MTN, Orange raise notch in communications cost battle

The subsidiary of the Orange telecommunications operator announced this January 30, 2015, a drop in the prices of telephone call to 15 Cfa francs per minute. This is an offer that nobody would have imagined 10 years ago when the Group purchased Mobilis as calls were still 500 francs Cfa ($1) per minute.

The details of this price drop are not yet known, but the announcement comes in the wake of the announcement by its direct competitor, Mobile Telecommunications Network (MTN), the market leader according to data from September 2014, which launched a campaign announcing the price of calls at 25 Cfa francs.

This is a new step in the telecommunication industry battle in Cameroon, led by the two giants of mobile telephony in Africa, apart from the fact that the country is expected to see widespread 3G this year.

In 2014, the two operators announced having sold a majority of their tours. "This was coaching enormous costs, both for the rental of sites, as per their operational management. Today, we can now focus on our core business, namely, telephony, noted a source from Orange Cameroon.

However, this decline in prices announced by the two operators posed a variety of risks to some players. The first are those who operate Call Box, which previously had a monopoly on low prices. "It is clear that this category of actors will need to perform a transformation of their business model, otherwise it will disappear.

Now, everything depends on how operators and large suppliers will set different margins to the final customer. But with this level of price, it will become difficult for the callboxes," said Martial Motcho, a Cameroonian ICT expert.

Another consequence to consider is Nextel, the third operator, who so far are the unique operator of 3G, still seeking its brands in the country. At last, it has exceeded 400,000 subscribers at the end of 2014. "But this might not be sufficient.

Generally, in mass telecommunications services, the case becomes profitable when there is a critical mass of customers who provide permanent income, for a minimum of operational costs", explained Mr. Motcho.

According to analysis, it now seems clear that the two operators have their eyes on 3G, which in principle should soon be their scopes.

Retaintion of the maximum number of users using extremely low prices on call services, in order to maximize data services, seem to be the strategy that works.

In any case, with calls at 45 francs Cfa per minute and, especially, with the internet judged 'rapid' by some, you can understand why the subsidiary of Vietnamese Viettel has quickly gained market share.

The reaction of the Cameroon Telecommunications (CAMTEL), the incumbent, is strongly expected. Very credible sources announced that the parastatal company will soon announce incredible offers, but with aims to revive fixed customer. A proposal expected to be seen in a segment where it is in near-monopoly.