The Democratic Republic of Congo (DRC), along with South Sudan and Ethiopia, still has tremendous growth opportunities in terms of telecom markets in the long term.
The mobile penetration in DRC is about 15%, which is relatively low compared to the average of 50% in Sub Saharan Africa. Therefore, most telecom operators have been eyeing the DRC market in order to sustain their growths.
Frost & Sullivan analyst Mervin Miemoukanda says that, in light of the recent negotiations between France Telecom and Congo China Telecom, Orange could shake up the Congolese mobile market.
“Mobile CDMA operators are likely to exit the DRC as the competition with GSM operators toughen up. We may witness the same situation as in Nigeria, where mobile CDMA operators have been posting negative profit margins year-on-year.
“In the same vein, Vodacom Congo and Airtel DRC could lose market shares to France Telecom’s subsidiary Orange. That said, France Telecom should get it right first as the DRC market is a tough one,” Miemoukanda says.
“The entry of France Telecom in the DRC telecom market will push the existing telecom operators in the country to revise their market strategies and business models,” he adds.
France Telecom has outstanding track records in the African mobile markets, specifically in the Francophone regions. The company has been successful in somewhat challenging countries with the same features as DRC. A case in point is Mali and Guinea, where the company adopted strategic deployment approach with focus on the rural market.
“It will be interesting to see how France Telecom will develop its homegrown strategies in DRC, where incumbent mobile operators, Vodacom Congo and Airtel DRC, have extensive geographic coverage and strong distribution channels,” says Miemoukanda.
CCT has had limited network coverage in the country, therefore it will be unlikely that France Telecom will shake up the market in the short term. France Telecom will focus on expanding its networks across the country, specifically in underserved markets, such as the Eastern and Northern parts of the country.
The Congolese government still has a 49% stake in Congo China Telecom. “The question one is tempted to pose is whether France Telecom will execute its strategies, without the involvement of the Congolese government. Considering the track records of the Congolese, this could have a detrimental effect on the company’s operational efficiencies. France Telecom would consider acquiring the remaining stakes detained by the Congolese government”, says Miemoukanda.
“However, France Telecom is likely to struggle to make in-roads into the market, as existing operators only compete on tariffs, due to a high price-sensitive market. Therefore, to be successful, the company could introduce innovative products and customised offerings, such as mobile money and broadband services for mass market. One of the areas the company could look at is its fixed line services, as these services are non-existent in the country. Combining mobile and fixed-line services will give France Telecom a competitive edge over existing operators, specifically in the enterprise segment,” says Miemoukanda.