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Algerian telecom Djezzy sees path forward

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Djezzy

A tax dispute behind it, Djezzy receives approval to expand its 3G network in the fast-growing mobile market.

Djezzy, a long-troubled Algerian telecom, says it is on a path to growth after receiving approval to upgrade its network to 3G nationwide.

The upgrade could put Djezzy on a par with rival companies Mobilis, which offers 3G coverage in all 48 of Algeria’s provinces, and Ooredoo, which offers 3G in 36 provinces.

Djezzy currently has more than 18 million subscribers, almost half the market, but it offers 3G coverage in only 30 provinces. The company, in which the Algerian government has a 51 percent stake, said it would extend service to the remaining provinces this year.

Tax dispute slows Djezzy growth

Algeria’s mobile market is booming. However, Djezzy’s growth has been slowed by a lengthy dispute over back taxes that culminated in the Algerian government’s purchase of a majority share in the company in 2014.

VimpelCom, owned by Telenor ASA of Norway and Russian billionaire Mikhail Fridman, retained the remaining 49 percent of the Djezzy, and continued to operate Djezzy through their Optimum Telecom Algeria.

VimpelCom recently reaffirmed its commitment to the Algerian market.

Company will expand 3G nationwide in 2016

Vincenzo Nesci, executive chairman of Optimum Telecom Algeria, said in March that the company had received government authorization to deploy 3G services in all provinces of the country and would implement the expansion during the during the ‘first months’ of 2016.

The expansion follows a long period of crisis for the company.

The Algerian government barred Djezzy from importing SIM cards and other equipment starting in 2010 and the Algerian central bank blocked overseas transfers of funds – including paying dividends to the parent company – in a dispute over taxes Algeria said the company owed.

The government said Djezzy, at the time the country’s largest operator with 14 million subscribers, owed $600 million in back taxes.

Government buys share of company

Algerian regulatory hurdles also derailed a proposed sale of Djezzy to MTN, a telecom based in South Africa, for $7.8 billion.

Instead, the Algerian government bought a majority stake in Djezzy in 2014, in a deal that provided the parent company with $4 billion in cash and dividends after paying a fine of $1.3 billion to settle the Algerian tax claims.

Djezzy faces competition from two other major mobile network operators, Mobilis and Ooredoo, seeking to serve Algeria, which has a population of about 40 million.

Djezzy leads market, lags in 3G

According to an August 2015 report by Algeria’s Post and Telecommunications Authority, Djezzy leads in the total number of subscribers with 18.6 million, nearly half of the market. Mobilis has 13 million subscribers and Ooredoo has 11.7 million.

However, Mobilis leads in 3G subscribers, with 3.8 million, followed by Ooredoo with 3.4 million. Djezzy brings up the rear in 3G with only 1.25 million subscribers.

The regulatory agency said the market grew by 22.7 percent in 2014, compared to 2013. The total market generated revenues of about $3 billion in 2014, 8 percent higher than in 2013.

One study found that Algeria was one of the fastest growing mobile markets in the region along with the United Arab Emirates and Saudi Arabia, while the market was stagnant in Egypt, Kuwait and Israel.

Mobile revenue in the Middle East and North Africa was expected to grow from a total of $50.4 billion in 2013 to $59.1 billion in 2018. As more people consume information on their mobile devices, the study said primarily spending on handset data would drive growth.

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Nigeria cuts MTN fine by more than a third to $3.4 bil

Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – Nigeria has cut a fine imposed on MTN Group by more than a third to $3.4 billion and given the South African mobile phone operator until the end of the year to pay it, the company said on Thursday.

The Nigerian Communications Commission handed Africa’s biggest mobile phone company the penalty in October after MTN failed to cut off users with unregistered SIM cards from its network.

Nigeria, MTN’s biggest market, has been pushing telecoms firms to verify the identity of subscribers amid worries unregistered SIM cards were being used for criminal activity in a country facing the insurgency of Islamic militant group Boko Haram.

The fine, originally $5.2 billion, prompted MTN to hold talks with the NCC over the past five weeks seeking a reduction.

“After further engagements with the Nigerian authorities, the NCC has reduced the imposed fine,” MTN said in statement.

The company, which makes about 37 percent of its sales from Nigeria, said it was considering the NCC’s decision.

“Executive Chairman Phuthuma Nhleko will immediately and urgently re-engage with the Nigerian authorities before responding formally,” it said.

Nhleko, who took charge for up to six months after the abrupt resignation last month of Sifiso Dabengwa, led the company for nine years before stepping down in 2011.

The fine came months after Muhammadu Buhari swept to power in Africa’s biggest oil producer, after a campaign in which he promised tougher regulation and a fight against corruption.

It also came after the kidnapping on Sept. 21 of Olu Falae, former Nigerian finance minister, by people whom the regulator said had used MTN phone lines to negotiate a ransom.

Some analysts have said the size of the fine risked damaging Nigeria’s efforts to shake off its image as a risky frontier market for international investors. Others said the fine showed Africa’s biggest economy was keen to enforce the law.

Separately, MTN announced a shake-up of its senior management structure in an effort to strengthen oversight, governance and regulatory compliance across its operations in 22 countries in Africa and the Middle East.

MTN’s Nigeria head Michael Ikpoki and the head of regulatory and corporate affairs Akinwale Goodluck have resigned with immediate effect, MTN said.

The company named Jyoti Desai, a 14-year veteran of the Johannesburg-based firm, as chief operating officer with effect from Dec. 1. Desai’s replacement as Group Chief Technology and Information Officer will be announced soon, MTN said.

 

(By Tiisetso Motsoeneng. Editing by Miral Fahmy and Mark Potter)

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Africa and the Middle East: Going Mobile

Comments (0) Business, Featured, Middle East

ME mobile

By Enu Afolayan, Contributor

Going mobile. That’s the tune businesses, and marketers, are singing in the Middle East and Africa as the end of 2015 nears. If you don’t have a plan or haven’t started one, for the mobile marketplace, then you are at risk at being a generation behind the competition. You’re still driving a moped while everyone else is passing you by in their sleek, new electric cars that are almost driving themselves. Moreover, they are working on an app for that.

The people of the MEA market are snatching up mobile devices at a rapid rate and are second only to the Asia-Pacific market as the largest users of mobile phones. According to eMarketer, an independent market research company, 606 million people in the region have at least one mobile phone. They expect an increase to over 789 million in 2019. That’s a lot of phones. That’s a lot of people with phones who use mobile services and are increasingly buying goods and other services with them.

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