European Telecom yesterday officially launched its South African operation, after converting a subsidiary presence to an African head office.
[VIDEO]The company, listed on the London Stock Exchange, describes itself as a value-added reseller of cellular products, supplying handsets, SIM packs and vouchers to the channel.
The Accessory Group, one of its 13 autonomous business units, which opened offices in SA during 1997, previously represented the company.
Colin Cartwright, international marketing director for the mother company and director of the newly established European Telecom Africa, says the local market is only in the beginning of its growth and represents a promising opportunity.
"There is a third network coming to market soon; we believe that shortly thereafter a second landline network operator will come in with probably a fourth cellular licence, so there is still huge potential in the South African market."
[VIDEO]European Telecom sees similar opportunities on the rest of the continent. "In recent months, a number of African governments have issued licences to develop cellular networks, and subscriber numbers are set to explode in the next five to ten years," it says in a press release.
Current distribution in the rest of Africa, through agreements with MSI Cellular Investments, will be housed in European Telecom Africa, giving it an annual turnover of around R350 million for the 2001 fiscal year, according to Cartwright. The initial investment is R6 million.
"We work on thin margins," he says. "The cellular distribution business is very much about volume." The company expects that European Telecom Africa will reflect its average 11% gross margin.
[VIDEO]Sub-Saharan distribution agreements have been concluded with Ericsson and Motorola, and other options are apparently under consideration.
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