3G and Mobile Services: NEXTTEL & CAMTEL

World Bank doubts Camtel’s ability to turn a profit on mobile services and 3G
In a November 2014 report, from which some excerpts were revealed on December 3, 2014 by the weekly Cameroonian publication, Repères, the World Bank has expressed some doubt about Cameroon Telecommunications’ (Camtel), ability to make the 3G technology it will be offering as of 2015 profitable.

“Camtel has been making minimal offers and poor service. It could not manage CDMA technology (with the CTphone) which is equivalent to 3G technology,” writes the Bretton Woods institution in its report. With this finding, the World Bank goes on to say that, “Done probably without any financial contribution due to the company’s deteriorated finances, the granting of a 3G licence to Camtel seems entirely politically motivated, particularly in light of the fact that Camtel seems to lack the human competence required to implement a quality network.”

The company’s recent “BBB” rating from the Bloomfield Investment firm will hardly withstand the criticism levied by these organisations. Bloomfield itself noted that Camtel’s finances are characterised by a “fragile financial structure, inadequate liquidity” and, especially, a “chronic liquidity deficit resulting from an oversized working capital which accentuates [the company’s] flexibility and financial dependency.”

3Gs popping-up in Cameroon

From this point of view, Camtel’s financials up to December 31, 2013, reveals a cash-flow deficit of 4.9 billion FCFA, an abysmal debt estimated at 141.2 billion FCFA in late December 2013 (compared to 91.7 billion in 2012), despite a net result of a little over 3 billion FCFA recorded at the end of the year.

But, more generally, the World Bank finds that Cameroon, which is planning to have 4 3G permits active in 2015 (Nexttel, MTN, Orange and Camtel), could move from being “one of the rare African countries not to have 3G permits to the country that has the most.” The situation does not reassure the World Bank which states, “With 4 3G licences, it is highly probable that the 20 million consumer market won’t be enough for the four operators to make a profit on the necessary investments necessary for the transition while providing quality 3G service.”

Furthermore, due to this kind of 3G excess on the Cameroon telecom market in 2015, the Bretton Woods institution notes that “it is highly probable that these operators will focus their investments in high value areas and neglect the rest of the country, further widening the digital divide in Cameroon.”

By Brice R. Mbodiam