Study: African telecom liberalization boosts services

Telecommunications liberalization is gathering pace in many African countries and has resulted in rapid growth in take-up of services, especially mobile services, according to a report released Wednesday by independent telecommunications analyst Paul Budde.

Out of 54 countries and territories in Africa, 35 now have independent telecommunications regulators, and most are actively encouraging foreign investment as privatization and liberalization open up new opportunities across the continent, Budde said.

In particular, several countries have opened their mobile markets to new entrants, resulting in explosive growth in the number of mobile subscribers in Africa. The number of mobile phone users on the continent exceeded the number of fixed-line subscribers by 2001, according to Budde.

Some countries such as South Africa, Zimbabwe and Nigeria have licensed fixed-line competitors to the former monopoly carriers and Morocco is expected to follow suit shortly.

European investors have been quick to take stakes in African carriers that are being privatized.

Deutsche Telecom AG subsidiary Detecon, Switzerland’s Telecel International Ltd. and Egyptian company Orascom Group have bought 51 per cent of Uganda Telecom.

Detecon and Dutch company MSI Cellular Investments Holdings BV have bought a 35 per cent stake in Tanzania Telecom.

Nigerian state carrier Nitel has been up for sale since 2001, although an earlier bid for 49 per cent of the carrier by a group called the Mount Kenya consortium fell through. Dutch company Pentascope International has emerged as the favourite to manage Nitel.

Ethiopian Telecommunications Corp. is expected to sell a 30 per cent stake to foreign investors sometime early in 2003.

Norway’s Telenor ASA has been identified as a strategic management partner for Ghana Telecom following the expiry in early 2002 of an earlier contract with Telekom Malaysia Bhd.

Malawi received seven bids, one local and six international, in January 2003 for a 30 per cent stake in Malawi Telecom.

The health of the telecommunications industry varies widely across the continent, Budde said.

In many of the smaller countries, deregulation is slow due to lack of management, expertise and insufficient investment. Political instability, outright warfare and inadequate funding have depleted existing networks in some countries, Budde said.