Interview: Abderrahim Koumaa; Alain Kahasha; George Akoury
How has the advent of 4G and high-speed networks affected the local market?
ABDERRAHIM KOUMAA: In anticipation of the increased use of data, recent years have seen great investments on our part, not only in 3G and 4G technology, but also in the move towards full internet protocol, and towards extending our national and international backbone. Today, 21 major cities are connected via 3G or 4G, and most companies and many households are connected via fibre-optic cable. Since 2015, additionally to the upgrade to 3G+ and 4G+ technology, the fibre-optic cable in Libreville has been extended through the use of fibre-to-the-street, fibre-to-the-building and fibre-to-the-home technologies. Monthly fees have decreased by 85% in the last three years, as we have moved away from the use of satellite technologies.
We have also made great strides towards catering to more price-sensitive consumers by introducing 3G- and 4G-compatible devices starting from CFA30,000 (€45) – since the increased use of data will necessarily occur through the adoption of smartphones by the general population.
ALAIN KAHASHA: Gabon has one of the highest rates of smartphone and SIM penetration in the sub-region, at 32% and 194%, respectively. In this context, we have seen data gaining ground against voice in the last few months, and we expect this trend to develop considerably in the short term.
If we look at the facts, the average revenue per user (ARPU) from our 4G clients is three times higher than from other users. Today, although 71,000 clients are currently using 4G-compatible devices, Airtel counts only 3000 active 4G users. You can therefore see the potential for ARPU growth. Operators must equally guarantee a quality connection to ensure the popularisation of technology among the wider public. We are also looking to increase smartphone penetration by providing phones at more accessible prices through partnerships with international companies.
GEORGE AKOURY: Today, compared to voice, data does not constitute a large share of our revenues. Once the network is reliable enough and moves to full voice over internet protocol, we are positive that this will change. However, it will not happen until we have the required infrastructure through all sites and all operators are using the technology. When the connection drops as often as it does, users are discouraged from utilising applications or streaming services, thus inhibiting its development. Of course we can move from 3G to 4G and 5G, but without securing a reliable network connection, ARPU will not develop.
In my opinion, the emphasis must be put on tariffs instead of phones. It is true that more affordable phones are entering the market, but if tariffs and quality of service do not incentivise people to utilise the service, new handset technologies will ultimately not serve their purpose.
What is your view on the sharing of infrastructure and how it affects service provision?
AKOURY: In an effort to provide universal coverage, the state pushes operators to provide services in rural, less populous areas. Given the lower ARPU levels in these regions, smaller operators in the market are compelled to utilise the infrastructure provided by its competitors. Without regulatory oversight, the balance of power is skewed in favour of the largest operator. To improve the competitive landscape, laws applying to fixed tariffs need to be enforced to allow smaller operators to compete in these regions. Indeed, the Universal Service Fund – to which operators contribute 2% of their revenues – is also meant to help cover these unprofitable areas.
KAHASHA: Given that 87% of the country’s population lives in urban centres, site-sharing makes sense, especially in rural areas. In Africa as a whole, this scheme has been problematic, since operators had difficulties grasping the concept, and saw it as a profit-sharing scheme. Today, however, competition tends to focus on the quality of service instead of infrastructure, so mutualisation will develop at its own pace. In other countries, we are seeing the expansion of roaming services at the local level, which allows most operators to be flexible with pricing; this is also an interesting concept.
KOUMAA: While the sharing of infrastructure is a reality in Gabon, it is worth noting that competition for infrastructure has a positive effect for the consumer and allows for better service. It has helped to boost investment in recent years, and is a source of job creation, both directly and indirectly. An equilibrium should be sought between sharing and competing, since the deployment of several networks favours technical and commercial independence, and hence encourages innovation.
What factors affect network reliability?
KAHASHA: The country’s equatorial climate and fauna are important factors affecting our network’s reliability. Energy deficiency also means that the majority of our sites are connected to generators which, given their locations, are often hard to reach – especially during the rainy season. It is in our best interest to have 100% network availability, so we have started seeking out alternatives, such as connecting to the public grid or using solar energy.
KOUMAA: In Africa as a whole, the main factor affecting the network is energy. The majority of disturbances to GSM sites are caused by energy shortages, which not only affect the continuity of the service, but inevitably also negatively impact the durability of our infrastructure. To overcome this deficit, we are making large investments in items like generators, batteries and solar panels.
AKOURY: In addition to the shortage of energy, changes in electric tension – which can jump from 220 V to 320 V in seconds – negatively impacts the durability of our systems. Electricity cuts may also last for anything from four to 24 hours, putting great strain on batteries and generators. Another factor is the management of frequencies.
How would you describe the challenges in developing more subscription-based contracts?
KOUMAA: For reasons associated with low incomes and controlled spending, pre-paid products are very popular in emerging countries. Unlike in the European market, where subscriptions account for 95% of the market, post-paid in Gabon remains a niche, representing merely 5% of the market. To circumvent this trend, operators are starting to introduce hybrid solutions that integrate voice, data, and SMS products, thereby allowing clients to control their spending and have access to price advantages without entering into any legal engagements.
AKOURY: There are two challenges to the use of post-paid services in Gabon. While many Gabonese lack identification, entering into a subscription-based agreement requires clients to be properly identified to mitigate the risks of non-payment. Given the current situation, subscriptions are also dangerous for operators, as some clients pay their bills with delays of up to 90 days. This is not to say that we do not provide monthly subscriptions to trustworthy clients, but we do encourage new clients to opt for pre-paid.
KAHASHA: The market for post-paid subscriptions has not yet reached maturity, given the African tendency of buying things on a needs-must basis. Today the post-paid market mostly concerns corporate clients, with individuals representing a very small niche. Nevertheless, more than 50% of our revenues from data are generated through subscriptions, which points to opportunities in this segment. The only way to secure customers is through service quality and subscription-based packages, both of which we are continuing to develop by exploring hybrid solutions.
Read More from OBG
