1. AFRICA STRATEGYIN TELECOMMUNICATIONS INDUSTRY TEAM 9 – GREENWICH COHORT Thu Ha LeAlmudena Jimenez CruzStephano BosmanClarisse HerbreteauNabila LarakiJacob Parackal

2. AFRICA STRATEGY IN TELECOMMUNICATIONS INDUSTRY Macro environment Political, economic, social, technological, environmental, legal Competitors Industry environment The organization Markets

3. P Political factors: Many African countries are just out of the civil war. Corrupt previous governments have left behind them disorderly regulatory regimes. Governments tend to intervene in the industry. E Economic: factors: 6% growth rate predicted in the sector for the year 2011 in Africa. Very fertile market, with a significant increase in consumption of new technologies. Sensitive economical disparity depending on the regions of the continent Tremendous investment in the sector since 2007. S Socio-cultural factors: Women in sub-Saharan African countries contribute over 40% of the economic activity of most nations. The literacy of women is low. Increase in the use of mobile phones. L Legal factors: Unified licensing introduced in 2006. Continuing liberalization of VOIP (Voice Over Internet Protocol). Privatization of national telecommunications services in the region is continuing with significant premiums over reserve prices being paid. MACRO ENVIRONMENT OF AFRICA T Technological factors: 3G mobile services Expansion of GSM networks Upgrades in data transmissions due to rapid growth of ADSL and wireless broadband services. E Environmental factors: Stress on saving energy due to high energy consumption in the industry. New technologies for energy saving network towers and grids.

5. Imitation of technology

7. Fresh to segmented and sophisticated local markets

11. is the telecommunications industry attractive in Africa? Yes

12. Companies Virgin Vivendi Airtel Etisalat Vodafone Orange

13. 1. Virgin Mobile  Joint venture with Cell C in South Africa since 2006  Cell C is 100% owned by 3C Telecommunications  Virgin’s marketing know-how  Opportunities and colonial ties Try-out of emerging market Africa strategy

16. Introduction of “Mobi cash “ the first money transfer and payment in MoroccoIntensive marketing campaigns and promotions offers Africa strategy

17. 3. airtel Operates in 16 African Countries.  Mode of entry: Acquisition Focus: Rebranding, improved network coverage, excellent customer care and range of products to chose from. CAPEX: Expand with lower capex and discussion with the government for utilizing USO fund for network. Partners: Looking for strategic partners and setting up of base in Nairobi. Telecom Population: Increase minutes of usage from 50-60 minutes to 250 minutes and increase the net density. Make Phone the mobile laptop for the common man in Africa. Africa strategy

19. MORE CUSTOMERS: focus on private customers and business sector. Better services and stable profit.Africa strategy

20. 5. vodafone Operates in 9 countries with high market shares: Egypt (44.35%); DCR (49%); Kenya (73%); Lesotho (80%); Mozambique (40%); South Africa (59%); Tanzania (46%), Ghana (17%), Libya (15%) Market entry mode: acquisition (Telecom Egypt 1998, Safaricom Kenya 2000, Ghana Telecommunications 2008); joint venture with Telkkom and Venfin in South Africa => Vodacom 1993; non-equity partnership agreement with AlmadarAljadid Libya 2010. Shift towards multi-media and high-end data services, . Focusing on the business segment through including IT Services within its portfolio. Africa strategy

21. 6. orange  Implemented in 15 African countries, primarily focused on the French-speaking areas of North and West Africa, and has then expanded its operations to the English- speaking region of Africa and to other more rural areas. Development and modernization of services through “3G network”. Offer low-cost handsets In Kenya, launched “One Kenyan Shilling per MB” tariff to become the most affordable internet bundle Launch of “Orange Money” online payment services Africa strategy

24. Wages are low; many workers speak English, French along with the enormous number of the available workforce.

26. AFRICA EXPANSION STRATEGY Virgin FDI Vodafone Vivendi Acquisition Orange Etisalat License Airtel Joint-venture Per capita income High (>$4,000 ) Medium ($1,000-4,000) Low (<$1,000)

28. Brand name: While others operates under its own brand name in Africa, Vodafone operates under name of its subsidiariesin some African countries e.g. Safaricom in Kenya, Vodacom in South Africa, AlmadarAljadid in Libya

29. Geographic expansion: Virgin only operates in South Africa, Vivendi operates in 4 Northwest African countries, others expand to operate in most areas of Africa.

31. Possible benefits and problems of current strategy BENEFITS • Integrate into an existing business that already knows the culture and how the country does business • Able to use partners’ network to offer its customers a range of service, which utilize ‘home’ network capabilities as well as extended coverage within Africa • Enable to meet their needs for unified communications, centralized customer care and services using local network. • Lower cost of operation • Benefiting from lower roaming charges • Powerful brand association PROBLEMS • Cultural, administrative, geographical and economical distances (CAGE framework) • Increase in cost of integrating and management • Decreased corporate performance and services • Potentially lowered industry innovation • Suppression of competing businesses • Decline in equity pricing and investment value • Conflict for control and decision-making between Parent company & subsidiary • Governments’ support could decline (E.g: Vivendi and Morocan government)

32. REFERENCES Airtel http://www.airtel.com/wps/wcm/connect/airtel.in/airtel.in/Home [Accessed 5 March 2011] Etisalat http://www.etisalat.ae/index.jsp[Accessed 3 March 2011] http://www.ameinfo.com/137846.html[Accessed 3 March 2011] http://www.bi-me.com/main.php?id=25953&t=1&c=33&cg=4&mset=[Accessed 3 March 2011] http://www.balancingact-africa.com/news/en/issue-no-254/money/uaes-etisalat-buys-5/en[Accessed 3 March 2011] http://www.arabianbusiness.com/etisalat-considers-africa-investments-198228.html[Accessed 3 March 2011] International Telecommuncations Union http://www.itu.int/ITU-D/ict/publications/world/world.html [Accessed 15 March 2011] GDP http://www.indexmundi.com/g/r.aspx?t=0&v=66&l=en [Accessed 6 March 2011] National Income per capital http://data.worldbank.org/indicator/NY.GNP.PCAP.PP.CD [Accessed 12 March 2011] Orange http://www.itweb.co.za/index.php?option=com_content&view=article&id=38751:orange-outlines-strategy-for-africa[Accessed 6 March 2011] http://euroafrica-ict.org/wp-content/plugins/alcyonis-event-agenda//files/Orange_development_strategy_in_Africa.pdf[Accessed 6 March 2011] http://hbr.org/product/orange-cameroon-a-global-telecommunications-compan/an/BAB136-PDF-ENG[Accessed 6 March 2011] http://www.telecompaper.com/commentary/france-telecom-sets-tough-goal-to-double-emerging-markets-revenue[Accessed 6 March 2011] Vodafone http://enterprise.vodafone.com/discover_global_enterprise/global_reach/ [Accessed 3 March 2011] http://www.safaricom.co.ke/index.php?id=1025 [Accessed 3 March 2011] http://allafrica.com/stories/201002161110.html [Accessed 3 March 2011] http://www.vodacom.co.za/vodacom/ [Accessed 3 March 2011] Vivendi http://www.vivendi.com/vivendi/Maroc-Telecom,953#Network [Accessed 3 March 2011] Virgin http://www.virginmobile.co.za/ [Accessed 3 March 2011]

33. APPENDIX 1: cage analysis

38. appendix 2 - POTTER’S FIVE FORCES MODEL The most attractive industry is one in which barriers are low which means that few can hardly enter in the market and non-performing firms can exit easily. Threat of new entrants: LOW. At first glance, it might look like the more profitable the industry is, the more attractive it will be to new competitors; although the attractiveness of the industry is depend on other factors: The capital required to set up this kind of industry in Africa, where the infrastructure is obsolete , is very high. The access to distribution is also another big barrier taking in consideration that getting telecom licenses is not easy. Customer loyalty in this kind of industry is quite high so, that is a factor that could motivate strong-branded companies to establish themselves in Africa. Many African governments provide subsidies to home-companies, which made even harder playing in this industry. Threat of substitute products or services: LOW / MODERATE. Recently it has come out the threat of new substitutes: the voice over IP (VoIP), which is a way to transmit voice conversations over a data network using IP, and the Internet telephony (or “peer-to-peer” telephony), which allows voice calls to be made between PCs over the public Internet using IP. However, at the moment, this threat is reasonable moderate. The quality of the sound is not as better as it could be with a regular call. Although some people that usually call over long distances can instead of picking up a phone go to a computer and call through that but it is not because it is more convenient, it is because just the high price of a long-distance call. The low costs of computer calling could potentially take over most long distance calling. The more local calls and business calls would be more secure for the mobile market, although cell phones with the ability to use the internet to make calls are being made available and will soon take a considerable market share of calls made. Bargaining power of consumers: LOW. The threat of buyers in this industry can be considered fairly low. The individual buyer has no impact on the price of the products offered. Africa market size is huge. While in United Stated and Europe the market has achieved their maximum and they are sutured, in Africa the market is experimented the fastest growing at the moment and it is expected to continuously increasing. Telephone and data services do not vary much, regardless of which companies are selling them. For the most part, basic services are treated as a commodity. Buyers are not usually tough, however, customers seeking low prices from companies that offer reliable service. The telecom industry is expected to always increase. The technology could be improved, change to new system that force companies to be constantly undated but it is not expected to be abandoned.

39. Bargaining power of suppliers: HIGH. The suppliers in this industry are those who provide the broadband switching equipment, fiber-optic cables, mobile handsets and billing software, but also, managers and engineers. We can say that supplier’s power in some aspects of this industry is high. There are few dominant suppliers taking in consideration the limited pool of talented managers and engineers, especially those well versed in the latest technologies that place companies in a weak position in terms of hiring and salaries. The brand of the supplier is very strong. You can think in the case of a highly-demanded fashionable phone (ex. I-phone) that is only offered by a company that have sign a contract of exclusivity with Apple. Just for that exclusive right to be the i-phone provider, the company will increased the number of customers who want to have an i-phone. Their role in the quality of the service is also very strong. If a Company have a signal service that does not provide a good reception in a certain area, the customers who live there will switch for another company who provide better reception. As we saw before, in the case, for example, the phones supplier, is very easy to find a new customer, above all, when the product or service provide for the supplier is so demanded. Competitive rivalry within an Industry: HIGH In the telecom industry, technological advances are crucial to have a competitive advantage in the market. Companies that are successful with introducing new technology are able to charge higher prices and achieve higher profits, until competitors imitate them. Rivalry will be more intense if there are equally size competitors, but in almost all African countries we find a clear market leader firm which dominated the market share. There are a few numbers of large firms worldwide that competes for the market share; this lowers the threat of rivalry. The firms that are in the business, however, fight to increase their market share and that increase the threat. The Industries that have a high fixed cost encourages competitor to manufacture at full capacity by cutting prices if needed. In this field, companies apply the vertical integration which is a strategy to reduce a business' own cost and thereby intensify pressure on its rival. Is not very hard to switch to another company, the rivalry among companies here is also high. Due to all companies which play in this industry play with huge amount of capital and pursue aggressive growth strategies, the barriers to leaving the industry are very high and competitors tend to exhibit greater rivalry. Accordingly, we can affirm that the telecom industry in Africa is very attractive.

40. Appendix 3