A week before Mohamed Dabbour was promoted from CFO to CEO of Millicom’s African operation, the group announced it was selling one of the businesses. A few weeks later, the group completed a deal with Bharti Airtel to merge two of their mobile networks into a 50-50 joint venture.
Dabbour appears not to be concerned. When he was CFO he knew how things stood, and he worked very closely with the then CEO of Millicom Africa, Cynthia Gordon. It’s unlikely there were any surprises.
“I was already involved with strategy with Cynthia,” he says. “I have been working with Millicom for nine years, and for eight-and-a-half years exclusively on Africa, including four years based in Africa. I’ve been there a very long time.”
Dabbour is based at Millicom’s UK headquarters office in London – though the company is Luxembourg-registered and its shareholders are Swedish. In fact it’s to one of the main shareholders, Kinnevik, that Gordon moved earlier this year, as a main board director after a telecoms management career that included MTS in Russia, Orange in France and Ooredoo in Qatar.
Let’s go to the sale first. Millicom announced in early February that it was selling its Senegal unit – which, like most of its businesses in Africa and Latin America, operates under the Tigo brand.
The purchaser was Senegalese mobile money company Wari, which agreed to pay $129 million. The transaction came only nine months after Millicom had been rumoured to be about to sell the Senegal business to Orange.
Strong and sustainable
Wari is “a leading platform for digital financial services in Africa”, said a statement by the companies at the time. Mauricio Ramos, group CEO of Millicom, said: “We are grateful to all of our employees, whose drive and commitment has enabled Tigo Senegal to become such a strong and sustainable business, and are confident that Wari Group will build on the current strength of Tigo Senegal.”
Kabirou Mbodje, CEO of Wari, said: “The acquisition of Tigo illustrates how an international group such as Wari, born in Africa, is proud to be at the forefront of driving the shift towards an ecosystem that provides social added value and tailored for Senegalese and African customers’ needs.”
Wari describes itself as an international cash-to-cash funds transfer service with the aim of meeting basic financial services in a cash-based economy. It offers 14 types of services and operates in 25 countries, and can be accessed in Europe, Asia, America and Africa.
Mbodje said: “By pooling the advantages of mobile telephony offered by Tigo and the world of benefits provided by Wari, a leading platform for digital financial services, we combine the expertise, energies and ambitions of our teams and our two groups in order to offer more convenient and affordable services to users.”
Dabbour is happy with the deal in Senegal. “The buyer was a local company,” he says. “It was convergence between financial services and mobile. We saw it was a good combination.”
It wasn’t the first sale in recent times in the Millicom portfolio in Africa. In April 2016 the company sold its business in the Democratic Republic of the Congo (DRC) to Orange for $160 million.
The DRC had been an over-populated market in terms of operators, with six competing for business at the start of last year. Neither Millicom nor Orange like to be down at the bottom of the league in any market: both usually say they want to be number one or two.
There was, and is, huge growth potential in the DRC, where penetration in the middle of 2016 was still only 50% – even with six companies competing for business from a population of 80 million. The DRC is the fourth biggest country in Africa by population, behind Nigeria, Ethiopia and Egypt and ahead of South Africa. Millicom sold its business, and Orange hopes to build its presence there.
Now, “we are doing well in all our markets”, says Dabbour. Though he admits that when potential buyers approach the company, it is right to consider what that means. So, in early March, just weeks after he took the CEO role, Millicom agreed to merge their subsidiaries in Ghana in a 50-50 joint venture.
That deal will see Tigo Ghana merge with Airtel Ghana, becoming the African country’s second biggest operator, serving nearly 10 million customers with revenues close to $300 million.
The combined unit will have around 5.6 million data customers, and offer 3G connectivity to around 80% of Ghana’s population, giving it the widest 3G reach across the country, according to a joint statement.
“In a highly fragmented telecom market, this deal represents a major milestone for our business in Ghana. The combination of Tigo and Airtel will create an operator that will be able to offer Ghanaian consumers and businesses a state-of-the-art network with high speed mobile data coverage, says Dabbour”
The deal with Airtel – which was widely rumoured earlier this year to be taking a close look at all aspects of its African business – “underlines confidence in the Ghanaian economy, and provides the opportunity to develop nationwide digital infrastructure and services in Ghana”, says Dabbour.
The combined operation will compete directly with MTN, the largest operator in Ghana, and Vodafone.
Airtel is trying to improve its loss-making operations in Africa, where it has not made a profit since buying most of Zain’s African business in 2010 for $10.7 billion. The Indian operator lost $91 million on its African operations in one quarter alone before the Millicom deal was agreed, on income of $900 million, compared with a loss of $170 million in the equivalent quarter a year ago.
Roshi Motman, head of Tigo Ghana and formerly an executive of Tele2 in Sweden, was rumoured to be preferred to run the combined operation in favour of Lucy Quist, the head of Airtel Ghana. But no statement has yet been made.
For Dabbour, Millicom’s strategy is to continue on growing “in the markets we are in right now”, he says.
“We keep on growing voice”, which is “the core business”, he recognises, but “data is a growing part” of the operation.
“We’re talking about bringing the digital lifestyle to our customers,” he says. Not just for consumers, but business-to-business is important to Millicom in Africa, providing fixed and mobile services as well as data centres in Chad, Ghana, Senegal and Tanzania. The company doubled its business revenue in 2016, he estimates.
“We see the market as underserved in Africa. We see an opportunity to become stronger and increase our revenue. We have fibre in all our markets – both for backbone transmission and for metro fibre services. When we can we use these for business-to-business,” he adds.
Business for 4G
The company has 4G in three markets so far, Chad, Rwanda and Tanzania, with both 2G and 3G in all others. “Providing 4G depends on the business case,” says the former CFO. “A lot of factors need to be considered. It depends on the appetite and on smartphone penetration. We do have a focus on affordable smartphones to maintain the strategy of growing data.”
Mobile financial services are available in all African markets, he adds. “In three markets we have more than one million subscribers. Tanzania is a well-developed market. We have interoperability between operators, and we also have cross-border transactions between Tanzania and Rwanda,” says Dabbour.
“We are integrating with banks so people can connect with bank accounts, but these markets have a high proportion of unbanked people. We think we can reach them. We are engaging with the authorities to expand mobile financial services.”
He’s clearly excited about the prospects of moving from a financial role to becoming the face of the company’s operations in Africa.
“I’m now engaging more with the public – in terms of driving the business and performance. I know how to look at the performance,” he says, but he still has a CFO’s instincts. “I need to keep looking at growth – whatever you invest in, you need to look at the performance.”
But there are a lot of similarities with his previous role as CFO. “This job is 80% dealing with people at all levels of the organisation. As CFO I also did a lot of interaction, but a lot more focus [on finance]. Now, it’s 360-degree interaction.”
Adapting hasn’t been as challenging as it might have been, because “I know the people in the Millicom group and the countries” from his days as CFO and before. “I’ve been in the company so long,” he adds.