Zamtel’s privatisation could increase its market share & competition – Onda Analytics

According to a new report from Onda Analytics, Zamtel’s privatisation could result in its market share increasing by 15% under its new owner within six years. The report, entitled The Privatisation of Zamtel,  predicts that a major operator will take over the Zambian company, creating serious competition for the country’s existing mobile operators Zain and MTN. Interested parties, including MTNL, Telecel Globe (a subsidiary of Orascom), Telkom SA and  Vimpelcom officially began due diligence this week.

The report predicts that with the right strategy, Zamtel’s mobile market share will grow from 4% in 2009 to 19% by 2015, increasing its subscriber base from 160 000 to 1.8 million. The strategic importance of Zamtel’s other assets – including its fixed line network and WiMAX network – is analysed in the report, which focuses on how Zamtel’s new owner must act in order to turn the operator into a significant mobile player in Zambia.

Lead report author Daniel Jones said “The new investor will have to turn around an operator in crisis. A strategy along the lines of a new entrant will be needed, as Zamtel has fallen further and further behind in the mobile market. High mobile tariffs and low penetration in Zambia present an opportunity for the buyer. Aggressive price competition and going after subscribers new to the market will help Zamtel grow its market share and challenge its competitors”.

In addition to increasing revenues, Zamtel must be wary of spiralling costs, which precipitated the current privatisation process, says the report’s co-author, Tom Harden: “Zamtel’s bloated cost base, as a result of its large headcount, has led it to insolvency…all the operator’s unionised staff have agreed voluntary redundancy. A massive staff reduction programme will be need to be carried out by whichever company takes over Zamtel. The union has recognised this, hoping to get the best redundancy packages for its members by negotiating the government now, rather than the new owner later”.

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