Industry Thought Leadership

Sudan is a beautiful country rich in culture, blessed in diversity and steeped in economic potential. In telecoms, Sudanese thrive on the Internet and use it to communicate with each other and the outside world, to stay informed, and to develop and modernize their businesses. Technology adoption in Sudan is high.

In the past, the telecom operators here, including our Sudatel, were limited in their network investments due to difficult outside circumstances. Although all traditional services were available, including 3G for mobile, ADSL for residential and fiber for business, all operators only had a passable quality of service (QoS) to offer their customers. Yet Sudatel was at risk of falling behind its key local competitors since its portfolio was constrained to CDMA, GPRS/Edge and 3G of limited throughput. Competitors were at various stages of investing in larger networks. Sudatel data customers were many but stagnating, using Sudatel primarily for its lowest market prices, which were attractive mainly to the low-consumption or budget-minded consumer. As a result, Sudatel’s ARPU’s were lower in number and revenues were smaller in profit. Its commercial brand, Sudani, was perceived as conservative and perhaps not ideally positioned for the modern internet consumer. This model was not sustainable for Sudatel.

About 18 months ago, investment difficulties in Sudan lessened to the extent that all operators had new capital expenditure (capex) investment options. For us at Sudatel, with our limited financial war chest, we had a major strategic choice to make: should we invest all we have in 3G, where the best and safest near-term revenues are, or be the first to jump the technology curve to a unique 4G LTE-A for a much better but far riskier long-term growth. On the one hand, a conservative investment approach may have left low prices generating unprofitable revenues with nothing to distinguish us from our competitors. On the other hand, a riskier approach may stunt our revenue growth if the newest technology drowned in a low market adoption rate (e.g. limited 4G handset/CPE (customer premise equipment) availability).

As a starting point, Sudatel had technology advantages others didn’t have. In particular, Sudatel operated the largest fiber optic network in Sudan, with direct access and ownership in submarine systems for worldwide access. In addition, Sudatel accumulated over the years the most and best spectrum. The first entrant operator had clear advantages in both mobile coverage and capacity. Prior to our investment decision, the largest of our competitors commercially launched 4G to protect its premium position. Note that the third competitor also launched 4G after our rollout.

No risk, no glory. We took the riskier path. However, not all of our dollar eggs would be put in the one basket on our investment journey. After careful analysis and measuring risks, we took a hybrid market approach to our network investment. We carefully analyzed our revenue generating customers for the best potential and the minimum quality of customer experience (CX QoS) they needed. Thus, our strategy consisted of decommissioning our CDMA equipment in the 850 MHz spectrum to launch LTE-Advanced (LTE-A) with direct fiber to the radio nodes, carrier aggregation in 850 MHz and 1800 MHz in the most profitable areas of Khartoum, congruent with an enhanced 3G experience in surrounding network clusters. We evaluated and upgraded all clusters with the maximum capacity of the equipment on hand, selectively enhance transmission more than required by the radio capacity, and followed through a higher capacity core through to onward-connectivity so as to have end-to-end data and voice enhancement. We clearly measured the potential revenues this combination of technology deployment could generate (Minimum Acceptable Customer QoS versus (potential revenue – network opex) = best clusters for profitable revenue generation). Our 4G LTE-A had at least a 30% better UL/DL speeds and more quality consistency than any competitive offers.

From a commercial standpoint, this optimum technology approach was complimented by a brand refresh to revive and revitalize our Sudani brand, together with a 25% premium over 3G pricing and a wider selection of subscription packages; including one that would allow any customer to “try-and-buy” at a very low entry point. Improving CX QoS in surrounding clusters also allowed us to do successive and timely 3G commercial voice and data revamps in tandem with the 4G LTE-A market adoption.

After 14 months of implementing this strategy, the results to date are nothing short of sensational. We have tripled and monetized data consumption, increased our net data subscribers at a faster rate than any rival adding 19% incremental customers on our base, tripled the number of 4G customers over the nearest rival, nearly doubled our mobile data revenues, and grew our overall (voice and data) revenues 39% YoY from Q1’17 to Q1’18. Mobile data ARPU increased from $1.1 to $16 for 4G LTE-A users. Mobile data revenues increased contribution to the EBITDA by 3%. To our customers enjoying our new services, the Sudani brand is now seen as a viable option and best value-for-money for anyone wishing to have mobile data services personally and for their businesses. We are now expanding on this strategy with the next wave of investments, even heading towards 5G using this LTE-A progression as a stepping-stone to achieve our vision of leading ICT services in the region.

The process was not easy and certainly unintentional mistakes were made, however the results are exceptional and we have learned several lessons that we will take forward to our next expansions. Here are some of the key success factors (that may or may not apply to all):

• Jumping the technology curve is viable but only if you can do so with clear and sustainable advantages. In our case, we had immediate access to spectrum and fiber networks to provide a superior end-to-end service. It would take our competitors a few years to match us.
• Time to market (TTM) is critical. You don’t need to be first but you need to be the best; even in our case the competitor had three times the radio sites and twice the coverage.
  Assure that any network design is fully end-to-end and not simply removing the interim bottlenecks of today. Properly forecasting profitable growth is critical to any design implementation.
• When you are not the market leader or the premium offering, move up the price/benefit scale, not down, to build your image and acquire profitable revenues. Any technology advantages are not beneficial if your customer does not see it or feel it. Hype your brand in the process.
• Assure that your customers have a superior quality of service but not a superior price. This enhances the value as perceived by customers.

Is 4G LTE-A a game changer? For Sudatel I can confidently answer ‘yes’ to this question. Technology for its own sake is not a game changer. But like any technology, using it best in your unique overall strategic approach within your own competitive circumstances is what could change the game.