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2005 has been a phenomenal year for Senegal’s mobile market, which added a reported 610,000 subscriptions, compared to 340,000 in 2004. This has occurred primarily because Millicom-owned Tigo has invigorated the market with attractive marketing and promotional campaigns, retroactively prompting incumbent Sonatel Mobiles to follow suit. Along with the upcoming entry of a Second National Operator (SNO), we believe total mobile subscriptions in the country are set to rise to 3.8m subscriptions by 2009.
Despite two mobile operators providing services in the Senegalese market, competition has largely been non-existent with the dominant player, Sonatel Mobiles, controlling 70 percent of the market through YE2004. However, in a marked departure from its existing strategy and starting with a re-branding campaign, Millicom-owned Tigo has emerged as a viable competitor to France Telecom’s Sonatel. During the first nine months of 2005, Tigo added a staggering 278,000 subscribers compared to a mere 138,000 by Sonatel.
Tigo was also first to launch GPRS in November 2005 (compared to Sonatel’s GPRS launch in mid-Dec 2005), possibly positioning itself in consumers minds as a leader in launching new services and technologies. It is now well on the way to becoming a serious challenger to Sonatel and is expected to account for 45 percent of the mobile market by 2010, up from a mere 26 percent stake in 2003. Sonatel, on the other hand, will see its market share decrease from 84 percent in 2003 to 45 percent by 2010.
Clearly, Tigo has managed to generate more revenues on the strength of its brand. To attract customers and build market share, Tigo has recognized the importance of a strongly communicated brand as part of its strategy. In 1H2005, Tigo was quite effective at managing its brand image and increasingly repositioning brand perception (compared to Sentel) in the market, along with providing a clear improvement in the quality of its network and service. During the second half of the year, on the back of a successful re-branding exercise, Tigo further sought to position itself as a price leader by reducing tariffs across the board, dropping connection fees to US$4, and introducing per-second billing.
Although done primarily in anticipation of the SNO, Tigo has geared up for competition with the end objectives of increasing its share in the market and attracting a greater number of high-quality high-value customers. Nevertheless Tigo is still confined to the prepaid segment in a mobile market where incumbent Sonatel enjoys a virtual monopoly on postpaid services. Despite only about 1.5 percent of the market being postpaid, these high-end subscribers generate attractive ARPS of around US$85 compared to market prepaid ARPS of around US$10. Given that MNP is not currently in place, this highly coveted postpaid segment remains almost untouchable for Tigo. Therefore, as an essentially prepaid operator, it will be necessary for Tigo to unlock value from its current and future subscribers by encouraging higher usage and customer loyalty until MNP comes into effect.
Complete analysis of the Sengal market is now available in the new Senegal Country Outlook and Senegal Mobile Forecast in our online store.
Purchase the full article on Tigo, Sonatel and Senegal mobile market in the Africa & Middle East Perspective available in our online store.
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