Tuesday, 24 June 2008


Senegal only has ten million people but it is one of the most attractive telecoms markets in Africa. Dakar is already a communications hub for West Africa and it has the potential to build itself into a regional gateway. The best way to get exposure is through Sonatel, listed in Cote d'Ivoire.

The main investor in Sonatel is France Telecom (42.333%). The Government retains 27.67% of the shares. The regulator, Agence de Regulation de Telecom (ART) is apparently talking about licensing a third operator. These two factors have conspired to keep the company's valuation in check.

In operational terms, the company has adopted a progressive attitude to international pricing and wholesaling. It was amongst the first pioneers of VOIP and the first to reach agreements with the numerous grey market operators. Its EBITDA margin is an imoressive 60%

Sonatel has created de facto monopolies in every major market. In the mobile market, it currently has 77% of total subscribers. It fought a long battle to avoid interconnection with its sole competitor Sentel. In the internet market, its subsidiary Sentoo has around 80% market share. Sonatel has captured half a million mobile subscribers and Sentel 150,000 subscribers. 80% or more of the market is pre-paid. Local estimates are that the total market is a million potential subscribers.

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