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ICT sector ready for the next step

Article - May 21, 2015

The Republic of the Congo has four main mobile network companies, but the sector is now preparing to extend communications networks across the country

The Republic of the Congo’s telecommunications industry has gone from almost nothing in 1997, when the Central African country went through a brief civil war, to a situation where today nearly 95% of the country’s population has access to wireless services.

This dramatic transformation has occurred at the same time as widespread economic growth has been felt across the republic, largely driven by reforms from President Denis Sassou Nguesso.

While the economy has expanded rapidly over the past decade thanks to vast oil reserves, the country has spent some of the income derived on improving not just transportation infrastructure but also its telecommunications sector. Such investment has been a key element of President Sassou Nguesso’s attempts to ensure the Republic of the Congo is not just well placed logistically but also able to communicate with its near neighbors and international partners quickly and effectively to drive further investment and growth.

Current situation

Keeping up to date with such a fast-changing environment has not been easy, however, and the country had to rebound after its communication network was badly affected during the conflict in the late 1990’s, as Thierry Lézin-Moungalla, Minister of Post and Telecommunications, explains.

“In terms of infrastructure, our country suffered from quite serious conflicts, and there was no remaining telecom infrastructure in 1997,” he says. To change that, when President Sassou Nguesso came to power in October 1997, and when the civil war formally ended, he introduced a strategy called Project of National Coverage, which was designed to give the entire Congolese population access to telecommunications networks.

The Project of National Coverage is now more than a decade old but its effects are still being felt. The initial proposals outlined in the plan have taken the country a long way towards that initial target of universal coverage, Mr. Lézin-Moungalla says. It is also apparent that the Republic of the Congo’s citizens – and its businesses – are now reaping some of the benefits.

“The program has enabled us to today have coverage in fiber optics between the two major cities of Pointe-Noire on the Atlantic coast, and Brazzaville, the political capital,” Mr. Lézin-Moungalla notes.

The fiber optics network is being extended towards the northern part of the Republic of the Congo and is already “connected in the Atlantic Ocean, to the international broadband system in the framework of an international project called the WACS,” or West African Cable System, the minister says. Mr. Lézin-Moungalla adds that WACS has “brought together states and operators in Europe, Africa and Asia,” reinforcing the Republic of the Congo’s ambitions to work not just with its near neighbors in Central Africa but also partners across the globe.

There are also numerous other projects currently under way that will bring similar fiber optic services to the country’s main towns and cities and, eventually, administrative centers in the 12 départements, or regions, that make up the 905,600-square-mile nation, Mr. Lézin-Moungalla says.

The plan, according to the minister, is to bring high-speed communications “as close as possible to the people,” including those who live deep in the countryside. And Congo has already made considerable advancements in providing an effective and reliable communications network: almost the entire country has telecoms coverage today, and 95% of Congolese have access to mobile phone services, Mr. Lézin-Moungalla says.

The main wireless players

In its annual report for 2014 on Congo’s telecommunications sector, released in March this year, the Postal and Electronic Communications Regulatory Agency (ARPCE) said that among the republic’s main cell phone service providers – including MTN, Airtel and Azur Telecom – there were 4.5 million subscribers as of December 2014, covering nearly the entire population of 4.66 million.

The three telecoms companies generated revenues of CFA282.2 billion ($465.4 million) in 2014 and carried 4.1 billion minutes of voice traffic and 3.5 billion text messages, the report says, reflecting the huge uptake of mobile services and the demand that telecommunications companies are attempting to meet.

What was also clear in the report was the growth in the number of subscribers, with MTN seeing its numbers climb by 14.1%. Airtel rose by a massive 47%, mainly because of the acquisition of telecoms operator WARID during the course of 2014; and Azur had nearly a third more subscribers by the end of the year than it had in 2013, the ARPCE report says.

Although Airtel and MTN clearly dominate Congolese telecommunications, with market shares of 48% and 44% respectively, other players are also operating in the industry, such as Congo Telecom.

Freddy Tchala, CEO of MTN Congo, a branch of South African telecoms giant MTN, says providing its staff and executives with the ability to embrace customer demands’ has been key to his company’s growth and strong position.

“We give our employees the freedom to act in the operations and decision making processes, so our offers are within the context of what the market wants. We also have a clear theme and a good definition of what our offer is, which is not always the case with our competitors.

“We understand what the most relevant services are,” continues Mr. Tchala. “We have the ability to develop appropriate offers for our customers, regardless of their social class, and we have the network quality and coverage to allow us to do this. We try to add to our services and will use innovation to remain a market leader. In addition, we are very committed to deeply understanding our customers so we are investing heavily in customer relations.”

Elsewhere fellow wireless operator Azur has forged a pact with the Société des Postes et Épargnes du Congo (SOPECO), the country’s postal service, that will see the two companies sharing their services to improve the brand’s visibility. The arrangement will see SOPECO selling Azur products and services as part of the telecom company’s strategy to expand its operations across more of the country, and was described by Brigitte Olga Manckoundia, Executive Director of SOPECO, as a “win-win” arrangement.

“As part of this collaboration, we will place at the company’s disposal our network and our staff who will sell the products. However, we will receive commissions because it will not be a free service,” she explains. Jean-Bruno Obambi, Group CEO at Azur, adds that the deal will mean customers across the country will now be able to access the company’s services, substantially increasing its presence nationwide.

This competitive environment has also driven Airtel to improve its services, says its managing director, Mr. Ndego, with the company enabling citizens to use their devices across Africa regardless of borders.

“This inclusive economy has opened up a new area to empower African people,” he says, adding that the company launched its one network service in 2008 that allows customers to travel throughout 17 countries – including India – where it operates without paying roaming charges.

Such developments reflect why the mobile telecommunications sector in the Republic of the Congo is considered a mature market, but multimedia and Internet data applications are only just gaining a foothold in the country, says MTN’s Mr. Tchala, and there are considerable investments to be made in the sector.

“For the past one or two years, the market in Congo has been in transition, as 3G networks expand,” he adds. With nearly 84% of the country’s population able to read and write, and with a high standard of living compared to neighboring countries, the Republic of the Congo is an attractive market for telecommunications companies, as well as being a fertile proving ground for new technology, Mr. Tchala says.

“I would say Congo is a laboratory for technology trends in Central Africa,” he continues. Mr. Tchala predicts “exponential growth” for the Republic of the Congo’s telecommunications industry, thanks to what he calls the “seemingly infinite new cell phone technologies” that are coming onto the market, and the government’s efforts to diversify the economy.

He describes diversification as “the future for the telecoms sector” and adds that as new industries and new business practices arrive, he expects “to see the importance of communication and media, in the broad sense of the word, expand.”

Gateway to Central Africa

Telecoms minister Mr. Lézin-Moungalla adds that the telecoms market in the republic operates as a “totally open and deregulated” sector and will form a vital part of the country’s attempts to diversify itself away from oil-related industries and establish itself as a regional gateway for the Central African region.

“We are a country whose geography enables it to be a sub-regional hub, as we have borders with all the countries in the Central African sub-region. And this physical and geographical hub should become a technological hub because with those infrastructures, and with a workforce that has enough education and is just waiting to be trained in ICT, we could offer services not just in our country and for our people, but also for neighboring countries.

“This tremendous market of 75 million people that is around us means we can offer services that will give our growth a little more fuel, a little more energy,” he adds.

It is a point that Mr. Tchala reiterates, adding that he also believes that the decision by the country’s government to embrace competition within the industry and welcome international partners through regulatory changes has resulted in a more vibrant sector.

“Our relations with the government are based on the organizations that set the regulations that we are subject to, namely ARPCE and the Ministry of Telecommunications,” he says. “Our professional relationships with these players are excellent, because the Republic of the Congo has the advantage of being a country where regulation works.”

Mr. Lézin-Moungalla also points out that the open market has proven extremely popular with investors both of national and of foreign origin, and it’s clear that bringing in foreign expertise has led to positive results.

“Today, any private investor wishing to invest in Internet and communications technologies can do so, as long as they meet the legal and regulatory conditions and get all the necessary authorizations,” the minister says.

And while the telecoms market has consolidated around three main players, the government is open to attracting further companies into the sector to provide competition and drive service standards, Mr. Lézin-Moungalla says.

Mr. Ndego of Airtel is another who has a positive experience of the Republic of the Congo’s telecoms market, and cites the “excellent incentives” offered to those entering for the first time as a key factor for many companies. Airtel, which is a subsidiary of the eponymous Indian company, made its first investments in the Republic of the Congo in 1998, becoming the first multinational to recognize the telecommunications promise that the country held after the civil war.

Despite being one of the country’s longest-standing players, Mr. Ndego says demand for telecommunications services in the country is high and numerous areas of the market are still growing.

“The telephone is used for many purposes – Internet, voice, entertainment and others. We are looking forward to being innovative, bringing new products in and improving the lives of consumers,” Mr. Ndego says, adding that Airtel has been in talks with the ARPCE to launch 4G mobile in the Republic of the Congo, with further details expected over the coming months.

Although the country has developed an extensive telecommunications network, additional investment is required to improve its communication infrastructures, Mr. Ndego adds. Industry reforms have helped to expand the market of services available and Mr. Ndego envisages continued growth in the telecoms market over the next five to 10 years, while he predicts mobile penetration will reach 100% of the population in the foreseeable future.

Telecommunications potential

Another player in the Central African country’s telecommunications industry is Congo Telecom, which emerged from what was previously the Congo Telecommunications Company, or SOTELCO (Société des Télécommunications du Congo) in 2009, as the Republic of the Congo extended deregulation in the telecoms industry.

Today, Congo Telecom provides landline and mobile services to people around the Central African country while a fiber optic cable laid by the company has allowed the wide-scale rollout of 3G mobile technology. That has enabled the Congolese population access to high-speed Internet on their handheld devices and is powering a huge wave of interest in Internet-related businesses. The company is also keen to increase the take up of its services, with a stated aim to ensure that every Congolese citizen and business has access to state-of-the-art telecommunications services at the best possible price.

“We believe that technology is a tool for economic and social growth, both for our country and for Africa, but on condition that everyone has access to it,” Congo Telecom’s missions statement says, while the company’s General Administrator Mr. Akouala adds that the company’s long-term vision is to drive the Republic of the Congo’s digital transformation so that it becomes a leader in information and communication technologies and in delivery of multimedia content to its customer base.

Congo Telecom already offers a ‘triple-play’ service, giving customers access to landline, wireless and Internet services in a single subscription package, and the company reported last year that more than half of its fiber optic cable projects have been completed. As with so many industries in the country, Mr. Akouala says Congto Telecom’s success has been built on the foundation of the sound and stable political system in the Republic of the Congo.

“Economic stability depends first and foremost on having political stability and peace in a country,” Mr. Akouala says. “No one will invest in a country in which there is political instability. And, as a result, there is little or no investment when there is political instability,” he adds.

Like its neighbors, the Republic of the Congo has known internal violence including a brief civil war in 1997. Violence continued to simmer until 2003, when rebel groups based in the south of the country signed a final peace agreement with the government of President Sassou Nguesso and from then the country has been able to use industrial growth and regulatory developments to power both economic and social expansion across the nation.

“We are a country that came out of war and, when we look around ourselves, countries that went down the same path as we did are having a hard time extracting themselves from war and developing,” says Mr. Akouala. “If, today, we’re talking about economic growth in Africa, and in Congo in particular, it’s above all because the president of the Republic of Congo, His Excellency Denis Sassou Nguesso, restored peace in the country.”

Social awareness

While the telecommunications industry has proven profitable, firms such as MTN are looking to give back to the industry with foundations targeting social improvement.

“MTN dedicates part of its profits to benefit the foundation,” says Mr. Tchala. “The role is to highlight the social and societal issues. We focus on education, culture and health, and the foundation invests between $500,000 and S1million each year to combat this problem. Our latest project was a health center but we also set up computer centers in schools and universities to make the digital world accessible to all. We have also emphasized the development of school libraries, which play an important role in our culture.”

The company has also placed the welfare of its staff at the center of its growth plans and has put initiatives in place that encourage employees to develop within the company.

“The telecommunications sector in Congo requires the entire ecosystem to have real skills,” says Mr. Tchala, whose company employs around 300 people directly and supports a further 10,000 indirectly.

“We want to prove that an African business can be successful while meeting quality standards. The telecommunications sector in the Republic of the Congo requires the entire ecosystem to have real skills,” he adds, explaining that staff are encouraged to take autonomous decisions in order to best meet the needs of the rapidly changing industry.

Meanwhile, Airtel says it aims to recruit the most talented students from universities for its business and has forged pacts with internationally renowned educational institutions to provide its staff with ongoing training.

“We have a series of programs and partnership with universities that are located in South Africa and Singapore, as well as at Harvard University in the U.S. and Abu Dhabi,” adds Mr. Ndego. High ranking executives and employees who impress have traveled around the world to gain further experience of the industry and gain highly prized management training that the company then utilizes across its business activities.

“We also have a partnership with the Institute of Management in India, and of course Airtel also offers online training to all of our staff on almost any topic they like through our Airtel academy initiative,” the managing director points out.

The company, like others operating in the telecoms industry, has also been a generous supporter of social programs and its initiatives have been wide-ranging. Airtel employees have been able to take up social courses in the country while staff have also undertaken charitable works to support widespread projects, including raising money to support an orphanage in Brazzaville. They are also raising monies for similar projects in Pointe Noire.

Corporate events have also become a key aspect of Airtel’s social inclusion programs and the company has enjoyed success with activities across sport, music, education and health. The firm is set to operate its healthcare service, Airtel Santé, in three cities this year – Brazzaville, Pointe Noire and Sibiti – and has targeted reaching more than 30,000 people next year through the program. The initiative, which will spread to more cities in 2016, attempts to provide first aid and healthcare assistance to people who have no other means with which to go to hospital or receive medical expertise.

Airtel also organizes a football tournament and music projects, and is involved in educational programs, which support schools and colleges by providing materials and donations to numerous institutions. This work is in addition to its partnership with the National Labor Force and Employment Office (ONEMO), which operates a program called Young People Forum. The projects sees Airtel provide entry level jobs to graduates and qualified individuals, and the company also works in association with the Marien Ngouabi University, where among other things it helps to offer young women a thorough education to enable empowerment.

Such examples highlight how the Republic of the Congo is using the success of an economic sector to benefit the wider population, especially its young people. It is the success of these programs that are helping to create a self-fulfilling pattern of growth across numerous areas of the Congolese economy, which can in turn lead to further investment.

ICT and economic growth

This growth cycle was reported last year in a study from the World Bank, which projected that the Republic of the Congo’s economy is set to grow at a rate of around 7.6% between 2014 and 2016. And Congo Telecom’s Mr. Akouala points out that the country’s economic growth will inevitably not remain within its borders.

“The Republic of the Congo sits at the crossroads of important markets. We have the Democratic Republic of the Congo next door – that’s a huge market. There’s Angola, there’s Gabon, the Central African Republic and Cameroon. So you see, we’re in the middle of several countries with big populations. This makes us a large market for investors. Setting up a business in Congo and taking that business’s products into each of these countries – that can only lead to profitability,” Mr. Akouala adds.

President Sassou Nguesso has made the development of the information and communication technologies sector a priority for the Republic of the Congo and as of October last year, his government had already invested some $200 million in development across the sector to drive continued growth.

Such investment has powered projects such as the aforementioned fiber optic cable linking Brazzaville, with the capital of the Democratic Republic of the Congo (D.R.C.), Kinshasa. Residents of the two capitals had been able to see each others’ cities across the Congo River for decades, but until recently, calling someone in one of the cities from the other meant going via either France or Belgium, the former colonial powers of the two countries. That situation is now changing and marking the country out as one of Central Africa’s emerging nations.

Further investment will be the key for the Republic of the Congo’s communications growth, and foreign partners – particularly those from the U.S. – are welcomed for their expertise.