Angola Telecom Targets 2015 Profit After State Answers 911 Call

Angola Telecom, the African country’s state-run phone company, is on track to make a profit for the first time in eight years after receiving a $314 million government bailout to fund debt payments and boost sales.

Years of equipment neglect and lax bookkeeping of more than 300 bank accounts meant the company only collected about a quarter of the $190 million it was due in phone bills in 2011, Chief Strategy Officer James Wilde, 43, said in a Feb. 17 interview in Luanda, Angola’s capital. That changed after the government intervened in November 2012, allowing the company to increase revenue collection, repair and extend fiber-optic lines and plan to start its own mobile-phone network, Wilde said.

“Our first priority was to stop the bleeding and make sure the patient was breathing,” Wilde said as he navigated dense Luanda traffic in a Land Rover Defender. “We closed bank accounts, increased collections and developed short-term revenue streams while we upgraded the service.”

Angola, Africa’s second-largest oil producer behind Nigeria, is increasing telecommunications capacity to help diversify its $114 billion economy away from offshore crude oil production, which accounts for almost all exports and 80 percent of tax revenue. It plans to help companies become more efficient with better phone and Internet service while improving rural access to education and health care. Angola ranked 179th of 189 countries in the World Bank’s Ease of Doing Business Index benchmarked to June 2013.

Angola Telecom, which last made a profit in 2007, is forecasting net income of $5.89 million in 2015, compared with a loss of $40.7 million in 2012, according to financial statements provided by Wilde, a U.S. citizen. It has a revenue collection target of $300 million in 2015.

Mobile License

The company plans to secure a mobile-phone frequency license over the next year, Wilde said. It will compete with Unitel SA, the country’s largest mobile-phone operator part-owned by Africa’s richest woman, Isabel dos Santos, the daughter of President Jose Eduardo dos Santos. Unitel had 9.8 million subscribers as of March 2013, or about 75 percent of the market, according to a report by Paul Budde Communication Pty, an Australian company.

Its other main competitor is Movicel Telecomunicacoes SA, which was spun out of Angola Telecom in 2010 and is 40 percent owned by closely held Portmill Investimentos e Telecomunicacoes, which is run by Angolan army generals. Angola Telecom still has an 18 percent stake in Movicel.

Occasional Dividends

“When Movicel was privatized it left Angola Telecom without a revenue stream, aside from occasional dividends,” Wilde said. “We need a mobile license to survive.”

Competition from a third mobile operator could accelerate growth in an already booming Angolan market, which has increased penetration to 64 percent from 2 percent since 2003, Paul Budde said. Multinational operators including South Africa’s MTN Group Ltd. (MTN) and Vodacom Group Ltd. have expressed interest in a mobile license, Budde said. Angola Telecom’s reorganization is a step toward eventual privatization, according to the report.

Angola Telecom more than doubled revenue collection from 2011 to $119 million in 2012 and liquidated all short-term debt, the financial statements show. The company plans to quadruple its number of sales offices to 200 this year and offer a voice and data Wi-Max service called Talk and Navigate, Wilde said.

The company, which owns 51 percent of Angola Cables, will repair the damaged undersea Adones link, which was laid by Ericsson AB from Namibia to the oil-rich Cabinda province in the north of the country, Wilde said. Fiber-optic cables destroyed by road works following a 27-year civil war that ended in 2002 will also be fixed, he said.

Angola Telecom is also investing in recruitment and training for its 1,200-strong workforce, which has an average age of more than 50, Wilde said. The company needs to hire 300 new people, he said.

“They don’t want to change and it’s hard for them to understand the new concepts so it’s no wonder productivity is low,” he said. “This is the hardest challenge we face.”

To contact the reporter on this story: Colin McClelland in Luanda at cmcclelland1@bloomberg.net

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net

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