Although DR Congo is one of the first sub Saharan
countries to launch mobile services in the late 1980s, the development of the
market has been hampered by a challenging business and political environment.
Basic infrastructure, such as roads and electricity
supply, are completely run down and in most parts of the country non-existent.
This, coupled with inadequate telecoms regulations, has hampered market growth.
Currently, there are 5 licensed mobile operators in DRC: Vodacom Congo, Airtel
DRC, Tigo Congo, Congo Chine Telecom (CCT) and Supercell. Except for Supercell
and CCT, mobile operators in the DRC are international players. CCT is jointly
owned by Chinese Telecom vendor ZTE (51 percent) and the DRC government
Airtel DRC (previously Zain DRC) and Vodacom Congo are still dominating the
market, with 38 percent and 34 percent market shares, respectively.
Historically, Vodacom Congo was the market leader and
lost market shares to Tigo Congo and Zain DRC following aggressive competition
from the two mobile operators. These mobile operators cater to approximately 10
million subscribers. With a population estimated to 66 million in 2010; this
represents a mobile penetration of 15 percent.
This penetration rate is relatively low compared to the average of 50 percent
in sub Saharan Africa. Therefore, there are still considerable growth
opportunities in the country. As a result, many international players have been
eyeing countries like DRC to sustain their organic growth.
Due to operating problems, CCT has intended to exit the Congolese mobile market
since 2009. Today, the company’s majority stakeholder ZTE is in negotiation
with France Telecom. In fact, the Chairman of France Telecom, Lafarge, was
amongst the businesspeople that travelled with French president Nicolas Sarkozy
to DRC in 2009.
During this presidential visit, France Telecom indicated its desire to enter
the Congolese mobile market through either an acquisition of existing player or
bidding for a mobile license. This expansion plan has now come into being.
The question one has to pose is whether the entrance of France Telecom could
have a detrimental effect on Vodacom Congo’s future growth?
One is tempted to say France Telecom, specifically its mobile arm Orange, may
shake up the DRC market.
Although Orange is not likely to shake up the market in the short term, the
company is expected to chip away its competitors’ subscribers in the medium to
long term. As a result, Vodacom Congo and Airtel DRC are expected to lose their
leading position. This will most likely put pressure on their profit margins if
remedial strategies are not taken.
Orange has been successful in somewhat challenging Francophone countries with
the same features as DRC: Mali and Guinea. For example, in Mali, Orange adopted
a strategic deployment approach with focus on the rural market.
This strategy has proven to be successful and has been a
key driver for the company’s exceptional growth. Frost & Sullivan expects
Orange to replicate such deployment strategy in DRC, as CCT has limited network
infrastructure in DRC.
Alike Mali, DRC has a considerable diaspora in France and Francophone
countries. Therefore, Orange will likely provide services which target
Congolese in the diaspora.
That said, Orange has not been able to make in-roads into Kenya and Uganda. The
failure of Orange in these countries can be attributed to cultural issues.
Uncertainty surrounds the future of Vodacom Congo in terms of Vodacom Group’s
commitment to its subsidiary. This situation has had a detrimental effect on
Vodacom Congo’s network expansion plans.
Vodacom Congo may be hard hit by the entrance of Orange if the conflict between
the Vodacom Group and Congolese Wireless Network (CWN) is not resolved.
Today, none of the major mobile operators have considered offering fixed line
and data services, such as mobile money services and broadband services to the
mass market.Traditional fixed services are non-existent in DRC due to the
collapse of the incumbent Office Congolais des Postes et Telecommunications
Vodacom Congo could consider acquiring OCPT to complement
its product portfolio and gain a competitive advantage over its rivals. If not,
Orange will most likely provide fixed line services in the long term in order
to gain a competitive advantage over its rivals. Unlike its competitors, the
company has solid experience in that market.
Moreover, Vodacom Congo should enhance its broadband and data services in DRC.
The company could provide mobile money services and discounted international
voice tariffs, given considerable Congolese Diaspora in South Africa.
Innovative services can include international airtime
transfer, allowing Congolese residing in South Africa to send airtime to their
relatives in DRC. The company can also replicate its rival Zain’s One Network
in DRC for calls between DRC and South Africa.
Vodacom Congo should not exit the DRC market as most countries on the continent
have stopped issuing new mobile licenses and have high mobile penetration
rates. DRC, along with Ethiopia, remains one of the few countries in sub
Saharan Africa with massive growth opportunities in the long term. Therefore,
exiting DRC could be a suicidal strategy for the company.
In Conclusion, Vodacom Congo’s main competitive strength lies in the length of
its presence in the Congolese mobile market, with many years of experience in a
variety of challenging conditions. This means that the company is likely to
pre-empt changing market conditions and respond accordingly.
By Mervin Miemoukanda, Information, Communications and Technology Industry
analyst at Frost & Sullivan