Sudatel unit eyes revenue growth
Dubai, March 4, 2012
Expresso Telecom, a four-country African operator owned by Sudan's Sudatel, aims to double its revenue by 2014, a top executive told Reuters, with the firm targeting mobile data to drive growth.
The Dubai-based operator, which was set up in 2007 and has about 2.3 million subscribers across its voice and mobile data licences in Ghana, Senegal, Guinea and Mauritania, also wants to expand its footprint across sub-Saharan Africa.
'As a group we're hoping to be Ebitda (earnings before interest, tax, depreciation and amortisation) positive this year,' said Tanvir Haque, chief business development officer.
Expresso aims to raise its annual revenue to $350 million by 2014 from about $150 million at present, he said.
The firm is a relatively small player in West Africa; in contrast to major operators such India's Bharti Airtel and France Telecom. It has a 16 per cent market share in Senegal, 21 per cent in Mauritania, 10 per cent in Guinea and just 1.5 per cent in Ghana.
African markets are among the toughest globally, with multiple operators, low-income populations and high costs due to a lack of infrastructure, but Haque was confident Expresso would achieve its targets.
'There's no denying we're operating in difficult markets where many people earn less than $1 a day, but there is also a high-value segment willing to spend significantly more on telecommunication services,' said Haque.
'African markets have this huge dichotomy. We believe we have products and services to meet the needs of the consumer market, but in some markets we are being very specific in targeting the high-value customer.'
This means mobile data, which many telecoms operators across the Middle East and Africa hope can offset falling voice margins. Data provides a tenth of Expresso's revenue but this could rise to up to 40 per cent over the next three years, Haque said.
'Data ARPUs (average revenue per user) are much higher than those for people who just use their phone for voice and text, so we don't necessarily need to increase our subscriber base by that much to reach our revenue target, we just need to target the right customers,' he said.
'The small-to-medium business segment is underserved, so we are targeting this sector.' Mobile data penetration in Expresso's markets is likely to rise six-fold to reach 30 per cent of households within the next decade, Haque predicted.
'Mobile broadband demand is ready to explode, especially in the business segment,' he said.
'The main difficulty is the cost of PCs and tablets, which remain quite expensive for many African markets, but as hardware prices come down, demand for broadband will increase and that will largely be served by mobile datacards, not fixed services.'
Expresso has ambitions to expand its African footprint and would consider bidding for mobile virtual-network operator (MVNO) licences, with governments unlikely to issue additional conventional mobile licences.
'We would like to have a corridor of operations through Sub-Saharan Africa, running from Senegal in the west to Sudan in the east and covering everywhere in between, so we're interested in Chad, Niger and Mali, but our main focus for now is organically growing our existing businesses,' said Haque.
'That will give us a platform to then expand our footprint. Within three years we will look at inorganic growth through acquisitions.'
Expresso may launch an initial public offering in three to five years, he added.– Reuters
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