MTC Ready to Battle Powercom

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By Mbatjiua Ngavirue WINDHOEK MTC appears unfazed by the prospect of a powerful new competitor entering the mobile phone market, saying it has plenty of ammunition in its arsenal to fight competition from new entrant Powercom. MTC was approached for comment following the announcement this week that Powercom (Pty) Ltd would be granted Namibia’s second GSM cellular mobile licence. The granting of the licence to Powercom ends MTC’s 11-year monopoly of the cellular phone market in Namibia. After 11 years MTC claims to have acquired a total active customer base of 500 000, of whom 90% are pre-paid customers. This is an exceptional market penetration rate for a country with a population estimated at only 1.8 million. Customers have however not always been entirely satisfied with the quality of service provided by the company. Members of the public are now waiting anxiously to find out whether the entry of Powercom to the market will bring about better service and lower subscription and call rates. MTC Senior Manager: Corporate Services, Albertus Aochamub, yesterday appeared confident the company would be able to meet the challenge posed by Powercom. Aochamub said the company welcomed competition in the hope that the two companies could collectively grow the overall market for mobile phones. “We trust that the consumers will be the ultimate victors with improved choice of solutions and technologies,” he said. He however conceded competition could result in some customer “churn” for MTC, which in turn would minimise MTC’s customer growth rates and only time would tell if this would impact profitability. The unanswered question at the back of many people’s minds is whether a small country such as Namibia can support two mobile phone operators – without one operator killing the other, or the two each other. According to Aochamub, there are conservative market estimates that put the market size at 700 000 – 800 000 potential customers. “Depending on the competitive posturing of the new operator the market is large enough for two,” he confidently predicted. Mac Allman from Powercom on Tuesday pledged the company’s service would be up and running before Christmas. Allman refused to divulge how much the company would be investing to set up operations, saying only it was a “significant amount”. The company however expected to eventually create 400 jobs, with additional jobs being created by sub-contractors working for the company. Powercom is a consortium made up of NamPower, Namibia Mineworkers’ Investment Holdings Company (Nam-mic), Old Mutual and TMP as the management and technical partner. TMP is a creation of the Norwegian telecommunications company Telenor, with which it has a strategic partnership. TMP, amongst others, manages Ghana Telecom. In terms of the licence, Powercom must have paid the Namibian government a fee of N$65 million by the first anniversary of granting of the licence, and a N$1 million annual licence fee thereafter. Allman, the TMP representative at Powercom, said the company would not be able to compete with MTC all over the country immediately. “Reality is reality. MTC has an 11 years’ head start, but we expect to have similar coverage in three years’ time,” he said. The real question for consumers is whether the promised competition will bring about lower phone charges or not. It will obviously not be in the interest of either company to start a price war in which they will both end up losers. Allman of Powercom said he believed there would be real change for consumers, with his company offering very competitive pricing. According to the chairman of the regulator the Namibian Communications Commission, David Imbili, it is the duty of the commission to protect consumers against collusion between telecom operators. He said the commission would monitor all aspects of the two companies’ operations, particularly inter-connectivity charges. Aochamub pointed out that even in the absence of competition MTC has not raised tariffs for the past two years. The company has also reduced prices on some products, and would continue to do so as it gained improved economies of scale. This is likely to be of cold comfort to hard-pressed Namibian consumers, with some still deciding to give up mobile phones altogether. Many consumers are deciding to abandon cell phones, feeling they eat up too much of their limited monthly disposable income. Powercom has indicated it plans to introduce 3G service and HSDPA, a form of high-speed mobile technology for multi-media access on the move. Countering this, MTC says its network is already at 2.5G while providing GPRS related services as well, thereby placing Namibia among the leading countries on the continent. “3G and HSDPA are a natural progression in the technology evolution world-wide, and we will naturally get there even before our competitor have sold their first mobile package,” Aochamub boldly stated.