Imara African Cement Report Africa, the last cement frontier Angola ...

Orascom
Mobinil
TNM
Safaricom
Econet
Sonatel
MTN
Telecom
Egypt
Unitel
Telecommunications Sector: Lucrative and still rapidly expanding
Overview of the Telecoms sector
Like many other sectors of Angola‟s economy, Angola‟s telecoms
industry has more than a few tales to tell. The destruction that
resulted from three decades of war severely damaged the country‟s
fixed line network, which is still far from its potential. The breakneck
pace of technological advancement in mobile telephony however has
had a more definitive impact on the local market, and leads the fixed
line network by a significant margin, in volumes as well as revenues.
The importation of technology and skills transfer can also be
attributed to Unitel‟s partnership with Portugal Telecom (PTC:PL), an
international mobile telecoms operator, capitalized at € 5,1bn that
has operations in Brazil, Africa and Asia.
Figure 29: Angola International traffic by Service
provider 2009
Mundo Startel
Infrasat
Nexus
MSTelecom
Movicel
Angola Telecom
Unitel
The four other Telecoms operators are hardly off
the mark still and not likely to change the
hierarchy any time soon with a combined 0.4% of
international traffic
14%
25%
- 20,000,000 40,000,000
Traffic in minutes
60%
Source: Angola Telecom
Annual Report 2009
The numbers are not small, and with over 9.8m mobile phone subscribers in total, Angola has one of the larger
mobile telecoms markets in Sub Saharan Africa. Penetration levels, at about 70% of the addressable population,
point to further upside, and the duopoly comprised of Unitel and Movicel have embarked on multi-million dollar
expansion projects over the next five years to satisfy demand and expand coverage to areas that are still
lacking. Similarly, there is significant scope in the growth of data services, and following the very recent
launch of 3G services and video conferencing, data services are rapidly growing.
Telecommunications Operators
Unitel
Unitel is the leader in the Angolan mobile telecoms market by a wide margin. With over 6.5m subscribers now,
Unitel is roughly twice the size of Movicel and offers the full spectrum of mobile telephony products, including
GPRS, EDGE, UMTS, international roaming. 3G services, launched in 2009 have grown rapidly, and although
small, data revenues are on an ascending trajectory. This is particularly impressive considering that Unitel
started operations in March 2001. The mobile group is owned by Mercury (a subsidiary of Sonangol), Group
GENI, Vidatel and Portugal Telecom, each with a 25% shareholding.
2009 First half results overview
Turnover and EBITDA for Unitel increased by 38.1% and 50.2% in the first half of 2009, reaching US$ 362m and
US$ 236m respectively sustained by strong subscriber base growth in Luanda and in the country‟s other main
cities. Net additions of 383 000 were recorded in H109, increasing the number of clients to 4 955 000,
representing an increase in the subscriber base of 37% y-o-y. During the first half of 2009, the average number
of minutes of use (MOU) increased marginally from 104 minutes per subscriber at an average ARPU of US$24,50,
which is the highest in Africa and more than twice the regional weighted average of US$11.84. The nearest
peer is Maroc Telecom, but Unitel‟s ARPU is still about US$10 higher!
Planned infrastructure Capex
Unitel has recently announced a massive US$ 1.7bn network expansion and upgrade programme over the next
four years. This will see it extending its reach to areas not yet covered, as well as the laying of a fibre optic
network across the country to improve bandwidth. Currently Unitel‟s network covers 138 of the country‟s 168
municipalities and it expects to reach all of them by 2012. Unitel will also be involved in a project to build the
country‟s first satellite by 2011 having recently signed an agreement with Russia to borrow as much as US$
300m from Vnesheconombank, VTB Group and Roseximbank for its satellite program.
Relative Valuation of Unitel
Extrapolating the dividend received by PT, Unitel paid out €244m for
FY2008 (≈US$360m). We have valued Unitel using two relative valuation
metrics: EV/EBITDA and the dividend yield basis and derived the following
approximate valuations:
UNITEL EBITDA
2010
Weighted
Average
EV/EBITDA
Equivalent
valuation
Figure 30: ARPU vs GDP per capita
7,000
6,000
5,000
4,000
3,000
2,000
1,000
-
25
20
15
10
5
-
EV/EBITDA
Basis
US$865m 4.0x US$3.4bn
GDP per capita (US$) LHS
ARPU (US$) RHS
Source: ISA
30