JOHANNESBURG, South Africa-Uganda has one of the lowest penetration rates of telephone services in the world. As of July 1995, the Uganda Posts & Telecommunication Corp. (UPTC) had an installed capacity of just under 70,000 lines and approximately 42,000 subscribers. The result is a telephone density of 0.23 lines per 100 people. It is estimated 80,000 potential subscribers are waiting for lines.
Identifying this significant unmet demand for telecommunications services, the UPTC embarked on a process of deregulation and privatization to create an environment favorable to foreign investment.
When the Ugandan privatization unit made its first call on the country’s new, second national network on 16 October, it heralded the country’s determined move to liberalize the telecommunications sector. Unofficially, the network has been in a test phase since mid-November 1997.
“The new network symbolizes success of the policy of (a) liberalized economy, privatization programs and foreign investments,” said Uganda’s Minister of Justice and Constitutional Affairs Mayanja Nkangi.
The company-owned by South Africa’s MTN Holdings and Sweden’s Telia Overseas A.B. and other local and regional partners-was appointed as the country’s second telecommunications operator in January. Currently, it operates a GSM (Global System for Mobile communications) 900 MHz network for local and national calls. The company soon will add a fixed switch to provide PSTN (public switched telephone network) services as well.
Speaking at the function to herald the first call on the network, Chief Executive Officer Thomas Bragaw said the company had an initial investment of US$70 million and so far has spent US$31.5 million on renovations, countrywide site construction and equipment installation. He said the company will employ about 100 people both locally and from abroad. Fixed calls will be introduced in January 1999.
As Ross Macdonald, MTN’s head of international business development, pointed out, the challenge of providing services in a country where only 15 percent of the population live in towns is formidable.
The Ugandan government is aware of this and has imposed stiff penalties on MTN if it performs poorly. The company opened a US$4 million letter of credit drawable by the government if its performance fails to match its service pledges. MTN Uganda has made a commitment to lay 89,000 lines during the next five years, and it plans to invest US$70 million in the country. It also expects to provide extensive geographic expansion to marginal areas and install 2,000 pay phones in country districts.
In terms of pricing, MTN already has made an impact by reducing the prices on calls. Its launch tariffs are lower than its mobile competitor Celtel and lower than certain rates of state-run wireline provider Uganda Telecommunications Ltd. (UTL).
The company is aware that GSM 900 alone will not fulfill all its obligations and is exploring technology options, which include expansion into GSM 1800, VSAT (very small aperture terminal) satellite, P-MP, TDMA (Time Division Multiple Access), DECT (Digital Enhanced Cordless Telephone) and cdmaOne for its wireless local loop requirements.
The new GSM network is to delve a blow to the existing GSM operator, Celtel, which has been in operation since 1996. A consortia of MSI (United Kingdom), Vodafone plc (United Kingdom), IFC (United States) and CDC (United Kingdom), it carries 8,790 subscribers and has limited coverage, mainly in urban areas. Its monthly tariffs of approximately US$38 and connection fee of approximately US$150, are considered expensive by many consumers.
Further competition in the Ugandan telecommunications arena is to be introduced early next year when UTL, as part of its privatization process, chooses an equity partner that will hold 51 percent of the shares. Telkom S.A. and Telekom Malaysia were the favorites on the list, but Telkom withdrew, paving the way for Telekom Malaysia as the successful contestant. This process is still underway and has not yet been completed.
Malawi
The Malawi Posts and Telecommunications Corp. (MPTC) is restructuring, paving the way for eventual liberalization and privatization of the country’s telecommunications industry.
When the Communications Bill of 1998 is approved by parliament later this year, it will form the legal basis to split the MPTC into three entities-a Regulatory Authority for Telecommunications, Broadcasting and Postal Services, Malawi Posts, and Malawi Telecoms.
“The change will give telecoms more commercial status and allow for future participation by the private sector,” said Mike Makawa, chief executive of MPTC, at the recent Wireless Africa ’98 conference held in South Africa.
The operator will look for a strategic investor within a reasonable period of time after the split. After that, it plans to explore the practical aspects of the government issuing a license to a competing second basic telephony operator.
MPTC meanwhile has embarked on a number of projects to increase subscribers, including penetration in the rural areas, where 85 percent of the population lives. The additional switching and transmission equipment required for the expansion projects was provided through funding from the African Development Bank/African Development Fund Telcoms II.
This project will add 41,000 lines in the southern and central sections of Malawi by the end of 1999. The Danish government funding organizations DANIDA/NDF funded the city of Blantyre exchange programs.
Several wireless access technologies for WLL solutions are under trial, including one for DECT technology, currently being tested in Blantyre.
Meanwhile, discussions are underway for a technology best suited for the immensely varied topography of the country, which varies from the Rift Valley floor almost at sea level, to the mountains at almost 3,000 meters. MPTC has approached various suppliers of CDMA (Code Division Multiple Access) technology as a possible solution. When completed, these projects will add an important milestone in the network digitization and expansion program.
Mobile cellular services currently are provided by Telecomms Network Ltd. (TNL), a joint venture between Telekom Malaysia and Malawi PTC. The GSM 900 network, with about 7,500 subscribers, rolled out in February 1996 and covers the main cities of Blantyre, Lilongwe, Zomba and Mzuzu.
A tender for a second license, issued in March 1998, has been awarded to MSI. There were six companies in the final round, including the familiar names of Millicom International Cellular S.A., MTN and Vodacom Group plc.
United Kingdom-based MSI holds the majority shareholding (42 percent) of Celtel, the current GSM operator in Uganda.
Namibia
The telecommunications sector in Namibia has developed in the period of six years “so rapidly and dramatically that one could describe these developments as a miracle,” said Theofelus Mberirua, managing director of Telecom Namibia. Speaking at the Wireless Africa ’98 conference held in October in Johannesburg, he said that “the work that has been done in Namibia has been termed by many experts as a marvelous achievement.”
Six years ago, Telecom Namibia was plagued by a host of shortcomings that resulted in very poor services, characterized by inefficient and bureaucratic operations and a low level of infrastructure maintenance. An imbalance in the public network coverage resulted in limited access to services in rural areas.
When Telecom Namibia’s vision became known to the public, many critics believed it was too ambitious and unrealistic to attain. Its Vision 2000 reads: “Telecom Namibia will be one of the 10 most effective, reliable and profitable telecom providers in the world by the year 2000.”
This was a very ambitious goal, taking into account the smallness of the Namibian telecom market
in global terms.
However, it was this aggressive policy that signaled to the rest of Africa “that it was not go
od enough for Namibia to merely compare themselves with their African counterparts, but to strive for the attainment of even higher global standards,” said Mberirua.
A number of legislative acts that were shackling the telecom sector to a state monopoly were repealed and replaced by new acts of parliament, paving the way for liberalization and privatization. Equally aggressive was the country’s investment program. During the past six years, Telecom Namibia has invested close to N$800 million (US$133 million) in infrastructure development.
The establishment of international facilities and links to Namibia’s mainstream foreign destinations are key milestones in the expansion of the telecom network as well. A standard “A” international earth station and an international switching center have been in operation in Windhoek since 1995. Furthermore, three smaller satellite stations have been erected, one each at Luderitz, Katina Mulilo and Windhoek.
But what has contributed considerably toward Vision 2000 has been the launch of GSM wireless services. The small, albeit effective GSM network run by Mobile Telecommunications Ltd. (MTC) is well on its way to make cellular services available to between 80 percent and 90 percent of the population by the end of 1999.
Launched in April 1995, MTC is a joint venture between Namibia Post and Telecom Holdings Ltd., Swedfund International and Telia Overseas. It initially covered the capital city of Windhoek and the towns in the immediate area, including Rehoboth, Okahandja and the Windhoek airport.
The network expanded to the central West Coast in 1995, to northern Namibia in June 1997, and by January 1998 had extended its reach to southern Namibia. The diamond town of Oranjemund was added a few months later. The operator, with 20,000 subscribers, now has 26 roaming partners in 20 countries.
For quick and easy access in rural areas, Telecom Namibia opted for DECT for its WLL rollout. DECT has been deployed in Windhoek and Ongwediva in the north. Other wireless technologies, including CDMA, also are under consideration as different technologies are required to meet the differing demands of rural access in Namibia’s vast and varying landscapes.
“For concentrated settlements, the promising technology of VSAT (very small aperture terminal) satellite [dishes], which can provide high bandwidth at relatively low costs, have been abandoned, but could be used with the technology becoming cheaper,” said Mberirua.
A number of GMPCS (Global Mobile Personal Satellite Communication Services) currently are either already under construction or on the drawing board, and all are promising alternative solutions for rural access. Namibia is carefully monitoring developments of Iridium L.C.C., Globalstar L.P. and ICO Global Communications.
