GUINEA-BISSAU GOVERNMENT RESCINDS PORTUGAL TELECOM’S MONOPOLY AND TAKES BACK CONTROL

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Guinea-Bissau’s telecoms sector has been in a mess. The Government sold 51% of the newly created Guine Telecom to Portugal Telecom International when it fell out with SIDA in 1989. The new owner was awarded a monopoly on telecoms. In June 1998 the PTI managers left during a civil war and never returned. PTI has refused to make payments on its international settlement debts with the company and appears not to be willing to negotiate a way out. Unlike any other African country it has no cellular operator. Now the Government is seeking to learn from past mistakes. It has retaken control of the company and is offering a cellular franchise as a first move in liberalising the sector. Miguel Reis reports on how it all happened.

After three years of attempting to negotiate a bilateral resolution of its dispute with Portugal Telecom, the Government of Guinea-Bissau has rescinded the monopoly concession it gave to the incumbent Guine Telecom. The company is owned 49% by the state, and 51% by Portugal Telecom International. In a policy statement issued before it rescinded the monopoly, the Government announced plans to complete policy reforms to the sector and to grant a license to an additional cellular operator through open public contest.

Guine Telecom was formed in 1989, when the Government cut ties with its strategic partner SIDA, the Swedish development agency, and granted exclusive rights to manage the sector to the new company. At the time it was claimed that the Swedish agency was not modernizing the sector quickly enough. But many of the engineers in company at that time say that this was a political move and did not reflect the progress actually being made.

The official rescinding of the Guine Telecom monopoly canme late last week with the decree only being published on Friday. The impasse reached in negotiations with Portugal Telecom International (PTI) held up policy reform and deployment of attractive cellular technology in Guinea-Bissau well behind most of its neighbors in the sub-region. At present the country has no cellular operators.

The Ministry of Telecommunications is currently asking for expressions of interest from "experienced cellular operators as part of an international bidding process that will be carried out in due course. The Government intends to issue one cellular license in a competitive manner as part of the reform process". (contact details for bidders at the bottom of this story)

The break is the culmination of process that began nearly ten years ago with Guinea-Bissau’s adherence to the West African Economic and Monetary Union, which calls on member states to progressively harmonize telecom regulations and integrate markets. In 1998 the Government began a process of renegotiation of the monopoly concession, though this was allegedly stalled through the personal intervention of the former President João Bernardo "Nino" Vieira (a civil war the same year stopped negotiations entirely). National legislation liberalizing the sector was passed in 1999, but the monopoly remained a key policy contradiction.

In June 1998 the Portugal Telecom International managers of Guine Telecom left the country on a Portuguese container ship, fleeing the civil war. Order was restored nine months later, but PTI showed little interest in returning to resume its management of the company. Since their departure , now fully 5 years , PTI has withheld settlement payments owed to Guine Telecom for incoming international calls, an accumulated debt whose value would equal millions of US dollars.

Guine Telecom has come to the brink of extinction several times since 1998, and has survived only through the tremendous efforts of its technical staff. They repaired infrastructure that was seriously damaged during the war, without technical assistance and paid for entirely out of national receipts. PTI has not responded to repeated requests from Guine Telecom and the Government of Guinea-Bissau that they resume their strategic partnership, nor to date have they clarified the issue of payments due Guine Telecom.

In spite of this PTI held firm in the position that it should retain exclusivity in international traffic, that the Government should have no role in management of the company, that it should be granted a GSM license free of charge, and that it be allowed to begin cellular service before any other operator.

Within Guinea-Bissau the PTI management of Guine Telecom has been seen in the words of one observer of the local telecom sector as "patently extractive and un-transparent for nearly the entire history of the company". The Government has come to see PTI’s negotiating posture as an attempt to regain its former position, and has found that yielding on these points would have further unhealthy effects on the development of the sector, already considered to be one of the worst in Sub-Saharan Africa. The Government presented its firm negotiation agenda in February of this year. PTI declined to acknowledge the points presented, and the Chairman of the Board of Guine Telecom, a senior PTI administrator, has for several months been unavailable, "because of scheduling conflicts," to meet with Government authorities to discuss these issues.

Faced with the tremendous challenges of rebuilding the national economy, and after five years of PTI "abandonment," imperiled public service, and poor responsiveness, the Government of Guinea- Bissau found that it is obligated to end the monopoly and assume temporary management of the company. The action is presented as a move to implement policy reforms more effectively. According to Minister of Social Works Dionisio Cabi, "the ‘door is not closed’ on Portugal Telecom. PTI is welcome to present a concrete proposal, and to negotiate its participation in good faith, if it wishes to continue as a strategic partner in the sector in the sector, in accordance with national telecom regulations".

The public contest for the additional cellular license is expected to be launched by the end of the month. Publication of associated regulations on interconnection, dispute resolution and universal access goals is projected for roughly the same time.

Operators that wish to participate in the bidding process should send their Expressions of Interest with a background on their company to:

Senhor Presidente do Conselho de Admnistração
Instituto das Comunicações da Guiné-Bisau (ICGB)
Avenida Domingos Ramos, n.º 53
Cx. Postal. # 1372, Bissau

Tel # +245-20 4873; +245-20 4874
Fax # +245-20 4876

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