 TELECOMMUNICATIONS: THE INVASION OF CELLULAR PHONES |
The DRC, a country of continental dimensions with an estimated population of 65 million people, only had 60,000 telephone subscribers in 1998, a sum well below the recommendations of the International Telecommunications Union (ITU) that suggests one telephone for every 1000 people. Thus, in a world where communication takes a more and more predominant position, the evolution of the DRC has taken place in a vacuum. The development of the GSM communication system around the world has offered a great opportunity to African countries, and more particularly to the DRC. Since 1998 we have witnessed a frenzy of telecommunication companies (with the GSM system) that in the space of 3 years have quadrupled the number of operating telephones.
Cellnet Wireless Network, the first company that dared to penetrate the market, created all by itself 30,000 lines in 8 months. This opened up the door to cellular phones. For more than 2 years it supplied the market since it only had to compete with Télécel, which at the time it was undergoing a total transformation. Towards the end of 2000 Sait-Télécom and Celtel flooded the market with cellular phones at prices defying any sound competition. Their predecessors had a hard time trying to adapt to this new situation since they were used to set rather high prices. In 6 months these newly born communication companies had contributed between both of them to more than 100,000 cellular phones. Kinshasa, the capital of the DRC, was living in a cellular phone fever.
A new national company added new elan to the situation. The Congolese Postal and Telecommunications Office (OCPT) officially announced its association with 5 South Korean companies creating a new telecommunications firm called Congo-Korea Télécom that intends to create 150,000 new lines from mid 2001 to the end of the year. The distinctiveness of this joint venture is that it will concentrate on the cable network sector which had until now been neglected. The new OCPT partners will use the latest optic fiber technology, not much used in Africa yet. The DRC will be the third country, after South Africa and Ivory Coast, to use it. In fact, this technology offers the possibility of facilitating synchronization, as well as the elimination of any disorders, such as interferences or the frequent lacks of tone registered in the OCPT network.
The Manager and Director General of OCPT, Mr. Wakilongo, believes this partnership will bring new confidence to his company. "The OCPT has just acquired a new partner with sufficient weight that will set up more than 150,000 lines in the next 3 months. From now to the year 2002 more than 1 million cable lines will be installed in the city of Kinshasa, and until 2005, 2 million cabled lines in the whole of the Republic."
The new company intends to offer the most competitive communication prices. In this respect, Mr. Walikongo stresses that "You cannot forget that in the whole world, all telephone systems considered, cable phones are the least expensive. With my cellular, I spend around USD 200-300 per month whereas for the cable phone, we at OCPT barely ask for USD 20 per month. I believe that with the cable we will fix a monthly price of USD 30, and with that a Congolese can satisfy his/her telephone needs."
The OCPT joint venture with the Koreans will be a nice opportunity to acquire sufficient funds to renew equipment and change its personnel. "This is an important problem we are trying to solve. In fact, 70% of the OCPT personnel is older than 55 years of age. They have to retire, but there is a problem of means. About the equipment's old age, it is true, the telephone exchanges we have belong to the first generation, whereas nowadays exchanges are already in the fifth numeric generation."
Privatization has been proposed as a solution for the OCPT problem. The President of the enterprise declared: "First we must consider Congo as a whole. Almost 20 years ago the Congolese government debated and choose between liberalization and privatization. Finally it chose liberalization. We are one of the first countries in the world, and particularly in Africa, that has liberalized telephones and the telecommunications sector. Thus in 1978 we had completely liberalized the sector, and once liberalized the privatization question did not arise again. To privatize OCPT means, in a certain way, that the Congolese State is helping the whole sector, and for us to it means to direct ourselves towards liberalization. Thus we have just accepted to enter the cable sector. The Congolese State, for instance, has just accepted the Koreans to take over 40% of OCPT. That means total liberalization."
Talking about the investment opportunities OCPT offers to foreigners, Mr. Walikongo believes that the Congolese market is still totally virgin. There are more than 74 million people who need a phone in the DRC. "If you go to the provinces, you would feel sorry for them. If there is a lack of telephones in the interior it is because everything is concentrated here in Kinshasa. If it weren't because of the insecurity caused by the war, we would have asked the richest men in the world to come and invest here. However, even if they had given us USD 1 billion, this sum would still not be sufficient to satisfy the DRC's telephone needs. This is a very large country that offers plenty of opportunities, a large demand, and an abundant and cheap work force..." The President of OCPT has a message directed to all those investors that still hesitate about coming to invest in the DRC. "They should not take into consideration the insecurity factor because the war is about to come to a halt. The present Head of State is determined to put a stop to it."
| In respect of that part of the cellular market the Congolese State left in private hands, some companies have been able to leave the pack and in only 6 months have managed to break all records. Amongst them stands out Sait-Télécom, a firm that only after 6 months of existence managed to surpass 40,000,000 clients. Daughter-company to Sait-Télécom Belgique, this firm has been able to brake the interconnection myth and it has proved to be well ahead of those who ask for a new telecommunication legislation and a healthy and effective management of frequencies.
Referring to these points, the number one of Sait-Télécom in Congo, Mr. Tumba, said: "We are the very last telecommunications operator, the last born. At our inauguration we had promised that we were going to trivialize interconnections and everybody laughed in our face, but today, after 5 months, it is a fact. We have the most interconnected network, because in fact communicating means opening up. There are those who want to communicate in a close environment. I do not know how they are going to deal with frequencies. The important factor here is the State, because it is the one managing frequencies, it is not the operators. In fact we abide by the Government's law and its management. Therefore, since we are the first ones interested we are in the front seat, we keep ahead and we go and ask the State for advice because the frequencies are our raw material and when they are not managed properly our communications suffer."
In order to support telecommunication operators in their growth and development, SAIT-Télécom expects the Congolese State to pave the way with an up to date legislation. The laws that rule the sector go back to 1940, in other words, they are 60 years old. In the meantime, there have been technological improvements, breakthroughs in Internet and telecommunications, cellular phones, etc. But the legislators have not adapted legislation to this evolution. Therefore it would be necessary that legislators take these developments into consideration.
Coming back to improving the management of frequencies, Mr. Tumba stresses that "besides the local market, we also have to take account of with neighboring countries. If we do not agree with them there will be some interferences after lowering interconnection prices. This is our priority at present. We are going to help the countries in the region to manage better the allotment of frequencies."
SAIT-Télécom has a singular strategy regarding expansion and development projects to convince the promoter to redo his financial plans allowing for an extension of equipment from now on. It is an opportunity that has to be seized. Mr. Tumba predicts an expansion and a democratization of communications in the very near future. He believes that this will be an important development factor for the DRC.
The top decision-maker of SAIT-Télécom believes that the decline of telecommunication prices is essential for the development of their enterprise to be able to produce economies of scale. Price reductions will not be derived from any legislation, but rather market forces will establish the price levels. However, the State should deal with the problem of coordinating interconnections. They have to go through either a private or mixed national transit center, because presently interconnections are a mockery. Each individual operator makes the interconnections, whereby the State does not intervene. It is a mere spectator.
After having ruled over the telecommunications sector for more than 10 years, Télécel, presently STARCEL, is being totally restructured. Mr. Joël Cadier, General Director of this company says, "The aim of the present situation is to adapt our resources and means to the new economic and competitive predicament". Reducing stipends through a re-negotiation of salaries and social advantages did this adaptation. Besides, STARCEL improved the organization of the company and sub-contracted a certain number of activities that are not entirely in the sphere of telecommunications. These sub-contracts led the company to dismiss some personnel. The firm has sent an application to the Ministry of Work in order to discharge approximately one third of its employees.
In order to remain competitive in a market where competition hits hard, STARCEL is trying to set in place a commercial and price policy "a little more aggressive in order to keep our historical clients, that is, private businesses, the Government, expatriates and liberal professionals."
In the international arena, STARCEL has developed the product "ALLO MIKILI!" This product does no compete with other operators, but rather with pre-paid international communication cards - e.g. LAM Télecom, GSM, AMC, etc. "In this aspect we have definitely won. We have succeeded because we have recuperated about 70% of the traffic of pre-paid international communication cards", explained Mr. Cadier.
Success depends precisely on the way it can resist the uncontrollable advance of the GSM network and its pre-paid system. According to Mr. Cadier, "The pre-paid system, that will directly compete with the GSM networks, will be operational from September 2001. What is so good about the pre-paid system is that we collect and perceive revenues immediately and effectively. This is not so evident with prepaid postage. However the counterpart of prepayment is a dramatic reduction of consumption by subscribers. There are subscribers that would like to have the prepayment system, not for themselves, but rather for their subordinates. Precisely for this reason we are going to offer to them post-payment as well as pre-payment, and either limited or unlimited post-payment for certain of their colleagues."
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