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International Business Project

Submitted by:Vardhaman Bhandankar (08PG0308-Finance)Devashish Rai (08PG0313 Human Resource)

Bhawna Seth (08PG0349- Marketing)

MBA II Year (SEC-D)


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Table of Contents

1. INTRODUCTION..51.1Telecom Industry In India51.2Government acts for regulation of telecom industry..51.3Telecom Network Services61.4Telecom Service Providers In India.61.5Current Situation In The Indian Telecom Market71.6GSM (Global System for Mobile Communications).7-9

2. COUNTRY PROFILE ...102.1Ghana .10

2.1.1 Economy..........102.1.2 Key Industries In Ghana.10-112.1.3 Key Statistics..122.1.4 Geography..122.1.5 Politics In Ghana122.1.6 Culture In Ghana...132.1.7 Telecom Infrastructure And Technology In Ghana..14-172.1.8 Reforms In The Telecom Sector In Ghana...182.1.9 GSM In Ghana..182.1.10 Competition In Ghana...202.1.11 Reasons ForChoosing Ghana212.1.12 Future OfTelecom Industry In Ghana..232.1.13 Porters Diamond Applied to Ghanas Telecom Industry24

2.2South Africa .252.2.1 Economy.252.2.2 Key industries In South Africa...252.2.3 Key Statistics..262.2.4 Geography..262.2.5 Politics In South Africa..272.2.6 Culture In South Africa..282.2.7 Infrastructure and Technology in South Africa..282.2.8 Competition In South Africa...292.2.9 Porters Diamond Applied to South Africas Telecom Industry.30


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2.3Egypt312.3.1 Economy 312.3.2 Key Statistics..322.3.3 Geography..322.3.4 Politics322.3.5 Infrastructure And Technology..332.3.6 Competition In Egypt.342.3.7 Porters Diamond Applied to Egypt Telecom Industry.35

3. INTERNATIONAL MARKETING363.1Segmentation and Targeting36

3.1.1 Segmentation of the Ghanian Market..363.1.2 Target market in Ghana...363.1.3 Segmentation of the South African market..373.1.4 Target Market in South Africa373.1.5 Segmentation of the Egyptian market..383.1.6 Target Market...38

3.2Positioning OfThe GSM Services In The Chosen Countries383.3Four Ps..39

3.3.1 Product.....393.3.2 Pricing..403.3.3 Promotion....413.3.4 Place41

4. INTERNATIONALFINANCE.424.1Ghana42

4.1.1 Foreign Exchange Status.424.1.2 Investment Decisions...424.1.3 Future424.1.4 Break-even42

4.2South Africa .434.2.1 Foreign Exchange Status.434.2.2 Investment Decisions434.2.3 Break-even43

4.3Egypt444.3.1 Foreign Exchange Status444.3.2 Investment Decisions..444.3.3 Break-even ..44


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5INTERNATIONAL HUMANRESOURCE..45

5.1Recruitment455.2Type Of Assignment45

5.3 Selection Criteria.45

5.4Training & Development46

5.5 Compensation..47

5.5.1 ApproachesT

oC

ompensation485.6Taxation.49

5.7Repatriation...49


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1.Introduction1.1Telecom Industry In India

The Indian telecom history begins in 1851 when the British India capital Calcutta(now Kolkata) witnessed its first operational landlines.

However the telephone services came thirty years later in 1881. In the modern

telecom scenario, the major change was the advent of private telecom business

companies.

In 1997, the formulation of the Telecom Regulatory Authority of India (TRAI) to

facilitate the Indian telecom business plan expansion led to increased share of private

telecom companies in the telecom market size of India. In 1999, the new national

telecom policy came with cellular telecom services.

The smooth functioning of Indian telecom market is supervised by a government

telecom regulatory body called the Telecom Regulatory Authority of India (TRAI).The telecom regulatory authority of India is a subordinate of the ministry of

telecommunications India.

The telecommunication service in India include telephone services, national and

international dialing services, pay phone service, telex and telegraph (both manual &

automatic), remote area business message network based on satellite transmission,

email and voice mail facility, cellular mobile phone, video conferencing, VSAT,

internet, and intelligent network services among the major telecom services and

solutions.

1.2Government acts for regulation of telecom industryThe various telecom India related acts by the Department ofTelecommunications

India are:

Indian Telegraph Act 1885: This act empowered the government of India to take

control of the existing telegraph lines and lay down the necessary infrastructure for

further expansion of telecommunications in India.

Indian Telegraph (amendment) Rules 2004: This act set the guidelines for the set

up and development of public telecom services in India.

Indian Wireless Act 1993: According to this act wireless telecom services could be

set up only after due licensing from the telegraphy authority of India.

Information Technology Act 2000: The act defines the information technology

based communications in India. Telecom Industry of India was shown e-commerce

way through this act in a legal manner.


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Communication Convergence Bill 2001: This bill declared the establishment of

Communications Commission of India to regulate the transfer of all form of

communication including broadcasting, telecommunications and multimedia.

Telecom Regulatory Authority ofIndia (TRAI) Act 1997: The act established

TRAI for the regulation of telecom business in India. Further amendments were

made in the act as per the needs of the Indian telecom market that surfaced in thetelecom market analysis and research conducted.

1.3Telecom Network ServicesThe telecom network services in India are being expanded in order to meet the in-

house demands and also set new world standards. The internatinational telecom

services and products by India's overseas telecom service provider Videsh Sanchar

Nigam Limited (VSNL) include:

Long Distance Transmission Network: It is based on terrestrial microwave radio

relay and co-axial cables along with optical fibre cables.

International Subscriber Dialing Network: It is a fully automated system with

services available for all countries.

1.4Telecom Service Providers In IndiaThe Indian telecom directory shows two major divisions:

Fixed Service Providers (FSP's):

These include the basic service providers that are the state operators like MTNL

India and BSNL India who collectively account to over 90% of the total basic

telecom services and private sector telecom service providers in India who mainly

focus on leased lines, ISDN, videoconferencing and other high-end services.

Cellular Service Providers (CSP's)

The cellular services in India are also categorized as GSM (Global Mobile

Communications System) and CDMA (Code Division Multiple access) system. The

leading GSM services providers in the Indian telecom industry 2007 are Vodafone,

Airtel, Idea Telecom, Tata, and Reliance. These include both pre-paid and post paid

mobile phone cards and services providers. The leading CDMA providers are still

Reliance communications and Tata Indicom with Airtel and Touchtel just entering

the market.


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1.5Current Situation In The Indian Telecom MarketA well built telecom infrastructure in India has brought Indian telecom industry in

an enviable position, as it is second amongst the emerging nations of Asia. Indian

telecom sector ranks as the fifth largest world over.

Moreover, with a rapid increase in the telecom and IT industry in India, the major

cities in india including New Delhi, Mumbai, Kolkata, Chennai, Ahmedabad,

Bangalore, Hyderabad, Pune, Gurgaon, Noida have registered new records in the

sale of various telecom products and solutions. The telecom directory of India is

increasing in size day by day. The leading directories include telecom directory of

Bangalore, Karnataka, Kerala and other South India areas as that is the main

telecom business centre of India.

A new industry upcoming in the telecom sector of India is the telecom outsourcing

or business process outsourcing (BPO). The BPO industry in India is based in the

IT hubs mainly Gurgaon, Noida, Bangalore, Hyderabad, Pune, Chennai, New Delhi,

Mumbai and other cities.

The latest telecom update in India is that, India with a mere 2.2 telecom services per

100 persons is a huge market for telecom business solutions. More and more

international telecom companies are diverting their telecom technologies towards

Indian Telecom sector, in order to confirm their telecom market share in India. This

has also created mass telecom jobs in India; the Indian telecommunications industry

provides many job opportunities especially with the BPO sector job openings.

1.6GSM (Global System for Mobile Communications)In the 1980's an international working group tasked by most European PTTadministrations started to develop a common standard forcellular networks. A jointstandard allows international roaming across the many European borders, until thenonly realized on a regional scale by the analog NMT-standard.

The main advantages of a digital system are a larger user capacity per unit ofspectrum, ease of implementation of sophisticated encryption, authentication, and

other security features, and robustness against radio channel imperfections. A Pan-European standard further provides economies of scale in mass production ofhandheld and car terminals, which would never have been achieved in thefragmented national markets in Europe. In the early 1980's, these two objectiveswere seen as the most critical success factors for achieving a much larger penetration of mobile telephone services in Europe. A third factor has been theintroduction of competition in the monopolistic European markets - a cultural


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import from the US. In 1992, the new standard for Pan-European digital cellulartelephony, GSM, saw its first operational successes.

The concept of GSM was initiated in 1982, byCEPT (Conf. Europeenne des Posteset Telecommunications). In 1978, 900 MHz band was reserved for GSM and the

decision to implement GSM was taken in 1986, followed by the opening up of thefirst network in 1994 with access being granted to ISDN(Integrated Services Digitalnetwork) related services.

While GSM was originally intended and designed mainly as a vehicular system, itis now mostly marketed as a system for handheld use.

GSM History: Briefly, the GSM history can be summarized as follows:

1982-1985: -Conference Europeenne des Postes et Telecommunications beganspecifying a European digital telecommunications standard; in the 900MHz

frequency band. These standards later become known as Global System forMobileCommunication (GSM).

1986: - Field-tested were held in Paris to select which digital transmissiontechnology to use. The choice was TDMA or FDMA.

1987: - A combination ofTDMA and FDMA was selected as the transmissiontechnology for GSM. Operators from 12 countries signed a MoU committingthemselves to introducing GSM by 1991.

1988: -CEPT began producing GSM specifications for a phased implementation.

1989:-European Telecommunication Standards Institute(ETSI) took overresponsibility for GSM specification.

1990: - Phase I specifications were frozen to allow manufacturers to developnetwork equipments.

1991: -The GSM 1800 standard was released.

1992: -Phase I specification were completed. First commercial phase I GSMnetworks were launched .the first international roaming agreement was established

between Telecom Finland and Vodafone in UK.

1993: -Australia becomes the first non-European country to sign the MoU. Firstcommercial DCS 1800 system was launched in UK.

1994: -The MoU had over 100 signatories covering 60 countries. More GSMnetworks were launched.


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1995: -The specification for the Personal Communication Services (PCS) wasdeveloped in the USA.This version of GSM operates at 1900MHz

1996: -The first GSM 1900 systems become available. Those comply with the PCS1900 standard.

Some important years in Indian Telecom History:

1994: -Private sector allowed entering telecom.

1995: -Government grants two mobile licenses per circle.

1997: - Regulator (TRAI) created by Act of Parliament.

2002: -Third and Fourth GSM operators enter fray.

2003: -CDMA operators launch service. Incoming calls made free onmobile.

2004: -Number of mobile connections crosses number of fixed connections.

2007: -Mobile phone subscriber crossed 200 millions mark in India.


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2.Country Profile2.1 Ghana

2.1.1Economy

The economy of Ghana,( West Africa), has a diverse and rich resource base,

and as such, has one of the highest GDP per capita in Africa.

Ghana remains somewhat dependent on international financial and technical

assistance as well as the activities of the extensive Ghanaian diaspora. Gold,

timber, cocoa, diamond, bauxite, and manganese exports are major sources of

foreign exchange.

The domestic economy continues to revolve around subsistence agriculture,

wh

ich

accounts for

50%ofGD

Pand employs

85%of t

he work force,mainlysmall landholders.

On the negative side, public sector wage increases and regional peacekeeping

commitments have led to continued inflationary deficit financing, depreciation of

the Cedi, and rising public discontent with Ghana's austerity measures.

Furthermore, according to the World Bank, Ghana's per capita income has barely

doubled over the past 45 years. Even so, Ghana remains one of the more

economically sound countries in all of Africa.

The country has, since July 2007, embarked on a currency re-denominationexercise, from Cedi () to the new currency, the Ghana Cedi (GH).The transfer

rate is 1 Ghana Cedi for every 10,000 Cedis. The Bank of Ghana has embarked

upon an aggressive media campaign to educate the public about what re-

denomination entails.

2.1.2Key Industries In Ghana:

Agriculture:

The country is mainly agricultural, with a majority of its workers engaged in

farming. This agricultural arm of the government also harvests red mercury andgold for export sales. Since its inception, it has drastically assisted the government

in stabilizing the economy and boosting it as illegal sales of the major crops/nuts

have been meaningfully and instantly curbed and also rendering employment to

thousands of Ghanaians.

Manufacturing :


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Ghana's industrial base is relatively advanced compared to many other African

countries. Import-substitution industries include textiles; steel (using scrap); tires;

oil refining; flour milling; beverages; tobacco; simple consumer goods; and car,

truck, and bus assembly.

Services:Tourism has become one of Ghana's largest foreign income earners (ranking third

in 1997), and the Ghanaian Government has placed great emphasis upon further

tourism support and development.

The financial services in Ghana have seen a lot of reforms in the past years.

Barclays Bank (Ghana) limited has become the first Bank in Ghana to be awarded

the General Banking license in the Country. It has therefore become possible for

non-resident individuals and foreign companies to open offshore Bank Accounts

in Ghana.

Economic history:

At independence, Ghana had a substantial physical and social infrastructure and

$481 million in foreign reserves. The Nkrumah government further developed the

infrastructure and made important public investments in the industrial sector.

Two U.S. companies built Valco, Africa's largest aluminium smelter, to use

power generated at the dam. Aluminium exports from Valco were a major source

of foreign exchange for Ghana.

IMF support:

Since an initial August 1983 IMF standby agreement, the economic recoveryprogram has been supported by three IMF standbys and two other credits totaling

$611 million, $1.1 billion from the World Bank, and hundreds of millions of

dollars more from other donors. In November 1987, the IMF approved a $318-

million, 3-year extended fund facility. The second phase (1987-90) of the

recovery program concentrated on economic restructuring and revitalizing social

services.

Ghana intends to achieve its goals of accelerated economic growth, improved

quality of life for all, and reduced poverty through macroeconomic stability,

higher private investment, broad-based social and rural development, as well as

direct poverty-alleviation efforts. Other reforms adopted under the government's

structural adjustment program include the elimination of exchange rate controls

and the lifting of virtually all restrictions on imports. The establishment of an

interbank foreign exchange market has greatly expanded access to foreign

exchange.


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2.1.3Key Statistics

Ghanas Economy In 2009

Particulars Figures

GDP 4.7%

capital Accra

Currency Cedi (now Ghana Cedi) (GHC)Exchange Rate Cedis (GHC) per USD 1.4

Exports $5.73 Bn (USD)

Imports $9.81 Bn (USD)

Inflation 19.6%

Budget (revenues) $4.55 Bn (USD)

Budget (expenditures) $6.124 Bn (USD)

Labour Force 10.33 Mn

Unemployment Rate 11%

Population 23.108 Mn

2.1.4Geography

Ghana is a country in West Africa, along the Gulf of Guinea, just a few degrees

north of the equator.

Ghana, which lies in the center of the West African coast, shares 2,093 km of land

borders with the three French-speaking nations of Burkina Faso (548 km) to the

north, Cte d'Ivoire (668 km) to the west, and Togo (877 km) to the east. To the

south are the Gulf of Guinea and the Atlantic Ocean.

The total area available to Ghana is 2,38,540 km, of which 3.5% is occupied by

water.The largest inland body of water is lake Volta, with climate being

primarily tropical.

With a total area of 238,540 square kilometers, Ghana is about the size of the

United Kingdom. Its southernmost coast at Cape Three Points is 4 30' north of

the equator. From here, the country extends inland for some 670 kilometers to

about 11 north. The distance across the widest part, between longitude 1 12' east

and longitude 3 15' west, measures about 560 kilometers. The Greenwich

Meridian, which passes through London, also traverses the eastern part of Ghana.

The natural resources available in Ghana include gold, timber, industrial

diamonds, bauxite, manganese, fish, rubber, hydropower.

The key environmental issues in Ghana are drought, deforestation, overgrazing,

soil erosion, poaching, habitat destruction, water pollution, drinking water.

2.1.5 Politics In Ghana


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y Politics of Ghana takes place in a framework of a presidential representative

democratic republic, whereby the President of Ghana is both head of state and

head of government, and of a multi-party system. The seat of government is at

Golden Jubilee House.

y Executive power is exercised by the government. Legislative power is vested inboth the government and Parliament. The Judiciary is independent of the

executive and the legislature.

y The Constitution that established the Fourth Republic provided a basic charter

for republican democratic government. It declares Ghana to be a unitary republic

with sovereignty residing in the Ghanaian people.

y Intended to prevent future coups, dictatorial government, and one-party states, it

is designed to establish the concept of power sharing. The document reflects

lessons learned from the abrogated constitutions of 1957, 1960, 1969, and 1979,

and incorporates provisions and institutions drawn from British and American

constitutional models.

y One controversial provision of the Constitution indemnifies members

and appointees of the Provisional National Defence Council (PNDC) from

liability for any official act or omission during the years of PNDC rule. The

Constitution calls for a system of checks and balances, with power shared

between a president, a unicameral parliament, a council of state, and an

independent judiciary.

Administrative Divisions

Ghana is divided in 10 regions: Ashanti, Brong-Ahafo, Central, Eastern, GreaterAccra, Northern, UpperEast, Upper West, Volta, Western.

Judicial Branch

The structure and the power of the judiciary are independent of the two other

branches of government. The Supreme Court has broad powers of judicial review.

It is authorized by the Constitution to rule on the constitutionality of any

legislation or executive action at the request of any aggrieved citizen. The

hierarchy of courts derives largely from British juridical forms. The hierarchy,

called the SuperiorCourt of Judicature, is composed of the Supreme Court of

Ghana, the Court of Appeal, the High Court of Justice, regional tribunals, and

such lower courts or tribunals as Parliament may establish. The courts have

jurisdiction over all civil and criminal matters. The country appointed its first

chief justice of the judicial service in the person of her ladyship Georgina Wood

2.1.6 Culture in Ghana


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Ghana is a country of 22 million people comprising over 60 ethnic groups. Fifty

two major languages and hundreds of dialects are spoken in Ghana, and English,

the official language of Ghana, is spoken by many. Like most other African

nations Ghana has rich traditional cultures that differ from one ethnic group to the

other.

People:

On the basis of language and culture, historical geographers and cultural

anthropologists classify the indigenous people of Ghana into five major groups.

These are the Akan, the Ewe, MoleDagbane, the Guan, and the Ga-Adangbe.

Festivals:

The celebration of festivals in Ghana is an essential part of Ghanaian culture.

Several rites and rituals are performed throughout the year in various parts of thecountry, including child-birth, rights of passage, puberty, marriage and death.

Most of the celebrations are attended by entire villages and are strictly observed

by the traditional elders of the respective ethic groups.

2.1.7Telecom Infrastructure And Technology In Ghana

Over the past few years there have been attempts by governments past and present

to improve Ghanas information highways because of the realization of the use of

ICT as a tool for sustainable development, which is indeed significant. This has

led to some improvements in ICT infrastructure though there is still room for

further improvement.

The private sector has also been very instrumental in developments in this sector,

building some form of infrastructure on their own with great success. This has

improved the telecommunications landscape a lot in Ghana.

Modern business especially ICT Outsourcing requires a huge bandwidth to

operate. The main telecommunication products and services consumed by any

modern ICT business are on offer by Ghana Telecom. These are: Voice services

Data services

Leased lines which utilize communication pipes.

Ghana Telecoms network backbone is based on the Asynchronous Transfer Mode


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(ATM) transport technology, which is fast and reliable. Ghana Telecom also uses

microwave, intercity fibre and fibre operated by Volta Communications (Voltacom)

owned by the Volta River Authority (VRA) which stretches from Kumasi, Nkawkaw,

Accra, Winneba, and Cape Coast and to Obuasi.

This network covers about 15 major cities and towns in the southern part of Ghana.

These networks are accessed through the copper cables, HDSL, the wireless CDMA and

the FCT. The Voltacom fibre optic will be linked further up north of the country and then

connected to the SAT-3 network in Accra to form a national backbone infrastructure

company which would be a separate entity from Ghana Telecom and VRA.

Ghana connects to the global highways using the SAT3 cable and satellite. This SAT3

submarine cable is owned by a consortium of 36 telecommunication companies.

Ghana Telecom is one of the owners of the undersea SAT-3 cable and operates this cable

in Ghana. Non-owners can therefore get on the SAT-3 in one of the following ways:

y Buy capacity from Ghana Telecom

y Buy directly from cables network administrator, Telkom SA, through an

Indefeasible Right of Use (IRU), and therefore bypass Ghana Telecom. However

the national carrier has the first right of refusal.

The availability of this SAT-3 Submarine Optical Fibre Cable linking West/South Africa

and Europe to USA and Asia provides quality phone and high-speed Internet service.

Ghana Telecom also has a satellite Earth Station at Nkuntunse. The SAT-3 Submarine

Cable and satellite systems are used to provide International Private Leased Circuit

(IPLC) with speeds ranging from 64Kbps to 155Mbps. Since the SAT-3 cable is the onlyundersea cable system that Ghana has access to, it raises concern on the lack of

redundancy; particularly with respect to international cable connectivity. Most ISPs

receive data on average at a speed of 2Mbps and run it to subscribers at an average speed

of 1Kbps. Subscribers face more serious problems since there is inadequate support for

them by some ISPs.

Telecom redundancy in respect of the SAT-3 link is also a challenge though we have

been informed that Ghana Telecom is taking steps to rectify this

situation.

Internet Service Providers currently in Ghana operate using Ghana Telecom SAT3 fibre

and or their own satellites for International connectivity and for terrestrial connectivity

they use leased lines from Ghana Telecom, wireless technologies such as Kasapa CDMA

technology, license and license free frequency spectrums.


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Most ISPs use Ghana Telecoms SAT3 for connectivity to the global Internet. The

National Communications Authority (NCA) has granted licenses to many ISPs to operate

their own international satellite gateways as well. A few of the Internet service providers

use a combination of SAT3 fiber and satellite connectivity whiles others use the satellite

for redundancy.

On the SAT3, 2Mbps connections are available to the ISPs from Accra to Portugal at

twelve thousand dollars ($12,000) but members of the Ghana Internet Service Providers

Association (GISPA) negotiated that to five thousand dollars ($5000). The ISPs build

their own networks within Ghana by providing access in some of the other regional

capitals using a combination of VSAT, microwave and fibre optic connections for their

backbone connectivity.

Although the fibre optic ring that links the regional capitals in the southern part of Ghana

was intended to help manage the electrical grid, the plan was also to use it as a high speed

data backbone for the country. Only a few ISPs like ThirdRail (now DiscoveryTel) andInternet Ghana use Voltacoms backbone capacity.

This fibre uses Synchronous Digital Hierarchy (SDH) at 150Mbps. From the research, it

was found that the dial-up services offered by some of the ISPs via the old copper cables

of Ghana Telecom gave subscribers major problems.

About a third to a half of all calls do not complete because of network congestion and

poor maintenance. The poor state of the telecoms infrastructure and the drop in

international call rates has encouraged a rapid growth in grey market Internet

telephony.

Ghana Telecom has estimated that this is costing by their own estimates

USD15-20 million a year in revenues.

All mobile telephony operators have built their own networks and roll out services to

their subscribers using different kinds of technologies. These operators are at various

stages of their development rollout, and employ different technologies and equipment to

achieve, the same thing, that is, communication.

The term CDMA is used to refer to a family of specific implementations ofCDMA

pioneered by Qualcomm for use in digital cellular telephony. The IS-2000 version,

CDMA2000 is one of such implementations. Kasapa Telecom signed a contract with a

Chinese equipment manufacturer ZTE to deploy CDMA20001x which is based on the

CDMA2000 technology.


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This is essentially a third generation mobile technology and is backward-compatible with

earlier versions. They deliver increased network capacity to meet the growing demand for

wireless services and high-speed data services.

GSM (Global System for Mobile) communications is a digital technology developed in

Europe during the 1980s and first deployed in the early 1990s. Today it is widely usedin Europe and Asia Pacific. Commonly referred to as a second generation (2G)

technology, GSM networks serve more than half the total wireless voice subscriber base

in the world.

There are three GSM operational companies MTN, TiGO and GT Onetouch. Westel

Telecommunications are getting ready to roll out their services after being granted a

license to operate GSM in 2006.

General Packet Radio Service (GPRS) is the next generation data technology for GSM.

GPRS can send data at speeds ranging from 9.6 to 57.6 kbps by combining three to sixvoice channels in the TDMA system. It is widely deployed in Europe.

EDGE (Enhanced Data rate for GSM Evolution) is an evolutionary 3G technology based

on existing GSM and EDGE will allow more data (up to 384 kbps) to be transmitted over

the TDMA radio frequency once quality improves. GPRS and EDGE technologies are

available to all GSM subscribers in Ghana.

From the year 2000, telephone density per 100 has risen from as low as 1.01 to 27.2 at

the end 2006. There has been a commensurate increase in the number of companies as

well. There are currently five licensed mobile operators, four of which are operational.

There are two national telecom operators, Ghana Telecom and Westel both of which

contribute about 360,000 fixed lines. There is a lot of work to be done by these operators

in terms of increasing subscribers.

Moving forward, it is important for the nation as a whole to look at expanding ICT

infrastructure considering the impact telecommunications has had on the fortunes of this

economy.


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2.1.8Reforms In The Telecom Sector In Ghana

In 1996 Ghana privatized its incumbent telecommunications firm by selling 30

percent of Ghana Telecom to Telekom Malaysia, licensing a second network

operator, and allowing multiple mobile firms to enter the market. The reforms

yielded mixed results. Landline telephone penetration increased dramatically

while the number of mobile subscribers surpassed even this higher level of fixed

line subscribers. On the other hand, the network did not reach the levels the

government hoped, the second network operator never really got off the ground,

and the regulator remained weak and relatively ineffective. The sustainability of

competition is unclear. The government ended Telekom Malaysia's management

of Ghana Telecom and has invited Norway's Telenor as a strategic partner. What

this means in practice remains unclear, and the process for selecting Telenor

lacked any transparency. Meanwhile, some of the mobile firms are in precarious

financial positions. Competition is still relatively strong, but its sustainability will

depend on the government's future commitment to ensuring it.

2.1.9 GSM In Ghana:

The West African nation ofGhana is poised for further growth, but

increased competition is bound to make things challenging.

Africa, particularly sub-Saharan Africa, is under close scrutiny at the moment.Despite raging growth in recent years, mobile penetration remains relatively lowand countries across the region are seen as an attractive option in the overseasexpansion plans of ambitious carriers.

Mobile penetration in Ghana-which stands at just over 40 per cent of a populationestimated to top 23 million-may be higher than the continental average of 34 percent, but it is still low in comparison with teledensities across Europe, NorthAmerica and South East Asia. That said, Ghana is far from an untapped market.

There are currently four mobile network operators in Ghana. Tigo (owned byMillicom Ghana), One Touch (owned by Ghana Telecom which is now majorityowned by Vodafone) and Scancom (owned by MTN) all operate GSM 2G and 3Gnetworks, while Kasapa (currently owned by Hutchison TelecommunicationsInternational) operates the countrys only CDMA network. There are two other

GSM licensees in Ghana, Zain-owned Western TeleSystems (2G) and NigeriasGlo Mobile (2G and 3G). While neither operates at the moment, both havenetworks planned according to Informa Telecoms & Medias World CellularInformation Service. The Ghanaian regulator- the National CommunicationsAuthority (NCA)-has also granted one WiMAX licence to the ISP InternetGhana-this too has yet to go live.


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The current licence framework only became effective in 2004 when mobileoperators were, for the first time, issued long-term licences. Before that date,operators were granted yearly authorisations to use a specific spectrum.

Millicom introduced mobile services in Ghana in 1992, operating a TACSnetwork. The operator then launched GSM in 2002. Celltel, which later became

Kasapa, entered the market in 1995 with an AMPS network, while Scancom andOne Touch followed in 1996 and 2000 respectively. MTN, which entered Ghanain 2006 through its $5.5bn takeover of Investcom, which owned Scancom, isGhanas market leader. Millicoms Tigo is in second place, Vodafones OneTouch is third and Hutchisons Kasapa fourth. At the end of 2006, Ghana had 4.9million subscriptions, by June 2008 that figured had nearly doubled to 9.4 million.Mobile subscriptions in Ghana increased by 59 per cent year-on-year in Q108.With total African subscriptions growing by 40 per cent over the same period.

Ghana is Africas ninth largest mobile market and West Africas second largestby subscription count after Nigeria. Informa Telecoms & Media forecasts that the

10 million subscriptions mark will be passed before the year is out. The countrywill by then have six mobile networks as both Glo Mobile and Zain are expectedto launch during Q408. Tigo recorded the highest year-on-year growth, 84 percent, in Q108, taking market share from Scancom, which had 52 per cent of thecountrys subscriptions in Q108. Though Scancom had the highest ARPU, $14 inQ208, with 97 per cent of spending on voice services. Vodafones One Touch hadan ARPU of $9 for the same period which compares favourably with Kasapas $8and Tigos $7.5.

Vodafone plans to launch a 3G network in Ghana through One Touch, whichmight enable it to establish new sources of revenue from data services. Recent oil

discoveries in Ghana could boost the disposable incomes of the countrys usersover the medium or long term. The population of Ghana is not poor in comparisonwith some of their West African neighbours, however, nearly 30 per cent ofcitizens live below the poverty line making mobile communications a luxury thatsome can ill afford. Competition is set to increase, potentially driving ARPUsdown further as operators compete on price and tap into lower-income groups forgrowth.

Glo Mobile entered the Ghanaian market after a so-called express bid for a sixthmobile licence was launched on 6th March 2008. The authorities shortlisted 11unsolicited applications from companies including Globacom Nigeria, Teylium

Group and Warid Telecom. On 20th June 2008 the NCA announced that GloMobile-one of Nigerias biggest three mobile operators-had been awarded thelicence for a consideration of $50.1m. The new operation in Ghana was allocatedspectrum in the 900/1800MHz and the 2.1GHz bands, as well as an internationalgateway licence.

However, Vodafone was not among the initial bidders mentioned. FranceTelecom was even reported to be the winner in November 2006, mainly in the


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local Ghanaian press. But in February 2008, it was reported that the governmenthad suspended the sale of shares in Ghana Telecom. France Telecoms $520moffer had been rejected because the government put a higher price on thecompanys assets. Vodafone was announced as the winner on 3rd July 2008. TheUKgroup closed the deal in August acquiring a 70 per cent stake from theGhanaian government for $900m. The deal was struck on a debt-free, cash-free

basis, implying a total enterprise value for Ghana Telecom of about $1.3bn. Thegovernment will retain 30 per cent of the company.

Vodafones entry into Ghana fits into its strategy of expanding aggressively intoemerging markets to offset slowing growth in mature markets. It gives the UKfirm access to one of the remaining attractive markets in the region. Thechallenges will mainly lie in Ghana Telecoms fixed-line assets and Vodafonewill have to deal with heavy debts and reducing the number of staff. The movewas a final feather in the cap for former Vodafone chief executive officer ArunSarin who stepped down at the end of July. Ghana is one of the most attractivemarkets in Africa with mobile subscribers growing at more than 55 per cent per

annum. Our extensive operating experience together with our portfolio ofproducts and services position us well to deliver a superior mobile experience toGhanaian customers and significantly improve financial performance, he said.

Vodafone is aiming for Ghana Telecom to ultimately raise its mobile market shareto about 25 per cent, reversing recent underperformance. Sarin said that over thenext five years Ghana Telecom is to invest over $500m in its operations andnetwork, restoring and expanding network coverage and completing andintegrating the fibre backbone, as well as introducing initiatives such as M-PESAand ultra-low cost handsets.

2.1.10 Competition In Ghana

It all started with the entry ofZain in the 4th quarter of 2008. Zain had already

done their homework very well and launched a very sophisticated network. They

have the financial muscle to announce their new brand loudly and they did that

with maximum effect. Before then, no operator had given MTN Ghana (the

present market-leader) serious competition like Zain has.

Zain launched the first 3.5G network (supports very fast Internet connectivity,

video calling etc) in Ghana and MTNwas scrambling to catch-up. Though Zains

3.5G network is presently limited to Accra, Tema and Kumasi, EDGE (faster than

GPRS) is available where their 3.5G doesnt cover. Perhaps it is an endorsement

of the quality offered by Zain that makes it the fastest growing network in Ghana

today. Zain presently has in excess of 1 million subscribers as per media reports.


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Vodafone is widely known to be a world-class telecommunications company.

One can only expect the very best from them, following their take-over of Ghana

Telecom and its Onetouch subsidiary. Vodafone also made a lot of noise with its

launch into Ghana earlier this year. They announced having made improvements

to the cellular and fixed line networks before launch.

2.1.11 Reasons For Choosing Ghana

Ghana is one of the most attractive markets in Africa with mobile subscribers

growing at more than 55% per annum and mobile penetration around 35%.

Telecom companies can take advantage of the variety of opportunities offered by

the new environment of the telecom sector in Ghana. Following are the key

indicators of this market:

Market Statistics

y Telecom services market estimated $171 million in annual revenues (1999);

estimates for 2002 are $400 million.

y Telecom equipment market annual revenues $60 million (1999); estimates for

2002 are $200 million.

y Number of access lines (fixed)240,000; teledensity is 76 per 1,000 persons.

y Number of mobile subscribers is 200,000.

y Number of Internet subscribers 8,000 (dial-up).

y Current population is 19.1 million.

Current Operators

y Government ownership in Ghana Telecom is 70%.

y Ghana Telecom is 30 percent owned by Telekom Malaysia.

y The other wireline operator licensed by the Government of Ghana is Westel

Telesystems Ghana Ltd., a consortium led by Western Wireless, USA, which

owns a 70 percent share, 30 percent of shares are held by the GOG.

Internet

y 29 ISPs licensed; 12 operational.

y Internet is available in seven secondary cities.

y Cyber cafes are a growing trend; current estimates are 1,400 PC's in cyber cafes in

Accra; the average cyber cafe has 10 PCs.

y Total national bandwidth is 4-6 megabytes (not including private satellites).

y Ghana Telecom and Westel are the sole international data providers.

y IP telephony services are accessible, but not legal.


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Wireless Operators

y Mobile/cellular operators are Spacefon, Mobitel, Celltel (AT&T joint venture),

ONETouch.

y Licensed satellite operators: 14.

y

Internet access services: 12.y Other notable players--none.

y Wireless technologies in use are digital (GSM, ETACS, and AMPS) and analog.

Telecom Equipment Manufacturer

y Electrical cables and telephone wires are produced in Ghana by Nesan

Kablemetal Ghana, Ltd.; other locally sourced telecom equipment is assembled in

country.

y Types of telecom equipment where there is the greatest demand: N/A.

Government

The GOG ( Government Of Ghana)has indicated it plans to develop the

IT/telecom sector via further divestiture of Ghana Telecom, and by granting

additional licenses.

Legal/Regulatory Framework:

a.The national telecom law is the National Communications Authority Act--Act

524, which was passed December 30,1996 and went into effect in 1997. The Act

established the National Communications Authority (NCA) to regulate

communications by wire, cable, radio, television, satellite and similar means of

technology for the orderly development and operation of efficient

communications services in Ghana. The objectives of the Authority are to ensure

the necessary communications services are provided to satisfy demand and to

ensure that communications systems operators are responsive to customer and

community needs

All the above statistics taken together makes it conducive for telecom operators toenter the Ghana Telecom Market. Given the connectivity, as also the available

telecom infrastructure has affected our choice of Ghana for international business.

As far as competition goes, only 6 GSM operators does not account for much

competition but these are strong players which have a greater percentage of the

Ghanian Telecom market, which requires a well planned entry strategy.


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Over all Country Attractiveness:

2.1.12Future OfTelecom Industry In Ghana

Pushing for the implementation of Mobile Number Portability also known as

MNP in Ghana. Mobile Number Portability (MNP) enables mobile telephone

users to retain their mobile telephone numbers when changing from one mobile

network operator to another.

Currently, Ghana has six GSM Mobile Operators and the implementation of MNP

would give customers/subscribers the choice and flexibility to be on any network

they want.

Four out of the six GSM Operators in the country namely [Zain, Kasapa Telecom,

Glo Mobile and Vodafone-Ghana] have openly declared their support for its

Over all Country

Attractiveness

Benefits

y Exposure to the

untapped market of

Ghana.

y significant additionalgrowth prospects

from recent oil field

discoveries

y low mobile penetration

at around 35%

Costs

y Licence costs

y Distribution

costs

Risks

y Strong Competition

y Telecom market

nearing saturation


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implementation but only MTN is very mute on this subject and rather asking the

National Communication Authority for comments on the implementation of

MNP.

With as many as six GSM Operators and a penetration level of more than 55% of

its population, implementation of MNP in Ghana earmarks the future of telecomsector in Ghana.

2.1.13 Porters Diamond Applied to Ghanas Telecom Industry

Strategy, Structure and Rivalry

Strategy: low cost penetration

Structure: use existing dealer base of the

allying partner

Rivalry: strong hold of the existing players,

market on the verge of saturation.

Demand

Conditions

( large potential &

greater demand

from the service as

also increasing

demand from the

agricultural sector)

Factor

Endowments

(availability of

required skilled

labour as also the

basic telecom

infrastructure)

Related & Supporting

Industries

Presence of Vodafone

and other

internationally

competitive players


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2.2 South Africa

2.2.1Economy

The economy of South Africa has a two tiered economy; one rivaling other

developed countries and the other with only the most basic infrastructure. It is

therefore a productive and industrialised economy that exhibits many

characteristics associated with developing countries, including a division of

labour between formal and informal sectors and an uneven distribution of wealth

and income. The primary sector, based on manufacturing, services, mining, and

agriculture, is well developed.

South Africa's transportation infrastructure is among the best in Africa, supporting

both domestic and regional needs.

The formal economy of South Africa has its beginnings in the arrival of Dutch

settlers in 1652, originally sent by the Dutch East India Company to establish aprovisioning station for passing ships. As the colony increased in size, with the

arrival of French Huguenots and German citizens, some of the colonists were set

free to pursue commercial farming, leading to the dominance of agriculture in the

economy.

2.2.2Key Sectors In South African Economy

Agriculture

Unlike other African countries, South Africa's agricultural sector is not dominated

by subsistence farming, with most farms being large commercial, albeit family-owned, enterprises. The country is completely self-reliant and has more than

enough output to export massive amounts of agricultural produce. Many other

southern African countries rely on South Africa for maize imports.

Trade and Investment:

South Africa has rich mineral resources. It is the world's largest producer and

exporter of gold and platinum and also exports a significant amount of coal.

Another major export is diamonds. During 2000, platinum overtook gold as South

Africa's largest foreign exchange earner. The value-added processing of minerals

to produce ferroalloys, stainless steels, and similar products is a major industry

and an important growth area. The country's diverse manufacturing industry is a

world leader in several specialised sectors, including railway rolling stock,

synthetic fuels, and mining equipment and machinery.


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Telecommunications:

The domestic telecommunications infrastructure provides modern and efficient

service to urban areas, including cellular and internet services.

In 1997, Telkom, the South African telecommunications parastatal, was partly

privatised and entered into a strategic equity partnership with a consortium of two

companies, including SBC, a U.S. telecommunications company.In exchange for exclusivity (a monopoly) to provide certain services for 5 years,

Telkom assumed an obligation to facilitate network modernisation and expansion

into unserved areas.

A Second Network Operator was to be licensed to compete with Telkom across

its spectrum of services in 2002, although this license was only officially handed

over in late 2005 and has recently begun operating under the name, Neotel. Four

cellular companies provide service to over 20 million subscribers, with South

Africa considered to have the 4th most advanced mobile telecommunications

network worldwide. The four cellular providers are Vodacom, MTN, Cell C and

Virgin Mobile.

2.2.3Key Statistics

South Africas Economy In 2009

Particulars Figures

GDP - 1.9%

Capital Capetown

Currency Rand

Exchange Rate Rand Per USD 8.54

Exports $67.93 Bn USDImports $70.24 Bn USD

Inflation 7.2%

Budget (revenues) $74.92 Bn USD

Budget (expenditures) $86.26 Bn USD


Unemployment Rate 24%

Population 49,052,489

2.2.4Geography

South Africa occupies the southern tip of Africa, its long coastline stretching

more than 2,500 km (1,553 mi) from the desert border with Namibia on the

Atlantic coast southwards around the tip of Africa and then north to the border

with subtropical Mozambique on the Indian OceanIn some places, Although the

country is classified as semi-arid, it has considerable variation in climate as

well as topography.


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Area

total: 1,219,912 square kilometres (471,011 sq mi)

land: 1,219,912 square kilometres (471,011 sq mi)

water: 0 square kilometres (0 sq mi)

Natural resources :South Africa has a rich resource base of gold, chromium, antimony, coal, iron ore,

manganese, nickel, phosphates, tin, uranium, gem diamonds, platinum, copper,

vanadium, salt, natural gas.

Environment - current issues :

Lack of important arterial rivers or lakes requires extensive water conservation

and control measures; growth in water usage outpacing supply; pollution of rivers

from agricultural runoff and urban discharge; air pollution resulting in acid rain;

soil erosion; desertificationEnvironment - international agreements :

South Africa is a signatory to the following protocols/agreements: Antarctic-

Environmental Protocol, Antarctic-Marine Living Resources, Antarctic Seals,

Antarctic Treaty, Biodiversity, Climate Change, Climate Change-Kyoto Protocol,

Desertification, Endangered Species, Hazardous Wastes, Law of the Sea, Marine

Dumping, Marine Life Conservation, Ozone Layer Protection, Ship Pollution,

Wetlands, Whaling

2.2.5 Politics Of South Africa

The African National Congress is the ruling party in the national legislature, as

well as in eight of the nine provinces, having received 65.9% of the vote during

the 2009 general election and 66.3% of the vote in the 2006 municipal election.

The main challenger to the ANC's rule is the Democratic Alliance, led by Helen

Zille, which received 16.66% of the vote in the 2009 election and 14.8% in the

2006 election. Other major political parties represented in Parliament are the

Inkatha Freedom Party, which mainly represents Zulu voters, with 4.55%; and the

Congress of the People with 7.42% in the 2009 election.

South Africa is a federal parliamentary representative democratic republic,

wherein the President of South Africa, elected by parliament, is the head ofgovernment, and of a multi-party system. Executive power is exercised by the

government. Legislative power is vested in both the government and the two

chambers of Parliament, the Council of Provinces and the National Assembly.

The Judiciary is independent of the executive and the legislature. Government is

three-tiered, with representatives being elected at the national, provincial and

local levels.


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2.2.6 Culture in South Africa

There is no single culture of South Africa. As South Africa is so ethnically

diverse, it is not surprising that there are vast cultural differences as well.

Main Cultural Differences:

Because of the legacy of Apartheid segregation, many cultural differences

correspond closely to the racial groups defined by Apartheid (Blacks, Whites,

Coloureds, Asians). This may change as assimilation progresses, although many

cultural differences between Apartheid-defined racial groups persist.

The black Africans account for as much as 79% of the entire population, whites

account for 9.6%, colored 8.9% and Indian/Asian 2.5% of the entire population.

The main religions followed by the south African people include, Zion Christian

(11.1%), Pentecostal/Charismatic (8.2%), Catholic (7.1%), Methodist (6.8%),Dutch Reformed (6.7%), Anglican (3.8%), Muslim (1.5%), otherChristian (36%),

other (2.3%), unspecified (1.4%), none (15.1%.)

The main languages spoken include: IsiZulu (23.8%), IsiXhosa (17.6%),

Afrikaans (13.3%), Sepedi( 9.4%), English (8.2%), Setswana (8.2%), Sesotho

(7.9%), Xitsonga (4.4%), other (7.2%).

2.2.7Infrastructure and technology in South Africa

Compared to the rest of Africa, South Africa has a good infrastructure ,

including a highly developed network of some 358,596 kilometers (222,831

miles) of roads (only 17 percent of which are paved, however) and 21,431

kilometers (13,317 miles) of rail track. There are a number of international and

national airports; a highly developed system of bulk water supply; a power supply

parastatal , ESCOM, that supplies roughly half of Africa's electricity at rates that

are among the cheapest in the world; a telephone utility company, TELKOM, that

provides services for about 4 million main telephones and network links for one

of the fastest growing cellular telephone industries in the world; and broadcasting

services.


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However, the infrastructure in the areas occupied by the black majority is

generally undeveloped or badly maintained.

South Africa's modern and extensive transport system plays a very important

role in the national economies of several other African states. A number of

countries in Southern Africa use the South African transport infrastructure totrade.

SPOORNET, the largest railroad operator in Southern Africa, has 3,500

locomotives and 124,000 wagons. There are 30 international airports, where the

necessary facilities and services exist to accommodate international flights.

Telecommunications, the lifeline of modern business and industry, is one of the

fastest growing industries in South Africa. With a growth rate of 45 percent

prompted largely by the introduction of cellular telephones and the partial

privatization ofTELKOM, this sector is a vital component in the strategy to

modernize and increase international competitiveness.

South Africa has approximately 5.3 million installed telephones and 4.3 million

installed exchange lines.This figure represents 39 percent of the total lines

installed in Africa. By November 1998, more than 1.5 million South Africans

were using the Internet with service providers increasing their customer base by

10 percent a month.

2.2.8 Competition In South Africa

The cellular market in South Africa is one of the fastest developing in the world.

It started in mid-1994 and in four years has grown to over 2 million subscribers.

The introduction of the pre-paid option for air-time boosted the market during

1997. Uptake of the prepaid option has been rapid.

There are approximately 4.6 million fixed line phones and approximately 2

million cellular phones in South Africa. It is estimated that every third call made

in SA is from a cellular phone.

With subscriber numbers still showing growth potential, revenue per subscriber is

decreasing. MTN and Vodacom are therefore exploring new opportunities. These

include:


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y Expansion into neighbouring countries. Vodacom already has shares in a GSM

network in Lesotho and MTN has shares in Uganda and Rwanda GSM networks.

Both MTN and Vodacom bids were unsuccessful for the Botswana cellular

licence.

y Data transfer. As next generation cellular technologies capable of high speed data

transfer come of age, data is expected to form an increasing component of totalwireless traffic.

y Expansion into other communications sectors. Vodacom has indicated its

intention to become a broad-based communications company, and has begun

offering Internet access services through its Yebo connection.

2.2.7 Porters Diamond Applied to South Africas Telecom

Industry



Structure: use existing dealer base of the

allying partner

Rivalry: strong hold of the existing players

Demand

Conditions

( large potential &

greater demand

from the service as

also increasing

demand from the

young generation.)

Factor

Endowments

(availability of

required skilled

labour as also the

basic telecom

infrastructure)


Industries


and other

internationally

competitive players


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2.3Egypt

2.3.1Economy

Occupying the northeast corner of the African continent, Egypt is bisected by the

highly fertile Nile valley, where most economic activity takes place. In the last 30

years, the government has reformed the highly centralized economy it inherited

from President Gamel Abdel Nasser.

During the 1990s, a series of International Monetary Fund arrangements, coupled

with massive external debt relief resulting from Egypt's participation in the Gulf

War coalition, helped Egypt improve its macroeconomic performance.

The pace ofstructural reforms, including fiscal, monetary policies, privatization

and new business legislations, helped Egypt to move towards a more market-

oriented economy and, since the turn of the new millennium, prompted increasedforeign investment.

The reform program is still a work in progress and the government will need to

continue its aggressive pursuit of reforms in order to sustain the spike in

investment and growth and begin to improve economic conditions for the broader

population. Egypt's export sectorsparticularly gold and natural gashave

bright prospects.

Natural Resources:

Warm weather and plentiful water permit several crops a year. Land is worked

intensively and yields are high. Cotton, rice, wheat, corn, sugarcane, sugar beets,

onions, and beans are the principal crops. Increasingly, a few modern techniques

are applied to producing fruits, vegetables and flowers, in addition to cotton, for

export. Further improvement is possible. The most common traditional farms

occupy one acre (4,000 m ) each, typically in a canal-irrigated area along the

banks of the Nile. Many small farmers also own cows, water buffalos, and

chickens.


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2.3.2Key Statistics

Egypts Economy In 2009

Particulars Figures

GDP 4.5%

Capital Cairo

Currency Egyptian Pounds (EGP)

Exchange Rate EGP per USD 5.6

Exports $43.98 Bn USD

Imports $22.91 Bn USD

Inflation 10.1%

Budget (revenues) $48.86 Bn USD

Budget (expenditures) $61.61 Bn USD


Unemployment Rate 9.7%

Population 83,082,869

2.3.3Geography

The Geography ofEgypt can be split into two sections. Southwest Asia and

North Africa

Egypt has shorelines on the Mediterranean Sea and the Red Sea. It borders Libya

to the west, Sudan to the south, and the Gaza Strip and Israel to the east. Egypt,

covering 1,001,449 square kilometers of land, is about the same size as Texas and

New Mexico combined, four times the size of the UKand double that of France.

Its longest distance from north to south is 1,024 kilometers, and from east to west

is 1,240 kilometers. Egypt's natural boundaries consist of more than 2,900

kilometers of coastline along the Mediterranean Sea, the Gulf of Suez, the Gulf of

Aqaba and the Red Sea.

2.3.4 Politics

The government ofEgypt consists of a semi-presidential republic whereby the president is both head of state and head of government, and of a system

dominated by theNational Democratic Party. Executive power is exercised by

the government. Legislative power is vested in both the government and the

People's Assembly.


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2.3.5Infrastructure and Technology

Egypt's infrastructure is relatively underdeveloped. The country is serviced by a

network of over 64,000 kilometers (39,769 miles) of primary and secondary

roads, 49,984 kilometers (31,060 miles) of which are paved. Despite the

modernization of the road system in the 1980s, most roads remain in poor

condition or under construction. With growing numbers of licensed automobiles

in the 1990s, the road system, especially in urban areas, has become highly

congested, and is a major safety concern.

Egypt has a total of 90 airports. Egypt Air, the country's official airline, carries

some 4.6 million passengers, roughly 25 percent of international air traffic, and an

estimated total of 87,240 metric tons of freight annually, but has a poor service

record and is generally unreliable. Egypt has 3 major ports, at Alexandria, Port

Said, and Suez, and 3,500 kilometers (2,175 miles) of waterways, dividedbetween the Nile and the canals.

Telecommunication services in Egypt are thoroughly modern. Telephone service

is provided by the state-owned Telecom Egypt. According to the EIU Country

Profile for 2000/2001, the country has some 6.5 million lines, and has been

adding new ones at the rate of 1 million per year. In 2000, Egypt had over 60

local Internet service providers.

Egypts growing telecommunications industry is one of the countrys most

exciting developing sectors. In little less than one decade, the industry has gonefrom nearly non-existence and no ministry to one of the countrys fastest growing

and largest ministry.

Since the creation of the ministry of communications and information technology

in 1999, Egypt established a new era of liberalized policies with business as a

central theme characterized by new regulatory laws. This was part of a national

strategy to create an export-driven, private sector-led ICT market.

This plan focused on state-of-the-art national telecommunications network

and human resources development has led to the Egyptian fixed-line telecom

services being one of the fast growing in the Middle East and North African

region.


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2.3.6 Competition in Egypt

The existing operators in the Egyptian telecom market include the following:

Fixed Line Operators: Telecom Egypt

Mobile operators: Vodafone Egypt ( Joint Venture Between Vodafone and

telecom Egypt),Mobinil (France Telecom and Orascom Telecom) and Etisalat

Egypt.

The market already had two strong networks: Vodafone Egypt and MobiNil,

representing Vodafone International and Orange, the number one and two mobile

operators worldwide. Telecom Egypt (TE), the state-run fixed-line monopoly that

falls under MCIT, entered the picture with promises to launch Wataniya, the

nations third operator in an industry then barely five years old. At least 6.84

million subscribers are shared between two GSM operators, MobiNil (3.64

million) and Vodafone (3.19 million).

Entry of new telecom operators requires a a feasibility study to be submitted to

the National Telecommunication Regulatory Authority (NTRA) and also

licensing to be obtained by NTRA.

Establishing a network costs millions of dollars in up-front investment, plus a

ready store of cash to sink into the maintenance and expansion of basic services,

as well as the introduction of new features.

Regulatory authorities will have to consider three factors when assessing the

effect a third mobile operator will have on the sector: acquisition, retention and

impact on Average Revenue per User (ARPU), a key industry metric.

Acquisition refers to the ability of a mobile operator to acquire new users;

retention measures an operators ability to hold on to existing users; while ARPU

refers to the revenue generated by each user.

Though the number of players in the Egyptian telecom market are limited, but

they hold a greater percentage of the telecom market share and offer a greater

competition to the new entrants.


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2.3.7 Porters Diamond Applied to Egypt Telecom Industry

CHAPTER3



Structure: set up own dealer and retail

outlets as also the modern retail stores.

Rivalry: strong hold of the existing players

Demand

Conditions

( large potential &

greater demand

from the service

sector and also the

young generation.)

Factor

Endowments

(availability of

required skilled

labour as also the

basic telecom

infrastructure)


Industries


and other

internationally

competitive players


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3. International Marketing3.1 Segmentation and Targeting

The countries so chosen can be segmented on the basis of the following:

y Income/ Occupationy Education

y Lifestyle

y Age group

3.1.1 Segmentation of the Ghanian Market

Based on Age Group:(as estimated in 2009)

y 0-14 years: 37.3% (male 4,503,331/female 4,393,104)


y 65 years and over: 3.6% (male 393,364/female 460,792)

Based on Literacy: (as per 2000 census)

y definition: age 15 and over can read and write

y total population: 57.9%

y male: 66.4%

y female: 49.8%

Based on Occupation: (as estimated in 2005)y agriculture: 56%

y industry: 15%

y services: 29%

3.1.2Target market in Ghana

y At the initial stages the following cities in Ghana namely Accra,Kumasi and

Tamale, will be targeted as these account for the majority of the population

ofGhana.

y The target age group will be 15-64 years (59% of the population),with

growing emphasis on the lower age group ofbelow 14 years ofage,

acoounting for37% of the entire population.

y The literate population comprises only of 57% of the population, and thereby

an equal emphasis on the illiterate population becomes a must.


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3.1.3 Segmentation of the South African market

Based on Age Group: (as estimated in 2009)


y 15-64 years: 65.8% (male 16,275,424/female 15,984,181)y 65 years and over: 5.4% (male 1,075,117/female 1,562,860)

Based on Literacy: (as estimated in 2003)



y male: 87%

y female: 85.7%

Based on Occupation: (as estimated in 2007)

y agriculture: 9%

y industry: 26%

y services: 65%

3.1.4 Target Market in South Africa

y All the three capital cities of South Africa will be entered into at theinitial stage, which includes: Cape Town, the largest of the three, is the

legislative capital; Pretoria is theadministrative capital; andBloemfontein is thejudicial capital.

y The target age group will be 15-64 years, which comprises of 65.8% ofthe entire population.

y The target occupation will be services employing 65% of the labourforce.

y The literate population accounts for as high as 86% of the population,thereby the focus will be on the literate population of South Africa.


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3.1.5 Segmentation of the Eyptian market

Based On Age Group: (as estimated in 2009)



y 65 years and over: 4.8% (male 1,701,068/female 2,299,875)

Based On Literacy:



y male: 83%

y female: 59.4% (2005 est.)

Based On Occupation:

y agriculture: 32%

y industry: 17%

y services: 51%

3.1.6 Target Market in Egypt

y Our services as a GSM service provider will begin in the capital ofEgypt that

is Cairo, to start with.

y The population in the category of the age group 15-64 yrs, which comprisesa major percentage(63.8%) of the Egyptian population, will be ourtarget

market in Cairo.

y The services sector will be our target market, considering the fact that 51%

of the labour force is employed in the services sector.

y Since, the use of GSM services requires minimum of reading abilities, the

main focus will be on the literate population to start with, which comprises of

as much as 71% of the entire population.

3.2 Positioning OfThe GSM Services In The Chosen Countries

OurGSM services will be positioned as :

a) Low cost GSM service provider

b) For the common masses who want greater connectivity

c) Introducing Per second call rates for the first time in the African markets.

d) Greatertalktime at lower call rates


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3.3 4 Ps

3.3.1 ProductOurService includes GSM services which will comprise of the following :

y International roaming

y Open architecture

y High degree of flexibility

y Easy installation

y Interoperation with ISDN (Integrated Services Digital Networks), CSPDN

(Circuit-Switched Public Data Network), PSPDN (Packed- Switched

Public Data Network), and PSTN (Public-Switched Telephone Network)

y High-quality signal and link integrity

y High spectral efficiency

y Low-cost infrastructure

y Low-cost, small terminalsy Security features

These objectives have been gradually achieved and a broad collection of services

are provided. The GSM services are grouped into three categories:

1.Teleservices (TS)

2.Bearer services (BS)

3. Supplementary services (SS)TS cover, in essence, telephony, BS encompass

basically data transmission, and SS are the value-added features.

Teleservices: (TS)

Regular telephony, emergency calls, and voice messaging are within TS.

Telephony, the old bidirectional speech calls, is certainly the most popular

of all services. An emergency call is a feature that allows the mobile

subscriber to contact a nearby emergency service, such as police, by

dialing a unique number. Voice messaging permits a message to be stored

within the voice mailbox of the called party either because the called partyis not reachable or because the calling party chooses to do so.


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Bearer Services : (BS)

Data services, short message service (SMS), cell broadcast, and local features are

within BS. Rates up to 9.6 kbit/s are supported. With a suitable data terminal or

computer connected directly to the mobile apparatus, data may be sent through

circuit-switched or packet-switched networks. The broadcast mode (to all

subscribers) in a given geographic area may also be used for short messages of up

to 93 alphanumeric characters. Some local features of the mobile terminal may be

used. These may include, for example, abbreviated dialing, edition of short

messages, repetition of failed calls, and others.

Supplementary Services: (SS)

y Advice of charge.

y Barring of all outgoing calls

y Barring of international callsBarring of roaming calls

y Call forwarding.

y Call hold

y Call waiting

y Call transfer etc

3.3.2 Pricing

Use ofPredatory pricing methods is going to be adopted in the chosen countries, as

all the three countries have a few but frimly established telecom operators who are

resorting to price reduction as one of the strategies to gain more market share.

Ghana

Charges would be 14 ghana pesewas/ minute

Free night calls from 11pm to 7am within the network.

Egypt

Our SIM cards will be retailed at 20,000 point of sale via ~1000 distributors

the company offers plan, talklonger@E

GP 60/min while other telcos arebringing down the pricing to 0.75 EGP/sec.

South Africa

R0.70 for the first minute and at R1.55 for every minute thereafter anytime

of the day. SMS messages will be are charged at 75 cents while off-peak

SMSs will be charged at 25 cents per message.


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3.3.3 Promotion

y Capturing the younger generation who forms a major part of the targetmarket.

y Celebrity endorsements

y Special season offers, festival discounts, and innovative advertisementcampaigns will primarily be used by the cellular service providers as

tools to push back the competition and penetrate into the chosen

markets.

3.3.4 Place (Distribution)

y Distribution logistics will be facilitated through our authorized dealer

channels and retail outlets.

y Modern lifestyle outlets will be set up in the targetted cities, providing

customers with delights of todays hi-tech world. Customers can come in to

check their handset, their mail, surf the web at our retail stores, or check out

the latest music or movie releases.

y Another option that we will be considering is that in a few of the tartgetted

countries where the entry strategy involves an alliance or take over of the

existing player, the existing players dealer system or network will be

leveraged so as to distribute our services.


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4. International Finance4.1Ghana

4.1.1Foreign Exchange Status

The Ghanaian Cedi is the currency in Ghana (GH, GHA). The symbol for GHScan be written . The Ghanaian Cedi is divided into 100 pesewas. The exchangerate for the Ghanaian Cedi was last updated on February 17, 2010 fromBloomberg. The GHS conversion factor has 4 significant digits.

1 GHS = 32.1 INR

4.1.2Investment Decisions

Buying 70 % stakes ofKasapa . Kasapa Telecom Limited - a subsidiary of HutchisonWhampoa Group - offers mobile, home, and business voice and data service on its 800

MHz CDMA2000 1X network, expanding throughout Ghana. Kasapa means good talkin Twi, the most widely-spoken local language in Ghana.

Kasapa would retain a 30 percent stake in Kasapa Telecom Limited, which has anenterprise value of around $1.3 billion.The 70% stake would br bought for $900 millionon a debt-free, cash-free basis.

4.1.3Future

Our short term goal : 1 million customers by May 2012.

Over the next 5 years, we expect Kasapa to invest over US$500 million in its

operations and network, restoring and expanding network coverage andcompleting and integrating the fibre backbone

We plan to leverage the experience of rapid network deployment in India andother emerging markets, its brand and ultra-low cost handsets, to accelerateKasapa 's growth

Through these actions, we intends that Kasapa will deliver a superior product andservice offering in the Ghanaian market and thereby raise its mobile market shareover time to around 25%, reversing recent underperformance

4.1.4BreakEvenAs shownin the picture we are planning to providenetwork in the areas in next 1 year in order to Break-even in 1.5 to 2 years.


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4.2EGYPT


The Egyptian Pound is the currency in Egypt (EG, EGY). The symbol forEGP can bewritten E. The Egyptian Pound is divided into 100 piasters or 1000 milliemes. The EGPconversion factor has 4 significant digits.

1EGP = 8.4 INR


The company is entering Egypt without any merger or acquisition with any othertelecom operator. But,

y We will enter into a MOU with Vodafone relating to a comprehensive range ofinfrastructure sharing options in Egypt.

y Infrastructure sharing is expected to reduce the total cost of delivering

telecommunication services, especially in rural areas, enabling both parties to

expand network coverage more quickly and to offer more affordable services to a

broader base of the Egyptian population.

The company is targeting an 8 % pan-Egypt market share, and the opening of one million

retail points and breaking even on EBITDA within three years.

In order to reduce time-to-market, we will outsource infrastructure and back-end services

to partner organizations with established core competencies. The operational model is

low-cost with a gradual network-build up, infrastructure sharing, GSM equipment at

competitive cost, full-scale IT-outsourcing and a long term cost and capex efficiency.

4.2.3Break-Even

It will take more time here to reach the breakeven asinfrastructure will add up to cost of operations. With currentand expected cash-flows we are expecting to Break-even in 5-6 years in Egypt


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4.3 SOUTH AFRICA


The South African Rand is the currency in South Africa (ZA, ZAF). The South African

Rand is also known as Rands. The symbol for ZAR can be written R. The South African

Rand is divided into 100 cents. The ZAR conversion factor has 6 significant digits.

1 ZAR = 6 INR


y Buying 67 % stakes ofCell C . (50% of which is held by Virgin)

y Cell C would retain a 33 percent, which has an enterprise value of around $5.7

bn.The 67% stake would be bought for $3.5 billion

y We will assume net debt of approximately US$2 billion and rest will be in cash.

y The acquisition meets our stated financial investment criteria

Infrastructure sharing MOU with Vodacom

y Whilst Cell C and Vodacom will continue to compete independently, Us and

Vodacom have entered into a MOU relating to a comprehensive range of

infrastructure sharing options in South Africa.

y Infrastructure sharing is expected to reduce the total cost of delivering

telecommunication services, especially in rural areas, enabling both parties to

expand network coverage more quickly and to offer more affordable services to a

broader base of the SAF population.

4.2.3BreakEven

Operationally, we are looking for adding 3-4mn over the first

few months. This would help us to breakeven in 12-14 months.


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5.International Human Resource (HR)

5.1 RECRUITMENT

Keeping in mind Egypts second most advanced status in Middle East after Israel, we follow

the Polycentric approach of staffing. In this policy, each subsidiary is a distinct national

entity with some decision-making autonomy. HCNs manage subsidiaries who are seldom

promoted to HQ positions in parent country. Moreover, PCNs are rarely transferred to

subsidiary positions.

This approach will also help in eliminating language barriers, avoiding adaptation of PCNs

and reducing the need for cultural awareness training programs. This also allows us to take a

lower profile in sensitive political situations. Moreover, its not only less expensive but willalso give continuity to the management of foreign subsidiaries (lower turnover of key

managers).

Similar policy will be used for our South Africa subsidiary as well.

However, for Ghana subsidiary we will follow the Ethnocentric approach because of the

absence of skilled manpower. It will ensure that our subsidiary complies with overall

corporate objectives and policies, has the required level of competence and controls.

5.2 TYPEOF ASSIGNMENT

The assignments will be traditional expatriate assignment which is long term and ranges

between 1-5 yrs.

Besides this, we will also follow virtual and contractual assignment to maintain a result

oriented and better control.

5.3 SELECTION CRITERIA (Common)

We follow the following selection criteria:


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5.4 TRAINING ANDDEVELOPMENT

The role of training is in supporting expatriate adjustment and on-assignment

performance.

The training programme has 2 objectives:

1- Management DevelopmentA- Individuals gain international experience which assists career progressionB- Multinational gains through having a pool of experienced operators on

which to draw for future international assignments

2- Organizational DevelopmentA- Accumulating a stock of knowledge, skills and abilitiesB- Developing a global mindsetC- Expatriates as agents of direct control and socialization in the transfer of

knowledge and competence.

The entire training programme consists of 3 points:

1: Pre-departure training-

A pre-departure training program helps to ensure fewer difficulties when abroad. The

program covers such topics as:


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A- Cross-cultural communicational aadaptability is a major requirement for successfulcommunication in our modern world. Body-talk, expressive sounds, facial and other

gestures, posture, bodily movements, and the three distances (intimate, personal

and social) which vary in cross culture. In the global workplace we tend to minimize

or even to ignore our cultural differences while mythologizing that they no longer

exist.

B- Preliminary visits to be familiarized with the target country

C- Interpersonal Skills - People interacting with other people, and how do they do it,that's what Interpersonal Skillmeans.

D- Conflict Resolution- These training activities help to manage conflict in theworkplace effectively by facilitating confrontation and reconciliation and other

peace building programs.

E- StressManagement- Some stress is always good. But to reduce the excessive stressspecialized training is required.

F- Functional Capability- Its very important to train the person for the job assignedinternationally. Even if person is expert, a fresher course is given.

2: Language Training

A- The role of English as the language of world businessB- Host country-language skills and adjustmentC- Knowledge of the corporate language

3-Practical Assistance

A- Information that assists relocationB- Assistance in finding suitable accommodation and schoolingC- Further language trainingD- Makes an important contribution to adaptation of expatriate and accompanying

family members to the host location

5.5. COMPENSATION

We must manage highly complex and turbulent local details, while concurrently

building and maintaining a unified, strategic pattern of compensation policies,

practices and values.


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The area of international compensation is complex, primarily because we will have to

cater to three categories of employees: PCNs, TCNs and HCNs

Key Components of compensation are:

Base salary

The base salary is the foundation block for international compensation

whether the employee is a PCN orTCN. It is the basis for in-service

benefits and pension contributions may be paid in home or local-country

currency.

Foreign services inducement

It is a salary premium as an inducement to accept a foreign assignment or

as compensation for any hardship caused by the transfer.

Hardship premium

Given against any foreign defined as hardship

Benefits

Like vacations, special leave, rest and rehabilitation leave etc.

Allowances

Allowances are paid in order to encourage employees to take international

assignments and to keep employees whole relative to home standards.

Cost-of-living allowance

Housing allowance

Relocation allowance

Education allowance

Home leave allowance

Hardship allowance

5.5.1 Approaches to Compensation

1- Going Rate Approach (also referred to as the Market Rate Approach)2- Balance Sheet Approach (also known as the Build-up Approach)


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A- Goods n ServicesHome-country outlays for items such as food, personal care, clothing,

household furnishings, recreation, transportation, and medical care.

B- HousingMajor costs associated with housing in the host country.

C- Income TaxesParent-country and host-country income taxes

D- ReserveContributions to savings, payments for benefits, pension contributions,

investments, education expenses, social security taxes, etc.

Of these, we will be following the Balance Sheet Approach because it not only guarantees

maximum employee satisfaction but also maintain equity among various factors.

5.6 TAXATION

In

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