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Mozambique to gain third mobile operator

Tender presents opportunity for major players such as MTN and Bharti, according to analyst.

Mozambique presents an attractive opportunity to international operators.
Mozambique presents an attractive opportunity to international operators.

The government of Mozambique has issued a tender for a third mobile licence in a move that will open up competition with the country's existing mobile operators Mcel, the mobile arm of incumbent operator Telecomunicaçöes de Moçambique, and Vodacom.

Mozambique's government, which was originally expected to launch the tender by the end of 2009, put a reserve price of US$25 million on the license, and said submissions were due by July 6th 2010.

The tender presents an opportunity for mobile operators, including MTN and Bharti Airtel, looking to expand their footprint across sub-Saharan Africa, according to analysts at UK-based Onda Analytics.  

"With only Vodacom of the region's main players already in Mozambique, it is likely that other major operators, such as MTN and Bharti will be watching the opportunity closely. Portugal Telecom has also already declared an interest in entering the Portuguese-speaking market," said Tom Harden, partner, Onda Analytics.

In a report published late last year, Onda Analytics estimated that Mcel and Vodacom would generate total revenues of $388 million in 2009, with this figure forecast to grow by 80% in the six years to 2015, aided by the additional subscribers and revenue from a third operator. A successful third operator could expect to take an 18% share of total mobile service revenue by 2015, the report added.

Despite this, a third operator could also face an uphill struggle in a market renowned for its low APRU. "With market penetration still relatively low and set to grow strongly over the medium term, the opportunity is clear. However, Mozambique has low average income levels and hence low ARPU, meaning that the profitability of a third operator is open to question," Harden added in a research note.

Mozambique, which has a population of about 21.6 million people, had 4.88 million mobile subscribers by the end of June 2009, up from 3.87 million a year earlier, giving a mobile penetration rate of about 22.4%, according to data from TeleGeography.