Emerging Markets Communications Strategies

Analyzes the issues facing existing and new players who are looking for a share of growing mobile markets in over 30 developing countries, including the developing regions of Asia and Africa.

August 24, 2011 17:01 telliott

I don’t know how old Naguib Sawiris is, but he’s probably old enough to know better. Nevertheless, earlier this summer some reckless impulse apparently caught hold of the founder of EMCS (Mobinil), Egypt's #2 mobile operator. Because he thought it was funny – or so he said afterwards – he tweeted a cartoon of Mickey and Minnie Mouse, Mickey with a full black beard, Minnie with just her eyes, ears and pink hair bow showing past a black niqab.

Sawiris, a Coptic Christian who was beginning to gain some political prominence in post-Mubarak Egypt, soon found himself the target of lawsuits charging religious contempt, as well as death threats. Mobinil has been the subject of a boycott;  the company says it expects to show the loss of more than 300,000 subscribers in Q3, out of approximately 30 million. (To be fair, mobile number portability has just been introduced to Egypt, so the losses aren’t necessarily all boycott related.)  

Clearly, the joke is not turning out to be very funny.

I’m not going to take any position on freedom of expression, respect for religious tradition, or any other Great Principle that may be associated with this unfortunate episode. Well, OK, maybe just one Great Principle: however absorbing the abstract world of telecoms may be, the spreadsheet neatness of ARPUs and erlangs should not cause us to forget that we are all working in the real world, and it’s a messy one at that.

(I’m also not going to post a link to the cartoon – my momma didn’t raise any fools – but it’s not that hard to find. ) 

For more on Mobinil, see “Orascom: Shrinking, Growing, or Becoming Something Different?” and” Plus ça change… The North African Status Quo Proves Tenacious


29 Feb 2012. This just in: the court has thrown out the contempt for religion lawsuit, saying the plaintiffs lack standing.

February 3, 2011 16:56 telliott

News reports this morning indicated that the Egyptian government used Vodafone Egypt’s network to send out unsigned and unattributed text messages urging support for the government. There is no information at this time about whether the Mobinil and Etisalat networks were used for a similar purpose.

Wired’s Danger Room characterizes this as a “hack” but Vodafone’s official statement, while strongly protesting the government’s actions, indicates that the Emergency Powers provisions of Egypt’s Telecoms Act oblige the mobile operators to send messages: “we do not have the ability to respond to the authorities on their content.” 

This raises a number of issues about the relationships between privately run communications networks and the national governments that license them.

  • When push comes to shove, private companies who want to stay in business in a country will do what the government tells them to do. To expect otherwise is naïve. However, between Push and Shove there is generally a large gray area – this is the area where RIM and various governments are finding themselves – and there can be an opportunity to work out compromises. The more symmetrical the power relationship, the more likely this is: yes, RIM needs the Indian government, but the Indian government also needs RIM.
  • For all the hyperventilating about “Twitter Revolutions” the Egyptian situation reminds us all that The Cloud rests firmly on physical infrastructure with more or less centralized points of control with plugs that can ultimately be pulled. Since Egypt’s mobile voice and data services were shut off by government command for varying periods of time, the demonstrations have relied on some very old technology: word of mouth, leaflets, and bullhorns. So if you’re planning political action, don’t put that photocopier up on eBay just yet.


Update 4 Feb 2011. France Telecom has indicated that Mobinil was required to send SMS to its customers by the Egyptian Army.

June 22, 2010 22:06 telliott

For all the talk of mergers and buy-outs, entrances and exits, little has actually changed recently in mobile communications in North Africa.

The rancorous struggle between France Telecom and Orascom for control of Mobinil seemed destined to end in one party or the other beating an ignominious retreat from Egypt. Instead, after closed door meetings and $300 million changing hands, the two will continue to share control of Mobinil. Business goes on exactly as before.

  • No, I tell a lie: FT can consolidate 100% of Mobinil’s revenues, versus 70% before the deal, which would have added 1% to operating revenues in 2009. Orascom has an option to sell out in a year or so, but then FT once had a court order to buy them out and look how far that got them.
  • Elsewhere in Egypt, Vodafone indicated that its 55% stake in Vodafone Egypt might be available. This aroused interest from Telecom Egypt, the state-controlled wireline operator that owns the other 45%, but it turns out they only wanted to get a controlling interest, not take the whole thing off Vodafone’s hands. Talks terminated.
  • ­But not to worry. Others were interested. Like Orascom. That’s right – the Orascom that still owns a big chunk of Vodafone Egypt’s largest competitor. Even a liberal interpretation of anti-trust might have some issues with that deal, but it had a certain superficial plausibility, particularly if Orascom left Mobinil and wanted to do something productive with all the cash it was to get from MTN for the sale of Djezzy in Algeria.
  • Not so fast!, says the Algerian government, already miffed at Orascom. (See “Orascom: Growing, Shrinking, or Becoming Something Different.”) “Algeria refuses to continue being a market where other countries sell their products” according to a member of the governing FLN party. So South African MTN isn’t welcome. If Djezzy is sold, it will be to the Algerian government. Just don’t expect that to happen quickly or to produce mountains of cash for Orascom to buy out Vodafone Egypt.

Beyond the obvious – “it ain’t over til it’s over” – what’s the message here? With a population of 162 million, relatively high personal incomes, and a subscription penetration around 80%, North Africa’s mobile markets are worth fighting over. We expect continued interest and eventually some done deals. After all, Orange Tunisie finally launched as Tunisia’s third operator, after quietly plugging away for a year or so.

December 13, 2009 19:12 telliott
An end may be in sight to the long-running battle between partners Orascom and France Telecom over control of jointly owned Mobinil, the number one carrier in Egypt. But then, we’ve said that before. The dispute, which arose out of an arbitration claim filed by Orascom in 2007, seemed to have frozen into the status of trench warfare c. 1915, with France Telecom periodically upping its offer for the 49% shareholding not covered by the arbitrator’s ruling, and the Egyptian Financial Supervisory Authority slapping it down as inadequate. However, France Telecom's most recent offer of EGP 245 (US$ 44.71) per share seems to have broken the stalemate. The regulator has approved the offer, which represents about a 19% premium over Mobinil’s 10 December 2009 closing price. Orascom has not yet indicated what course of action it will pursue, but it seems likely that it will formally object. In losing its interest in Mobinil, it would suffer more than just the indignity of being tossed out of its home market. It would lose its second largest EBITDA contributor (after Djezzy in Algeria), and its presence in one of the faster growth markets in the region, particularly with 3G services just beginning to be rolled out.  Mobile Subscriptions With its investment in Canadian operator Globalive (Wind Mobile) at risk due to an adverse ruling by the Canadian regulator on foreign ownership, and its other operating companies requiring cash for expansion, Orascom could certainly use the money if it were forced to sell all its Mobinil holdings. However, our thinking is that Orascom would view the cash as decidedly a second-best outcome, and will probably vigorously pursue whatever legal options it finds. -Tom Elliott UPDATE: According to news reports today (14 December 2009), the Canadian authorities have decided that Globalive is Canadian enough to be granted an operating license, so that uncertainty is removed. However, Orascom still could use the money.