Etisalat Reports Strong Growth in African Subscriber Base

The 3.9 million GSM subscribers in sub-Saharan Africa at the end of 2007 (Atlantique Telecom had 2.9 million; Zantel had 1.0 million) represent a 123% increase over the 1.75 million in 2006 (Atlantique Telecom had 1.4 million; Zantel had 355,246). Etisalat was unsuccessful in bids for Westel (Ghana), NITEL (Nigeria), and the second Kenyan fixed-line licence, but is continuing to look for new investment opportunities (see sub-Saharan Africa: 12 April 2007: Etisalat Reports Strong Growth in Sub-Saharan Africa).

• Atlantique Telecom, West Africa: Etisalat acquired a 50% stake in Atlantique Telecom (AT) in April 2005, which has six GSM operations in West Africa (Benin, Burkina Faso, Togo, and Niger) and Central Africa (Gabon and the Central African Republic) (see sub-Saharan Africa: 21 April 2005: Etisalat Buys Stake in West African Mobile Operator Atlantique Telecom). In 2007, Etisalat acquired an additional 20% in AT, taking its share to 70%, a controlling majority. And in May 2008, Etisalat announced that it had purchased an additional 12% stake, thus increasing its holding in Atlantique Telecom to 82% (see sub-Saharan Africa: 20 May 2008: Etisalat Increases Stake in Atlantique Telecom to 82%). During 2005, Etisalat acquired a licence in Côte d'Ivoire. It launched services in July 2006 under the brand name "MOOV".
  
  According to its 2007 annual report, AT had 2.9 million subscribers across the seven operations by end-2007, a 107% growth over 1.4 million at end-2006. Atlantique Telecom expects to reach the 4-million subscriber mark by the end of the year. Following the success in Côte d'Ivoire, branding for Atlantique's operations in Gabon, Benin, and Togo has now switched to the "MOOV" label.

• Emerging Markets Telecommunications Services Limited (EMTS), Nigeria: Etisalat acquired a 40% stake in in 2007, promoted by Mubadala Development Company, in what Etisalat describes as the "largest investment for Etisalat in a greenfield operation in Sub-Saharan Africa" (see Nigeria: 10 September 2007: Etisalat Enters Nigerian Mobile Market via Stake in Mubadala). EMTS has acquired a new licence to provide integrated telecommunication services in Nigeria. The licence, originally granted to Mubadala Development Company, is a 15-year renewable universal access service licence (UASL). Under the agreement, Etisalat will be responsible for managing the new company. Etisalat says that this strategic investment gives it "the opportunity to take advantage of significant synergies with current operations in West Africa (Atlantique Telecom)" (see Nigeria: 17 March 2008: Etisalat Launches GSM Services in Nigeria).

• Canar Telecom, Sudan: Etisalat increased its 37% stake in Canar Telecom to 82%, with a renewable management agreement to implement, operate, and maintain a fixed-line telecommunication network in Sudan (see Sudan: 22 November 2004: Etisalat Consortium Wins SNO Licence in Sudan). Etisalat also holds a 4.6% stake in the fixed-line incumbent Sudatel. Since the launch of service in January 2006, Canar says that it won 38% of the fixed voice and 44% of the internet market in its first year of operation, and increased its customer base by 50% during the year to take a 58% share of the fixed line market by end-2007 (see Sudan: 8 March 2006: Second Sudanese Operator Canartel Signs Up 18,000 Subscribers).
  
  During December 2006, Canar launched Sudan's first 3G wireless broadband internet services using the CDMA 2000 1X EV-DO platform, under the brand name "Canar Go". The operator had rolled out 2,300 kilometres of a national fibre-optic cable network by end-2006, which it extended by 1,500 kilometres during 2007, plus an additional 250 kilometres in major cities to reach a total of 4,050 kilometres by year-end.
  
• Zanzibar Telecom Limited (Zantel), Tanzania: Etisalat increased its holdings in Zantel from 17% to a controlling 51% in October last year (see Tanzania: 23 October 2007: Etisalat Ups Stake in Zanzibar Telecom to 51%). In 2005, the playing field changed dramatically as Zantel expanded operations to mainland Tanzania. From 100,000 subscribers in 2005, Zantel reached 355,246 by end-2006, 678,761 by 31 December 2007, and 959,209 by 31 March 2008; it has since reached 1 million subscribers (see Tanzania: 22 May 2008: Zantel Reaches 1 mil. Subscribers in Tanzania).
  
  When Zantel initially entered the mainland market, its operational territory was limited to Dar es Salaam, with national service being provided through a roaming agreement. In a significant forward-looking move, the existing core network was replaced in 2007 with new state-of-the-art technology, and a nationwide roll-out of Zantel's own infrastructure was initiated. In the first half of 2008, Zantel's network will provide coverage to approximately 65% of the population. By end-2008 this will increase to more than 75%. Zantel is also participating in the EASSy submarine cable project.
  

Outlook and Implications

In terms of its foreign investment strategy, Etisalat said that "its core strategy for market selection remains woven around low penetration and high population. This is backed by strong market research on high growth potential, consumer behaviour, and value creation opportunities. As it expands its global footprint, the Corporation has been conscious of ensuring that it optimises the synergies existing in regional markets such as the Middle East or West Africa. Aligned with the Corporation's mission of extending people's reach, other promising additions to Etisalat's investment portfolio can be expected in 2008 and beyond."

In terms of regional connectivity, Etisalat is participating in a number of submarine cable systems.

• TEAMS: The operator signed a memorandum of understanding (MoU) with the Kenyan government in November 2006 for the construction of a submarine cable (see Kenya: 21 November 2006: Kenya Signs MoU with Etisalat for New Submarine Cable). Called The East African Marine System (TEAMS), the proposed submarine cable will link the city of Mombasa with Al Fujairah. According to Balancing Act, the Kenyan government will hold a 40% stake in the project, Etisalat will take a 20% stake, and the remaining 40% will be set aside for East African investors.

• FALCON: Canar Telecom is participating in two submarine cable projects. In November 2005, Canar signed an agreement to invest in FLAG Telecom's FALCON cable and commissioned the FALCON landing station at Port Sudan during the year (see Sudan: 21 November 2005: Second Sudanese Fixed-Line Operator Invests in FALCON Submarine Cable).

• EASSy and others: Both Canar Telecom and Zantel are participating in the Eastern African Submarine System (EASSy). Etisalat also signed a construction and maintenance agreement for the proposed FOG2 submarine cable in January 2006 (see Middle East and North Africa: 23 January 2006: Etisalat, ITPC, STC Sign Agreement for FOG2 Submarine Cable), and signed an MoU for the proposed India-Middle East-Western Europe (I-ME-WE) submarine cable along with Egypt, Saudi Telecom Corporation (STC), VSNL, and Telecom Italia Sparkle (see Middle East and North Africa: 24 October 2006: Middle Eastern Operators Sign MoU for I-ME-WE Submarine Cable).