Namibia – Topsy-turvy world of telecoms sector where the Government owns almost everything and wants monopoly gateway without a tender
29 September 2017
Namibia was one of the first countries in Africa to get an extensive fibre network and has a very high level of penetration across both voice and data metrics. But the main players in its telecoms sector are now entirely owned by the Government and the Minister responsible wants to impose a monopoly gateway with surveillance tools.
In population terms, Namibia is a relatively small country (2.48 million people) but covers a vast geographic area. Urbanisation is accelerating and there has been rapid growth in parts of the once poor north of the country.
There used to be three major telecoms operators – Telecom Namibia, MTC and Leo – but financial pressures have reduced this to two: Telecom Namibia and MTC. MTC and Leo were mobile operators and Telecom Namibia the fixed line incumbent. The latter was owned through Namibia Post and Telecommunications Holdings (NPTH), a Government-owned investment company that also holds the real-estate associated with its telecoms investments in a separate subsidiary.
Both MTC (which was 64% owned by Government and 34% by Portugal Telecom and its successor owner) and Leo (part-owned by Orascom) went up for sale. In MTC’s case the Government acquired a 100% stake. In Leo’s case it was also acquired by the Government through Telecom Namibia and turned into a tower leasing company called Powercom. Its portfolio includes both the former Leo and Telecom Namibia Towers. After a lot of arm-wrestling with the independent regulator CRAN, Leo’s mobile licence went to Telecom Namibia.
Telecom Namibia has come through a period of financial challenges and continues to be short of capital to invest. It also has all the complaints leveled at state-owned incumbents everywhere in Africa. It lacks the skills for a data future, is slow in responding to outages and generally slow to respond to customer demand. It made two disastrous international investments, one in Angola and the other in Neotel in South Africa, both of which it has now withdrawn from.
In terms of mobile subscribers, MTC is the biggest player with 2.3 million and Telecom Namibia is believed to have 300,000 subscribers. Smartphone penetration is over 40% and rising on the back of subsidized handsets in the market costing US$25-28. Both mobile operators are in the process of what has become known as digital transformation as voice and SMS revenues have declined significantly. Telecom Namibia has the main fibre network but MTC has announced that it will be investing in its own fibre networks.
Both provide 3G and 4G coverage. Access to broadband, according to the Minister responsible, has gone from 42% to 53% in the last year. Regulator CRAN has licensed spectrum with licence conditions on geographic coverage for 100 locations, of which 23 have no coverage.
Data consumption has risen rapidly over the last 5 years and continues to rise. For one operator it is over 35% (including SMS) and for the former fixed line operator it is well over half its revenues. In the case of MTC, 24% of its data activity is streaming and of the relevant parts, 72% is You Tube. As elsewhere in Africa, the biggest social media players are Facebook, WhatsApp and Twitter. Facebook users currently stand at about 500,000. There are local caches for Google and Netflix (believed to have somewhere under 12,000 subscribers) and Akami has a presence. There is also a local Internet Exchange Point.
There are 12 ISPs operating but a much smaller number of larger players including Paratus Telecom (which has announced it will be doing FTTH), MTN Business and Africa Online.
Under pressure from the EU around the EU Partnership Agreement negotiations, the Government has said it will put through an NPTH Dismantling Bill to dissolve the current telecoms assets holding company. Information Minister Tjekero Tweya said:”The EU deemed this a monopoly and has wanted liberalization to include telecommunications.”
But he talked of the Government Institutions Pension Fund stepping in which would only transfer Government ownership to another entity. As the dominant liberation movement (now party) SWAPO cleaves very much to the notion that state socialism will deliver ICT development much as its colleagues in South Africa’s ANC but without the same level of independent institutions restraining them.
There are rumours that MTN Business will open an MVNO on Telecom Namibia’s network but nothing concrete yet. The Government is said to be contemplating private ownership but will only look at minority investors.
The other major controversy in the market is a monopoly international gateway proposal. The WACS landing station is jointly owned by Telecom Namibia, MTC and the Government of Botswana. As an international connection, it has been a significant alternative to Telkom in South Africa for both Botswana and Zambia.
On 24 September The Namibian got hold of a proposal that Information Minister Tjekero Tweya has been pushing for a monopoly international gateway to be used for both tax-raising and surveillance. The contract proposed in May 2016 to the Minister would be worth ND3 billion a year.
It would control incoming and outgoing voice calls, text messages, Internet and data. It includes intelligence integrated tools to monitor, intercept and decrypt voice, data integrated voice, data and internet communications.
The Minister has tried to push though the contract proposal without a tendering process – something resisted by CRAN - awarding it to the French company who made the proposal called GEM Telco.
The Namibian talked to a Government official who described the transaction as another “money-making scheme” which might benefit politicians and their friends in high places if implemented.
The Minister is rather touchy on the subject. At a regional broadcasting conference (SABA) held this week he described how a journalist had dared to ask him questions about the contract at the opening of the Namibian Internet Governance Forum also this week. He said that journalists should concentrate on positive news and he would be “identifying enemies” in the media. Sign me up for that one.
It is hard to give a measure of the patronizing and arrogant nature of the man. He turned up over an hour late to open the conference and addressed delegates like a headmaster would naughty school children, going well over his allotted time. Dominant parties -like dominant telcos- do not create the dynamic for change that the continent (and indeed Namibia) needs.
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