New GSM operator planning to capitalise on pent-up demand

25 Jul 2003

TDCA Ltd, a consortium comprising the Aga Khan Fund for Economic Development (AKFED, 51%), Monaco Telecom International (35%), MCT Corp of the US (9%) and French telecoms manufacturer Alcatel (5%), has said it will launch Afghanistan’s second mobile network this weekend and expects to overtake its more established rival Afghan Wireless Communication Company (AWCC) within its first year of operations. The partners have earmarked around USD50 million to roll out the new network to Kabul, Herat, Kandahar, Mazar-i-Sharif, Jalalabad and Kunduz by the end of 2003, by which time it expects to have garnered 50% of the market. TDCA’s network capacity currently stands at around 50,000, a figure it hopes to double within six months. Despite the bold predictions, TDCA’s owners do not expect to see a profitable return on their investment for at least five years.

As detailed in CIT’s new report, The Yearbook of Middle East Telecommunications 2003, TDCA was awarded its licence by the Ministry of Communications (MoC) in October 2002 after submitting a bid of USD5 million. The government received tenders from seven hopefuls, each of which was required to pay a USD10,000 application and processing fee and submit technical and financial plans. The GSM licence requires the holder to roll out a network covering at least 50% of Kabul within six months and at least 80% of the population of the capital, plus some coverage of five major cities, within six months of commercial launch. The government will not award a third mobile licence until three years after the licensing of AKFED.

Afghanis got their first taste of mobile telephony in April 2002 when AWCC – a joint venture between the Ministry of Communications (MoC) and Afghan expatriate Ehsan Bayat’s US-based Telephone Services International (TSI) – made the first ceremonial call over its newly deployed GSM network in Kabul. Previously Afghans could only communicate via expensive satellite phones and the country’s tiny and highly inefficient fixed line network. Mobile services were launched in Herat in August 2002 – an important city because of its key geographical position on the old silk route – and in Mazar-i-Sharif the following month. Afghanistan’s second city Kandahar was next in December 2002, at which time AWCC revealed that a similar launch in Jalalabad was also imminent, although by the end of June 2003 this had yet to take place. The new networks enable national and international mobile calling, voice mail, SMS and data services, including internet access. The international traffic and call termination is handled by MCI (formerly WorldCom); the bankrupt US firm signed an agreement with TSI in June 2002 to provide AWCC with long-distance carrier services via satellite links.

As it stands AWCC customers are required to purchase rechargeable pre-paid calling cards, due to the lack of an automated billing platform and the decimated postal service in Afghanistan, although ultimately contract packages will be available. There are currently only a limited number of handsets available on the market and their price is relatively high, given the widespread poverty in the country. Nokia offers one model at a cost of USD290 while Motorola has three handsets on the market priced at up to USD350. Despite this, initial take-up rates have been steady, with 15,000 users having signed up by the end of 2002, rising to 40,000 by the end of June 2003. The launch of TDCA’s network should see the cost of services fall, at least slightly. AWCC has already abandoned a USD12 per month service fee previously payable by its customers, although it denies that this had anything to do with impending competition.