Telecoms enjoy boom in Somalia

desert burner · November 5th, 2009, 09:25 AM

Somalia’s mobile phone business is booming despite the almost daily artillery fire that flies over expensive satellite dishes and the violence that has brought misery to the population of the Horn of Africa nation.

The three largest firms, Hormuud Telecom, Nation Link and Telecom Somalia, have a combined 1.8 million mobile users who enjoy some of the world’s cheapest calling rates, allowing them to stay in touch with their loved ones amidst the conflict.

“This business is very important during this time of conflict when everybody wants to know what is happening at every moment.

It is a way of survival in every conflict zone,” Mr Ali Ahmed Nur, managing director of Nation Link, told Reuters.

Very risky

“Running a business in Somalia is very risky. Sometimes our employees cannot get to work because of insecurity,” he said.

Besides being crucial for keeping in touch with family, insurgents say they receive orders for attacks by text message, African Union peacekeeping soldiers are bombarded with threatening calls from rebels and government depends on mobiles.

One telecoms firm is also expanding its network to coastal ports used by pirates, who make thousands of dollars from ransom payments from ship-owners but have to rely on expensive satellite phones at the moment.

Despite the tough environment, the sector has attracted investment from wealthy individuals and Somalis living abroad.

With mobile phone use at about 18 per cent of the population, Somalia lags its neighbour and east Africa’s largest economy Kenya, where it is above 40 percent, but it is ahead of several other poor African nations.

The money invested is small by international standards — less than $10,000 can be enough to buy a share certificate in one of the firms.

But it is a relatively large sum in a country where nearly half of the population is dependent on food aid.

“We make profits but we keep investing to survive. Shareholders reinvest, they want continuous dividends,” Nur said, declining to give financial details.

Ahmed Mohamed Yusuf, chairman and CEO of Hormuud Telecom, the biggest network with more than a million subscribers, told Reuters it would move to 3G networks in the near future and that the firms were planning to unify international dialling codes.

Some smaller operators, such as Telenet International and Somafone were kept out of an interconnectivity deal between the three big firms signed in 2005.

Abdullahi Hussein, executive manager of Telecom Somalia, said the deal presented benefits for companies and subscribers, but he admitted they had marginalised the smaller players.

“In a way it seems we had agreed to have control of the market but our intention was to ease the burden on our poor customers,” he said, adding they could now afford cross-network calls.

The deal forced firms such as Somafone to change tack to survive.

It now offers the lowest international calling rates of 0.30 US cents per minute compared to 0.50 US cents for the three big firms — making it a popular choice for many Somalis who depend on remittances from relatives abroad.

Somali telecom operators use the US dollar and other regional currencies in their operations to avoid problems associated with an extremely weak Somali shilling.

“We prefer dollar and other regional currencies since the country has no central bank that circulates the shilling,” Ahmed Galool, public relations director of Salaam Somali bank, which partners with Hormuud Telecom, told Reuters.

Lawless state

A hundred dollars is equivalent to three million Somali shillings, which apart from being heavy to carry, exposes money traders to the risk of robbery in the lawless state.

The telecoms sector employs more than 6,000 Somalis and a few foreign engineers, mainly from Asian countries.

Officials said the companies try and stay out of the country’s 18-year-old conflict, which involves complex tribal and ideological differences.

http://www.businessdailyafrica.com/C...1/-/index.html

desert burner · November 5th, 2009, 09:25 AM

encouraging news to hear

Kenguy · November 6th, 2009, 05:38 PM

I dont think Kenyas mobile phone use is 40%. And how did they come up with 18% for Somalia?

desert burner · November 7th, 2009, 05:33 AM

Quote:

Originally Posted by Kenguy

I dont think Kenyas mobile phone use is 40%. And how did they come up with 18% for Somalia?

writers will always be the same they cook up statistic to legitimize their articles though i am not taking away the country of my kin what they achieved in tricky business environment.

Xusein · November 7th, 2009, 05:42 AM

Quote:

With mobile phone use at about 18 per cent of the population, Somalia lags its neighbour and east Africa’s largest economy Kenya, where it is above 40 percent, but it is ahead of several other poor African nations.

Kenya is only one of our neighbors and is obviously better off at the moment. Somalia's usage for sure is higher than Ethiopia though from a % standpoint (don't know Djibouti's numbers), and it compares positively with the other Horn nations when it comes to internet as well.

And look at this: All of this is done in a unstable situation without the relative stability that our neighbors have. Even relative costs are lower, some of the lowest rates in the entire world I believe. Imagine what can be done in a peaceful and "normal" government situation.

Maybe it is too hard to believe with the current situation, but I think Somalia could become a regional Telecom hub if it was able to have the peace that other states currently enjoy, not only because of this but it's location as the closest African nation to the booming Asian markets. The expertise and the general infrastructure is already there. It really pains me to see the Somalis (and other several things) potential wasted for idiots holding it back for no reason other than being stupid.

Xusein · November 7th, 2009, 05:47 AM

Quote:

Originally Posted by Kenguy

I dont think Kenyas mobile phone use is 40%. And how did they come up with 18% for Somalia?

1.8 million out of 10 million. Actually much higher than what I thought.

desert burner · November 7th, 2009, 10:04 AM

Quote:

Originally Posted by Xusein

Kenya is only one of our neighbors and is obviously better off at the moment. Somalia's usage for sure is higher than Ethiopia though from a % standpoint (don't know Djibouti's numbers), and it compares positively with the other Horn nations when it comes to internet as well.

And look at this: All of this is done in a unstable situation without the relative stability that our neighbors have. Even relative costs are lower, some of the lowest rates in the entire world I believe. Imagine what can be done in a peaceful and "normal" government situation.

Maybe it is too hard to believe with the current situation, but I think Somalia could become a regional Telecom hub if it was able to have the peace that other states currently enjoy, not only because of this but it's location as the closest African nation to the booming Asian markets. The expertise and the general infrastructure is already there. It really pains me to see the Somalis (and other several things) potential wasted for idiots holding it back for no reason other than being stupid.

absolutely true, i sometimes imagine what could have been Somalia today if this workaholic and entrepreneurial wizards were investing in their country for the last 20 years

believe me if they is relatively peace in the future they can catch up some of the African countries

i know some sectors are even booming with this lawlessness now

Yoniii · November 7th, 2009, 01:43 PM

The fact that they are able to run one basic telecom company in Somalia is impressive in it's own, that they have a "boost" is amazing when you include the circumstances.

I hope Ethiopia drops the state monopoly in the telecom and Internet industry.

November 5th, 2009, 09:25 AM	#1
desert burner real gooner Join Date: Apr 2009 Location: asia Posts: 1,912	Telecoms enjoy boom in Somalia Somalia’s mobile phone business is booming despite the almost daily artillery fire that flies over expensive satellite dishes and the violence that has brought misery to the population of the Horn of Africa nation. The three largest firms, Hormuud Telecom, Nation Link and Telecom Somalia, have a combined 1.8 million mobile users who enjoy some of the world’s cheapest calling rates, allowing them to stay in touch with their loved ones amidst the conflict. “This business is very important during this time of conflict when everybody wants to know what is happening at every moment. It is a way of survival in every conflict zone,” Mr Ali Ahmed Nur, managing director of Nation Link, told Reuters. Very risky “Running a business in Somalia is very risky. Sometimes our employees cannot get to work because of insecurity,” he said. Besides being crucial for keeping in touch with family, insurgents say they receive orders for attacks by text message, African Union peacekeeping soldiers are bombarded with threatening calls from rebels and government depends on mobiles. One telecoms firm is also expanding its network to coastal ports used by pirates, who make thousands of dollars from ransom payments from ship-owners but have to rely on expensive satellite phones at the moment. Despite the tough environment, the sector has attracted investment from wealthy individuals and Somalis living abroad. With mobile phone use at about 18 per cent of the population, Somalia lags its neighbour and east Africa’s largest economy Kenya, where it is above 40 percent, but it is ahead of several other poor African nations. The money invested is small by international standards — less than $10,000 can be enough to buy a share certificate in one of the firms. But it is a relatively large sum in a country where nearly half of the population is dependent on food aid. “We make profits but we keep investing to survive. Shareholders reinvest, they want continuous dividends,” Nur said, declining to give financial details. Ahmed Mohamed Yusuf, chairman and CEO of Hormuud Telecom, the biggest network with more than a million subscribers, told Reuters it would move to 3G networks in the near future and that the firms were planning to unify international dialling codes. Some smaller operators, such as Telenet International and Somafone were kept out of an interconnectivity deal between the three big firms signed in 2005. Abdullahi Hussein, executive manager of Telecom Somalia, said the deal presented benefits for companies and subscribers, but he admitted they had marginalised the smaller players. “In a way it seems we had agreed to have control of the market but our intention was to ease the burden on our poor customers,” he said, adding they could now afford cross-network calls. The deal forced firms such as Somafone to change tack to survive. It now offers the lowest international calling rates of 0.30 US cents per minute compared to 0.50 US cents for the three big firms — making it a popular choice for many Somalis who depend on remittances from relatives abroad. Somali telecom operators use the US dollar and other regional currencies in their operations to avoid problems associated with an extremely weak Somali shilling. “We prefer dollar and other regional currencies since the country has no central bank that circulates the shilling,” Ahmed Galool, public relations director of Salaam Somali bank, which partners with Hormuud Telecom, told Reuters. Lawless state A hundred dollars is equivalent to three million Somali shillings, which apart from being heavy to carry, exposes money traders to the risk of robbery in the lawless state. The telecoms sector employs more than 6,000 Somalis and a few foreign engineers, mainly from Asian countries. Officials said the companies try and stay out of the country’s 18-year-old conflict, which involves complex tribal and ideological differences. http://www.businessdailyafrica.com/C...1/-/index.html

November 6th, 2009, 05:38 PM	#3
Kenguy Registered User Join Date: Dec 2006 Location: Nairobi/Kampala Posts: 3,841	I dont think Kenyas mobile phone use is 40%. And how did they come up with 18% for Somalia? __________________ The African Renaissance. Thanks for the Kenyan Forum

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November 7th, 2009, 01:43 PM	#8
Yoniii Registered User Join Date: Sep 2009 Posts: 178	The fact that they are able to run one basic telecom company in Somalia is impressive in it's own, that they have a "boost" is amazing when you include the circumstances. I hope Ethiopia drops the state monopoly in the telecom and Internet industry.