Sudan - mobile telephony in the south

Zain launches $100-150 mln south Sudan expansion

Kuwaiti Mobile Telecommunications Co (Zain) launched its new network in south Sudan, where it aims to spend up to $150 million expanding in the semi-autonomous region emerging from decades of war.

"We have opened our regional office today. For the first time we will directly serve customers," Zain's Sudan Chief Executive Officer Khaled Muhtadi said. "We now have a vastly improved service ... with 50 antennas across the south."

Zain fully acquired Sudan's former state operator Mobitel in 2006, opening the door to expansion in the south where suspicions after decades of north-south civil war had prevented northern-owned operators from expanding despite a 2005 peace deal.

So far very little of Zain's $500 million investment in Sudan has been spent on the south where Muhtadi said the company may have around 150,000 customers. Because lines have been sold on the black market it is difficult to know exactly, he said.

"(But) we estimate over the next couple of years to spend $100 to $150 million, depending on what we find of the ground," he said.

With the south's bad roads and high cost of fuel and transportation, expansion has been hard and it was not clear how much of the population has returned home after the war. South Sudan's population has been estimated at 10 million.

Four national telecoms contracts and two exclusively for the south are valid but no new contracts are allowed until 2010. Other national operators have found it hard to expand in the south, which has acted to protect their own operators against the more established companies working in the north.

A memorandum of understanding signed last year between the northern and southern telecoms ministries allowed Zain to enter, Muhtadi said, and over the last months new equipment has been set up. "In one place because of flooded roads ... we had to helicopter in fuel," Muhtadi said.

Zain's move south is key after losing its lion's share of Sudan's market in 2007 to fierce competition in the rest of the country from the part-government owned operator Sudani.

South Sudan's Ministry of Telecommunications Undersecretary Juma Stephen said Swedish telecoms group Ericsson (ERICb.ST: Quote, Profile, Research) would finish the $17 million infrastructure for south Sudan's own international gateway by the end of the year, adding his ministry hoped to rent it to all operators.