Chinese to upgrade Leo, Telecom network

Windhoek – Chinese firm, ZTE Corporation, will upgrade the network of Telecom Namibia and its newly acquired subsidiary, Leo, at a cost of US$46 million.
Telecom acquired Namibia’s second largest mobile operator, Leo, last December.
The upgrade is part of improving the services offered by the telecommunication entity, which has a monopoly on fixed lines, and installing a new GSM network for Leo.
Telecom Namibia Managing Director, Frans Ndoroma, said Leo has potential for growth and has an existing population coverage of about 64 percent with 270 000 customers.
Ndoroma said the project will deliver a converged switching platform for both fixed and mobile service with an IMS (IP multimedia systems) core for personal multimedia communications.
IT will also deliver radio access networks, both 3G and Long Term Evolution (LTE) also known as 4G technology to expand the overall coverage and data capacity for Leo.
Ndoroma said the existing 2G sites of Leo and Telecom’s Code Division Multiple Access (CDMA) base stations would be replaced.
He added that the agreement with ZTE would lead to the building of a unified mobile network that will provide Telecom and Leo with a fully transformed 2G/3G/4G networks with immediate effect.
“This will result in a major enhancement of Leo’s network quality and efficiency, enabling improved customer experience and richer applications on the mobile platform, and strengthening Leo’s competitiveness,” Ndoroma said.
He said the deal involves the rollout of base stations in three phases. This includes a number of road coverage sites throughout the country as well.
Ndoroma promised customers a variety of different products and services in the near future such as sales bundles, integrated tariffs and products and applications with convergent features.
“Aggressive network rollout, fixed-mobile convergence and innovative service offerings will drive our future growth and are prerequisites for success of what we are starting to do from now,” he said.
This project is among the biggest projects Telecom Namibia has undertaken so far, he said.
“Implementation of this project will allow us not only to expand mobile services and improve quality, but also help satisfy the increasing demand for mobile data and make fixed-mobile convergence a reality in Namibia,” he said.
Rating agency, Fitch, said in August last year that it was expecting Telecom Namibia to increase investment in mobile infrastructure but said that this may not be matched by a commensurate increase in revenues due to strong competition from rival state-owned entity MTC.
Fitch said ultimately this could lead to margin compression, weaker cash flow generation and higher leverage.
Fitch said as a fixed line incumbent, Telecom Namibia benefits from a monopoly position in fixed line telephony.
However, Fitch noted that the domestic fixed line market has matured and growth in the traditional fixed line revenue base ‑ notably voice ‑ is likely to remain muted over the medium term.
Fitch said it anticipated limited fixed line growth due to on-going revenue pressure in the voice segment. It believes that increased monetisation from broadband products with the benefits provided by the participation in West Africa Cable System (WACS) could offset revenue pressure in the mature voice market over the medium term.
Successful execution of the broadband growth strategy and managing key operating costs such as international bandwidth costs could provide a steady earnings performance over the medium term, Fitch said.
However, Fitch acknowledged that MTC’s participation in the West African Sea Cable (WACS) is likely to increase competition in Namibia through mobile broadband substitution.
Telecom Namibia is wholly owned by the state company, Namibia Post and Telecom Holdings Limited (NPTH).
NPTH also has a controlling stake in MTC and owns the postal services company, Namibia Post Limited.

February 2013
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