World Dialogue on Regulation

The Telecom Regulatory Authority of India (TRAI) has called a meeting with telecom sector representatives to discuss an alternative model of imposing access deficit charges to fund the roll out of rural telephones.

TRAI had promised to end the ADC by 2008. However, political reasons could be driving TRAI to continue with the charge for at least one more year. According to government sources, the method of imposing the levy could be modified. Today, operators pay a percentage of their annual revenues as ADC.

One model proposed by TRAI involves giving a discount worth US$ 5.00 to each rural subscriber. The model has not been finalised.

ADC was imposed on telecom operators by TRAI to subsidise services in rural areas. Since BSNL has the largest number of rural subscribers, over 90% of the ADC funds have been allocated to state-owned BSNL. BSNL is in favour of extending the ADC while private mobile operators are opposed to continuing the levy.

“There is no justification to continue the ADC regime any more. TRAI should stick to its commitment of ending the charges by April 2008,” said a representative from a mobile operator.

“The TRAI had itself said in its consultation paper that ADC was not required any more…We don’t think there is any rationale to subsidise rural telephony any more as operators are themselves rolling out services in these areas,” said an industry representative.

Source: The Hindu Business Line - WDR/Intelecon Regulatory News.

The US$ 28.8 million acquisition of Transtel by Neotel, South Africa’s second national operator, was approved by the country’s Competition Tribunal.

Through the acquisition, Neotel gains 550 more staff, valuable networking facilities, a presence in over 100 locations and access to last mile networks connecting to Transtel customers.

Fani Zulu of Neotel said that buying Transtel was important in order to gain access to its network and its technicians.

“Its network is complementary to ours and it’s the last mile that connects to customers, so we can expand that and quickly bring our services to private customers,” he said.

Transtel is a division of Transnet. Transnet will now appoint Neotel as its sole provider of voice and data services for five years. This move will increase Neotel’s annual revenues by at least US$ 75.0 million.

Source: Lesley Stones (Business Day) - WDR/Intelecon Regulatory News.

The government of Kenya is selling 25% of mobile operator Safaricom.

Kenyan Finance Minister Amos Kimunya released the schedule for the Safaricom IPO, which will result in the listing of a 25% stake in the company on the Nairobi Stock Exchange (NSE) on June 9. The government will retain 35% ownership after the IPO is complete. Safaricom has been valued at US$ 2.9 billion. The Kenyan government hopes to raise at least US$ 735 million from the sale.

"I expect we will be generating Ksh50 billion (US$ 735 million) which will go towards ensuring we have an infrastructure to make Kenyan companies more competitive," Kimunya said.

Participants in the IPO will be divided into two categories: domestic investors, including all citizens of the East African Community (EAC), and international investors, which will be made up of foreign institutional investors. Of the 10 billion shares available, international fund managers, investment banks, pension funds and trust managers will get at least 35% of the shares. Esther Koimett, Kenya's Investment Secretary said the government will claw back 15% of the shares set aside for the institutional investors if local demand for shares outstrips supply.

Kenya's newly created Privatisation Commission is overseeing the sale of the shares. The offer opens on March 28 and closes on April 23.

Source: East African Business Week - WDR/Intelecon Regulatory News.

ProInversion, Peru's government body for the promotion of private investment, intends to retender for a rural broadband contract on May 9. The contract is to provide internet service in 1,050 rural municipalities.

Prequalified operators include Telefonica del Peru, Gilat to Home Peru, Rural Telecom and Consorcio Trebol Informatica e Itaca. The operators have until April 29 to submit technical offers to ProInversion. Operators not already prequalified have until March 25 to submit prequalification documents.

The tender was originally launched in 2007. On June 14, 2007, ProInversion cancelled a US$ 11.5 million contract awarded to Telefonica after another bidder, Consorcio Yachay, said that its bid had been unfairly disqualified.

Some technical conditions of the tender have been modified since the 2007 process, and since the changes are significant, the tender process is being redone. Telecommunications regulator Osiptel has come to the conclusion that the satellite connectivity market does not have sufficient capacity, and therefore the 2007 rural broadband project tender was no longer feasible.

Source: Business News Americas - WDR/Intelecon Regulatory News.

China will extend telecommunications services to 24,000 villages in 2008 based on a plan formulated by China's Ministry of Information Industry (MII).

The government intends to extend telephone services to approximately 24,000 natural villages, which are small villages with electricity and at least 20 households. The MII plans to increase coverage in natural villages nationally by 1% in 2008.

China will also increase broadband coverage in villages and towns from 92% percent to over 95% in 2008. All towns and villages in eastern and central China are expected to have access to broadband services by the end of 2008.

In 2004, MII initiated the Cun Cun Tong project for universal service. All major operators are participating in the project, including China Telecom, China Mobile, China Netcom, China Unicom, China Satcom and China TieTong. The operators have invested over US$ 4.22 billion in the project since its inception and have extended telecom service to 75,000 administrative-level villages - a village officially registered with the government - and 20,000 natural villages. Today, most villages in the country, with the exception of those in the Tibet Autonomous Region and Sichuan Province, have access to telecom services. About 99.5% of all administrative-level villages in China have service.

Source: Interfax China - WDR/Intelecon Regulatory News.

The European Telecommunications Network Operators' Association (ETNO) has asked EU authorities get involved in the nationalization dispute between the government of Bolivia and Euro Telecom International (ETI), the majority owner of fixed line operator Entel.

ETNO wants Bolivia’s government to guarantee a legal framework for foreign investment in the country. ETI has turned to international arbitration at the World Bank's International Centre for Settlement of Investment Disputes (ICSID) over Bolivia’s plan to take possession of ETI's stake in Entel, acquired in 1996 for US$ 610 million. The Bolivian government already owns 47% of Entel.

In December 2007, the Bolivian government started negotiating with the ICSID to reject the plea for arbitration filed by ETI in October. In May 2006, Bolivia's government decided not to recognize the ICSID as a valid organization because President Evo Morales' administration believes the ICSID always sides with multinational corporations.

Source: Business News Americas and El Diario - WDR/Intelecon Regulatory News.

Digicel Fiji has become the country’s second mobile operator and will compete with Vodafone Fiji.

Three other bidders for the mobile license were Pacific Spectrum Holdings Limited, Telecom Pacific Limited and Unwired. Interim Commerce Minister Tom Ricketts said the other three bidders did not meet all of the government’s requirements.

Ricketts said Digicel would be issued a license once it paid the amount it bid, US$ 10.25 million. Digicel will have to wait until October before entering the market as agreed in the plan to de-regulate the telecommunications market.

Mr Ricketts said that it is possible the country will license a third mobile operator. He said the entry of a third mobile provider, "will be left to the Telecommunication Authority of Fiji (TAF) when they choose to do so". He said the TAF would be formed in the coming weeks.

Source: Fiji Times - WDR/Intelecon Regulatory News.