In line with the its economic development, Côte d’Ivoire’s telecoms market has undergone a period of significant growth. On top of a strong increase in the penetration of mobile communications services over the past few years, the market is now being revitalised with the expansion of 4G networks, combined with a rising focus on the provision of data services by the country’s three operators. These trends are being underpinned by a more vigorous approach by sector regulators. In recent years measures have included revoking the licences of some telecoms operators, a move which has reshaped the market. Largely caused by a lack of compliance on the part of these companies, the strict punishment was intended to spur the industry into providing better services and allocating more resources to infrastructure development. In line with this firm stance, the government has also increasingly used financial penalties as a way to encourage operators to improve service provision.
Sector Weight
Côte d’Ivoire already has one of West Africa’s most dynamic telecoms markets, which has recently seen a combination of new regulations, fresh investment and market maturation that is likely to strengthen the sector’s weight in the economy. According to the Group of ICT Sector Operators (Groupement des Opérateurs du secteur des Technologies de l’Information et de la Communication, GOTIC), Côte d’Ivoire’s ICT sector currently accounts for 8% of GDP, most of which is attributed to telecoms.
Prior to 2016 the market consisted of six operators; however, it was for the most part dominated by the three largest companies, France-based Orange, South African firm MTN and MOOV, which is owned by Morocco Telecom. The three firms combined accounted for 95.8% of mobile subscribers and 96.7% of mobile telecoms revenues in 2015, and roughly the same in 2014, according to figures from the country’s telecoms regulator, the Telecommunications/ ICT Regulation Authority of Côte d’Ivoire (Autorité de Regulation des Telecommunications/TIC de Côte d’Ivoire, ARTCI). However, in mid-2015 the government moved to revoke the licences of three smaller competitors, giving the trio of dominant players even more control of the market.
In 2016 the total revenue of the mobile segment – which comprised of income from Orange, MTN and MOOV – was CFA872bn (€1.3bn), according to the latest data from the ARTCI. This was marginally better than in 2015, when the total was CFA851bn (€1.3bn), which in turn represented a near 10% increase on the previous year. The upward trend is a continuation of growth in mobile services uptake in recent years, and suggests that the government’s changes did not have a major impact on sector revenues.
In terms of total investment in mobile communications, this rose from CFA87.9bn (€131.8m) in 2015 to CFA251.4bn (€377.1m) in 2016. This mirrored a similar rise in mobile penetration, which increased from 104.86% in mid-2015 to 125.92% by mid-2017.
Meanwhile, investment in the internet industry has varied over recent years, rising from CFA1.8bn (€2.7m) in 2011 to 3.8bn (€5.7m) by 2014, before decreasing to CFA1bn (€1.5m) in 2015 and CFA741m (€1.1m) in 2016, according to state figures. By comparison, internet penetration has shown steady growth, rising from 23.08% to 43.31% between 2014 and 2016. Much of the upswing in internet users, however, has taken place via mobile internet subscriptions.
Licences Revoked
In its mid-2015 announcement to nationalise the mobile operators Café Mobile, Comium and GreenN, the ARTCI stated that the move was to improve market efficiency, promote stronger competition and encourage more solid commitment by operators to improving service quality. The strict intervention was further justified by the large volume of accumulated debts that the three operators had incurred. A combined total of CFA90bn (€135m) was owed by the firms to the state for unpaid taxes and licence fees. At the time authorities also cancelled an unused operating licence that had been given to Abu Dhabi-based firm Warid Telecom. “From the moment these actors didn’t pay their licences, it was the right move on the part of the government. Furthermore, we are a market of 24m people, so the market does not have the capacity for six active licencees,” Catherine Assanvo, deputy-director for strategy and development at Orange, told OBG.
Missed Opportunity
In revoking the licences, the government announced that some of the three operator’s assets would be tendered as part of a fourth licence. The move seemed to be making headway in September 2016, when the authorities announced that this other licence would be bought up by Libyan Post, Telecommunications and Information Technology Company (LPTIC). The firm, which is owned by the Libyan government, had already been present in Côte d’Ivoire through its subsidiary LAP Green Network, which managed one of the three operators that had been nationalised in 2015 – GreenN.
However, in a turn of events in October 2017, the authorities announced that the LPTIC licence had been revoked. The government stated that not only had the Libyan firm been unable to begin the deployment of its network, but that it had requested to change the conditions of its licence. Following the company being awarded the licence, little additional information had come out about how it would deploy its 4G network and comply with legal requirements.
As of early 2018, it is unclear whether the government will attempt to tender a fourth mobile licence in the near future. Given the current level of penetration of mobile communications in Côte d’Ivoire, a fourth mobile operator making a fresh entrance into will likely need to have robust financial resources to be able to secure a significant market share.
Mobile Trends
Mobile service providers have seen their customer base rise rapidly, especially over the past decade, growing from roughly 4m subscriptions in 2006 to over 27.5m in 2016.
This continued into the third quarter of 2017, when the figure hit 32.2m. Subscription numbers largely surpass the country’s total estimated population, revealing that a large proportion of users possess more than one SIM card, which is a common strategy used to take advantage of specific promotions and inter-network discounts and rates.
The reduction in the number of mobile operators coupled with the industry‘s organic rate of growth have translated into positive changes in market share for two of the players. Orange saw its share increase from 41.2% to 43% between mid-2015 and mid-2017, while MOOV underwent a bigger expansion from holding 18.46% to 23%. Over the same period, MTN saw a slight reduction in market share, from 34.56% to 34%, according to the ARTCI.
Mirroring what is happening in several markets across the globe, Côte d’Ivoire’s telecoms sector is undergoing a transition from a purely voice market to one where data is a significant driver of revenue, too. The speed at which this change happens will likely depend on how effectively the current players in the mobile industry can roll out affordable offers. Nonetheless, it is likely that voice will remain a vital component of revenue for the foreseeable future. “Voice will remain a critical part of the sector,” Patrick M’Bengue, president of GOTIC, told OBG.
Pre-paid customers remained the dominant driver in the mobile segment, accounting for 99.57% of customers in 2016 and showing little change as of the third quarter of 2017.
Mobile Internet
Growth in smartphone penetration is also sustaining a rise in data consumption, while opening the door for more content delivery in the future. “At the moment, around 15% of the market is made up of smartphones,” Orange’s Catherine Assanvo told OBG, adding that since the end of 2016 three out of four mobile phone units sold in Côte d’Ivoire are smartphones.
In the way that mobile phone penetration quickly overtook that of fixed-line telephony, the internet market is largely circumventing fixed-line internet. Through the first three quarters of 2017, mobile internet subscriptions grew by over 14%, reaching a total 16.9m in September 2017, with it taking little over a year for the total to more than double from the 7.5m customers registered in June 2016. By comparison, fixed-line internet subscriptions fell from approximately 101,000 in June 2016 to 94,000 a year later, but recovered as of September 2017 to a figure of 118,000, according to the ARTCI.
The mobile internet segment remained dominated by MTN, which had a 49% market share in the third quarter of 2017, while MOOV and Orange’s each held close to 25%. The operators earned a combined revenue of CFA20.4bn (€30.6m) from mobile internet during the second quarter of 2017, up from CFA18.7bn (€28.1m) in the first quarter of the year.
The deployment of 4G networks has been one of the telecom market’s top priorities in recent years, and in both 2015 and 2016 the three operators renegotiated their licences and began paying for new ones to enable them to provide 4G services across Côte d’Ivoire. The operating permits were priced at CFA100bn (€150m), with each provider allowed to launch 4G offers at the beginning of 2016. The licences are valid for a period of 15 years, although the sector players have told international media that they will attempt to negotiate an extension.
Mobile Money
Mobile services for day-to-day financial transactions is another area that has gained significant ground in recent year, with mobile money now a critical part of operators’ revenue streams. According to the GSMA, an industry trade body headquartered in London, in late-2011 – three years after mobile money first reached the country’s markets – 2m accounts had been registered for the service. By 2014 this had risen to 6m, and grew by a further 33% to hit 8m by mid-2017, according to figures from the ARTCI. Orange dominates the market, having registered 5.4m mobile money accounts as of mid-2017, followed by MTN with 2m and Moov with 555,000.
As of August 2017 mobile money penetration rates showed continued growth reaching 34.46%, up from 30.8% in December of 2016. The rising volume of mobile money transactions, which brought in about CFA51.2m (€76,000) in revenues to the operators in the market in 2016, is part of a regional trend.
The product first came to the region after 2006, when the Central Bank of West African States ( Banque Centrale des Etats de l’Afrique de l’Ouest, BCEAO) established the necessary legislation governing money transactions by non-banking institutions, leading to the establishment of mobile money services by the Ivorian mobile market’s three main competitors, as well as by e-money institutions such as Qash Services and CelPaid. Over the following years, operators began to expand their services, establishing partnerships with a host of other sectors that can benefit from mobile payment services. One such example was when, in early-2015, Orange partnered with the pan-African bank Ecobank to allow customers to transfer money between mobile and bank accounts in Côte d’Ivoire, Cameroon, the Democratic Republic of Congo, Niger, Senegal and Guinea.
Additionally, in July 2015 MTN partnered with Western Union to allow its customers to receive mobile money transfers from the financial services company in Côte d’Ivoire and Rwanda. MTN has also been partnering with operators in African countries where it does not have a presence: in 2014 it signed a deal with Airtel to allow its customers in Côte d’Ivoire to make mobile money transactions with users in neighbouring Burkina Faso. A similar accord was established with Vodafone, allowing MTN users in Uganda, Rwanda and Zambia to send and receive money with Vodafone users in Kenya, Mozambique, Tanzania and the Democratic Republic of Congo.
The regional mobile money segment has also attracted firms from other sectors. Pan-African online retailer Jumia, for instance, launched its mobile money platform, Jumia Pay, in Nigeria in mid-2016. The launch is expected to be a precursor to similar moves in other nations, with media reports stating that the platform would also be launched in Côte d’Ivoire, Egypt, Morocco and Kenya in the near future.
Legal Change
The regulation governing mobile money transactions in the region was tightened in March 2017, when the BCEAO blocked mobile money transactions between UEMOA countries and France. The ruling came after Orange Money Côte d’ Ivoire, Orange Finances Mobiles Senegal and Orange Finances Mobiles Mali, began offering mobile money transactions between these countries and France. According to international press reports, West Africa’s banking regulator argued that the suspension of these services was due to the fact that only banking institutions are allowed to manage money transfers between West African countries and other regions.
Fixed-Line Services
Global trends have traditionally seen the fixed-line market pushed to the bottom of the telecoms spectrum. In several African markets that experienced a fast adoption rate for mobile services before fixed lines had asserted themselves, this tendency is even stronger. According to the ARTCI, as of September 2017 there were approximately 288,000 fixed-line subscriptions in Côte d’Ivoire. The number represents a slight increase on mid-2016, when 283,000 fixed lines were operational, but is considerably lower than the number of fixed lines in 2002, which exceeded 334,000. For the two providers that make up the fixed-line services, the segment generated total revenues of CFA196.5bn (€294.8m) in 2016. As of the third quarter 2017 the fixed-line market was dominated by Orange Fixe service, which had a market share of 97%, with the remaining 3% of users serviced by MTN Fixe. Orange merged with Côte d’Ivoire Telecom in early-2017, putting its name on the service, though the state still owns a 49% share.
With an overall penetration rate of 1.2%, it is difficult to envision a considerable expansion of fixed-line services in the coming years, although the segment will likely undergo small increases in the number of users as new businesses are opened.
Number Portability
A long-awaited measure set to come online in 2018 is the introduction of number portability for mobile users. The ARTCI’s intention to implement the regulation goes back several years, with an initial study on the potential impacts of the measure published in 2014. In early 2016 a ruling ordering the effective implementation of number portability in a maximum period of 24 months came out, and in June 2017 the ARTCI announced it had chosen local business operator VipNet to handle the management of the necessary system.
In winning the bid, the company beat out offers of three international firms, Digital Africa Telecom, Crossroad and Silicom. The contract to manage the system was worth CFA326.6m (€490,000), according to international media reports, and required VipNet to have a centralised portability base up and running before the end of 2017. The ruling also established that the process to migrate consumers between operators while maintaining their original numbers should take no more than 24 hours. “Ensuring lower regional roaming tariffs, expanding broadband access, and instituting number portability are three of ARTCI’s priority projects,” Ahmed Chérif, CEO of VipNet, told OBG. “The latter will benefit users by lowering the costs of changing numbers and encouraging competition across a saturated sector.”
Regulating Standards
The regulator has also been assertive in pushing for quality in the sector. This stance has evolved since the implementation of the 2012 telecoms law, which helped reframe the sector on the back of the previous industry law promulgated in 1995, and has made it easier for the ARTCI to monitor the way the operators’ investment plans are being implemented.
At present one of the regulator’s main priorities is to ensure call quality. This, however, has translated into heavy fines for telecoms operators (see analysis). Although financial penalties can be an effective way to push for service quality improvements, they have nonetheless become a contentious issue for the sector, particularly in a country where a small number of players account for the majority of the industry’s contribution in terms of government fees. “We need to break this paradigm of viewing the telecoms operators as cash cows,” Patrick M’Bengue, told OBG. “There is also the question of how to tax telecoms and media companies that provide services and run advertising in our country but pay taxes in elsewhere. Enlarging the taxation base of firms that can be considered telecoms players would certainly help distribute the sector’s burden more evenly.”
Pushing For Security
The government has also made moves to create a safer online business environment. In mid-2013, when the National Assembly approved laws to regulate e-commerce and electronic transactions, one important change was the authorisation of electronic signatures. This was done to help streamline both online operations conducted by private businesses, as well as facilitate citizens interactions with various branches of the state bureaucracy. That same year laws saw the approval of laws to strengthen the protection of personal data, setting-out the legal privacy guidelines for internet users. This law, which will come into full effect in 2018, will require enhanced in-country data collection, pushing a number of operators to increase their data storage capacity through a number of datacentres. Legislation aimed at improving security of mobile communications then came in September 2017, when authorities launched a campaign to encourage users to register their information with mobile providers by March 2018 by producing a valid form of ID. The move came after an initiative to implement stricter rules for SIM card sales in early 2017, making it mandatory for buyers to register in authorised stores, putting an end to sales by street vendors. Cybercafes will also be required to register users.
Ranking
Some of the sector’s weaknesses and strengths were assessed in The Global Competitiveness Report 2016-17, published by the World Economic Forum. In the document Côte d’Ivoire was ranked 98th out of 138 countries for its overall technological readiness, one of the 12 key elements the report examined. Within that category, the country came 59th for availability of most recent technologies, 60th for foreign direct investment and technology transfer, and 69th in company-level technological absorption. However, it came in 110th and 120th for the number of internet users and average internet bandwidth, respectively, pointing towards the need to further incorporate digital tools and capabilities. Côte d’Ivoire was ranked 62nd for the number of mobile phone subscriptions, but had a worse ranking for the prevalence of internet access points in schools (98th).
Outlook
The survey results underscore the room the ICT industry has to grow as it continues to be a key contributor to the economy. Export.gov, a body that helps US firms export to international markets, has estimated that telecoms contributed over $878m to Côte d’Ivoire’s budget in 2016. Beyond its fiscal impact, the sector provides an important platform for entrepreneurship and market development for Ivorian companies. As coverage of 4G services continues to improve, data is set to become a vital source of revenue for operators, and a solid platform for domestic content to be provided across the country. The tender of a fourth mobile telecoms licence is likely to give additional time for the sector regulator to consider the state of the market and whether an additional operator could enhance it. With investment in infrastructure set to continue over the coming years and data usage expanding, the industry should maintain its positive performance over the medium-term.
