In the palm of your hand: Several new mobile options are being heavily promoted

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Despite promising announcements, a number of delays have kept Gabon’s citizens from benefitting from 3G services. Consequently, government mobile services do not exist yet and private mobile services remain very limited, though Airtel has begun initial attempts to introduce mobile payment solutions.

The government, through several initiatives, such as the implementation of the “Cloud Gabon” project, the expansion of a mobile broadband network and the creation of IT flagship zones, is determined to encourage the development of mobile services.

MOBILE PAYMENT SERVICES: Through mobile payment services, clients of a mobile operator can pay their bills with participating service providers, receive the payment of their salaries, transfer funds, buy additional mobile services and cash in their funds at any point of service. Customers usually do not need to have a bank account to enjoy these services.

As such, mobile payment service are particularly well adapted to the high penetration rate of mobile phones and the low penetration rate of bank accounts in most sub-Saharan countries. But until recently there was no regulation in Gabon (or in most other Central African states) regarding mobile payment services.

In order to fill this vacuum and respond to a growing need, the Bank of Central African States (Banque des États de l'Afrique Centrale, BEAC) organised a seminar in June 2011 in Yaoundé, Cameroon, where all stakeholders could share their input before the adoption of new regulations on mobile payment services. The new regulations stipulate that the maximum value of cash that can be held in a mobile account is of CFA5m (€7500). It also indicates that the ceiling per transaction is CFA500,000 (€750) and that the maximum value of transactions is CFA2.5m (€3750) per day and CFA10m (€15,000) per month.

As for the ceiling of commissions paid to intermediaries that act as points of service, it is set at CFA2500 (€3.75) and/or a maximum of 5% per transaction. Airtel is the first mobile operator in Gabon to offer a mobile payment solution, called Airtel Money. The mobile payment solution is the result of a partnership with BGFI, a leading local bank, signed in July 2010. According to the agreement between the two companies, each electronic value on Airtel’s platform is guaranteed by a reserve fund owned by BGFI.

The service was initially tested during a pilot phase in 2011 with Airtel employees and a few local retailers. It was evaluated by the BEAC in March 2011, and Airtel was granted a licence in August 2011. Airtel Money was officially launched for public use in March 2012.

By the end of August 2012, 80,000 customers had registered with Airtel Money, and 900 points of service, where customers can cash in their electronic money, have been installed in local businesses. A total of 200 points of payment have also been identified, although only 50% of them were operational as of the beginning of the second half of 2012.

BIG PLANS: “Our objective is to reach 400,000 users and 2500 points of service,” Charles Boukinda, senior manager and head of mobile commerce at Airtel, told OBG. “We are thus in the process of developing partnerships with common service providers, to allow their customers to pay their bills electronically.” IPI9, a local internet service provider, recently announced that it was now also offering mobile payment options to its subscribers through Airtel Money.

“At the moment, people need to see that they can trust Airtel Money, particularly if they are to receive their salary through it,” Boukinda told OBG. “We have noticed that when they have been demonstrated that Airtel money is real money, they fully adopt the service. As a result, more and more people want to subscribe to Airtel Money.” Indeed, the volume of transactions was $1m in August 2012, growing by 100% compared to the figures seen for the previous month.

“As mobile payment services are a bit more complicated than simply buying a SIM card, it requires a step-by-step communication strategy, to avoid confusion. Our next upcoming marketing campaign is going to focus on how to one can use the Airtel Money service to transfer funds,” Boukinda told OBG. The development of mobile payment services can have a significant impact on the growth of Gabon’s digital economy, in particular by encouraging small retailers across the country to begin to run their own local points of service activities, further expanding the network.

ON HOLD: The arrival of 3G technology, which allows mobile operators to offer value-added services such as broadband mobile internet, music and video e-commerce platforms and video call services, was widely announced by Gabon’s government in 2010.

The Regulatory Agency for Electronic Communications and Postal Services (Agence de Régulation des Communications Electroniques et des Postes, ARCEP) eventually organised a tender for the acquisition of licences for 3G operations.

The bidding price was set at CFA33bn (€49.5m), which represented a major investment compared to the limited number of potential users. Consequently, no mobile operator took part in the tender, although there is a growing demand for services which require more bandwidth. The arrival of the 3G technology in Gabon was thus postponed with no clear indication on how the government would proceed.

INCREMENTAL ENTRY: In October 2011, following a round of bilateral discussions, ARCEP finally awarded the first 3G licence to Airtel (the brand under which Celtel Gabon operates) and extended the company’s 2G licence. The cost of the licence acquired by Airtel was substantially reduced from the initial price. (ARCEP eventually granted it to Airtel for a fee of about CFA5bn, or €7.5m.) No other operator has yet followed suit and purchased its own 3G licence.

It was reported in December 2011 that Airtel had reached an agreement with Gabon Telecom to access the SAT3 fibre-optic cable and thus benefit from its broadband connection, but the firm has not yet announced the start of its 3G services.

According to Arthur Bongo Ondimba, the CEO of local internet service provider Solsi, his firm is also considering the possibility of forming a consortium, depending on the conditions for accessing the fibre-optic cable. As Bongo Ondimba told OBG, unless the government decides to intervene, the prices will likely be high, given the level of investment involved.

As for Airtel, the company is still waiting for a granting decree to be issued by the government that will authorise 3G use. At that point, companies and even the general population should be able to benefit from faster and more powerful data exchange services. However, there is no indication as to when the government will be issuing the granting decree. In the meantime, no other mobile operators seem to currently have an interest in acquiring their own 3G licence.

“Considering its leading market position, it is up to Airtel to launch 3G services first,” Vincent Wegmann, the marketing director of Azur, told OBG. “The cost of a licence is prohibitive, and there is a CFA100m (€150,000) penalty placed on activation in the case of there being a monopoly present at that time,” he said.

MAKING MOVES TOWARDS 4G: Armand Clotaire Lichambany, the general manager of the Department for the Promotion of the Digital Economy at the Ministry of Digital Economy, Communication and Postal Services, told OBG that Airtel’s granting decree has not yet been fully issued yet with regards to 4G. “The granting decree will be issued,” he said. “Then, the licence acquired by Airtel and the granting decree will allow the company to offer both 3G and 4G services. Hence, it should be considered if it is not preferable to skip 3G and move directly toward 4G.”

The long-term evolution (LTE) technology used in 4G mobile phones could enable people living in remote areas to benefit from a wider ranger of mobile services. “Using the 4G technology can help Gabon meet the Millennium Development Goals, by contributing to poverty reduction and by increasing access to health services,” Lichambany told OBG.

The ministry is thus evaluating the possibility of reducing the cost of the licence from CFA5bn (€7.5m) to CFA3bn (€4.5m), to ensure that more mobile operators can enter the 3G and 4G market in Gabon, thus helping to boost rural development.

CLOUD GABON: The development of a mobile broadband network using LTE technology is essential for the growth of the digital economy and the successful implementation of the government’s development strategy. It will provide access to internet and to mobile services in rural areas. Potential mobile services include applications relating to agriculture, learning, government, environment and health services, all part of the “Cloud Gabon” project, designed to increase the country’s cloud-computing capacity.

HEALTHY APPLICATIONS: Another priority in the development of digital governmental services is the mobile health component. “If dispensaries in remote areas are equipped with smartphones, it will be possible to provide people in such locations with better, more regular and accessible medical assistance. For instance, mobile health services have the potential of considerably reducing child mortality,” Lichambany told OBG. “In each dispensary nurses can be trained on how to use a smartphone to regularly collect medical data on villagers. This data could then be transferred instantly to a remote medical centre where each case could be monitored by a team of doctors. When needed, the required medical resources could then be sent immediately to the dispensary.”

The development of private and public mobile services is essential for the growth of a real digital economy in Gabon. Initial services, such as Airtel Money, seem to respond a growing need of the public. But mobile services can only develop if there is an affordable and reliable broadband network. It is up to the government to help bring about these conditions, by removing financial and administrative obstacles to the acquisition of 3G and 4G licences and by developing strategic public-private partnerships for the construction of all the required infrastructure and IT flagship zones. Once this is achieved, more operators will likely join the 3G segment, and lead to more mobile options as a whole.

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The Report: Gabon 2012

Telecoms & IT chapter from The Report: Gabon 2012

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