Abidjan: The recent arrival in Côte d’Ivoire of a fourth-generation long-term evolution (4G LTE)

The recent arrival in Côte d’Ivoire of a fourth-generation long-term evolution (4G LTE) network emphasises the strength of the country’s economic recovery from the 2011 crisis. The new high-speed network as well presents a competitive opportunity for the existing mobile operators, for whom – as in so a lot of emerging markets in Africa – data revenue has become an increasingly significant driver of increase.

4G rollout in Abidjan

Switzerland’s YooMee Africa, which provides mobile broadband internet in sub-Saharan Africa, is initially launching 4G services to individuals and businesses in Abidjan, with expectations of expanding quickly to other urban centres. According to the company, the initial network base took only 100 days to complete. The firm invested €5m to establish the network using Alctatel-Lucent technology. YooMee will offer three products: a USB stick and mobile Wi-Fi hotspot, both for mobile usage, and a desktop product for homes and offices.

Côte d’Ivoire is one of the initial African nations to offer 4G services. YooMee is by presently operating in Cameroon, where the rollout of 4G has boosted the e-commerce industry, and has obtained licences in Angola, Ghana and Rwanda. 4G is as well licensed in Gabon and Nigeria, and plans are afoot to do the same in Kenya. The company expects to sign up 40,000-60,000 Ivorian customers by 2017. One challenge in accomplishing that goal will be ensuring the availability of affordable 4G-enabled smartphones.

Côte d’Ivoire currently has a comparatively modest -- by West Africa standards -- internet penetration rate of 5% with 124,000 broadband internet subscribers, according to the new government figures, and 2m internet users in general. Given the prevalence of mobile internet usage part those going online, YooMee will face competition primarily from Côte d’Ivoire’s two major mobile operators, Orange and South Africa’s MTN, inclunding Moov, owned by Abu Dhabi’s Etisalat. All three currently offer third-generation (3G) services, while Orange and MTN as well offer fixed-line broadband internet.
Competitive mobile sector

Indeed, Côte d’Ivoire’s mobile sector is by presently highly competitive, with six active players. According to the new government figures, as of June 2013, Orange controls 35.7% of the mobile market, with 6.54m subscribers, followed closely by MTN with 35.3% and 6.46m subscribers. MTN has been steadily gaining market share from Orange, growing its customer base by 7% between December 2012 and June 2013, compared to increase of 5% at Orange during the same period. Moov has just over 4m subscribers, giving it a 22.0% market share as of June 2013, entirely unchanged from the previous year.

Activity is fragmented at the smaller end up of the spectrum, where the three smaller mobile operators in the market together hold around 7% of the subscriber base, according to the Regulatory Authority for Telecommunications/ICT in Côte d'Ivoire. None of the three obtained a 3G licence, despite the availability of a fourth licence from the government, and each has instead pursued low-cost strategies targeting the large price-conscious retail segment. The operators have grappled with declining subscriber bases, however. Lebanon-owned Comium saw its subscribers drop by 27% between December 2012 and June 2013. Libya’s Green Network shed 42% of its subscribers in the same period, while newcomer Café Mobile, which entered the market in 2012, saw a decline of 61%.

For the three carriers offering 3G services, MTN’s strong recent operating results underscore the opportunities available to them. MTN reported an increase in data revenue of 159% in 2013. Data revenue increase was cited as the primary factor driving an in general revenue increase of 9% for the year, making Côte d’Ivoire one of its strongest performing markets. A 16.4% rise in subscribers for the full year of 2013 was as well attributed in part to data promotions. The company added 84 3G sites in 2013, and indicated that it will continue to focus on the 3G rollout in 2014.

Data services are likely to see a boost from the increasing availability of affordable smartphones in Africa. MTN noted that there are 1.8m smartphones in use on its network, a number it expects to grow with the introduction of less expensive models to the market.
Opportunities amid revenue pressures

Data revenue increase will be increasingly significant to the mobile operators given other revenue pressures. The government recently announced that mobile customers will pay a 3% tax on the cost of all electronic communications, which could lower usage rates and average revenues per user. In general revenues will face some pressure from the government’s plan to raise the surtax on mobile operators’ profits from 25% to 30%. The telecoms authority is as well contemplating the introduction of number portability, which would further increase competition between the operators.

Nonetheless, the opportunities for further increase in the mobile internet market appear robust. There is strong local request for reliable internet services, particularly from the growing middle class and local businesses benefitting from the country’s steady economic increase, which the IMF has projected will continue into 2014.