Mozambique Investment Forum

Finance Opportunities within Mozambique

Paris, 3 October 2003

Rui Fernandes, Chairman, mCel

History• In 1997, mobile telephony was

introduced to Mozambique

• Government legislation stipulated that this would be part of TDM’s basic service offering

• A joint venture between TDM E.P. and Detecon, GmbH – Telecomunicações Móveis de Moçambique Lda (tmm) was formed

• Shareholding of tmm – 74% TDM, 26% Detecon

History• TDM E.P. own the infrastructure

• tmm manages the service:– does not own assets

– makes recommendation to TDM

– maintains infrastructure

– promotes the service

• Detecon responsible for Management of the company for the first three years (1997-2000)

Beginning of 2001• End of Detecon Management Contract• New Management introduced• Total staff of 169• Over 52,000 subscribers• Number of shops: 7• Number of dealers: 72• Roaming with 64 operators• Service limited to Maputo and surrounding areas,

Xai Xai, Beira, Chimoio and Manica

Beginning of 2001

• Network Infrastructure Capacity– NSS: 75,000 subscribers– BSS: 60 sites– prepaid platform: 30,000 subscribers– voicemail: 45,000 mailboxes– SMSC: 10 messages per second– billing system: 50,000 subscribers

2002 - Changes to the Sector• Government changed legislation–opening

the telecom sector• This allowed competition to the telecom

sector–starting with mobile • Tendering process for a second mobile

license was launched• License awarded to Vodacom on 28 August

2002• Until now, Vodacom not operational

End of 2002• Government decided separation of TDM and tmm• As a result tmm changed from a management

company to a fully fledged mobile operator• All mobile assets and liabilities to be transferred

from TDM to tmm as from 1st January 2003• Interconnect Agreement to be negotiated with

TDM based on the same conditions as those to be applied to Vodacom

• License to be awarded to tmm on the same conditions as those applied to Vodacom

Beginning of 2003• Detecon agreed to sell its shares in tmm• tmm 100% fully owned by TDM• tmm given a new name – Moçambique

Celular, Lda abbreviated as mCel• Assets and liabilities transferred to mCel• Interconnect Agreement negotiated and

signed by end of May 2003• License awarded to mCel of the 30 May

2003

mCel Today• Company experiences incredible growth

mCel Today• Total staff of just over 410• Subscriber numbers over 370,000• Teledensity over 2% • Number of shops: 17• Number of dealers/outlets: over 800• Roaming with over 140 operators• Service extended to all provincial

capitals• Constant expansion of the service

mCel Today• Constant expansion of the service

mCel Today

• Network Infrastructure Capacity– NSS: 500,000 subscribers – BSS: 160 sites– prepaid platform: 500,000 subscribers– voicemail: 150,000 mailboxes– SMSC: 20 messages per second– billing system: 150,000 subscribers

Achievements• New image launched–more customer focused• Some services offered free

– no connection fee for SMS– no fee for call barring– free voicemail retrieval– no connection fee for Fax & Data

• Embarked on a subscriber education campaign• Introduced lower denomination recharge vouchers• Reduced prepaid starter pack from 650,000MT to

as little as 199,000MT

Achievements• Continue growth in revenue

– 2001 – total gross USD26 million

– 2002 – total gross USD42 million

– 2003 – Expected total gross USD60 million

• Profit

– 2001 - Over USD5 million

– 2002 - Over USD14 million

Average Revenue Per User (ARPU)Regional ARPU Comparision

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10

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50

60

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MTN Cell C mCel

Regional Mobile Operators

USDPostpaid

Prepaid

Source Sunday Times Survey

Projections

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20,000

40,000

60,000

80,000

100,000

120,000

USD ('000)

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Year

Gross Revenue

Projections

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5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

USD ('000)

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Year

Cash Profit

Project Financing• Financing required for two projects:

– Phase 7/2002• Project value: USD 15 Million

• Financing requirement: USD 13 million

– Phase 8/2003

• Project value: USD 21 million

• Financing requirement: USD 12 Million

• 2004 to 2006– Project value: USD 48 million

– New finance requirements

Challenges• For mCel:

– continual demand for mobile services– pressure to continue investing in the capital program to cater for the demand– financing of such growth

• For the Financiers:

– don’t always go for the big players – look at some of the smaller operators– take the risk

Thank you very much for your attention