Mozambique's public telecommunications company, TDM, "needs to restructure to the size of the market", Transport and Communications Minister Antonio Mungwambe said in Maputo on Tuesday.

Speaking at a public hearing on his ministry's implementation of the government economic plan for this year, organised by the Economic Affairs and Services Commission of the country's parliament, the Assembly of the Republic, Mungwambe pointed out that, with the spread of mobile phones, many citizens have given up their fixed phones, thus shrinking TDM's client base.

But TDM's workforce had not shrunk, and the company was now overmanned, Mungwambe claimed.

He preferred to talk of "restructuring" TDM rather than "privatising" it, arguing that they key goal of the moment was to slim the company down to fit the market for fixed phones.

Any future privatisation, he added, "will probably not involve selling off the entire company", he said. It could involve bringing in a foreign partner, or selling shares in TDM - but in any case, "this is not at the top of our agenda".

First the problems plaguing TDM had to be solved - and these included the unjust interconnection charges through which TDM is forced to subsidise not only its own mobile phone subsidiary, M- cel, but also the South African-owned competitor Vodacom.

TDM went public last year against these charges, which were negotiated secretly in 2002, and seem to have acted as a key sweetener persuading Vodacom to enter the Mozambican market.

According to a TDM director, Salvador Adriano, every time somebody rings a mobile phone from a fixed phone, TDM has to pay 16.5 US cents. But when it is the other way round, mobile to fixed, Vodacom (or M-cel) only pays TDM 6.5 cents.

Since many more calls are made from fixed to mobile phones than the other way round, this is a huge burden on TDM. Adriano estimated that the fixed network was paying the mobile ones about 1.2 million US dollars a month.

Mungwambe said that negotiations are now under way between the three operators over the interconnection charges, and his ministry has asked the regulatory body, the Mozambican National Communications Institute INCM, to intervene. Agencia de Informacao de Mocambique