World Dialogue on Regulation

Ecuador’s government is demanding that America Movil and Telefonica pay US$ 700 million between them to renew their mobile licenses.

President Rafael Correa is attempting to restructure agreements in a number of sectors to increase state participation in deals he says are unfair to the state.

The proposed license renewal rate is a 600% increase over the US$ 100 million that both operators paid in the 1990s for their concessions. Both firms are in talks with the government over license renewals, which expire this year.

"Between the two operators, the current price of their concessions is about $700 million, even when the price of those concessions could be higher because of how that market is growing," said Jaime Guerrero, the head of CONATEL, the telecommunications regulator.

"A concession cannot cost the same when they had zero clients and now there are about 10 million mobile users," Guerrero said.

America Movil's Porta affiliate and Telefonica's Movistar unit control 96% of the country's mobile market. For America Movil, its Ecuador unit represents only 4.6% of the company's total subscriber base.

Correa has said he wants mobile operators to improve service and lower rates. He has warned that if companies did not comply with the new regulations they might have to leave the country.

Source: Reuters - WDR/Intelecon Regulatory News.

Nigeria's 2006 privatisation of Nitel has failed to turn around the operator and the government wants a new investor to take control.

The government sold 51% of Nitel to Nigerian firm Transcorp for US$ 500 million, but Transcorp has been unable to raise enough money to overcome Nitel's problems.

"Incessant changes and disagreements between board members and top management in Transcorp are a major factor leading to instability in strategy and programme implementation," said a document stating the government's position.

The government still holds 49% of Nitel. The government now wants Transcorp to sell 27% of Nitel to a new investor, which would then purchase a further 24% from the government to take control.

Transcorp was set up with the support of then President Olusegun Obasanjo by a group of his business allies. During the final months of Obasanjo's tenure, Transcorp purchased a number of state assets, including a Hilton hotel in Abuja and a stake in an oil refinery.

Since the end of Obasanjo’s term in May 2007, Transcorp has struggled. In August, investors bought only 36% of the company’s IPO, which had been intended to raise money to repay what Transcorp borrowed to buy Nitel. The new government also took back the oil refinery, saying the privatisation had been improperly conducted.

Source: Reuters - WDR/Intelecon Regulatory News.

Zambia’s telecommunications regulator has delayed applications to enter the mobile phone market after failed bidder Vodacom Zambia took legal action to prevent new entrants.

Vodacom Zambia has filed papers to prevent new license bids, claiming unfair treatment by regulators. Previous negotiations between Vodacom Zambia and the Communications Authority (CA) stopped when the parties could not agree on a frequency band. The CA now says it will wait for the court's ruling before awarding any more licenses.

Vodacom Zambia had partnered with South Africa's Vodacom, but their efforts to secure a mobile license failed. Vodacom South Africa has now abandoned the Zambian venture. Celtel Zambia is the largest mobile operator, followed by MTN Zambia, a subsidiary of South Africa's MTN and Cell-Z, part of state-owned Zamtel.

Source: Reuters - WDR/Intelecon Regulatory News.

The Communications Commission of Kenya (CCK) will institute a unified licensing regime starting 1 July 2008.

The new regime is considered necessary because of changes in the telecommunications sector. CCK is gathering stakeholder feedback in an effort to finalize the new rules. The draft regulations themselves are the result of initial consultations with stakeholders.

In the new licensing regime, there are three license types: network, service and content providers. Network providers - unlike the current system whereby they acquire licenses based on network type - will be granted a unified licence that will include satellite, mobile and fixed-line services. Operators will be able to offer any type of service to end users.

In September 2004, CCK announced its intention to implement a unified technology-neutral licensing framework. Convergence between technology and services has resulted in a situation where multiple services use a single network.

Source: The Nation - WDR/Intelecon Regulatory News.

Namibia could have among the highest telecommunications costs in Africa once the value added tax (VAT) exemption for prepaid services is eliminated.

In 2007, the Ministry of Finance announced that prepaid airtime cards would be subject to 15% VAT starting February 1, 2008.

According to the Namibian Economic Policy Research Unit (Nepru), the tax change, which will happen on Friday, would have a negative effect on economic growth. Economist Christoph Stork says that 92% of mobile users are on prepaid service, and the addition of VAT would likely lead to a decline in Namibia’s economic competitiveness.

Discussing the taxation changes, Stork said, "The burden of that increase is likely to be borne by consumers, the poor and informal small businesses in particular, depending on how much of the increase the operators’ pass-through."

Stork went on to say, "The Government should be concerned with cheaper and wider access to information and communication technologies, in particular for the poor rather than imposing more obstacles to universal access."

He used Uganda as an example of a country whose telecom sector - although in some regards a leading model in Africa - has had its growth stifled by tax increases.

Stork also said three actions are urgently needed from the government: a new telecommunications act, an independent regulator for the telecom sector and clear policy guidelines for the regulator.

"Instead of milking the sector through raising taxes, more effort needs to be undertaken to reduce costs of services. The introduction of competition to Namibia's mobile sector has already led to a considerable price drop," Stork said.

Source: The Namibian - WDR/Intelecon Regulatory News.

Peru's telecommunications regulator Osiptel has ordered a rate reduction for local and national long distance calls from public phones to mobiles starting on February 23.

Local calls made from public phones to mobiles, which used to cost US$ 0.34 for 55 seconds, will now cost US$ 0.17 for 43 seconds. National long distance calls from a public phone to a mobile will cost US$ 0.17 for 42 seconds compared to US$ 0.68 for 65 seconds.

"Osiptel has regulated a price ceiling bearing in mind that a lot of Peruvians use public telephones, many of which are from low-income households," Osiptel said.

According to Osiptel, Peru had 154,137 public phones at the end of September 2007. Outside of Lima, there were 63,965 public phones. At the end of September there were 13.5 million mobile subscribers, 6.2 million of which were outside Lima.

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

The National Telecommunications Commission (NTC) will require fixed wireless operators to interconnect with other providers at no charge within local calling areas.

"WLL subscribers shall be allowed to move around, originate and receive calls anywhere within a local calling area," the NTC draft circular said.

The NTC circular also said that WLL equipment registered within a local calling area should not be allowed to be used outside the local area. It added that WLL calls made from one local calling area to another are to be considered long-distance calls and should incur interconnection charges.

Bayan Telecommunications rolled out its wireless landline service around Manila, Visayas and Mindanao. It has around 125,000 subscribers for its service. Philippine Long Distance Telephone Co. and Digitel also provide WLL service.

Source: The Manila Times - WDR/Intelecon Regulatory News.

The government of Burundi issued a license to mobile operator HITS Telecom. HITS, based in Uganda, will provide GSM and internet service.

HITS is Burundi’s sixth mobile operator. The other operators include ONATEL Mobile, U-COM, Africell and Econet Wireless. Only ONATEL Mobile and U-COM claim to cover the entire country. U-Com also offers mobile internet service.

The House of Integrated Technical Systems (HITS) Telecom was established in Uganda in 2007. In Uganda it operates as a branch of the House of Integrated Technical Systems Limited, which is registered in Saudi Arabia.

Source: Burundi Realites - WDR/Intelecon Regulatory News.