Zambia Seeking Bids for New Mobile Provider to Take on MTN

LUZAKA (Capital Markets in Africa) – Zambia is seeking bidders for a fourth mobile-network license to take on operators including market leader MTN Group Ltd. 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.

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.

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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 percent 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 percent rise from the figure at the end of December. Almost all of these use mobile internet.

New Operators
MTN Zambia had the country’s largest market share of about 48.3 percent in 2016, while Airtel Zambia had 41.4 percent, according to the finance ministry’s economic report for that year. Vodafone Zambia began offering data services in the country in partnership with Afrimax last year, but doesn’t yet have a license to offer voice calling.

The southern African nation’s telecommunications regulator approved a modernized licensing framework this year, opening the way for new operators, Mushimba said.

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

Source: Bloomberg Business News