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May 20, 2002

DRC prepares for big cellular investment

DRC|Africa|Environment|Mining|SECURITY|Systems|Africa|Democratic Republic Of Congo|DRC|Services|Systems|Operations
DRC|Africa|Environment|Mining|SECURITY|Systems|Africa|Democratic Republic Of Congo|DRC|Services|Systems|Operations
© Reuse this When Africa’s biggest mobile operator Vodacom offered $5 of free airtime to new clients in the Democratic Republic of Congo it sparked a mini-riot.

Security guards were called in to break up shoving matches between hundreds of people in the lobby of a flashy Kinshasa hotel, where Vodacom booths had been set up ahead of the launch earlier this month.

And when Celtel, currently Congo’s leading provider, cut its rates by 20% in anticipation of Vodacom’s launch, traffic shot up and clogged the company's networks for days.

Demand for mobiles is huge in the war-torn central African country and Vodacom Congo will become the eighth network provider. Most arrived in the past 18 months.

The former Zaire was the first African country to have mobile phones with the launch of a small, costly network in the mid-1980s, but only about 150 000 of Congo’s 55-million people currently use them.

Congo’s State-run fixed network, numbering around 20 000 landlines according to the most recent estimates, is unreliable. Users complain of regular interruptions to services and say numbers can be arbitrarily assigned to new users, making mobiles a more popular option.

Executives like Henry Stephan, Vodacom Congo’s chief operating officer, are betting on a surge of new users.

“We expect the number of mobile phone users to jump to about 600 000 in the next five years and then reach one million within a decade,” Stephan said.

Others estimate the market could reach three-million users.

Vodacom plans to spend $370-million in the first year of operations – the largest non-mining investment in Congo’s history according to a report on the country’s telecoms by BMI-TechKnowledge, an African IT and telecoms research house.

The rapid growth in Congo reflects an Africa-wide explosion in mobile use, with user numbers rocketing from two million in 1998 to more than 30-million by the end of 2001, according to the United Nations’ International Telecommunication Union.

The organisation predicts 100-million Africans will own cellphones by 2005 and says the number of mobile users has already outpaced that of fixed-line phones.

Africa has had mobiles since the 1980s, but they only really took off in the mid-1990s with the arrival of pre-paid billing.

Pre-paid cards allow companies to collect money in places where steady incomes, fixed addresses, credit checks, reliable banking and postal systems do not exist.

Under the late dictator Mobutu Sese Seko, who was ousted in 1997, mobiles were the preserve of an elite of barely 20 000 in the former Zaire who paid up to $3 per minute for local calls.

“We have tried to make phones more accessible to the masses,” says Vic Subramanian, marketing manager for Celtel, which serves two thirds of Congo’s users.

Industry analysts say that not only can better communications encourage business and drive economic growth, but they also lead to greater democratic freedom in countries like Congo that have known decades of dictatorship.

“There is a correlation between mobile communications and the spread of democracy,” said Dobek Pater, a senior analyst with BMI-TechKnowledge.

The big challenge for the Congolese is bringing the vast mineral-rich territory back together after four years of war that have seen it carved up into fiefdoms ruled by rebel factions and an unelected government.

Recent peace talks fuelled hopes that the former Belgian colony might turn the corner, but after eight weeks they broke up without an overall agreement and some analysts warned of a possible return to all-out war.

“With the war and the constant government hassles it is a high risk market and a difficult environment to work in.

“How do you explain to your head office that you have to give 100 free phones to government ministers and their assistants and friends,” said one telecoms official who asked not to be identified.

Vodacom is half owned by South Africa’s State-controlled telecoms utility Telkom. Britain’s Vodafone owns 31,5% of Vodacom, South African group VenFin holds 13,5% and the investment holding company Hosken Consolidated Investments the remaining 5%.

It began its operations in the three major markets in Congo -- the capital Kinshasa, the diamond-mining city of Mbuji-Mayi and Lubumbashi, capital of the mineral-rich south-eastern province of Katanga.

It has plans to roll out into new markets over the coming year, including rebel-held areas like Goma in the east.

“If we can get it so that people in Goma can talk to people in Kinshasa it will only help bring the country together,” said Vodacom’s Stephan.

“This country has such potential it is incredible.” – Reuters © Reuse this Comment Guidelines (150 word limit)
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