Zain was licensed in Niger in 2000 for 15 years, but poor quality of service has led the Niger regulator to put up the license for renewal this year. This is expected to raise issues of valuation of assets as well as questions of what Zain must do to get back the license.
"At end of 2010, Zain should either leave the Niger market or renew its license," said Adamou Iro, a legal and telecom expert in Niger.
Last week, Niger's regulator, Autorite de Regulation Multisectorielle (ARM), announced the reduction of the license duration for Zain by five years, and of Moov (owned by Etisalat) for three years. Both licenses were issued in 2000.
With the decision, ARM has become Africa's most strict regulator, given that countries like South Africa, Rwanda, Nigeria, Kenya and Ghana have only fined operators and threatened to withdraw licenses, but have never done so.
ARM said that unless the services are provided as stated in the service level agreements, it will continue cracking the whip.
"The network quality is bad; Zain and other operators lack transparency in their billing systems, customers lose coverage all the time, there are drops in the middle of communications, and most often help-lines numbers are hardly answered," said Iro.
For Zain, the option seems to be a network upgrade by the end of the year, or it may quit the market, though the details of the original license are not known.
"Probably, according to the original licence conditions, Zain can automatically apply for a licence renewal and it would probably be granted, but stricter quality measures may be set in place or clauses regulating that quality (of voice services)," said Dobek Pater at Africa Analysis.
But the issue of quality of service is not isolated to Zain or Moov -- it's common in Africa, given that data users are rising, most mobile operators have become the largest ISPs (Internet service providers), and network investment is not matched with sales and marketing.
In fast-growing markets, the demand (particularly in the larger urban centers) often outstrips supply. Operators have begun to push data services, which places further pressure on the quality of voice, and in the narrow band, operators use the same voice networks to deliver data services, added Pater.
The actions in Niger have raised the debate of investments in 3G and WiMax and the availability of both spectrums. WiMax spectrum is scarce and 3G licenses are expensive, forcing most mobile operators to partner with smaller companies with WiMax licenses, allowing separation of voice and data services.
"In Niger, mobile operators Zain, Alink Telecom, Orange, Moov and Sonitel offer WiMax connections, but only in the capital city, Niamey," Iro said.
The rising number of Internet users and the widespread use of mobile phones has raised a dilemma for mobile operators: Do they choose voice over data or can they do both and survive?
"The dilemma is how to ensure good quality on both without sacrificing one or the other; data will generate higher revenues in the future, particularly when targeting the business market segment, but it will take time. Meanwhile, you have to be in the game now," added Pater.
The debate whether 3G networks can deliver services as good as WiMax will go on, but meanwhile Zain will have to address questions of quality before license renewal.
"I don't see Zain not having its license renewed; non-renewal would mean that effectively it would need to stop operating, and it would take time for it to sell its infrastructure to a potential bidder or for a new licence to be issued and a new network deployed," concluded Pater.