Interview with CEO of Roshan: Poor security dents Afghan mobile phone profits

Via Reuters. By Jonathon Burch

KABUL, Sept 24 (Reuters) – Afghanistan’s mobile telephone industry is booming, but with power cuts and militant attacks on telecom masts, running the business is fraught with problems, the head of Afghanistan’s leading mobile provider said on Wednesday.

Afghanistan’s economy is emerging from decades of war and, despite millions of dollars pumped into reconstruction, it remains one of the poorest countries in the world.

Criminality and insecurity caused by a resurgent Taliban have added to the problems hindering economic growth. In 2002, more than 99 percent of Afghans did not have access to telecommunication services. The capital, Kabul, accounted for around two-thirds of Afghanistan’s functioning lines, according to the World Bank, and there was no mobile phone network.

“When we came to Afghanistan … there were no banks … no electricity … there was no logistics, air travel was limited … and there was the Taliban issue,” said Karim Khoja, CEO of Roshan. “There are a whole range of things that at different times have plagued us, one way or another.”

Launched in 2003, Roshan has coverage in more than 227 towns, reaching almost 56 percent of the population, making it the primary mobile company in Afghanistan.

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Roshan is owned by a consortium led by the Agha Khan Fund for Economic Development, Monaco Telecom International, a subsidiary of Cable & Wireless (CW.L: Quote, Profile, Research), and Telia Sonera.

Afghanistan has three other mobile networks, with Afghan Wireless (AWCC) coming in second place. Both Roshan and AWCC boast more than 2 million subscribers each.

While poor infrastructure, government bureaucracy and problems with energy — Roshan has to generate its own electricity at all its sites — have all added to the companies’ woes, deteriorating security is a primary concern.

“On any one day we have to switch off between 30 to 50 sites at night in the south … and then switch them on in the morning,” said Khoja. “And if we don’t, our sites get attacked, so that’s how it really affects us every day.”

MOBILE BANKING

The Taliban have attacked and destroyed mobile phone masts in the south and east, where the insurgency is strongest, accusing foreign troops of using mobile phones to track the insurgents.

But officials say the Taliban move at night and want to stop villagers informing security forces of their whereabouts.

Up to 18 Roshan sites have been attacked, said Khoja.

“It’s a loss of revenue. It’s also a loss of security,” said Khoja, pointing out that people cannot use their mobile phones in times of emergency.

Getting technical experts to come to Afghanistan is another problem because of the poor security, Khoja said.

But he and his company remain pragmatic. “I think our approach to Afghanistan has been, you know, you can’t expect to come to a country post-conflict and have it all be wonderful. That was part of the risk,” he said.

Despite the risks, Roshan has expanded, and now operates in 33 of Afghanistan’s 34 provinces. This year Roshan also launched the country’s first mobile money transfer service, M-Paisa.

The service, launched in conjunction with Vodafone (VOD.L: Quote, Profile, Research), allows businesses and ordinary Afghans to transfer money from one part of the country to another via their mobile handset.

In a country with no electronic payroll system and only a fledgling banking sector, M-Paisa will make a real difference to the lives of ordinary Afghans, said Khoja.

M-Paisa will also incorporate a voice recognition system next month to allow the country’s illiterate to use the service.

“It’s no different from banking but it’s very easy to do,” said Khoja. (Editing by Paul Tait)