MVNOs and 3G to bolster Cameroon’s telco sector

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CAMEROON’S telecom landscape is becoming more competitive thanks to the entry of a new MVNO and the awarding of the first 3G licence in the country, according to a new report from Pyramid Research. “The telecom market in Cameroon was a duopoly of mobile services for many years, but recent activities have changed this configuration,” said Ousmane Yatera, analyst at Pyramid Research.

In July 2012, Samuel Eto’o, the Cameroonian star footballer, launched a new MVNO called Set Mobile. Pyramid Research estimated that the company had 200,000 customers in 2012, although its tariffs were not particularly competitive compared with its competitors.

Another operator, Viettel, is due to launch this year, and is expected to disrupt the market due to its distinctive advantage of being the first to offer 3G in Cameroon. Moreover, the company plans to cover 81 per cent of its network prior to the launch. Pyramid Research predicts Viettel will reach 9.8 per cent share by 2018, Yatera said.

Revenue in the Cameroonian telecom market will grow over the forecast period to a total of $1.8bn by 2018, driven in part by increased mobile data consumption. The entry of the new MVNO in 2012 and the award of a third MNO licence to Viettel will shake up the landscape, although the deployment of undersea cables could help Orange and MTN reduce Viettel’s impact by improving the quality of their service and their mobile broadband offerings. On the fibre optic backbone side, there are still 4,000km to be built as part of the national broadband network plan.

“We expect mobile voice service to generate 71 per cent of total telecom revenue in Cameroon in 2018. The intensified competition from the new MVNO Set Mobile will contribute to mobile voice revenue, which is expected to grow at a CAGR of seven per cent over the forecast period,” said Yatera. However, with the recent 3G licence awarded to Viettel, data services will also be an increasingly important source of revenue.

Many Cameroonians, who have been waiting for 3G services for a long time, will likely embrace mobile data. With demand for data on the rise, we anticipate that mobile data revenue will grow at a CAGR of 26 per cent through the end of the forecast period, faster than voice, to reach $253 million by 2018. Mobile broadband adoption will be the primary driver. Revenue in the fixed segment is projected to reach $282 million by 2018.

Growth will be mainly due to the expansion of existing WiMAX networks and the deployment of a 10,000km fibre optic backbone cable to be completed by 2015. Moreover, the landings and technical launches of the WACS in May 2012 and the expected ACE and Main One undersea cables should reduce overall telecom tariffs, benefiting the population given that the nominal GDP per capita in 2012 was estimated to be just $1,267.

Piggyback operators named for brands or even celebrities, such as Eto’o, could be big business in Africa. MVNOs are mobile brands that piggyback off existing networks, buying wholesale from one or more mobile operators.

In SET Mobile’s case, it is buying its services from Orange Cameroon and is not, as it seemed to advertise at its launch, Cameroon’s third mobile operator.

Eto’o’s brand targets his younger fans. “Our company will provide a unique quality of service and will make the difference by low prices and a range of handsets affordable to everyone,” said Charles Gueret, who heads the new operator, via Twitter.

Orange says it could lose customers to the new brand. “There will be competition and there will be a risk of cannibalisation,” said Claire Paponneau, senior vice president for the EMEA zone for Orange.

Eto’o’s brand is Africa’s fifth MVNO network, according to analyst Informa Telecoms.

Others include Kirène drinks, which launched a mobile brand in Senegal in 2009 using the Orange network, and Virgin Mobile in South Africa, operating as an MVNO since 2006 in partnership with Cell C.