Telecommunications In Sudan

THE WORLD HAS BEEN ENGULFED IN A CONTINUOUS, MOMENTUM GATHERING  COMMUNICATIONS REVOLUTION SINCE  the beginning of the 20th century. Countries of  the Global South, particularly those in Africa,
tended to lag behind as the telecommunications revolutionary wave from the 1980s accelerated its momentum in consonance with opportunities afforded by the digital wave and satellites; but in recent years, they have began catching up. Sudan, only twelve years ago, was one of the laggards, but today has a world-class telecommunications sector and it’s dynamic. Aside from over one million landline subscribers, one in 35 Sudanese now owns a cellphone, introduced into the country less than ten years ago, with an even much higher density in Khartoum and other urban areas.

The importance of a world class telecommunications sector to the country’s socio-economic development plans was realized by President-Al Bashir’s government and thus a decision was implemented in the early 1990s to commercialize and modernize the sector in partnership with private entrepreneurs. The vision was towards a rational communications culture that would enhance efficiency in all aspects of life,while reducing road traffic, which was at inflated and invariably costly proportions owing to the telecommunications lapses. Keen to experiment with privatization, the government liquidated its parastatal, National Telecommunications Corporation, and an entirely new entity, combining governmental and private capital, Sudatel– Sudan Telecommunications Company Plc. was born. Sudatel’s maiden fiveyear plan (1994-1999) focused on achieving ten density of one line per-one hundred inhabitants by the dawn of the then pending millennium. Tele-density was at that time 26 lines per ten thousand
inhabitants. Land line penetration has far exceeded that goal, with one line per 30 inhabitants; coupled with cell phone penetration, 1 in 16 Sudanese now has a telephone.

Considering that business and institutional efficiency in the country would be greatly enhanced by a comprehensive and a widespread telephone network, providing increased density of land lines to homes and businesses, as well as mobile phones, Sudatel sought to at once satisfy unfulfilled demand and stimulate demand growth. In an era when a host of innovative telecommunications services were seasonally appearing in the global market, this meant keeping abreast with commercial offerings in the world at large. Although it appears that Sudatel would be operationally sharper were it confronted with competitors, over the past ten years, the company has persisted in introducing value-added services and new marketing strategies, keeping pace with global telecommunications innovations. The company’s directors and management wisely prepared Sudatel to face the inevitable end of its monopoly, which comes at the beginning of 2005.

Government’s technology policy is admittedly proactive, meaning Sudan’s telecommunications sector is open to any new offering that is commercially feasible. In addition to conventional landline and cell phone services, for businesses in Khartoum, data communication and private network services are offered, as well as paging and video conferencing. Sudatel has also provided the infrastructure for e-commerce, Tele-education, and Tele-medicine.

In December 2004 Sudatel’s cell phone service subsidiary, Mobitel celebrated having reached the one million customer mark. Mobitel’s customer base has grown from 10,000 in 1999 to 100,000 in 2001 to one million in December 2004 to 1.5 million today, as claimed by Mobitel.

Areeba, a Lebanese company, joined the cell phone with 63 services securing over 350,000 lines in less than three months in 2005. Not only are cell phones virtually ubiquitous in Khartoum and other cities, where mobile telephone conversations have heavily impacted the social culture; in the rural areas and among the nomadic herdsmen, cell phones integrate digital age technology into traditional environments.

The cell-phone handset market is commensurately vibrant with all the leading brands and latest innovative technology, including cell phones with digital cameras, text writing keyboards, and video technology that enables the
persons at the two ends to see each other while talking. Prices range from about $350 for a basic Nokia upwards to over $1,000 for gleaming silver-toned leading brands. However, there is a thriving used cell phone market, as well as
an ancillary cell phone casing market; as people go for newer models with the latest innovations. Cell phone ownership was initially a status symbol, but now that it has become common status, lies in having high quality,
state of the art handsets.

A modern corporate policy regime assured that Sudatel lived up to its vision of becoming a world-class telecommunications player, despite its monopoly. Human Resource strength was from the outset a central concern and this was reflected in recruitment and training policies. Sudan has a rapidly growing pool of talented young engineering graduates and there are Sudanese telecommunications engineers working aboard; thus, the professional manpower picture has continued to look promising. Sudatel’s management has developed a modern library dedicated to communication science and information technology for use by researchers and professionals from other institutions, as well as its own staff. The library has the latest research facilities, including Internet,Compact Disk, E-Index, Data Cloud, and search facility for the in-house data bank.

In efficiency, Sudatel has gained a consensual reputation among visitors to the country as operating one of the most reliable phone systems in the world. While it appears that there are sometimes clogs in the landline to cell phone network, especially to remote locations, landline to landline calls and cell phone to cell phone connections are executed at virtually 100% efficiency.

In consonance with the attention given to human resource development, Sudatel focused on the need for an optimally efficient organizational structure, as well as procedures. Employing state of the art systems analyst techniques, job descriptions were logically developed to afford an effective convergence of human talent with an empirically rationalized operating and procedural system, as well as with the state of the art technology being introduced.

In the technology realm, the networking strategy involved, first of all, extension of backbone optical fiber in the national core network and the optical fiber ring in Greater Khartoum. Commensurately, there would be digitization of
current PSTN exchanges in urban areas. The rural areas were not to be left behind. Digital telecommunications were introduced to rural Sudan, variously using WITL, CDMA, DECT, VSAT, or digital microwave. For the promising
mobile phone market, a GSM network was installed, starting from Greater Khartoum and extending along the backbone optical fiber to the multiple points comprising the upgraded system. To assure efficient connectivity to the
rest of the world, a new digital gateway earth station and international exchange were installed.

Subsequently, during 2003, a number of Intelsat and Arabsat circuits were transferred to the submarine optical fiber cable and the Ethiopian Link. The sub-marine optical fiber system links Port Sudan to Jeddeh, Saudi Arabia, and connects Sudan with Ethiopia. The fiber optical sub-marine cable is a regional connection of international circuits to create new gateways, as alternatives to the satellites. The objective of this project, undertaken as a regional joint
venture between Sudatel, Saudi Telecommunications, and Arab Investment Company, is to improve traffic between Sudan and the rest of the world, especially in view of the high level of traffic between Sudan and the Arab countries.
Usage of the latest technologies allows larger capacities for advanced services communications and enables connection with other international sub-marine cables, apart from reducing operational costs.

Customer Care was conceptualized to assure that customers received premium quality service. Sudatel thus employed object oriented programs and relational database in organizing its customer care system. Customer Care stations were well distributed for relatively convenient access. Currently, Sudatel has nearly 300 customer
services sites and 25 bank payment windows. Proper and timely billing is facilitated by computerized accounting. To know the amount of your latest bill, simply call 997. Upon request, a printout can be given listing all the calls made against your account. During the two major holiday seasons, disconnected residential phones are opened for receiving
calls. An earlier customer inducement, disconnecting only outcall service while allowing incoming calls for customers in arrears, was discontinued in 2003. There is a considerable number of inactive landline accounts and many of the affected residences have cell phone owners. Apparently, the Customer Care policy is not to reassign dormant numbers, but rather to anticipate that with improvements in the economy the number of inactive accounts will
diminish.

Thanks to the Sudatel vision of optimally impacting the country’s efficiency profile with telecommunications possibilities, 70,000 residences in Khartoum now have direct access to the Internet. Internet usage charges are included in landline telephone bills. Sudatel pays the Internet Service Providers (ISPs), who compete for users. One can install access to any number of the local ISPs into his or her personal computer, or use the Dial-up Internet connection offered in the Microsoft Windows XP package. Now DSL internet connection is offered, providing
a manifold increase in band width and speed, while reducing the cost to customers. Although free Internet access for landline telephone subscribers has affected the fortunes of internet cafés, it has enabled increased Internet usage; however, with the steady increase in the  university student population and introduction of DSL, Internet Cafés continue to thrive near university campuses. In US dollar terms, internet usage has been about 50¢ per hour.
Internet telephone service is offered commercially at private calling stations, affording long distance calls at a fraction of the normal telephone rate.

Like many other places in Africa, there was initially  a prevailing official apprehension about allowing Internet access in Sudan. However, realizing its enormous constructive opportunity offerings, Sudatel took the initiative in 1998
to introduce Internet into the country at a 128kpps bandwidth capacity, as a new service to its fixed line subscribers. Sudanet was established as a Sudatel subsidiary and given exclusive Internet Service Provider (IPS) rights. Since
then, other ISPs have been licensed. Bandwidth is now 20mbps up link and 60mbps down link; and Internet is currently available in fourteen Sudanese cities, from the northeastern tip of the country to Nyala in South Darfur. Internet access for thirteen additional cities is in the pipeline, as well as capacity increases for the four major cities, using ATM core date service.

In 2001, a non-profit organization, styled Sudan Internet Society (SIS), was established to serve several important purposes concerning Sudan’s involvement with the Internet namely, to promote local Internet awareness, help developpolicies, Internet technologies, and suggest some regulations with respect to the Internet usage in the country. SIS made re-establishing .sd web services one of its strategic objectives. Since then, a policy has been introduced allowing usage of the .sd name space to companies registered in Sudan, as well as to Sudanese education,
medical, and governmental entities.Non-profit organizations and Sudanese ISPs may also use .sd. The country’s primary website, Sudan.com, which provides virtually all the daily press releases concerning Sudan, is currently for sale at a price of $129,000.

Sudatel is still largely government owned. The company was floated in 1993 with a 900,000 share capital of $150 million, the Government of Sudan holding 600,000 shares, comprising 66.8% of the equity. There were 36 founding shareholders from the private sector. As profits grew,authorized capital increased to $250 million and later to $750 million, with $460 million paid up. After announcing an astounding $44.59 million profit for 1998, a 6 million DM contract was awarded to Siemens of Germany for installation of 23,000 new digital lines. This policy of employing profits to sustain dynamism has become a Sudatel corporate trait. Nevertheless, Sudatel has remained an active borrower. The OPEC Fund, which has extended a total of $140 million to Sudan’s public sector, during 2003 lent Sudatel $7.6 million towards implementation of its expansion program. Sudatel’s 2003 profit was $127 million and the company projects accumulated profits for the period of 2004 to 2008 at $661 million.

As a listed company on the Khartoum Stock Exchange (KSE), Sudatel’s investor profile is in principle fluid; however, there are now more than 6,700 shareholders, including 50 companies. In addition, the bond market provides indirect access to Sudatel equity and retained earning. While government bonds (Musharaka Certificates, which are akin to redeemable-preferentials) do not indicate specific underlying performing assets, it is no secret that Sudatel is
the government’s major holding outside the exclusive petroleum sector; hence, earnings of bond holders are largely attributable to Sudatel profits. Direct trading of Sudatel shares on Khartoum Stock Exchange’s secondary market
occurs daily. However, there are core investors who comprise the company’s Board of Directors. These include High-Tech Group, Emirates Communications Corporation (Etisalat), Qatar Telecommunications Company,Dubai Islamic Bank, Sudan’s Financial Investment Bank, Arab Investment Company, and three individuals: Hussein Saleh Saeed Alamoody, Abdelrahman Ali Abderrahman Aljeraisi, and Kamal Hamza Alhassan Abu Almaali. When a British company in February 2004 divested its 4% holding in Sudatel, United Arab Emirate businessman Talal Al Khouri
immediately picked it up through KSE. At an amount in the vicinity of $18 million, it was one of the largest one-off deals KSE had ever handled. It is not entirely clear why the British concern, which had been with Sudatel from its
founding and was getting quite good returns,pulled out, but Al Khouri was ready in advance to beat out an array of local investors for the holding which constitutes 13.4% of Sudatel’s non-government equity. Sudatel’s board of
directors had insisted that a single investor pick up all the British company’s shares.

Emirates penetration into Sudan’s telecommunications capital appears to constitute a cozy trend. In January 2004, Sudatel joined with the UAE satellite telecommunications company, Thuraya, to form Thuraya-Sudatel, a satellite
telecom service provider. Established with a capital base of $2.5 million, the company is focused on satellite mobile phones and fixed line public telephone utilities across Sudan.Thuraya is the dominant partner, providing 80% of the investment. Thuraya-Sudatel will be responsible for all sales, distribution, marketing,and customer support activities for Thuraya services in Sudan. Thuraya is marketing its fixed line satellite pay phones in Sudan at a 25% discounted call rate and intends to reduce charges even further if business goes well as expected. Presently, public telephone stations with a dozen or more booths and computer calculated discounted rates constitute the fastest growing small business in Sudan’s urban areas. With mobile phone ownership rapidly expanding and high urban commercial outlet rents, it remains to be seen how long the public telephone stations will remain profitable; but for now, more than half of the adult population has yet to attain phone ownership and it is only in the upper income areas that public telephone stations have grown scarce. The  Thuraya-Sudatel joint venture targeted satellite phone sales for the first year at 1,000 and 40,000 over its first five years in Sudan. The new generation of telecommunications satellites,
offering Personal Communications Services (PCS), promises greater voice transmission speed and broader range of novel facilities than conventional digital cellular telephony, including operation in areas where service is not yet available.

Thuraya’s Chairman, Mohammad Omran acknowledges that the joint-venture could move into other countries in the region if lucrative opportunities appear.

As a public liability company with a board of directors and founding private investors, Sudatel’s operations and performance, despite the government’s major holding, are subjected to the criteria and scrutiny standards of the corporate world. In this regard, it has faired well. The nearly $45 profit earned in 1998 resounded throughout Sudan’s capital market. A $755,000 Sudatel (mutual) investment fund was floated by Khartoum’s Financial Investment Bank (FIBA) in December 1999, which paid investors an annual return of 44%. A second Sudatel Fund,
floated by FIBA in October 2000, capitalized at $3.45 million, gave a one year return of 25.8%. In each case, the bonds were denominated at about $2 and were mainly bought in large lots by subscribers, who numbered only 425 and 525 in the first and second floatation, respectively. No company in the history of Sudan had ever performed so grandly.

Sudatel, at the close of 2003, with a market value of $534.2 million, accounted for 72.5% of Khartoum Stock Exchange’s capitalization. Closing at $15.27, its shares were traded both directly and indirectly, through government
bonds backed by performing assets, such as the 66.8% held in Sudatel. Sudatel is the government’s largest performing asset outside the petroleum industry and Musharaka Certificates,as the bonds are entitled, comprised 34% of total KSE contracts in 2003. In September 2001, a two-year $3.128 million Sudatel Dollars Fund was floated by FIBA with a view to attracting investment from outside the country.

In consonance with capital infusions from the United Arab Emirates, Sudatel became in January 2003, only the second foreign company to gain listing on the Dubai Financial Market (DFM). The Emirates Stocks & Commodities Authority also approved Sudatel’s listing on the Abu Dhabi Securities Market (ADSM). Sudatel’s first international listing– and the first ever for a Sudanese company– was achieved in 2002 when it became the 42nd listed company on the Bahrain Stock Exchange. At the time, Sudatel had an authorized capital of $250 million ($211 million paid up) and it listed 21.1 million shares at $10 on BSE’s secondary market.

The days of Sudatel’s monopoly are now numbered: on November 21, 2004, Emirates Telecommunications  Corporation (Etisalat) announced that the consortium it leads had been awarded the license to operate Sudan’s
second nationwide fixed line phone service. Etisalat-led Kanartel’s approved bid was for 45 million. The National Telecommunication Commission (NTC), Sudan’s regulatory authority, confirmed a few days later that the Etisalatled
Kanartel was selected over the two rival consortiums left in the competition and would begin operations within a year. NTC noted that Kanartel’s main rivals had been Egyptian Telecom and Korea’s Tamara Group. Other
interested operator consortiums dropped out after the first round of the tender, leaving the three short listed bidders to enter into detailed negotiations. Etisalat owns 40 per cent of the Kanartel consortium. A few months earlier, Etisalat led another consortium that won the license for Saudi Arabia’s $3.47 billion second GSM operation. Etisalat is focused on becoming the driving force for dynamic development of the communications sector in the Middle East-North Africa region.

In April 2004, Amlak Finance of the United Arab Emirates contributed $3 million to a $40 million syndicated package to finance further development of Sudan’s telecommunications sector. The other five contributors were Arab Investment Company– the lead arranger National Bank of Kuwait (NBK), Sudan’s Financial Investment Bank, African Export-Import Bank, and Dubai Islamic Bank. The $40 million two-year facility is being used to finance Sudatel’s investment projects, as it gears up to face competition. In addition to plans to upgrade its network in war-torn South Sudan in the wake of the recently concluded comprehensive peace agreement, Sudatel is further
extending digital and satellite networks, as well as fiber optics, to link Sudan’s other hinterland areas.

Sudatel’s new General Manager, Eng. Emad El Dien Huessien welcomes the new open market era as a positive development that will make the country’s telecommunications sector ever more dynamic, noting Sudatel’s technical fitness. Sudatel, itself, he acknowledged, is a product of market liberalization. He also acknowledged the infrastructural role telecommunications plays in national enlightenment progress.

With a view to optimizing foreign exchange earnings, Sudatel is accelerating projects related to international traffic growth. The company is moreover intent on entering strategic alliances with regional and international telecommunication operators on specific development programs.