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Mobile operators get Angola talking

Article - July 31, 2014
Movicel, one of the two mobile phone operators in Angola, has helped make mobile services more affordable to boost the number of users in the country.
MOVICEL CHIEF EXECUTIVE MIGUEL VENÂNCIO, RIGHT, SAYS HIS COMPANY WILL NOT COMPROMISE ON THE QUALITY OF THEIR MOBILE PHONES IN ORDER TO GIVE THE ANGOLAN PEOPLE AFFORDABLE HANDSETS AND DEALS.
Since peace was restored in 2002 after decades of civil war, the Angolan telecommunications industry has taken off and the thirst to be connected has spread to even some of the most remote corners of the country.

Growth continues to be driven by two key operators - Movicel and Unitel - who essentially maintain a continued dominant position in the market share.

Though competitors, Movicel and Unitel, which hold roughly 30% and 70% of the Angolan mobile market share respectively, have each managed to carve out their own niche markets.

Movicel, for instance, first started operating with Code Division Multiple Access (CDMA) technology, which hampered its initial market performance, given that GSM (Global System for Mobile Communications) had been widely adopted by mobile operators and equipment vendors and was already the worldwide industry standard.

Yet, as of November of 2010, Movicel began the transition to GSM/UMTS (Universal Mobile Telecommunications System), and by now the Luanda-based company has switched gears entirely and specializes in the lower end of the GSM market, offering entry level mobile handsets retailing at under $50.

While more pocket friendly, Movicel Chief Executive Miguel Venâncio insists that the company refuses to compromise on quality, and that one of its biggest challenges is finding the right balance between prices and high quality service.

“We need to invest heavily in order to spread the network and offer a better service through the entire territory while keeping fair prices for our customers,” he says, echoing the challenges faced by most telecom operators while reaffirming that these are challenges which Movicel takes very seriously. “In order to offer fair prices we need to balance some key elements such as CAPEX, investment in increasing coverage, and returns to our shareholders,” all key elements that form an integral part of the company’s operations strategy.

Priding itself on being in tune with the nuanced needs of its customers and offering a superlative user experience, Movicel was also the first Angolan company to launch a product especially targeted to a niche market. Geração M, or “Generation M,” was launched in November of 2013 and was tailored to the needs of Angolans between the ages of 15 and 25 who tend to be more voracious SMS (Short Message Service) and data consumers than older generations.

Movicel was the first mobile carrier to launch the 4G network in Angola, and is working to expand its 4G coverage to more areas including all of Luanda by 2014. Once full coverage is achieved in the capital, 4G will be spread to other cities.

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”We need to invest heavily in order to spread the network and offer a better service through the entire territory while keeping fair prices for our customers”

MIGUEL VENÂNCIO
Chief Executive Officer of Movicel
The product proved to be a great success and riding on its popularity Movicel plans to further break down this niche by offering even more customized services.

Other specialized plans it offers include the “Bis Movicel” plan, which was created to help Blackberry users maximize the connectivity of their devices at an advantageous price, and a SME (Small and Medium Enterprises) plan which allows the owners of small but growing businesses to communicate with cost-conscious packages.

Beyond the bespoke needs of its different mobile phone users, Mr. Venâncio explains that voice is still Movicel’s core business.

As Angola at large sees a slow but steady increase in data consumption, Movicel is gearing up to meet the demand by equipping its network to handle increased data traffic.

Already, Movicel was the first mobile carrier to launch the 4G network in Angola, and is currently working to expand its 4G coverage to more areas including all of Luanda by 2014. Once full coverage is achieved in the capital, 4G will be spread to other cities.

Like Unitel, the leaders of Movicel place a great deal of emphasis on the human capital of the company. They have a training program that provides the Movicel team with both soft and hard skills and whenever possible they invest in the education of their employees by sending them to study abroad.

Another approach, explains Mr. Venâncio, is attracting the attention of Angolans who are working in Europe or in the United States and getting them to bring their talents back to Angola by returning home.

“We want to be the first choice for Angolan citizens,” says Mr. Venâncio.

“We have the strategic objective of providing the best service and a superlative experience for our customers. Obviously we can’t achieve any of these without our human resources.”

In addition to treating its employees well, Movicel demonstrates a solid commitment to Corporate Social Responsibility through its participation in programs promoting polio vaccinations for disadvantaged children, environmental awareness events, as well as partnerships with the Ministry of Education and several cultural institutions.

Movicel’s business is firmly anchored in Angola and on the question of international expansion, Mr. Venâncio explains that’s it’s too early to say what direction the company may take in the future. “We are now committed towards expanding our coverage here in Angola and continue to improve our service,” he says.

However, the company does offer roaming coverage in over 200 destinations with over 500 different operators.

In 2010, 80% of Movicel’s capital was privatized by a cost of $200 million. Current shareholders include Portmil - Investimentos e Telecomunicaçoes, S.A. (40%), Modus Comunicare, S.A. (19%), Ipangue, S.A., (19%) Lambda Investment (6%) and Novatel Wireless (4%). The remainder of the company remains in the hands of state-owned companies, Angola Telecom and ENCTA, which are a tremendous boost to its coffers.

Angola Telecom alone has has national and international fiber, copper and satellite infrastructure assets worth billions of dollars, and as part of the telecoms restructuring program, the Angolan government injected more than $300 million into the company in 2012.

Among its upcoming projects, Movicel is currently evaluating the possibility of incorporating phone-banking and other related services into its offerings.

No final decisions have been made, though Mr. Venâncio hints that if carried out, the services will likely be presented through Movicel and some carefully chosen partners, so that the best possible model to serve the Angolan market can be offered.

Integration into the stock market is also another looming project for Movicel, though as the market itself is still in its early days, Movicel is still carefully evaluating its numerous possibilities and closely moderating how things will evolve.

A more pressing matter that the company must have on its agenda is the possible addition of a third mobile contender to the Angolan market.

Several multinational operators have already expressed their interest in taking up a license or other strategic investments in Angola, with some even expressing an early interest in making investments upwards of $100 million in to the country.

The prospect of intensified competition resulting from a new unified licensing regime has already been the subject of much speculation, and according to a report on the Angolan telecoms industry published by Eaglestone Securities, “A third mobile operator would push competition, making mobile services more affordable, boosting the mobile penetration rate.”

Indeed, compared with other sub-Saharan African countries, Angola has only two mobile operators as opposed to an average of 3.8 per country.

Yet it’s important to note that despite the increased competition brought on by a steady stream of new mobile operators in the region, mobile revenues in these increasingly competitive markets have still managed to grow by roughly 18% per year between 2000 and 2011.

Using these figures as a guide, it seems highly probable that intensified competition from a new unified licensing regime in Angola could further accelerate growth.

Mr. Venâncio is well-aware of the likelihood of a third player soon entering the Angolan mobile market, and this prospect does not alarm him.

He believes that the level of competition in the market in Angola is quite fair and is generally confident about the future outlook of the Angolan telecoms industry.

“The beauty of my job is that I get to build new things constantly,” he says. “It is exiting to bring telecommunications to people that didn’t have access before. In Angola we have only 70% penetration, if we can reach 100% that will mean millions of people with access to a mobile phone for the first time.”

Surely, that will mean enough to go around.

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