Share Square: Mali

Mali has a population of 16.0 million¹ and is served by 2 mobile network operators: Orange and Sotelma-Malitel². A third operator, Planor, received a 15 year license in January 2013 for which it paid $105M. With 13.5 million subscribers³, penetration is estimated at 85%, up from 10.8M in 2011⁴. When one considers that almost 48% of the population is 14 years old or younger then this penetration must be considered very high indeed. Orange introduced 3G services in May 2010⁵ and Sotelma-Malitel offers a 3G data service in specified areas.

Orange states that it has a customer base of 8.6M active pre-paid subscribers – and it is a safe assumption that by far the majority of all subscribers are pre-paid. While Orange launched 3G services in May 2010, and Sotelma-Malitel has a 3G data service, 3G penetration appears to be low, at less than 2% of the population⁶. To date there appears to be no real activity in terms of tower sharing, not surprising with only two operators. However TowerXchange recently reported that Eaton and IHS are amongst a number of tower operating companies looking at a potential tower deal in Mali; this almost certainly related to the recent award of a third mobile license to Planor.

While Orange has mentioned 4G testing in the Malian market, given the low penetration of 3G, and the low GDP per capita - $1,100⁷ compared with $6,600 for Egypt⁸ – it seems likely that the focus will be on continued 3G rollout over the next few years. However there is a scenario whereby 2G/LTE only phones become available – at lower cost to 2G/3G/LTE phones. In this case 3G rollout may be reduced and the focus move to LTE deployment. The other factor that could drive demand for 4G is mobile Internet access – but the cost of access is likely to be an issue for most of the population given the low GPP per capita.

Mali does offer some opportunity for a tower operating company; however there are a number of caveats. The rollout plans for Planor would be critical in assessing the scale of the opportunity, as would the on-going 3G rollout by Orange or Sotelma-Malitel. While Orange covers only 38% of the geography (much of the geography is desert) they reach 80% of the population. A successful entry is more likely to focus on an outsourcing option for one of the two established players, while providing Planor with the option of utilising the existing towers to speed their new network deployment.

Recent violence in the North of the country, in response to which France sent in troops, must add a risk premium to any analysis. Additionally it is worth noting that Orange has reduced its shareholding of Orange Mali over the last couple of years.

1. CIA World Factbook – data is estimate for July 2013

2. Orange is 70.05% owned by Sonatel, while Sotelma-Malitel is 51% owned by Maroc Telecom and 20% by the Government.

3. Data based on Orange’s own estimate of their subscribers and market share

4. CIA World Factbook

5. www.orange.com

6. Mobility Tech Zone puts internet penetration at 2.4% and fixed line penetration at 0.6%. Based on this 3G penetration is estimated to be 1.8% of the 16M population – 256,000. It is noted there is also a WiMax offer in the market.

7. CIA World Factbook - 2011 8 CIA World Factbook - 2012

8. CIA World Factbook - 2012