Monetising the information economy

Sudatel Telecom Group on a digital journey to attain positive capital by 2018
Eng. Tarig Hamza Zain Alabdeen, chief executive officer, Sudatel telecom group.
Eng. Tarig Hamza Zain Alabdeen, chief executive officer, Sudatel telecom group.
Dr. Abd Elrahman Mohamed Dirar, State Minister, Khartoum- Sudan.
Dr. Abd Elrahman Mohamed Dirar, State Minister, Khartoum- Sudan.

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Unabashed by the imposing trade sanctions or economic uncertainties, Sudatel Telecom Group has embarked on the digital journey to attain positive capital by 2018.

After successfully reducing debt by around $300 million and increasing current assets by $24 million in the year 2016, Sudatel Telecom Group is all set to launch 4G soon in the New Year and is also planning for 5G. Backed by the support of the Sudanese government, the group targets to be the best company of Sudan by digitally transforming the lives of Sudanese citizens.

Economic conditions have witnessed uncertainty all over the globe in recent times. So, how has Sudatel been coping along? “As is the behaviour of economy in any sector, whenever you lose one opportunity of work, you try to find an alternative route,” says Dr. Abd Elrahman Mohamed Dirar, State Minister, Khartoum- Sudan.

He adds how the Sudanese government has introduced e-government services to make lives easier for its citizens and minimise costs. Digital payments are being encouraged by government agencies. Education, and electricity are few of the services which have started taking big strides on the digital road. This has been definitely beneficial not just for the citizens, but also for Sudatel, adding to its data revenues.

Markets are saturated all over. Just like other telcos, Sudatel has also started to look for new, diverse sources of revenue generation, the CEO tells CommsMEA. “We are focusing on the data services, data centre, Sudatel academy, other forums and trainings; as well as mobile payments, and e-government services.” However, in spite of tough times, the group managed to increase its revenues up to $ 475 million in 2016 from $445 million in 2015.

Sudatel has experienced 11-15% increase in data utilisation and data revenues over the past year. In order to tap the changing behaviour of the customers, the group has launched the Sudan store that comes with 100 applications from Sudan and around 200 applications from third party providers. The app store has been proving quite popular with the customers, Alabdeen adds. Looking at the large proportion of time being spent by Sudanese over YouTube and other media, Sudatel also plans to launch IPTV by the end of 2017.

With its headquarters in Sudan, the Sudatel Telecom Group has its presence across several parts of Africa. In West Africa, the operations are mostly centred over Senegal, Mauritania and Guinea. In Nigeria, STG is operating as provider of fixed-line, submarine cables and data. Sudatel is linked to the Kingdom of Saudi Arabia as well via a network of sea cables. The group has a regional office in Dubai to manage the West African operations.

There are various subsidiaries of the Sudatel group. One of them is Expresso Senegal, aimed at establishing new telecom networks in West Africa, after having obtained a licence to act as an operator in Senegal in 2007. Sudani is the main operator of the Sudatel group that contributes around 58% of the total revenues.

Sudatel happens to be a member of the ACE (Africa connecting Europe) consortium, which links Europe to the West Coast of Africa. This system uses advanced high-speed broadband fibre optic technology and is a vector of social development and economic growth in Africa, reducing the digital divide.

Yet another connectivity project Sudatel is a part of is EASSy, a 10,000km submarine fibre-optic cable system deployed along the east and south coast of Africa to service the voice, data, video and internet needs of the region. It links South Africa with Sudan via landing points in Mozambique, Madagascar, the Comoros, Tanzania, Kenya, Somalia and Djibouti. The system is owned and operated by a group of 16 African (92%) and international (8%) telecommunications operators and service providers.

Communication sector is an area of focus for the Sudanese government. Dr. Dirar, says: “Nowadays, information is the most important factor in the modern economy. In Sudan, the government has started focussing a lot on the communication sector because it has a high contribution to the GDP, and is a great source of employment for the people.”

While the group is not averse to expanding in terms of operations, the focus will continue to be mostly Africa which has way too many great opportunities waiting to be tapped. The group also is also considering some expansion into the Gulf countries. Dr. Dirar says: “We have the great potential to expand. Sudan has a very special location. It’s the gateway for Africa. We have the potential as well as the infrastructure that makes our company the best in Sudan.”

2016- A YEAR OF SUCCESS

Speaking of the major milestones for the group in 2016, Eng. Tarig Hamza Zain Alabdeen, CEO, Sudatel telecom group says: “We managed to reduce our debts by almost $300 million. 90% of it has been paid from the cash flow of the company. Only 10% has been financed. That shows the ability of the company to generate cash. This is a good message to the investors.”

Further elaborating on the investment opportunities, Alabdeen says: “The group distributed 1 cent per share as dividend, which is almost 8% of the market value which is 13 cents and 2% of the book value which is 52 cents. So STG share is undervalued meaning good opportunity for the investors to look at this share.”

The group also successfully reduced its liabilities by $36 million over the year 2016, and increased current assets by $24 million. Sudatel’s capital which used to be - $400 million, has gone up to - $106 million, and is expected to be positive by 2018.

Alabdeen agrees that Sudatel hasn’t been untouched by the economic uncertainties across the world. The degradation in the value of Euro against the Dollar has affected returns. In addition, taxation in Sudan has become more stringent hence challenging the revenues of businesses in the country.

Minister Dr. Dirar further adds how the country had to bear the brunt of separation of South Sudan. “We lost 80% of foreign currency and 50% of local revenue.”

On the positive side, CEO Alabdeen draws attention to the fact that the company has managed to post positive profits at a time when several other telcos are posting losses. Being a smaller company, the group has benefited from smaller costs of recovery unlike the big organisations.

LOOKING FORWARD

Minister Dr.Dirar says that though economic difficulties continue, the group will make sure not to let down the improvement in its financial position. “Enhancing infrastructure and finding means and ways to attain considerable amount of foreign currency to supply or finance our activities will continue.” He also adds that Sudan’s favourable law of investment makes it easy for foreign investors to invest in the areas they wish without any restrictions.

Alabdeen admits that given the current economic challenges, it wouldn’t be possible to enhance profits in the year ahead. However, the group would focus on ensuring on maintaining the same level of profits achieved in the past year. There are also plans to expand footprint inside and outside of Sudan. Attempts at cost-reduction will continue. The group will emphasise on increasing efficiency and reducing any unnecessary costs.

“It’s very important for us to create positive cash flow,” says Alabdeen. He tells CommsMEA that there has been expression of interest in the past to acquire parts of Sudatel group like Sudani or Expresso. “At the end of the day, STG is a business. We are open for any discussion for any acquisition, or partnership.”

In terms of technologies, Sudatel is going to launch 4G LTE and has also started to mull over 5G in the meanwhile. Other areas of focus will be FTTH, smart city, smart homes, and IPTV. Convergence of telecoms and media has also caught the fancy of Sudatel and the group plans to make some progress on that front too.

Arabsat CEO is a board member of Sudatel and there are ongoing conversations on launching new satellites for covering Sudan and other neighbouring countries at Ka band.

Moreover, Sudatel happens to be a pioneer to launch mobile payments too. Considering the large size of Sudan and paucity of adequate banking infrastructure, the role of mobile becomes all the more crucial for easy money transfers.

Sudatel is the only one to have its own advanced data centre in Sudan, and this data centre has been recognised internationally for its technological superiority. The group is going to continue focussing on providing a selection of digital services to the people of Sudan. Summing up the strategy for 2017 and ahead, Alabdeen says the focus is to transform from being a mobile operator to an ICT platform operator.

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