West Africa focus: Mali gets competitive as Senegal faces a broadband monopoly

New information on the telecommunications sectors in two West African countries details the successes of privatisation in Mali, as well as the problems faced by Senegal’s Internet market.

Home to one of the world's most isolated cities, the fabled Timbuctu, and with a generally challenging geography for the provision of telecommunication services, Mali still has market penetration rates below African averages in all market sectors, including mobile.

France Telecom was extremely successful when it entered the market as the second mobile and fixed-line operator in 2003 and quickly amassed more than 80% market share under the Orange brand, offering converged fixed, mobile and broadband Internet services.

The national telco, Sotelma, with its mobile subsidiary Malitel, was privatised in 2009 when a 51% stake was sold to Maroc Telecom, itself majority owned by Vivendi of France. The fresh capital and management has enabled the incumbent to compete much more aggressively.

In addition, the government is planning to license a third mobile operator. Third generation mobile services have not yet been launched. The introduction of ADSL, WiMAX and mobile data services has started to accelerate growth in the Internet and broadband market, but Mali's landlocked location makes it dependent on neighbouring countries for international fibre bandwidth, which has kept prices high.

Improvements in this sector can be expected from the arrival of new competitive international submarine fibre systems to the region in 2011 and 2012.

Meanwhile, Senegal's economy has grown at 5% per annum on average since the mid 1990s and has only moderately been affected by the global economic crisis.

Representing around 6% of the country's GDP, the telecom sector is dominated by publicly listed Sonatel, the highly profitable national telco which is now operating under France Telecom’s Orange brand following its partial privatisation in 1997. The government is planning to sell part of its remaining stake to other investors.

Sonatel has one of the most efficient telecom networks in West Africa, offering some of the lowest retail and wholesale prices in the region, although they are still high by global standards. The company is also the market leader in the mobile sector which it has shared with Millicom’s Sentel GSM (later rebranded Tigo) since 1999.

Competition in the fixed-line sector was introduced when Sudan’s Sudatel launched as the second national operator (SNO) in early 2009 under the name Expresso. Its licence also includes the country’s third mobile concession. The new entrant initially chose CDMA2000 technology to serve both market segments but is currently migrating to GSM, including 3G mobile broadband technology.

However, the licensing of new operators has not always been transparent in Senegal. Both Sentel’s and Sudatel’s licences were awarded under controversial circumstances, and Sentel’s licence is being challenged by the government.

Although mobile market penetration has passed the 60% mark, the average revenue per user in Senegal is relatively high. A wide range of value-added services is available to subscribers, including mobile Internet access.

Development of the Internet market has been hampered by Sonatel’s monopolistic pricing of bandwidth on the only high-capacity international submarine fibre optic cable serving the country. Despite this, broadband services in the country are relatively advanced, including broadband TV and converged triple-play services.

Sonatel has progressively reduced its prices following the arrival of a second international fibre optic submarine cable in 2007, with two more scheduled for 2011 and 2012. On the retail level, however, some broadband prices have come down in 2010 while others have gone up.