NITF ICT Forum: Interconnection in Ghana / GSM in Zambia / Botswana Buyout

[Charles Lewis]

Interconnection tariffs milking GT dry as MOCT dithers [Accra Mail]

http://www.accra-mail.com/story.asp?id=6944

August 05, 2003

The largely state owned telecommunication company, Ghana Telecom (GT) has advertised its intention to adjust the interconnection between its fixed network and the mobile operators from ¢600.00 to ¢2,200.00. 
At the moment a call originating from Ghana Telecom's fixed network and ending in a mobile net work, say Spacefon costs the subscriber ¢600.00 per minute. 

Of this ¢600.00, GT pays Spacefon ¢320.00 and keeps ¢280.00. On the other hand, a call from Spacefon to GT at the peak rate costs ¢2800/min. Of this amount Spacefon pays Ghana Telecom only ¢280.00 and keeps the rest. That is the disposition when any of Ghana's thousands of mobile phone users make or receive a call. 

A communication expert told ADM, "Basic economic sense indicates that subscribers will prefer to call from Ghana Telecom's fixed network to the mobile systems than vice versa." According to him, "This leads to congestion and huge outward payment by Ghana Telecom to the mobile telco's." 

ADM has information that indicate that for the first half of 2003 alone GT would be doling out as much as ¢60 billion to the mobile telcos and in return receive only around ¢3 billion from them. 

GT is clearly suffering a haemorrhage with a "capital" flight not of its making, to its competitors in the mobile sector. Indeed for a long time when Mobitel had free use of Ghana's frequencies, GT was not even in a position to compete with its own mobile operations. 

With incredulity, the communication expert who puts blame at the doorsteps of the National Communication Authority (NCA) queries, "Could the initial aloofness exhibited by the regulatory body, the NCA, be a sign that the incumbent telco is about to be strangled out of business? Can the NCA regulate on this issue? If it cannot, then why?" 

He piles yet more queries, "How long has this scheme been in place? Are the reasons that originally led to this arrangement tenable today? Why the inertia?" Both the fixed and mobile network infrastructure in Ghana are not developed and properly evolved and so they need and must be given equal chances. 

The argument and perception that it is more expensive to build and operate cellular than fixed network is not tenable as calculations by industry experts indicate that it costs $250.00 of capital expenditure to provide a fixed subscriber with telephone line than the mobile operator. 

The communications expert says "whole sale importation of ideas from the sub-region or the technologically advanced nations will not work. 

Our local experts must resolve this problem between GT and the mobile operators which are clearly milking it." He believes the NCA must play fair. Choices for the NCA include GT's drive which appears to be towards a system where there will be harmonization or equality in tariffs. 

This means a situation where the call charges are either equal or close, in line with the International Telecommunication Union's (ITU) recommendations that tariffs between two telcos must be the same, regardless of the technologies used. 

Secondly, there is the second option of "Sender takes it all". With this arrangement the telco whose network originates the call takes all the call charge and pays nothing to the telco in whose network the call is terminated. 

If say a subscriber from Spacefon calls into GT's fixed network, then Spacefon keeps all the ¢2,800.00 or if it is the other way round GT keeps the ¢600,00. 

Last week, the Ministry of Communication and Technology (MOCT) waded clumsily into the already muddied interconnection waters by issuing a press release taking a stand in view of the so called deregulated telecom environment. (See ADM editorial on page 7) 

Though the release did see where GT was coming from, it nevertheless would not allow GT to take the necessary management decision to redress the situation and rather seemed to be directing GT to play according to the rules of the mobile telcos. 

So far, the NCA has not seemed capable of regulating on mobile tariffs which puts it in an impossible position to try to regulate on the interconnection tariffs between the mobile and fixed network. NCA over the years has been more or less an accomplice in allowing the mobile phone companies to take undue advantage over GT. 

The issue of how Mobitel came to own some of the juiciest frequencies has not yet been satisfactorily explained to the people of Ghana. 

During the (P)NDC era, this vital national resource was handed over to an individual to do with it what he wished. Today the 020 of GT is suffering because of where it finds itself on the frequency spectrum. 

The whole brouhaha about interconnection leaves a lot to be desired about legal, technical and manpower issue surrounding NCA and MOCT. 

They would have to come clear and allow GT to take the appropriate management decisions that would make it effective, efficient, competitive and in a position to pay off its local and foreign debts. 

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Zamtel to Offer Its GSM Network Country-Wide [The Post]

http://allafrica.com/stories/200308050686.html 

August 5, 2003 
Webster Malido
Lusaka 

THE Zambia Telecom-munications Company (Zamtel) will by next year offer its GSM network cellular service, Cell Z, to all the provincial centres of Zambia.

Zamtel managing director Douglas Mutesha disclosed in an interview on Saturday that now that the line of railway from Livingstone to Chililabombwe, Chipata, Chirundu and Siavonga had been covered, Cell Z would soon go to Mongu, Mansa, Kasama and Solwezi.

And Mutesha explained that Zamtel had introduced a pre-paid system for land lines because many people with land phones were not paying their bills. He said Zamtel would have a pre-paid system for land lines, GSM cellular and internet services.

"This will help us get as much money as possible," Mutesha said. And speaking earlier during the launch of the Cell Z service in Lusaka at Intercontinental Hotel, Mutesha said it had always been Zamtel's vision to provide GSM service to the Zambian community. He said from the time Cell Z was launched in Chipata in May this year, the customer base had reached more than 5,000.

Mutesha said Zamtel as a company had embarked on a national wide network digitalisation programme which so far covers the Copperbelt, Central, Lusaka, Eastern and Southern provinces. He said with the completion of work in these areas, Zamtel customers would be availed with new added services.

"Our ultimate goal is to reach all provincial centres with Cell Z and upgrade old switches with state of the art switches that will provide you value added and modern telecommunications facilities," Mutesha said. Transport and communications minister Bates Namuyamba said although liberalisation measures had stimulated some growth, development of the communications sector was still in its infancy in Zambia.

Namuyamba stressed the importance of communication services in economic growth and development. He said the liberalisation of the communications sector had witnessed the entry into the market of private service providers. Namuyamba said the introduction of Cell Z onto the cellular phone service market would bring about competition as well as a wider choice for the population.

And Namuyamba said the government was in the process of developing an information and communications technology (ICT) policy since lack of an efficient communications system has a negative impact on the performance of any economy. He said the ICT policy document would provide guidelines for the communications sector to effectively contribute to the growth of the Zambian economy.

"These policy guidelines are in line with the general economic policy measures currently being pursued by government to resuscitate the economy," said Namuyamba.

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Portugal Telecom Accepts Botswana Buyout Bid [The Daily News]

http://allafrica.com/stories/200308050260.html 
August 5, 2003 

PORTUGAL Telecom (PT) has accepted a bid from TS Masiyiwa Holdings - a major investor in the Econet group - for its 50 percent stake in Mascom Wireless Botswana, the Business Daily has established.

TS Masiyiwa Holdings is expected to pay nearly 44 million euro or US$50 million (about Z$42 billion) for the shareholding.

A company spokesman told the Business Daily yesterday that an offer had been made to PT early this year and the Portuguese company had formally informed the company of its acceptance on Monday.

TS Masiyiwa, along with TSM International, already owns 20 percent of Mascom, a Gaborone-based mobile phone operator.

The TS Masiyiwa Holdings official said: "We approached Portugal Telecom some time earlier this year about buying them out.

"In terms of our shareholders' agreement with them, we have a pre-emptive right to buy the shares as do our other partners in the business."

If the sale is concluded successfully, PT will continue offering management services, the TS Masiyiwa Holdings spokesman said.

Meanwhile, Econet Wireless Zimbabwe says it has been "overwhelmed by the market's positive response" to its proposed acquisition of 14 percent of TS Masiyiwa Holdings' stake in Mascom.

Econet's share price on the Zimbabwe Stock Exchange has climbed 500 percent in the three weeks ago since the proposed acquisition was officially announced. The share price closed at $78 yesterday.

A company spokesman said for Econet Wireless Zimbabwe to generate the same revenue as Mascom Wireless, which has 300 000 subscribers, it would have to increase its subscriber base 13-fold from the present 140 000 to about 1.8 million people.

This is because of the tariff differences between Botswana and Zimbabwe.

"Econet Wireless tariffs are only about US5 cents, compared to US30 cents in Botswana. To build a network that size, we need nearly US$300 million," the Econet official said.

On the issue of the valuation of Econet Wireless Holdings (EWH), which has been raised by some critics of the deal, the spokesman said: "EWH is a publicly listed company and its price is determined by the market based on the information in the market.

"The people who want Masiyiwa to pay more are busy buying at the current market price."

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Charley Lewis

LINK Centre

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