July 14, 2011 / 11:45 AM / in 6 years

CORRECTED-Zain Sudan in telco licence talks with South Sudan-MD

(Corrects July 12 story to show Zain is in talks over licence fee, not obtaining new licence. Conforms throughout.)

* Zain Sudan says business as usual in newly-independent South

* Carrier in talks with South Sudan govt over telco licence fees

* South Sudan provides only 6 pct of Zain Sudan’s revenues

By Matt Smith

DUBAI, July 12 (Reuters) - Telecoms carrier Zain Sudan is in talks with South Sudan to pay a fee to extend its Sudan licence to the newly independent country, the firm’s managing director said on Tuesday.

South Sudan seceded from the north on Saturday, the culmination of a 2005 peace deal that ended decades of civil war.

Zain Sudan, a unit of Kuwait’s Zain and one of three mobile telecoms carriers licensed from Khartoum, will continue to operate in the South as usual until new licence fees are agreed, managing director Elfatih Erwa told Reuters.

Erwa ruled out asking north Sudan to refund some its estimated 200 million euros licence fee to offset the cost. The firm will split its Sudan operations after South Sudan obtains an international dialling code.

Zain Sudan’s 57 percent mobile market share generated revenues of $273 million in the first quarter - almost a quarter of Zain group’s total -- but just 6 percent of this came from the South. The carrier had 10.7 million Sudan subscribers on March 31, up 21 percent from a year earlier.

Only 1 million of South Sudan’s estimated 8 million people have mobile phones, but this will likely treble within two years, Erwa said.

South Sudan is considered one of the world’s least-developed nations. The territory is about the size of France but is estimated by some officials to have just 50 km of paved roads.

Government revenues are derived almost entirely from oil.

Zain is gearing up to expand 3G services in the South, investing nearly $110 million in fibre and its core network in 2011, while it has invested $1.2 billion in the past three years in Sudan as a whole.

“Our network in the south is larger than the other operators combined,” added Erwa. “We are now ready to roll out a fibre network to the Red Sea - we already offer 3G services in the South, but internet access is currently via satellite and so capacity is limited. This will be improved dramatically when the fibre network is built.”

South Africa’s MTN has an estimated 19 percent share of Sudan’s mobile market and Sudatel’s Sudani has 24 percent. (Additional reporting by Alexander Dziadosz in Juba; Editing by David Cowell)

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