Telecommunication in Somaliland and Puntland

STG BV provides telecommunication services in Puntland and Somaliland. Last Year FMO adn Swedfund acquired a majority stake in the business. The existing company required significant restructuring, which has been finalised in the last twelve months. A legal structure has been put in place, excess staff has been terminated and loss making businesses have been spun off. Now the company is cleaned up, the network expansion can start.

Basic need for good quality communications. Currently there is limited quality and coverage in the country. STG BV plans to change this.

We will swap the existing network for a high quality network. We will put a lot of effort into services, marketing, distribution and customer care. We have a unique combination of local expertise, SFI involvement and telecom know how in the company.

In every main city, we will have our own flagship store. All other distribution will be done through 4-5 super dealers, who have their own network of sub dealers.

We have conducted market research and developed a new brand. We know there is a demand for high quality services, ie. no congestion, dropped calls, sms, voicemail, roaming, customer care etc.

We will be selling to the people of Somaliland and Puntland. Mobile telephony is a basic need, for which people are willing to spend a great portion of their household income. Average market penetration in Africa stood at 48% in 2008, which means that half of the continent already has a mobile phone. Market penetration in Somaliland and Puntland is only at 5-7%. Even poor countries like Liberia already have penetration levels of 30%.

Main competitors are Telesom/ Golis, Telcom en Somtel. Telesom and Golis are affiliated companies operating in Somaliland and Puntland respectively. They are market leader with a combined customer base of around 300K. Telcom is the number two player, but with limited quality and cash, therefore not a big threat. Somtel has not yet launched, but is backed by money from the gulf and is likely to become a strong competitor.

The combination of telecom know how, local knowledge and institutional investors is unique. Somtel has money but no telecom know how. Telesom/Golis has a reasonable coverage, but not great service.

We will introduce new services, like a one network concept, which means that people can roam between Puntland and Somaliland. No other operator offers that. We will introduce proper marketing and customer care.

Like with many things, you need to invest heavily, which is what we are planning to do. Total Capex in the coming 3 years almost equals USD 30mn

The current CEO of STG BV is Bengt Strenge, a swedish national with an extensive background in African telecoms. He was 6 years CEO of MTC Namibia, the number one mobile operator in the country.

CFO is Ray Pettersson, a well experienced financial controller and has held leading positions in companies undergoing expansion and change.

The founder of STG has been Abdirazak Osman, a Somali with US pass. He is now Supervisory Board Director.

As indicated before, the combination of telecom experience, local know how and first class corporate governance through FMO and Swedfund

Management is full time employed. As Supervisory Board member, I spend around 1 day a week on the business.

It is wel known that mobile phone penetration is directly linked to GDP growth. People can compare prices, talk to relatives instead of having to travel there. Developmental impact is huge, which is also one of the main reasons for FMO and Swedfund to be involved.