Cameroon's Broadband Market Set To Open Up In 2014
YooMee Africa has contracted Alcatel-Lucent to build out its LTE network in Cameroon. YooMee is a data-only provider in Cameroon, which currently offers WiMAX services on the University of Douala campus, where there are 70,000 students. Although Cameroon would seem an unlikely candidate for a 4G network, BMI believes the present lack of mobile broadband services in the country could allow YooMee to tap into a reasonable level of pent-up demand for more affordable data services.
YooMee's chief technical officer confirmed that the operator already has a 4G licence and expects to launch the next generation network within Q114. As of November 2013, Viettel was the only mobile operator in possession of a 3G licence, which it acquired in June 2013. Viettel intends to invest US$400mn in developing a 3G mobile network and will have 81% coverage of Cameroon's population when it launches in early 2014. Neither MTN nor Orange, which have held a duopoly over Cameroon's mobile market for several years, has a 3G licence, though MTN Cameron's CEO reported in early November that the operator was in talks with the government to procure one.
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Meanwhile, without the option of launching 3G networks, mobile operators have resorted to offering mobile broadband services over WiMAX networks. LTE networks are faster and more efficient than WiMAX, so YooMee should be in a good position to compete with MTN and Orange's WiMAX services. Furthermore, with a connection to the Africa Coast to Europe (ACE) submarine cable Cameroon now has direct access to international bandwidth, which should allow YooMee and Viettel to offer a high quality of service at an affordable price. This should pose significant upside risks to our broadband forecast for Cameroon, which currently see the broadband penetration rate remaining below 1% until 2017.
From the vendor perspective, the growth of LTE in Sub-Saharan Africa could provide some good opportunities for Alcatel-Lucent, which has struggled to keep pace with Ericsson and China's Huawei Technologies and ZTE. Throughout the last decade, Huawei and ZTE in particular have come to dominate Africa's telecoms equipment market, on the back of inexpensive loans from Chinese banks and lower pricing strategies (see 'Competitive Pricing Drives Huawei And ZTE's Outperformance In Africa', August 30). However, as governments and mobile operators upgrade to next generation networks, pricing is becoming less important that quality. BMI believes Alcatel-Lucent could leverage this trend to increase its share of contracts in Africa over the medium to long term. YooMee might be its ticket in, as it has indicated plans to expand data services to other markets in the first half of 2014, possibly including Côte d'Ivoire, Rwanda and Angola.