Angola calling

Article - September 21, 2011

Telecommunications is one of the fastest growing sectors in Africa, and in Angola. With a penetration rate of just about 57% at year-end 2010, the cellular market still offers huge growth potential in terms of capturing new customers as well as providing existing ones with a greater offering of services and products.

UNITEL, A 75% ANGOLAN COMPANY, BEGAN OPERATIONS IN 2001 AND HAS SINCE INCLUDE 3G, GPRS, EDGE AND UMTS

As in the rest of the world, telecom services are vital in building a middle class, and fostering entrepreneurship. In emerging markets such as Angola, they have the added bonus of serving as a tool for economic development and shortening distances where physical infrastructure is limited to poor roads and slow transport.

Angola has shown impressive growth in telecoms; between 2003 and 2008, cellular communications rose 80% per annum – about twice the average of sub-Saharan Africa and four times greater than the world average. Market analysts predict that the number of subscribers will grow 90% through 2014, reaching 15 million users out of a population of approximately 20 million.

A big boost for Angolan telecom services is the new fiber-optic cable linking South Africa to the U.K., which will have an anchor point in Angola. Angolan mobile phone users will be able to enjoy the resulting improved data and voice connections sometime early next year. Presently, two companies vie for market share, Movicel and Unitel, yet it is the latter that has dominated the sector for several years.

Unitel has pioneered cellular communications in Angola and today boasts the most well established GSM and 3G networks in the country. A 75% Angolan company (the remaining 25% is owned by Portugal Telecom), Unitel is also first in the minds of Angolans, thanks to its marketing strategy and support of the country’s most visible sporting and musical events.

“It is all about the culture we have in Angola,” explains Miguel Martins, CEO of Unitel. “As you know, Angolans love music, parties, dance and sports. So we’ve been investing a lot in bringing musicians that Angolans identify with and in advertising at soccer and basketball championships; Unitel is always behind these events.”

UNITEL, THE COMPANY THAT CONTROLS ABOUT 70% OF THE MARKET SHARE, IS ROLLING OUT NEW FIBER-OPTIC CABLES TO VASTLY IMPROVE NETWORK ACCESS

Of course, the company also invests in technology upgrades, new services, and studies on how to better target market segments. While voice services are well in the lead and continue to grow at a rapid pace, Unitel is encouraging other services, such as SMS, internet access, games, and ring tones. The obstacle, however, is the price tag these things have, as there is still little demand.

“Because there is no scale, the operators – in this case Unitel – can’t make it very accessible. So you need to focus on some kind of segment in the market, and for the first time in Angola, Unitel is segmenting its product offerings,” says Mr. Martins.

He adds that Unitel has just 1% in data penetration, a number the company plans to push up to 10% over the coming three years by improving access and lowering the cost. This, of course, goes hand in hand with technology and network improvements. The company is investing in ffiber optics to improve network stability and bandwidth.

In 2009, Unitel launched a four-year $1.7 billion project to lay fiber-optic cables across the country, and is currently in talks with Brazilian group Oi to install an undersea cable between the two countries. These two fiber optics projects will combine to give Angolan users excellent access to the local network as well as to international content.

“Unitel is looking for more opportunities to grow, especially throughout Africa, so we will always have the need to connect to others throughout the rest of the world,” says Mr. Martins. “I think that access to the outside world will always be a good investment.”

Unitel is beginning to target businesses and corporations with proposals that cater to their specific needs and budgets.

“Our goals are oriented towards giving more quality to the service that we have and reaching the customer in a different way. This is why we are segmenting the market in order to understand what each customer needs,” comments the CEO.

While mobile penetration is due to rise sharply, Mr. Martins sees investment opportunities not so much in the introduction of many new players, but rather in adding value. “Everything that is related with telecommunications, besides the telecoms operator, has a lot of potential development. Content development is one of the things that we are investing in probably because nobody else is investing in it,” he says.