BTC backbone separation to cost P100m


The termination of Botswana Telecommunications Corporation's (BTC) monopoly on voice and data network provision is set to level the playing field and significantly reduce tariffs, a government ICT official has said.

In addition, Mabua Mabua, the ICT coordinator in the Ministry of Transport and Communications, has told Business Week that the separation of the backbone infrastructure would boost Internet penetration. Already, a new company, the Botswana Fibre Networks (BoFINET) has been incorporated to take over backbone infrastructure from BTC.

Mabua said BoFINET is expected to commence operations in the next 12 months to mark the completion of the second phase of the BTC privatisation process. "When BoFINET starts operating, we anticipate considerable decreases in Internet prices as BTC will now be standing on the same footing with all other companies. We are trying to get rid of cross-subsidisation within BTC.  This should help improve out Internet penetration which is currently very low," he explained.

Botswana's Internet penetration stands at around 10 percent. Mabua said that given the country's economic profile as measured by per capita GDP, the penetration is supposed to be as high as 30 percent. He explained that through the privatisation of BTC, the backbone infrastructure is being separated and bundled into a new government owned company. The development will see all Internet Service Providers (ISPs) and telecommunications companies including BTC, openly competing for network and bandwidth supply.

Currently BTC plays the dual role of being an ISP and a bandwidth supplier to the other ISPs. This gives it an unfair advantage over other ISPs and telecommunication firms such as Mascom and Orange. At the end of the separation, the assets to be transferred to BoFINET include the Trans-Kalahari Optical Fibre, the metropolitan fibre loops, the Gaborone/Francistown fibre loop, the Dense Wave Division Multiplex fibre system and both the Eastern Africa Submarine Cable System (EASSy) and the West Africa Cable System (WACS). Mabua stated that separation of the backbone infrastructure and operationalisation of BoFINET is expected to cost P100 million. The costs will include advisory services, operational systems and expansion of network

"We are going to acquire new billing, IT and accounting systems. We will also have to fill in some gaps in the industry in terms of the new company trying to reach to markets that are not serviced at the moment. All these costs should amount to about P100 million," said Mabua.

It is expected that most of the BoFINET staff will come from BTC, with the newly appointed board and executive management rolling out the full personnel structure. Once complete, the establishment and weaning off of BoFINET will allow the Public Enterprises Evaluation and Privatisation Agency (PEEPA) to prepare an Initial Public Offer of 49 percent of BTC's share structure to citizens.

Updating the Parliamentary Committee on ICT in Gaborone on Wednesday, PEEPA deputy CEO, Tiny Diswai-Moremi said that the closure of the privatisation process is now expected in 2014. But before that, the BTC Transition Act of 2008 will need to be amended to include a share option scheme established exclusively for citizen employees. Taking a cue from the National Development Bank (NDB) privatisation model, five percent of the 49 percent available will now be allocated to citizen employees of BTC through a share option scheme.