CABO VERDE TELECOM'S MONOPOLY ENDS JANUARY 2006 AS CAPE VERDE UNILATERALLY LIBERALIZES

Telecoms

Cape Verde telecommunications market is about to witness a revolution. The monopoly of incumbent Cabo Verde Telecom on international communications will end on 1st January 2006. Following four months of unsuccessful negotiations between the government and CV Telecom, Cape Verde has decided to unilaterally implement the liberalisation of its telecommunication market. A legislative decree which reflects this new position has been published this week in the Official Bulletin of the country. This document also sets 1st January 2007 as the date when CV Telecom will lose its monopoly on fixed lines services.

These steps towards opening the fixed line telecommunication market are likely to lead to a fierce legal battle between the Cape Verde Government and CV Telecom. When privatised in 1996, CV Telecom was granted an exclusive concession contract until 2021. CV Telecom which is in majority owned by Portugal Telecom, the national fixed line incumbent in Portugal is decided to fight the Government’s decision on the basis of the rights that came from its exclusive concession agreement. Talks are also going on about CV Telecom seeking heavy financial compensations for the loss of potential revenue.

At the same time a North-American Consortium ASG Telecommunications has been selected as the second mobile operator. The licence should be issued very shortly. Meanwhile the company will invest US$6 millions to set up its operations in the country. The Minister Manuel Inocencio explained that a second mobile operator will not only introduce competition in the mobile market but will also help to improve the quality of the service and will reduce the cost of making calls from mobile phones in the country. This announcement is a second blow for CV Telecom who runs also the only mobile network covering the 10 islands.

How quickly these decisions will reshape the telecommunication market is difficult to predict. However it is sure that CV Telecom will do all that is possible to retain its monopoly on telecommunications in Cape Verde.