South Sudan's civil unrest causing collapse in mobile subscriber base
Following a referendum, oil-rich South Sudan seceded from Sudan in 2011 and became an independent nation. Having been deprived of investment for decades, it inherited one of the least developed telecommunications and internet markets in the world, while other infrastructure is also lamentably poor. Although this potentially can create investment opportunities for infrastructure and service providers, such developments largely depend on a negotiated end to the protracted civil war which erupted in December 2013, and which has caused considerable mayhem and bloodshed, particularly in the oil-producing areas. While the struggle continues, now exacerbated by large-scale famine, investors in all economic sectors have been discouraged.
There was once investment activity among mobile network operators who sought to expand their networks in some areas of the country, but by late 2016 both Zain South Sudan and MTN South Sudan had cut back their workforces in a bid to save on operating costs, while their falling subscriber bases have strained revenue. Zain South Sudan in particular recorded considerable financial losses in 2015 and 2016. Operators in the telecom sector, as in other markets, are placing themselves in survival mode and are hoping for a political settlement and a return to some degree of social stability. MTN reported a 32% fall in the number of mobile subscribers in the year to March 2017, with a consequent severe decline in revenue.
At only around 21% penetration, one of the lowest in Africa, South Sudan's mobile market potentially has many years of strong growth ahead of it, though this is premised on a resolution to the political crisis and a recovery of the country's economy. The virtually untapped internet and broadband market will kick off once the country gains access to international fibre optic cables and a national backbone network is put in place. Sophisticated infrastructure solutions are needed to reach the 80% of the population that live outside of the main urban centres. With a negligible rate of bank account ownership, mobile payment and banking solutions are set to dominate the country's financial services sector as well.
The limits to growth are currently defined by widespread poverty and a low literacy rate, but the government recognises the positive feedback loop on development that access to information and communication technologies (ICT) can have and is providing a range of investment incentives. The international community has provided billions of dollars in aid to strengthen governance and institutions in the young nation.
SES signs multi-year agreement with MADA Communications International to provide satellite internet services; RCS 2016 doubles internet capacity with O3b Networks; Zain South Sudan reports significant losses; South Sudan joins the One Network Area scheme; Government revisits plan to build 1,600km fibre network to connect to submarine cables via Uganda and Tanzania; Mobile banking solutions set to revolutionise the largely cash-based economy; Report update includes operator data to Q1 2017, recent market developments.
Table 1 Market penetration rates in South Sudan's telecoms sector 2016 Penetration of telecoms services: | Penetration Fixed-line telephony Fixed internet Mobile SIM (population) | 21.5%
Companies mentioned in this report:
Zain, VivaCell (Network of the World; NOW); MTN; Gemtel Green Network (G Telecom; LAP Green); Sudatel; Sudani; Canar Telecom (Canartel, Etisalat); fastNet; RCS Communication; iBurst; Thuraya; Yahsat; O3b Networks; Fujairah Media Group (FMG); Equity Bank.