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Viewing cable 08DAKAR778, SUDATEL SHOULD BRING A NEW DYNAMIC TO SENEGAL'S ICT

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Reference ID Created Released Classification Origin
08DAKAR778 2008-07-02 10:24 2011-08-24 16:30 UNCLASSIFIED Embassy Dakar
VZCZCXRO8250
PP RUEHBZ RUEHDU RUEHGI RUEHJO RUEHMA RUEHMR RUEHPA RUEHRN RUEHTRO
DE RUEHDK #0778/01 1841024
ZNR UUUUU ZZH
P 021024Z JUL 08 ZDK NUMEROUS SVCS
FM AMEMBASSY DAKAR
TO RUEHC/SECSTATE WASHDC PRIORITY 0761
INFO RUEHZO/AFRICAN UNION COLLECTIVE PRIORITY
RUCPDOC/USDOC WASHDC
RUEHLMC/MCC WASHDC
UNCLAS SECTION 01 OF 02 DAKAR 000778 
 
SIPDIS 
 
STATE FOR AF/W, AF/EPS, AND EB/CIP:KBLAKEMAN 
USDOC FOR 4510/IEP/ANESA/OA/PMICHELINI 
 
E.O. 12958: N/A 
TAGS: ECPS EINV EFIN ECON PGOV SG
SUBJECT:  SUDATEL SHOULD BRING A NEW DYNAMIC TO SENEGAL'S ICT 
SECTOR 
 
REF:  07 DAKAR 1925 (NOTAL) 
 
DAKAR 00000778  001.2 OF 002 
 
 
1.  SUMMARY:  According to sources from the Ministry of 
Infrastructure and Telecommunications, Sudanese telecommunications 
company Sudatel should begin its business operations and ICT 
infrastructure investment in Senegal in October 2008.  Though 
Sudatel claims to be an independent, private firm, job applications 
are being processed at the Sudanese embassy in Dakar.  Sudatel 
asserts it will invest USD 500 million over the next five to fifteen 
years in establishing its own network, in addition to the estimated 
USD 200 million license fee it has already paid (Reftel).  Sudatel 
is entering a dynamic mobile market and should bring much needed 
competition to the ISP sector.  Mobile customers are concerned that 
recent legislation that collects customer data is intended to 
facilitate government eavesdropping.  END SUMMARY. 
 
SUDATEL'S AMBITIOUS PROGRAM 
--------------------------- 
2.  Sudatel has an ambitious program to penetrate the growing 
telecom market in Senegal.  The company has announced plans to 
invest at least CFA 210 billion (USD 500 million) in equipment and 
ICT infrastructure in the next two years, and create more than one 
thousand jobs.  The company's recruitment process has already 
started and job applications are being processed at the Sudanese 
embassy in Dakar.  Sudatel expects to increase the number of 
fixed-line telephones in Senegal from 283,000 to 300,000 and to 
increase mobile users from 3.5 million to 4.5 million in the next 
two years. 
 
3.  As reported in Reftel, in September 2007, Sudatel won a 
comprehensive telecommunications license, paying as estimated  USD 
200 million to become Senegal's third mobile operator and enter into 
competition with the two existing mobile operators, Orange (part of 
the France Telecom-controlled Sonatel subsidiary) and Tigo (a unit 
of Luxembourg-based Millicom).  In addition, Sudatel has the right 
to provide fixed line and internet services, using its own bandwidth 
to go head-to-head with Sonatel, the current monopoly provider. 
According to sources from the Ministry of Infrastructure and 
Telecommunications, after a number of delays, Sudatel plans to start 
its activities in Senegal in October 2008. 
 
4.  According to company statements in the Dakar press, this is 
Sudatel's first venture in West Africa, though it has a large 
presence in East and Central Africa.  Sudatel reportedly represents 
60 percent of transactions in the Khartoum stock market and has been 
listed on the Bahrain and Abu Dhabi exchanges since 2002 and 2003, 
respectively. 
 
SIGNS OF GROWTH IN THE TELECOM SECTOR 
------------------------------------- 
5.  Over the years, the Senegalese mobile market has recorded sharp 
increases in subscribers.  According to a March report published by 
Senegal's telecommunications market regulator ARTP, January 2008 
mobile usage reached approximately 39 percent of Senegal's 11 
million inhabitants with 99.17 percent of mobile customers using 
pre-paid accounts.  Sonatel/Orange is the market leader with 3.044 
million customers, while Tigo has an estimated 1.118 million.  As of 
September 2007, Senegal has approximately 650,000 registered 
internet accounts, and 96 percent of these are Sonatel ADSL 
subscribers.  Smaller providers and some privately leased lines are 
operating through special contracts, with Sonatel as the bandwidth 
provider.  Fixed line usage is only approximately three percent of 
the population or 315,000 lines, but this number has been falling 
for the past few past years. 
 
6.  Senegal has generally effective ICT policies, effective 
regulators, and fairly good telecommunications infrastructure.  The 
GOS has recently established an inter-ministerial intranet service, 
which is part of a broader pledge by the Wade administration to 
improve service and accountability to the population.  However, this 
network is not yet widely utilized.  With the incorporation of new 
technology such as 3G services, mobile operators Orange and Tigo are 
providing customers with increasing access to mobile internet, 
online banking, and other services.  Tigo has recently introduced 
Blackberry service.  The upcoming arrival of the third operator 
(Sudatel) should further modernize Senegal's telecommunications 
sector, which could be one of the country's most attractive features 
for potential new investment. 
 
NEW PRIVACY CONCERNS 
-------------------- 
7.  Shortly after the February 2007 presidential elections, new 
legislation was enacted requiring mobile operators to collect, 
register, and report to ARTP additional customer data, including 
national i.d. numbers, date of birth, and address.  Previously, it 
was possible to get a cellphone chip without providing even proof of 
identity.  This new requirement has created some suspicion among 
 
DAKAR 00000778  002.4 OF 002 
 
 
customers, many of whom feel that the new legislation does not 
adequately protect personal information, and is likely to be used 
for government eavesdropping.  Consequently, new mobile phone 
subscriptions have slowed significantly, with Orange Senegal, in 
which the government controls 28 percent of the shares, seeing a 
more dramatic slowdown compared to the 100 percent privately owned 
Tigo, according to industry sources.  A member of Senegalese 
National Assembly told Econ, "I am with Tigo because I don't want my 
cell phone tapped." 
 
COMMENT 
------- 
8.  It is still unclear when Sudatel will begin rolling-out its 
services, but Senegal is ripe for enhanced competition, both on 
services and network quality.  In particular, land-line quality is 
poor -- though we are not convinced that Sudatel will make large 
investments in this sector, apart from tapping into the country's 
underutilized broadband internet potential.  If Sudatel follows 
through on its announced plans for investment and employment, the 
company would quickly become one of Senegal's major economic drivers 
for the coming years.  As reported in Reftel, Sudatel is assumed to 
have won its license over rival bidders because its cash offer was 
significantly higher.  Unfortunately, we believe the GOS spent that 
entire USD 200 million to support last March's Dakar summit of the 
Organization of Islamic States (OIC), rather than investing in the 
country's ICT infrastructure or improving its regulatory 
effectiveness.  Though Sudatel purports to be an independent, 
private company, it will be interesting to see if GOS regulators are 
influenced by Senegal's relations with Sudan.  President Wade speaks 
of a "special relationship" between the two countries, especially 
after brokering a "peace agreement" between the Presidents of Sudan 
and Chad at the OIC summit. 
 
SMITH