Delivering the goods

With a strong and stable economy, Botswana is rapidly moving towards 100% mobile penetration rates. CommsMEA assesses the country's telecom potential and challenges in the market.

With a population of just 1.8 million people and a geographical area of some 600,000 sq km, Botswana is not generally viewed as one of Africa's most lucrative telecoms markets.

However, as one of the most stable on the continent, with a liberal economy that has given strong growth since independence in 1966, the country has a vibrant and competitive telecom sector.

Indeed, Botswana has two mobile operators, Mascom and Orange Botswana competing with incumbent fixed-line operator BTC. Orange Botswana, which is owned by France Telecom, was formerly known as Vista Cellular, was awarded a 15-year mobile licence back in 1998, and re-branded as Orange in 2003.

Mascom was also licensed in 1998 by Botswana's regulator to provide mobile services for 15 years. The company's shareholders include Portugal telecom, T. S Masiyiwa Holding of Zimbabwe and DECI Investments, comprising the citizens of Botswana, and MTN South Africa, which acquired a 44% stake in 2005.

Botswana's fixed-line sector is less competitive, with just one service provider. Botswana Telecommunications Corp, better known as BTC is the incumbent fixed-line operator and has been granted a license by the regulator (BTA) to provide fixed-line voice services and value added services.

BTC is 100% government owned, with the Ministry of Finance and Development being the major shareholder. However the government has announced plans to privatise it, according to Lindsay McDonald, an ICT analyst with Frost & Sullivan.

"The telecommunications sector in Botswana is considered to be one of the most developed in Africa," she says. "The mobile market is growing at a faster rate than the fixed-line market, and100% mobile penetration should be expected in the next three to five years.

Furthermore, McDonald adds that the country's telecoms authority is recognised as one of the best in Africa, and that there also are plans to put a converged licensing framework in place.

But there remains room for improvement in Botswana's telecom regulations. "The telecommunications market is still not fully liberalised," McDonald says. "There are still restrictions on VoIP provision by the VANs service providers and self-provision of transmission links by the mobile operators."

There are also issues around the liberalisation of the international voice gateway and tariff rebalancing by the incumbent, according to McDonald. Indeed, she points out that the current licenses issued by BTA are service-specific, as operators are licensed to provide either mobile or fixed telephony services.

Moreover, the fixed-line market has low levels of penetration because of poor service delivery, which is below international standards. The difference in the competitiveness of the mobile and fixed-line sectors is reflected in the penetration rates.

While the country has mobile penetration of about 75%, fixed-line penetration was languishing at just 7% at the end of 2007, while internet penetration was 5.31%, according to McDonald.

Meeting potential

While most mature markets have mobile penetration rates of more than 100%, indicating that Botswana should have strong growth potential for mobile as well as fixed-line and data services, McDonald sees limited growth, for the next year or two at least.

"Given the current levels of penetration, there is not that much room for growth in this market," she says. "It is also important to remember that the country represents quite a small market anyway - there are less than two million inhabitants in the country. Growth would come mainly in the types of services provided."