Gabonese telecoms providers rolling out fibre-optic network

In line with its peers around the continent, Gabon’s telecoms sector is well developed and competitive, with 4G coverage and an overall penetration rate in excess of 100%. The industry is due for a shake-up in the near term, however, with the upcoming acquisition of one of the country’s four mobile operators by a fellow competitor. The merger will reduce Gabon’s four-operator market down to three, and comes at a time when competition over network speed, quality and service delivery is stronger than ever.

Meanwhile, operators are expanding 4G coverage, encouraging the use of value-added services and improving network reliability. This is in part thanks to increased pressure coming from the Regulatory Agency for Electronic Communications and Postal Services (Autorité de Régulation des Communications Électroniques et des Postes, ARCEP). Created in 2012 the sector regulator has stepped up its oversight in recent months, in some cases fining operators for failing to ensure quality service provision.

Mobile

Still a four-operator mobile market in 2015, Gabon’s mobile telecoms sector generated a total income of CFA232.89bn (€349.3m) for the year. Competition has been tight in the 1.9m-person market over the past decade, with two additional entrants – Moov and Azur – joining the sector’s two larger providers in 2006 and 2009, respectively.

According to ARCEP data, in terms of revenues, the subsidiary of Indian telecoms multinational Airtel – who acquired its Africa operations, including Gabon, from Kuwaiti telecoms company Zain in 2010 – led Gabon’s mobile telecoms market in 2015, generating around CFA103.1bn (€154.7m) in revenue for the year. Airtel was followed by the incumbent operator Gabon Telecom, with an estimated CFA86.8bn (€130.2m). Under the brand name of GT Mobile, previously known as Libertis, the former state-owned operator is now majority-owned by Morocco’s Maroc Telecom, who acquired a 51% stake in the company in 2007. The third-largest operator in Gabon is Moov. The brand, which is owned by Côte d’Ivoire’s Atlantique Telecom, itself a part of the UAE multinational telecoms company Etisalat, posted revenues of around CFA22.1bn (€33.1m) in 2015, just ahead of Lebanese firm BinTel’s local brand Azur, with CFA16.9bn (€25.4m).

Consolidation

A merger between Gabon Telecom and Moov won government approval in early 2016. In March 2014 Etisalat agreed to sell its Atlantique subsidiaries to Maroc Telecom after acquiring French media group Vivendi’s 53% stake in the Moroccan telecoms giant. While the merger has taken place, speculations on many details remain.

Pre-paid contracts continue to represent 99% of the market in Gabon, with average revenue per user (ARPU) standing at CFA5943 (€8.91) in the fourth quarter of 2015. Despite continued pushes to boost subscriptions, post-paid contracts represent under 1% of the market. However, despite representing less in terms of the total, post-paid mobile subscriptions generate substantially more income per unit than pre-paid mobile subscriptions. Post-paid ARPU for the year peaked at CFA42,632 (€63.95) in the second quarter of 2015, representing a 15% increase over the second quarter of 2014, when ARPU stood at CFA37,034 (€55.55). This was followed by a slowdown in the second half of 2015. In the fourth quarter, ARPU stood at CFA32,502 (€48.75), representing a contraction of 10% over the same period in 2014.

Penetration Rate

Mobile subscriber numbers have been sliding somewhat since 2014, as the market becomes increasingly saturated. The mobile penetration rate in Gabon is close to 200%, with many Gabonese citizens owning multiple SIM cards. “It is safe to say that most people have a minimum of two SIM cards per person,” Edgar Tougouma, technical director at Solsi, a local internet service provider (ISP), told OBG. “The cost of calling from one operator to another is high, so people switch between different SIM cards depending on who they are calling and what operator they are on.”

According to ARCEP, the number of mobile subscribers was estimated at 2.82m as of the end of 2015, which represents a 3.8% decrease over 2014, and translates into a loss of 110,000 subscribers. Gabon Telecom held the largest share of the mobile subscriber market at 38%, which is equal to 1.17m subscribers. The incumbent operator was followed by Airtel, with 36.4% of the market and 1.02m subscribers, and Moov, with 15.6% market share and 440,159 subscribers. Azur, meanwhile, held 6.9% of the market, with 193,864 subscribers.

Mobile Internet

Recent years have seen mobile internet activity in Gabon rise steadily, thanks in part to the rollout of new next-generation networks. After being awarded the first 3G/4G licence in Gabon at a cost of CFA5.5bn (€8.3m), Airtel launched 3G services in Libreville in April 2014, reaching 117,272 subscribers by the end of the year; Airtel’s 4G services began operations in December 2015. Gabon Telecom’s GT Mobile was issued the second licence in March 2014 and directly launched a 4G network in October in Libreville, the first of its kind in Central Africa. Under the terms of the licences, operators must provide coverage in all provincial capitals.

According to the latest available data, there were around 1.1m internet subscriptions in Gabon, as of March 2016. Of this number, an estimated 1.08m are delivered by mobile operators, representing around 98.8% of all internet subscriptions, a big jump up from the 617,013 recorded at the same time just two years earlier. In terms of subscriptions, Airtel was the market leader in March 2016, with a 55.7% market share. Airtel was followed by Gabon Telecom at 35.6%, Moov at 6.8%, and Azur at under 1.08%.

Fixed-Line Telecoms

As is the case with virtually every market on the continent, fixed-line activity presents a very different picture than the mobile sector. Until 2012 Gabon Telecom had a monopoly on access to the country’s sole submarine fibre-optic cable, the South Atlantic 3/West Africa Submarine Cable, enabling it to be Gabon’s only provider of fixed-line telephone services.

This dynamic is not likely to change due to the erosion of demand caused by the expanding mobile sector. Indeed, the penetration rate for the fixed line sector has remained static at 1.22% since 2014. As of the end of March 2016 subscriber numbers stood at 18,491 compared to 18,498 in 2014.

According to ARCEP, of the 18,491 active fixed lines recorded in Gabon at the end of March 2016, about 43%, or a total of 7947 lines, belong to businesses, while 43.4%, or 8023 lines, are used by private households and 13.4%, 2475 lines, by government entities. The remaining 0.25% is accounted for by public phones, with 46 lines.

Fixed-Line Internet

The country’s overall internet penetration rate stood at 72.56% as of March 2016. Mobile internet providers Airtel, Gabon Telecom Mobile and Moov accounted for 55%, 32.8% and 7.4% of the market, respectively, in terms of subscriptions in mid-2015, while internet obtained through a fixed line represented 4% of the overall market. Of the eight companies operating in the latter segment, IPi9 accounted for 71.1% of the market share, or 3% of the overall internet market.

The prevalence of 3G/4G connections as a means of accessing the internet is in large part a reflection of the lower cost and equipment requirements for mobile internet as opposed to fixed internet connections, but is in part also a reflection of network reliability. “The 4G data connection is seen as more reliable than ADSL because the copper cables used for ADSL get flooded when it rains, and the signal gets cut,” Bercky Lufwa Mayedo Ngoua, commercial director of IG Telecom, told OBG.

Infrastructure

As of mid-2016 Gabon had about 500 cell towers, including 40 rooftop antennas. In a reflection of the limited geographic coverage networks have in the sparsely-populated country, of the 500 sites, 300 are in the two main cities of Libreville and Port Gentil, which account for around half of the population, with the rest scattered across the country. Currently, with 3G and 4G consumption expected to rise, putting greater pressure on networks, Gabon is looking to bulk up back-end capacity, investing in fibre-optic connections.

International Connectivity

In recent years, Gabon, in line with many other countries in Africa, has seen its connectivity to Europe and Asia improve substantially through the installation of new submarine data cables running the length of the continent, many of which have landings.

The new 17,000-km-long Africa Coast to Europe fibre-optic submarine cable has resulted in a capacity increase in Gabon of up to 4.9 Gbps, improving the speed and accessibility of internet connections. The project has been subject to delays, however. Cable landings in Libreville and Port-Gentil were completed in 2012, but before access could be granted, the state had to first establish a public authority – the National Digital Infrastructure Company (Société de Patrimoine des Infrastructures Numériques, SPIN) – to manage the infrastructure. It also took time to secure an operator. In February 2015 SPIN awarded Axione of France’s Bouygues Energies and Services group the contract to operate and maintain the submarine and terrestrial fibre-optics network. At the time of publication, access to the network was restricted to the government.

Nationwide Access

The next step in the government’s plans is to expand fibre-optics across the country. To this end it has formulated an investment plan to extend cable access to Franceville and on to the Congolese border. The World Bank has contributed a $58m loan for this initiative under its Central African Backbone (CAB) scheme, which aims to increase coverage across central areas of the continent. In 2016 the World Bank supplied an additional $23m for the Gabon phase of the CAB project, which is pegged to finish in December 2016.

As part of the CAB project, in October 2014 the Agence Nationale des Infrastructures Numériques et des Fréquences (National Agency for Digital Infrastructure and Frequencies, ANINF) awarded a contract to China Communication Services International for the installation of 1075 km of fibre-optic connections across five of the country’s provinces, at a cost of $109m. According to ANINF, 60% of the project has been completed as of May 2016, representing a total of 960 km of fibre-optic cables, added to an existing 800-km network.

In April 2016 Abderrahim Koumaa, general director of Gabon Telecom, announced the launch of a new backbone IP transmission point to quadruple IP transmission capacity between Franceville and Libreville – from 70 MB per second to 300 MB per second. This new transmission point will enable the operator to improve the quality of the voice and data services provided in the Haut-Ogooué Province and broaden the 3G/4G coverage to more remote areas.

Value-Added

To help boost ARPU and compensate for slowing voice activity, operators have turned to new value-added services, such as mobile money. Ngoua told OBG, “To make themselves more attractive, operators are fighting to provide e-banking and mobile money services and reward the customers through bonus minutes, to incentivise people to use more voice and less voice-over-IP services.”

Airtel was the first operator to roll out such a project, with the launch of Airtel Money in 2012 in partnership with BGFIB ank, followed by Gabon Telecom’s Mobicash scheme with Union Gabonaise des Banque in 2014. Moov also launched a similar service in 2014; however, the upcoming merger with Gabon Telecom leaves this project’s future open to speculation.

Since July 2015 Airtel clients have been able to pay their AXA Gabon insurance premiums via a mobile money platform. First launched as a pilot, the platform was so successful that a formal agreement between Airtel and the local subsidiary of French insurance firm AXA was signed in September 2015.

Outlook

ARCEP is taking steps to ensure good service quality on the county’s mobile networks. After a formal written warning in April 2015, the regulator fined all four operators in October 2015 for failing to offer uninterrupted mobile network coverage and therefore reneging on sections of their licenses’ terms and conditions. This evidence of a strong regulatory presence is a good sign for the sector’s future development, with operators being incentivised to improve their infrastructure and services. Meanwhile, the long-awaited merger of two of the largest operators promises to restructure the telecoms landscape. As the mobile penetration rate nears saturation, operators are seeking to expand value-added products to maintain their competitiveness in what is a relatively compact market.

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The Report: Gabon 2016

Telecoms & IT chapter from The Report: Gabon 2016