Smile Expands LTE Portfolio To Uganda And DRC

Smile Telecoms has announced plans to deploy LTE network services in Uganda and the Democratic Republic of Congo (DRC) as part of its expansion strategy, following the launch of its first commercial network in Tanzania in June 2012. Smile's LTE investments bodes well for broadband services development in the region, although we maintain a subdued outlook for the immediate take-up of LTE services in most countries in the region, including Uganda and the DRC.

Underserved Markets
Uganda & DRC Internet Penetration, 2010-2017

Smile partnered with French-US equipment vendor Alcatel-Lucent to build its Tanzanian LTE network over the 800MHz band ( see our online service, June 12, 'Smile Takes A Gamble On LTE'). The operator has now set its sight on Uganda and the DRC, where Alcatel-Lucent will design, build and operate its 4G LTE infrastructure as part of a five-year agreement. Smile has set an ambitious target of three years (2015) to achieve nationwide coverage in all three countries using the 800MHz or 2.6GHz bands with mobile broadband access speeds of up to 20Mbps. The operator claims to have deployed four base stations in Tanzania and three in Uganda. It is yet to inaugurate its service in the DRC, but intends to have 30 base stations in the capital Kinshasa by Q3 2013.

Smile was relatively unknown before its recent aggressive roll-out plans. Some more revelation about its background and backers suggest it may have sufficient resources and management expertise to become a dominant player in the region's broadband market. Smile was launched as a WiMAX operator in 2007 by a former executive director at MTN Group, Irene Charnely, but switched to 4G LTE technology in 2009 because of its better growth prospects. The company is backed by Saudi Arabian firms Al-Nahla Technology and Atheeb Trading Company.

However, we retain the view that mass uptake of LTE services in the region is unlikely any time soon. This view is supported by a number of factors explained in more detail in previous articles on this subject ( see 'Commercial LTE Take-Off, But Mass Uptake Still Afar', November 1). A notable limiting factor is the nascent 3G services, which BMI expects to dominate the mobile broadband landscape over the medium term considering the significant resources leading mobile operators are channelling into the services as well as the increasing availability of low-cost 3G-enabled devices. Uganda's two biggest mobile networks MTN and Airtel are investing heavily in expanding their HSPA+ networks, while the four major players in the DRC - Vodacom, Tigo, Airtel and Orange - are expected to also invest heavily in the service once the controversies surrounding the country's 3G concession is resolved.

Our muted outlook notwithstanding, we believe Smile's investment bodes well for the overall development of the broadband markets it intends to operate in, most of which are largely underdeveloped. It is worth mentioning that the operator also plans to enter the South African market if it wins an LTE concession. In addition to providing competition for existing service providers, we expect the move to attract other investors and licensees with unused spectrum to the potential of the region's broadband market. Smile said it registered 400 customers in its first six weeks of operation in Tanzania and 180 customers after four weeks in Uganda.

This article is tagged to:
Sector: Telecommunications
Geography: Congo, Africa, Congo, Tanzania, Tanzania, Uganda, South Africa, Africa, Africa

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