Why govt preferred Libyans to Celtel and Vodacom

It didn’t come as a shock to some as Lap Green, a little known Libyan company manning not more than 1 million mobile telephone subscribers, won the bid to take over Rwandatel last week.

It didn’t come as a shock to some as Lap Green, a little known Libyan company manning not more than 1 million mobile telephone subscribers, won the bid to take over Rwandatel last week.

The shock was: ‘How can Zain International the Kuwait owned company that owns the mighty Celtel brand, that operates in more than 10 sub-Saharan countries, lose interest in the Rwandatel bid?

How can Vodacom the second biggest mobile operator with 32.4 million subscribers, on the African continent be second suited for Rwandatel?’

There is no better way of telling the story, here how it happened!

Sources from government say cabinet was interested in a player who would operate under the brand Rwandatel, who would control only 80 percent stake in shares, who would continue operating using the already existing Terracom CDMA technology and would have, as a secondary interest, the building of the ailing fixed line infrastructure.

The story now turns around the evolving competition between the two regional giants none of which would trade its already established regional expansion strategies in pursuit of Rwandatel.

Sources say Celtel lost the interest immediately after placing their bid thus prompting them to pullout. Celtel after launching for the first time in the whole world tariffs that know no boundaries, the ‘One Network’, slashing regional phone call prices was interested in having a re-brand of Rwandatel and rope Rwanda in its expanding network.

According to reliable sources, Vodacom and Celtel were also interested in buying out 100 percent shares, a stake that would allow either of the duo to operate as independent public company without any bureaucratic, government involvements.

The two would have wished to protect scenarios like that when government kicked out the former owner of Rwandatel early this year, annulling the Terracom contract, accusing it of not honouring terms of its contract.

In a turn around of events government bought-back its 99 percent shares sold in 2003. The company was again put back on market, this time with 70 per cent of its shares, fiddling around with Karame a brand that brought no success at all.

Upon announcing the  $100 million they were intending to invest in re-building Rwandatel, the Libyans also came out to say, they were willing to have an 80 percent share holding relationship between the consortium that runs their business and any Rwandan player thus having an edge over the Celtel and Vodacom bids.

The $100 million is by far three times above the $25 million the defunct Terracom, was to pay government for Rwandatel. This investment is to stretch over a period of 15-years and would see the company inject $87 million in the economy during its first year of running.

Eng. Albert Butare in an interview with the New Times last week said that National Social Security Fund of Rwanda turned up to be that player buying out 20 percent shares at $20 million.

The Libyans also said they were willing to venture into fixed-line telephony something Celtel and Vodacom where not really interested into pegging there fingers to because fixed-lines have never had any success story in sub-Saharan Africa.

Lap Green promised an investment of $317 million to revamp the telecom sector in the country. Sources also said that the technology factor fatigued Celtel and Vodacom forcing them to shy away.

Terracom being an American company operated its mobile operations using a second generation technology called CDMA. CDMA is quite inferior to a third generation GSM technology that Celtel and Vodacom subscribe to.

CDMA is an acronym for Code-Division Multiple Access, a digital cellular technology that uses spread-spectrum techniques. On the other hand GSM is the Global System for Mobile communications.

GSM which also operated by MTN, is the most popular standard for mobile phones in the world. Its promoter, the GSM Association, estimates that 82 percent of the global mobile market uses the standard and is used by over 2 billion people across more than 212 countries and territories.

Sources say that the CDMA doesn’t allow swapping of SIM-cards and would discourage any forms of borderless networks. Being the most popular, GSM operators like Vodacom and Celtel provide the roaming opportunities and provides the widest selection of handsets.

Only the Libyans were willing to operate under the CDMA with phones without SIM-cards and phones that locked to the Terracom network.

Rwanda already has a South African mobile telecom player in the names of MTN. Sources say that South African players Vodacom and MTN have a long standing agreement drawing a line into where each company should throw investments.

Under this mutual agreement Vodacom would not have had any keen interests in pushing for Rwandatel, if MTN Rwanda is already enjoying a market share of 95 percent.


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