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The Government traditionally ran telecommunications and postal services within Malawi. In 1994, these services were transferred under statute to a State-owned corporation Malawi Posts and Telecommunications Corporation (MPTC), which became responsible both for operating and regulating postal and telecommunications services.
On 13 January 1995, MPTC and TMB entered into a joint venture agreement to undertake a project to provide GSM mobile cellular telephone, fixed telephone and data network services. Telekom Networks Limited, was incorporated as a private limited company on 24 March 1995 and the name of the company was subsequently changed to Telekom Networks (Malawi) Limited. Under the terms of the joint venture agreement, MPTC and TMB agreed to hold 40% and 60% respectively, of TNM’s share capital.
In August 1998, the Government published a statement setting out a national policy for the development of communications services, covering telecommunications, postal and broadcasting services. In keeping with the objective of maximising the telecommunications sector’s contribution to the continued development of the Malawi economy, various targets were set:-
Subsequent to the publication of the policy statement and in order to give effect to its principles and policies, the Communications Act was enacted in December 1998. This established the framework for the regulation of communications services in Malawi and provided for the separation of the provision of telecommunications from postal services.
MTL was incorporated as a Government owned public limited company on 30 May 2000 in order to own and operate MPTC’s telecommunications business. On 31 August 2000 all of the telecommunications property, rights, assets and liabilities, comprising MPTC’s telecommunications business, including MPTC’s 40% holding in TNM, were transferred to MTL by operation of law and in accordance with the terms of the Communications Act.
On 14 February 2006 an 80% shareholding in MTL was sold to Telecom Holdings Limited, a consortium comprising Press Corporation as the majority shareholder, Old Mutual, NICO Holdings Limited, Press Trust and Detecon GmbH of Germany. The Government owns the remaining 20% in MTL.
Celtel Malawi Limited was incorporated on 3 September 1998 and launched operations in 1999 and in August 2008 Celtel changed its brand to Zain. The Zain group is a Kuwait-listed pan-regional mobile operator operating in over 20 countries.
On 2 April 2007 MTL Mobile acquired TMB’s 60% shareholding in TNM.
On 22 May 2008 MTL Mobile shareholders resolved to list the Company’s shares on the Malawi Stock Exchange.
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The various milestones achieved by TNM since incorporation are described below:-
In accordance with its policy of economic liberalisation and a move to market-based incentives Government has largely divested its interests in the telecommunications sector to achieve its objective of playing no role in the competitive market, beyond that of neutral arbiter.
Malawi’s telecommunications operators and network consists of the following:-
Source: TNM Management estimates, statistics Zain website. PSTN means public service telephone network.
Malawi’s two mobile operators, TNM and Zain, serve an estimated 1.42 million mobile customers and both operators have experienced rapid customer growth. TNM’s share of the total mobile market is 32% and 63% for pre-paid and post-paid subscribers, respectively.
Malawi Telecommunications Limited is currently the only fixed line operator in the country with an estimated 110,000 customers and offers fixed wire line and fixed wireless voice and data products and services to residential and business customers. MTL recently launched a CDMA wireless product.
Zain, Malawi’s second mobile service provider, was awarded a mobile licence in Malawi in 1999 and traded as Celtel until August 2008 where upon the company’s name was changed to Zain. Zain Malawi is owned by the Zain Group.
The contribution of the telecommunications sector to Malawi’s economy, derived from the revenue statistics of MTL, Zain and TNM is shown below:-
Notes:- 1 – RBM Monthly Economic Review April 2008. 2 – RBM Financial and Economic review Volume 40 Number 1. 3 – TNM, Zain and PCL.
Malawi has recently enjoyed a period of economic stability and development as outlined by the Minister of Finance, Honourable Goodall Gondwe M.P., in his 2008 budget statement in the National Assembly on 23 May 2008:-
Malawi’s telecommunications sector, in a stable economic climate and having been permitted access to a wider range of financial and technical resources, is experiencing strong growth and provides an increasing contribution to national development. The growth is evidenced by the growth in Malawi’s Penetration Rate, which growth is not inconsistent with that experienced in other sub-Saharan countries.
Economic growth continues to underpin telecommunications sector growth and in response to significant investment by telecommunications operators, efficiency, quantity and quality of services is improving to meet the economic and social needs of the country. The following table illustrates the growth of Malawi’s telecommunications measured by the Penetration Rate:-
Malawi’s mobile lines per 100 inhabitants have risen from 0.7 in 2002 to 14 as at 30 June 2008.
The most recent census in Malawi was carried out in 1998 which estimated Malawi’s population at 9.8m. Malawi is carrying out a national census the results of which are expected during 2008. The current National Statistics Office (NSO) estimates are:-
20 per cent of Malawi’s population live in urban areas comprising Blantyre City (5%), Lilongwe City (5%), Mzuzu City (1%), Zomba Municipality (1%), and other district centres (8%).
Many African markets have experienced growth rates in mobile subscriber numbers in excess of 50% per annum which quickly renders point-in-time indicators out of date. Malawi is a case in point, having increased its Penetration Rate to an estimated 14% from 7% in 2007. GDP per capita is regarded as a broad indicator of the factor most likely to limit Penetration Rates.
The table below shows African countries’ Penetration Rates at the end of 2007:-
The data are collected from an annual questionnaire sent out by the Telecommunication Development Bureau of the ITU. Additional data are obtained from reports provided by telecommunication ministries, regulators and operators and from ITU staff reports. In some cases, estimates are made by ITU staff.
The Penetration Rates of other African countries suggest that Malawi’s growth potential has yet to be fully realised.
Government removed import duties on mobile phone handsets and telecommunications equipment in May 2008. However, Government subsequently introduced an excise tax of 10% on all airtime usage in June 2008 and valueadded tax was reduced from 17.5% to 16.5%.
In July 2008 MACRA awarded Global Advanced Integrated Networks (GAIN) a third mobile licence. GAIN is owned by a consortium of individual investors. Management expects GAIN to be operational within a year of the formal publication of its mobile licence.
Access Communications Limited, the second national fixed network operator in Malawi, was awarded an operating licence by MACRA in July 2008 and is owned by a consortium of Malawian investors. Management expects Access Communications Limited to commence operations before March 2009.
In July 2008 and following the award of Malawi’s third mobile operator licence, MACRA advertised its intention to award a fourth mobile licence and accordingly, invited bidders. The advertisement indicates that the licence will be awarded by 31 December 2008.
MACRA also confirmed its proposed plan to migrate to a 9 digit numbering format by March 2009 which will increase the current 2 million available numbers to 10 million numbers.
The Communications Act, enacted in December 1998 provides for:
The Communications Act contains detailed provisions relating to the establishment, duties and powers of MACRA as telecommunications regulator. MACRA must be objective, transparent and non-discriminatory in its licensing policy and produce clear guidelines with power to regulate telecommunications, broadcasting, the use of radio frequencies and the provision of postal services.
The general duty of MACRA is to ensure that, as far as practicable, reliable and affordable communication services, sufficient to meet the demand for them, are provided throughout Malawi. In doing so MACRA is required to protect consumer interests; promote efficiency and competition; promote open access; promote research in telecommunications and encourage the introduction of new communication services. MACRA is to be independent in the performance of its functions. MACRA’S regulatory activities take the form of:
MACRA has power either itself or through duly appointed independent persons to investigate complaints and to require the licensee to respond. MACRA can modify the provisions of a licence, having taken representations from those interested, if it is in the public interest to do so regardless of whether there are modification provisions in the relevant licence.
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