- Sell-off rings the changes -
Privatisation drive heralds a period of major expansion in the telecoms sector
Telecommunications, so vital for business development, is set to expand rapidly in Sudan after the government's decision to sell its 45 per cent share in the Sudanese Telecommunication Company (Sudatel). Hafiz Atta al-Mannan, chairman of the commission organising the privatisation of public utilities, says: "Our aim is to encourage the public to invest in big businesses like telecommunications."
Sudatel, created in 1994 after the partial privatisation of the public telecoms corporation, is one of the most profitable companies in the country. Last year, Sudatel became the first non-GCC (Gulf Cooperative Council) company to be listed on the Bahrain Stock Exchange. It is also the very first Sudanese company to be listed on a stock market outside Sudan, although it is listed on the Khartoum Stock Exchange and has an authorised capital of $250 million.
The company's shareholder base includes the Qatar Telecommunications Company (Qtel), Etisalat of Dubai, and other Arab investors. Sudatel's finance manager, Ibrahim Mudather Zeinelabdeen, explains: "We are expanding and we want to widen our investor base. We are planning to double our authorised capital and this should happen during the first quarter of this year. We feel our resources have not been utilised properly." The expansion of Sudatel forms part of the overall reform and liberalisation of the Sudanese economy, adds Mr Zeinelabdeen.
Major priority of liberalisation is to boost services to rural areas
The development of the telecommunications sector is a priority for the government, and the number of subscribers has grown dramatically to more than 400,000 in recent years. Salah Idris, one of Sudan's best-known businessmen, recently sold one million of his shares in Sudatel. The buyer was Mobile Systems International (MSL), based in London and owned by Muhammed Fathi Ibrahim, another Sudanese tycoon.
According to a report from the Khartoum Stock Exchange, the deal was considered the market's biggest since its inception in 1998. Mr Idris, formerly Sudatel's biggest shareholder after the government, still retains 652,000 shares in the company. He owns a wide range of businesses in Sudan and abroad, including the export of meat products, slaughterhouses, trans-port and electronics. Minister of roads and communications Mohamed Tahir Eila says that telecoms is one of the government's top priorities. "We believe that without a proper means of communication and an efficient trans-port system we will not be in a position to either unite the country or utilise its resources," he says. "We believe this is one of the conditions that we will have to fulfil before we opt for any development projects." The decision to sell off the government's share in Sudatel is the signal for greater privatisation, Mr Eila adds.
Although the government is the main shareholder, the role of management was given to the private sector interests. And, perhaps more significantly, he says the government is now in the position of being able to absorb the costs of stream-lining the company. "We are also in the position of being able to introduce and implement the latest technology," he adds. "A number of our neighbours are richer than Sudan, but we are ahead when you compare the technology used. We started late, but we implemented the latest technology." Sudatel, whose profits grew from $24 million in 1997 to $60 million last year, will retain a concession until 2003. But, says Mr Eila: "We are going to adopt a free system. Competition will bring a better quality of service and better prices. "Even now, there are some areas in the sector that are open for competition. For example, domestically, any company can have its own system and compete for the service. Some local and foreign companies have been given licences to operate domestically. We are inviting more companies who wish to join the competition."
Most subscribers are concentrated in Khartoum and Port Sudan. An important priority is to boost the telephone services to rural areas and this has already begun with the recent introduction of fibre-optic cables. There are currently 30,000 mobile phone subscribers in the country and Mr Eila believes that cellular systems will eventually overtake fixed-lines.
He is optimistic that Sudan is now finally emerging from its years of under-development. "The resources that were used for defence in the past can now be used for reconstruction," he says, adding that the discovery of oil will stimulate foreign direct investment and encourage international institutions to provide development credit.
Major priority of liberalisation is to boost services to rural areas
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TELECOMMUNICATIONS
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