MADAGASCAR: WIDENING LIBERALISATION LOOKS SET TO CREATE FOUNDATION FOR NEW ECONOMY
After a protracted power struggle with the previous incumbent, the current Malagasy government came to power in 2002. It has re-energised the privatisation process and made ICT a national priority. All of this forms part of a broader vision of the island of the island becoming something more like a developed country economy. A mixture of natural gas, eco-tourism and sapphire mining make this less unlikely than it might first sound. Russell Southwood reports on progress.
The Malagasy Government has agreed to sell 50% of the shares (total share capital: USD10m) in the state incumbent telco to Hong Kong-based Distacom. It is a private holding company with a number of wireless investments in Hong Kong and India. In the 1970’s Distacom launched its first paging service in Canada. It then expanded to Hong Kong and ran the most successful paging company in the market. In the early ‘80s, Distacom tied up with Motorola and Hutchison to win one of the first mobile licenses in Hong Kong, now one of the world’s most penetrated wireless markets. In the early 1990’s, the Distacom management team initiated the Orange brand while partnered with Hutchison Telecom.
In business terms. TELMA appears to be in good shape and still has a workforce of 2760. Although up-to-date figures are hard to come by, it appears to be operating in profit and despite the imminent privatisation, still investing. It has launched ADSL and rolled out its new GSM service early in 2003. The latter had attracted 4,000 subscribers by the end of May 2003. Larger towns and regions such as Farafangana, Mananjary, Sainte-Marie ,Nosy Be, Vohémar, Antsohihy , Ambatondrazaka were among the beneficiaries of the new service. More than 50 "GSM publiphones" will be installed. Maintirano was connected by 22 February and Toamasina and d’Antsirabe by the end of the same month.
Until it got its mobile licence, it had a monopoly on fixed line provision but the precise time this monopoly will last forms part of the privatisation negotiations. The extended period of the fixed line monopoly has been talked of being anywhere between 2-8 years, although the final figure is likely to be nearer to the bottom of that range. Not surprisingly, the purchaser is insisting that it needs a longer period in order to get a return on the new investment it will bring.
There is a total of 120,000 mobile subscribers and 60,000 fixed line subscribers. There are four mobile operators: TELMA’s recently started operation; Orange; Intercel and Madacom. The latter is also owned by Distacom who must dispose of it once its purchase of TELMA has been completed. Its licence covers both mobile and IDD throughout the island. It claims to have 85,000 subscribers and on this basis would be the major player on the island.
There are an estimated 15,000 dial-up subscribers. They have a choice of seven ISPs, of which the largest, DTS (owned by France Telecom) has about 50% of the market. France Telecom bid for TELMA and lost so it is not clear what their next move will be. DTS also has a data communications licence. You buy a leased line from TELMA and DTS provides a wireless connection. The other ISPS are Simicro, Vitelcom, Orchid, and Golf-Sat. There are two much smaller ISPs, one based in Antsirabe and one in the south called Tuleear. Golf-Sat is owned by the Blue Line Group and also operates a data communications licence.
A typical connection cost would be MF30,000 a month from DTS. Cyber-café access costs mostly around MF100 a minute. The capital Antananarive is estimated to have around 60 legal cyber-cafes and more "hole-in-the-wall" operations. Most large towns have between 20-30 cyber-cafes. Users tend to be young and many are students. It uses? Downloading music, e-mail, job aplications and correspondence.
The regulator, OMERT was launched in 1996 when the priviatisation laws were first formulated but it has taken a change of government to get things moving. It has three significant categories which form part of the law. Firstly there are those who wish to build telecoms infrastructure (telecoms operators) who require a licence. Secondly there are service providers (for example, "pure ISPs") who require no licence but need authorisation. Thirdly there are equipment resellers. It has a governing body with seven representatives. When fully operational, this will include a representative from Government, one from the private sector and one from a consumer body. Not all of these representatives are yet in place. It is funded from the licence fees it charges. There is a 3% "taxe developmente" for universal access provision and a 2% tax on turnover to fund the regulator. The regulator has asked for bids to supply 11 secondary centres with telephony and internet access.
As elsewhere, VOIP has been an issue. At the beginning OMERT didn’t know what to do so ended up saying, just do it. Some service providers complained and then TELMA said it’s not legal. After discussion, it was concluded that those companies who were authorised telecoms operators who could terminate international calls (of which there are several) could use VOIP. There are small, illegal companies selling VOIP but no-one really knows to prevent them.
At an international level, the Government is keen to see the island connected to fibre and is currently conducting a feasibility study on how best to achieve this. The existing SAT3 cable passes by the island but it is currently unconnected.