Zambia seeks bids for new mobile provider to take on MTN

2017-09-19 10:24 - Taonga Clifford Mitimingi and Matthew Hill, Bloomberg
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MTN. (Duncan Alfreds, Fin24)

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Johannesburg -  Zambia is seeking bidders for a fourth mobile-network license to take on operators including market leader MTN Group[JSE:MTN] in the southern African country, Transport and Communications Minister Brian Mushimba said.

The ministry last week gave the go-ahead to the telecommunications regulator to start the process, he said in a recorded response to questions on Monday.

The new carrier could be in place over the next six to 12 months and the country may even have capacity for a fifth operator, he said.

The local unit of India’s Bharti Airtel Ltd. and state-owned Zamtel make up the current trio.

READ: MTN suffers first financial loss in 20 years

Communication costs in Zambia have been “rather on the high side,” Mushimba said from Lusaka, the capital.

“The market analysis that we have done supports the fact that we can have a fourth licensee and possibly a fifth and still the market will be profitable.”

The upcoming auction represents a rare opportunity for international wireless carriers to expand in sub-Saharan Africa without making an acquisition.

Slowing economic growth and falling tax revenue have limited the need for new providers, while Ethiopia is the only significant market that hasn’t already opened up spectrum to private bidders.

Some companies, including Airtel and Millicom International Cellular SA, have made a partial retreat by selling off country units.

READ: MTN expects to make good on Nigeria losses in interim results

Zambia, Africa’s second-biggest copper producer with a population of more than 16 million, had 12.4 million active mobile subscribers at the end of June, 10% more than a year before, according to data from the finance ministry.

The country had 5.9 million internet users by the end of June, a 3% rise from the figure at the end of December.

Almost all of these use mobile internet.

MTN Zambia had the country’s largest market share of 48.3% in 2016, while Airtel Zambia had 41.4%, according to the finance ministry’s economic report for that year.

Zamtel had the smallest market share with 10.4% mobile subscribers.

MTN, based in Johannesburg, is the continent’s largest wireless operator by sales and customer numbers.

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