to set up camp in Zimbabwe.

Zimbabwe's troubles deter (most) big telcos from investing

Adventures in telecoms socialism

In January, writing an article for the Com World Series blog, I discussed the links apparently being formed across Latin America by state-owned telecoms operators from countries with left-of-centre governments. The starting point was the news that Venezuelan incumbent telco CANTV was considering a strategic partnership with Ecuador's beleagured CDMA MNO Alegro PCS. I mentioned my own enjoyable trip to Caracas in April 2008, during which I had the opportunity to visit CANTV HQ. The operator had been renationalised by President Hugo Chávez in 2007. The external affairs representative whom I met was keen to tell me about how the organisation was looking to develop partnerships with telcos in politically sympathetic states such as Cuba and Nicaragua.

At that point, I was only aware of Latin America as an arena in which state-owned telecoms service providers from countries with left-leaning governments might look specifically to markets run by political fellow travellers for new opportunities.

Last month, however, I learned from a brief Global Mobile Daily report that Vietnamese operator Viettel, owned by the nation's military, has selected Huawei and Ericsson to provide equipment for expanding its networks overseas into North Korea, Cuba, and Venezuela. The report notes that the operator has yet to enter any of these markets, and states that, according to Viettel Deputy Director Tran Phuoc Minh, discussions are planned with telecoms authorities in each country.

This is just the latest move in an international expansion strategy with which Viettel has already made progress. Last month, Viettel's subsidiary in Cambodia, using the Metfone brand, officially launched mobile services. The unit is said to have over 1000 base stations supported by a 5000km fibre-optic network linking all provinces in Cambodia. The new operation reportedly attracted 500,000 subscribers in its first three months of trial services. A Saigon Times article on the operator's foray into neighbouring Cambodia indicates that the new cellco will target low-income subscribers with a wide range of low-priced services and packages. Viettel Deputy General Director Nguyen Manh Hung is quoted as saying that this approach is not only about customer acquisition but is also intended to "contribute to society".

Viettel, the article states, also announced the provision of free Internet services for nearly 1000 Cambodian schools within the next five years. Rural rollout seems to be high on the Metfone agenda, with the operating planning to "extend its coverage to Cambodia’s remote villages and islands."

Meanwhile in Venezuela, CANTV's mobile arm Movilnet is set to launch a low-cost mobile phone on the local market. A Telecompaper report this Thursday states that the device, dubbed 'El Vergatario' is the first mobile handset produced in the country. According to Movilnet President Jacqueline Faria the device will be the cheapest available in Venezuela. To be launched for Mother's Day in May, the CDMA phone will be available for VEF 30 (USD 13.95). El Vergatario will be produced at the Venezuelan Telecommunications Factory (Vetelca), a joint stock company, in which the Venezuelan state holds an 85% stake, with the remaining 15% owned by ZTE. The article suggests that Vetelca hopes to sell around 600,000 Vergatarios this year.

Movilnet's subscribers seem to be a remarkably loyal bunch and the country's mobile market overall is one in which the three competitors' share of the subscriber base has remained largely unchanged for some time. Movilnet's competitors have not remained complacent. Movistar Venezuela has been steadily migrating customers from a legacy CDMA to a newer GSM network since March 2007 and has more recently launched W-CDMA services. Digitel, owned by Venezuelan businessman Oswaldo Cisneros, is also working to roll out 3G services in two stages, starting this month, according to local news portal Ciberespacio. The operator currently offers Huawei USB modems and by mid-2009 will integrate voice and data services.

OK, comrades. That's all I have on telecom-socialism for now.

Adventures in telecoms socialism

The mobile phone: the tool of freedom fighter and terrorist alike

These are turbulent times for some mobile operators in South Asia. Earlier this week, India's oldest communications service provider, state-owned BSNL, had to shut down all of its mobile network base stations along a 500 km stretch of the border with Nepal. According to an Economic Times article, this was due to security concerns. "All the BTS towers of BSNL mobile established in all Nepal bordering districts including Basti, Balrampur, Bahraich, Gorakhpur, Shrawasti, Siddharthnagar and Maharajganj have been jammed," a Government source said on condition of anonymity." By taking this step we have tried to chop off a helping hand of those involved in anti-India activities on Indo-Nepal border," the official added.

This comes very soon after the mobile operators of Bangladesh lost revenues during the recent mutiny by members of the Bangladesh Rifles regiment. In a Daily Telegraph report, I read about the Bangladesh Telecommunication Regulatory Commission asking the country's cellcos to cut off services.

Further east, the tiny minority of Burmese citizens with access to mobile services had services suspended in during the 2007 protests led by Buddhist monks.

Even for those of us lucky enough to live in quite stable countries, it is easy to imagine how mobile devices could be used to accelerate the spread of dissent during times of unrest. The Burmese Government certainly takes no chances. Services are provided by a lone operator - the state-owned Myanmar P&T - to just 0.59% of the population (by December 2008), according to the World Cellular Information Service. It will not surprise many readers to see the close correlation between very low mobile penetration and a country ranking right at the bottom of the world press freedom index compiled by Reporters Without Borders. Burma is ranked 170 out of 173. Other countries in the bottom five are Cuba (2.93% mobile penetration), North Korea (0.02%) and Eritrea (2.13%).

More encouraging is the 19.51% mobile penetration rate of Turkmenistan. The Central Asian, former Soviet Republic was until recently notable for a long list of peculiar restrictions placed on its citizens. Former President Saparmurat Niyazov enforced a ban on satellite dishes, beards, long hair, ballet, opera and recorded music. These restrictions are now being gradually relaxed by the new President Gurbanguly Berdimuhamedow, who came to power after the death of his predecessor in December 2006. Although Turkmenistan continues to attract criticism as a repressive one-party state, the relatively more open society since the passing of the country's first President seems to correlate with the steady increase in the take up of mobile services. Penetration was just 4.40% around the time the Türkmenbaşy died in office. A year later this figure had doubled, growing faster still during 2008.

I am sure many applaud the mobile phone and Internet access as being useful tools for anyone seeking to weaken the grip of a repressive regime. These sames technologies, however, are equally useful to those keen to change the world in ways which do not meet with approval of the western media - hence the network suspensions in Bangladesh and on the India-Nepal border.

The mobile phone: the tool of freedom fighter and terrorist alike