Chad has launched the privatisation of its state-owned telecoms company, following a failed attempt four years ago to sell a large portion of the group to the sovereign wealth fund of Libya.
The privatisation of 80 per cent in the Societe des Telecommunications du Tchad (Sotel-Tchad) could offer investors a late chance to enter into the booming mobile phone market in Africa.
Chad, an oil-rich country in central Africa, has a lower market penetration of mobile phones compared with its neighbours. But industry executives warn of the difficulties presented by the country's vast geography, where the population lives mostly in remote rural areas.
The country is twice the size of France, its former colonial master, but has just 11m inhabitants. The result is that companies need to invest heavily to build a large amount of telecom towers, but have few clients to pay for the investment.
Still, telecoms is an area of huge interest for foreign investors in Africa. The GSMA, an industry body representing telecom companies, estimates that sub-Saharan Africa has the fastest growth globally in mobile phone subscribers, with an 18 per cent average annual growth rate over the past five years.
The privatisation comes after a failed attempt in 2010, when the Libyan Investment Authority agreed to pay $90m for a 60 per cent stake in Sotel-Tchad, suggesting a total valuation under $200m. The sale was derailed due to the start of the civil war in Libya. People familiar with the situation said the Chadian authorities were aiming for a higher valuation this time.
The Chadian government has promised it would not grant any further telecom licences beyond the three existing operators. In addition to Sotel-Tchad, Airtel, a subsidiary of India telecoms group Bharti Airtel, and Tigo, owned by Luxembourg-listed Millicom, also operate in the country.
Official estimates put mobile phone penetration in Chad at about 40 per cent, roughly half the 80 per cent more common in other countries in the region. The International Monetary Fund has told authorities in the past that "inadequate infrastructure" in electricity and telecoms were hampering economic growth and the spread of financial services.
Mobile telecommunications has been one of the biggest success stories of the past decade in Africa, bringing many individuals and businesses online for the first time and helping to boost economic growth into a new phase dubbed "Africa rising".
In the late 1990s, mobile phones were non-existent south of the Sahara desert and north of South Africa, but subscriptions rocketed as operators increased connectivity and the cost of handsets fell.
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