Zain, 3 others bid to become Rwanda’s third phone operator

Sunday October 5 2008

Zain company has already invested $12 billion

Zain company has already invested $12 billion in Africa and will offer WiMAX, 2.7G, 3G and 3.5G technology to the Rwandan telecom industry as well as laying a fibre optic loop. Photo/FILE 


Zain Group is among four firms that have submitted bids for Rwanda’s third telecommunication operator’s license.

According to the Rwanda Utilities Regulatory Agency, the four are the only ones — out of 17 that showed interest — to return filled-out bidding documents.

Apart from Zain, there are Sudan’s LarryCom, Luxemburg-based MilliCom and the Egyptian-owned Telecel Globe Ltd, part of Orascom Telecom.

The regulatory agency’s director general, Col Diogene Mudenge, said the next phase in the bidding process will begin when the government sets up a technical evaluation committee.

“The technical and financial evaluations are to be completed by the end of October and the committee’s report is to be approved by the Cabinet in November ,” said Col Mudenge.
“As negotiations with the preferred bidder are also to take place in November, the license will be awarded in December,” he added.

Rwanda currently has two telecom operators — the Libyan-owned Rwandatel and MTN Rwanda. The two received a 5-year duopoly in 2003 to provide fixed and mobile communication.

Government officials said the selection of a third national operator, in line with Rwanda’s decision to further liberalise the telecom market, would come at the expiry of Rwandatel and MTN’s exclusivity period.

Rwanda Utilities Regulatory Agency also said in the invitation to bidders that the third national operator will be issued both fixed and mobile licenses with a 15 year duration on the same terms and conditions as applicable to the existing duopoly operators.

Zain’s business development director, Dr Andrew Arowojolu, who submitted the company’s bids in Kigali last week, said once Zain receives the operational licence, it will add Rwanda to its borderless One Network.

Zain’s One Network was the world’s first borderless mobile telecommunications operation. It covers 500 million people in 15 countries across East, West and Central Africa and the Middle East.

Dr Arowojolu said the company has already invested $12 billion in Africa and will offer WiMAX, 2.7G, 3G and 3.5G technology to the Rwandan telecom industry as well as laying a fibre optic loop.

Yasmin Al Mosleny of Telecel Globe said the Egyptian-based company has a principal market capitalisation of over $12 billion and had more than 74 million subscribers by the first quarter of 2008.

Orascom Telecom runs mobile operations in six countries in the Middle East, North Africa and Asia.

For its part, MilliCom has cellular operations in Asia, Latin America and Africa. It currently has cellular operations and licences in 16 countries.

MilliCom’s cellular operations had a combined population under license of approximately 291 million people as at March this year. Its shares are listed on the Nasdaq under the symbol MICC.

The privately-owned LarryCom is the only sub-Saharan company to have shown interest in the bids. It is registered in Sudan with offshore offices in Dubai, Beirut and Egypt. LarryCom owns 15 per cent of Bashir Telecom. It also owns five per cent of Sudatel.

The licence obligations of the third national operator include payment of annual operating fees contribution to the Universal Access Fund and other fees as stipulated in the relevant legislations.

MTN Rwanda, a subsidiary of the MTN Group in South Africa, has for over a decade commanded a market share of over 90 per cent, growing its subscriber base to about 600,000.

Having received its operational licence in 1998 with a validity of 10 years, the company was to construct, maintain and operate a 900, 1800 and 1900MHz GSM telecommunication network within the geographic territory of Rwanda.

MTN Rwanda paid an initial license fee of $200,000 and pays an annual licence fee equivalent to three per cent of revenue.

The company has rolled out a successful Village Phone project under which public payphones have been allocated to local entrepreneurs to manage. The project was this year expanded to all the 30 districts in the country, in the process establishing 1,100 new businesses.

However, regulators last month found that some of of MTN Rwanda’s contractual obligation were not met and demanded that the firm be penalised.

Just months after the MTN Group in Johannesburg increased its share in the Rwandan subsidiary from 40 per cent to 55 per cent for $40.5 million, the company was last month fined $140,000 by Rwanda Utilities Regulatory Agency for failure to meet it’s license obligations.