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In June 2016, Orange Senegal was awarded a license to deploy an LTE network, along with the renewal of its existing mobile license, for a total fee of XOF100bn (US$169m). The award of the LTE license represents progress, but it comes more than two years after Orange, and Senegal's other two MNOs, first conducted LTE trials. A tender for LTE licenses in Senegal was abandoned earlier this year after the country's MNOs refused to participate because they disagreed with the XOF30bn price set by the authorities. The license award to Orange has only come about as a result of direct negotiations between Orange and the government. This kind of lengthy and inefficient licensing process is unfortunately too common in francophone West African markets, probably due to excessive centralization and a desire to generate as much revenues as possible from the sector.
Effective licensing is a key driver of 4G/LTE deployment in Africa. As of early June 2016, there were 15 live LTE networks across West Africa, seven of them in Nigeria. Benin and Cote d'Ivoire were the only francophone markets with LTE networks, despite the fact that francophone markets represent 60% of West African countries. The faster rollout of LTE in English-speaking markets, such as those in East and Southern Africa, mostly results from the early implementation of converged licensing frameworks in these markets. In 2005, the West Africa Telecommunications Regulators Assembly (WATRA) adopted common guidelines to harmonize ICT regulation in the region. One of the recommendations was the implementation of technology- and service-neutral licensing frameworks in order to accommodate convergence and the introduction of new technologies. However, technology- or service-based licenses are still prevalent in most francophone countries. In Senegal, all three players had been trialing LTE since 2013 and were waiting for 4G license issuance in order to go live. Orange now plans to launch LTE commercially by the end of July 2016, after spending XOF32bn ($53m) for a 4G license and XOF68bn to renew its mobile license. Competitors Tigo and Expresso are now also in talks with the authorities and hope to be awarded relevant licenses by the end of 2016.
Issuing service- or technology-based licenses is an obsolete practice in a converged telecoms environment. Mobile operators often run networks that are compatible with the latest technology, and LTE devices are already available in the markets. This means that in a significant number of countries in the region, some mobile users own 4G devices, and networks are 4G ready in selected areas, but the use of LTE is being hampered by the lengthy licensing process. The licensing processes are equally slow in francophone Central Africa, where, for instance, the Cameroonian authorities took until 2015 to issue 3G licenses, 11 years after the first 3G networks went live in Africa. The 4G licensing process in Cameroon, however, went faster than the 3G licensing and LTE went live in selected urban areas in early 2016. Authorities could argue that the number of 4G (and even 3G) devices owned is still limited, but there is demand for faster connectivity as well as benefits to making it available. While it is understandable that governments see a revenue opportunity in license fees, alternative mechanisms for generating revenues include spectrum fees and taxes on operator turnover. High license fees might discourage new investors and delay investments in network expansion. A slower 4G rollout also negatively affects the economy because increased broadband penetration rates fuel further economic growth.
LTE Deployment Tracker: 1Q16, TE0006-001230 (May 2016)
Thecla Mbongue, Senior Analyst, Middle East and Africa
Service Provider Markets
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Europe, Middle East & Africa team - +44 (0) 207 017 7700
Asia-Pacific team - +61 (0)3 960 16700
US team - +1 646 957 8878
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