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Cablegate: Awcc Bets On Dramatic Market Expansion

VZCZCXYZ0006
OO RUEHWEB

DE RUEHBUL #0597/01 0481303
ZNY EEEEE ZZH
O 171303Z FEB 10
FM AMEMBASSY KABUL
TO SECSTATE WASHDC IMMEDIATE 5660

UNCLAS E F T O KABUL 000597

NOFORN
SENSITIVE
SIPDIS

DEPT FOR EEB/CIP, S/SRAP, SCA/FO, SCA/A

E.O. 12958: N/A
TAGS: ECPS EAID PGOV PREL AF
SUBJECT: AWCC BETS ON DRAMATIC MARKET EXPANSION

REF: A. 09 KABUL 2962
B. 09 KABUL 3863

Classified By: A/CDDEA Stephen Cristina for Reasons 1.4 (b) and (d).

1. (SBU/NF) Summary: Afghan Wireless Communication Company
(AWCC), one of the Afghanistan's largest cellular providers,
plans to invest millions of dollars in dramatic
infrastructure expansion in 2010. The company will build
nearly 400 new towers, mostly utilizing its own capital, but
40 will be funded by the Afghan Government-run
Telecommunications Development Fund (TDF). New towers will
be clustered in Kabul, Kandahar, Herat, Jalalabad and Kunduz.
AWCC currently provides communication services to nearly
every Afghan bank and will debut a mobile money transfer
product in the first half of the year. AWCC hopes lower
rates and better coverage will encourage existing customers
to talk more, and new customers drawn by recent service
expansions have far exceeded AWCC's expectations. If future
sites are equally successful, AWCC could overtake Roshan as
the cellular market leader. The company's optimism rests on
Afghanistan's still-increasing demand for cellular service
and a market that is growing by more than 1 million users per
year.
End summary.

BETTING THE FARM ON INCREASING CUSTOMER DEMAND...
- - - - - - - - - - - - - - - - - - - - - - - - -

2. (SBU/NF) Owned by an American citizen and headquartered
in Fort Lee, New Jersey, AWCC was the first wireless operator
to enter Afghanistan but has fallen behind rival Roshan in
recent years. Roshan claims approximately 2.3 million
customers, while AWCC hovers closer to 2 million. During a
February 10 meeting with Econoffs, AWCC Managing Director
Amin Ramin and Director of Business Operations Vishal
Rattanpal said the company will utilize its own capital
funding for the vast majority of new cellular towers.
Seventy will be built in Kabul to enhance indoor and outdoor
coverage and provide data capability to existing subscribers.
(Note: Both AWCC and Roshan offer market of internationals
and businesspeople.) Sixty towers will be erected in
Kandahar province, while multiple towers will go up in Herat,
Jalalabad and Kunduz.

3. (SBU/NF) In addition to expanding its infrastructure,
AWCC will lower prices to entice existing users to talk more,
Ramin said. On February 10 he held a press conference to
announce a new pricing plan of 200 minutes of calling per day
for a daily charge of 25 Afghani (50 U.S. cents). This rate
is Afghanistan's lowest and reflects the increasing amount of
time users spend talking on their cellular phones. Note:
AWCC's new Amcit Commercial Development Director has previous
experience in East Africa where he successfully launched a
similar marketing plan with dramatically successful results.
Based on his discussions with Econoffs, we expect to see
additional marketing innovations which will expand the
average Afghans' access to more affordable telephone and
internet service in AWCC's service package in the near
future. End note.

...WITH A LITTLE HELP FROM THE AFGHAN GOVERNMENT
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4. (SBU/NF) In addition to self-funded expansion, AWCC is
utilizing GIRoA Telecommunications Development Fund (TDF)
support to build 40 towers in areas thought to be
commercially unfeasible (reftel A). Funded by a tax on every
carrier, the TDF is administered by the Afghan
Telecommunications Regulatory Authority (ATRA) and designed
to expand rural service. Ramin said the first tower, in
Nuristan province, is already operational, and a site in
Jalalabad is ready for construction but security concerns
have delayed progress. Four TDF-funded towers each are
planned for Badakhshan, Paktiya and Zabul. Rattampal said
that at one site recently constructed in Badakhshan, AWCC had
expected 500 customers to subscribe to service. Within the
first week, 5,000 people living near the site were utilizing
AWCC's network ) a powerful indicator of the ever-increasing
market potential for Afghan wireless providers.

5. (SBU/NF) Four TDF-supported sites in Dai Kundi province
are planned, but massive snowfall, including a major
avalanche near the Salang Tunnel, has prevented their
construction. Additionally one village in the Sang-i-Takht
district of Dai Kundi reportedly confiscated AWCC's truck as
it pass through, along with $250,000 worth of equipment the
truck was carrying. Villagers insisted the AWCC engineers
erect the tower in their town, rather than the district
center. AWCC has asked the provincial governor and police

chief of help with no success. Post will follow up at the
provincial level and urge action by law enforcement officials.

BANK PARTNERSHIPS WILL LEAD TO M-MONEY SERVICES
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6. (SBU/NF) AWCC provides communication services to
virtually all of the Afghanistan's banks, including Kabul
Bank (the nation's largest), Azizi, Bakhtar, Maiwand,
Pashtany, Ghazanfar and Afghan United banks. Ramin said that
Kabul Bank, using AWCC-provided technology, will open 200 new
branches and hire an additional 5,000 employees. Many of
these branches will be on ANSF bases, enabling ANSF employees
who do not already do so to receive their salary through
direct deposit and withdraw cash at their base. AWCC's
technical support allows customers of each bank to check
their balance, initiate a balance transfer and request a
stop-check order using their cellular phones.

7. (SBU/NF) In addition to its current banking services,
AWCC plans to launch a mobile money transfer platform in the
spring, to compete with Roshan (reftel B). AWCC plans to
import a successful product from a third-party company and
implement it locally. Ramin said the company was in
discussion with the Ministry of Interior and the Ministry of
Defense to explore the possibility of regarding paying
Ministry employees through mobile money transfer. Post will
continue to encourage the Afghan Government to support mobile
money transfer initiatives, which has the potential to drive
more Afghans into a more formal and transparent financial
system and aids efforts to combat corruption and illicit
finance.

8. (SBU/NF) AWCC's planned expansion is well-timed to market
forces. The number of Afghan cellular subscribers has grown
by more than 1 million per year, and AWCC's recent experience
suggests that the 60 percent of Afghans who do not own
cellular phones would like to. Coupled with Roshan, a
stronger AWCC could force smaller rivals MTN and Etisalat out
of the Afghan market. End comment.
Eikenberry

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