MALAWI COMMUNICATIONS SECTOR POLICY 1998                                                                     MALAWI SDNP
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Telecommunications Policy:    2.0 SECTOR STRATEGY


2.1.1 Malawi Telecom as National operator

MPTC was established as a state owned enterprise with responsibility as a national operator for the provision of postal and telecommunication services. MPTC is already a joint venture partner in providing the GSM cellular radio service.

Malawi Telecom when established will continue to have the task of modernising the telephone service and making basic services available to all under licence. Malawi Telecom will have to meet annual roll-out targets for the installation of new telephone lines. These targets will ensure priority for public services, schools and commercial enterprises.

Malawi Telecom will also be encouraged to participate in the introduction of new services.

The GSM cellular service provided by Telekom Networks Ltd. will operate in future under its own licence.

2.1.2 Commercialisation of MPTC
At both national and local levels, it is necessary for MPTC to re-organise its operations and to bring managerial methods up to date. This process has already begun. The main theme for the changes required is the commercialisation of operations - an increased autonomy for the telecommunications and postal businesses, enabling them to be run on
commercial principles and in accordance with the wishes of their customers. But in turn for greater autonomy, there will also be improved accountability for performance, both in terms of the quality of service provided to customers and In terms of the financial results achieved.
Specific steps that are necessary as part of the commercialisation process include -

Licences will be issued by MACRA to both Malawi Telecom and Malawi Posts, setting standards for service.

For its Part, the Government as owner will exercise supervision of Malawi Telecom and Malawi Posts through operational planning agreements. These agreements will contain the financial targets set for the enterprises and will ensure their commitment to the restructuring of the sector.

The Board of Directors of Malawi Telecom will be constituted in accordance with the Companies Act and its Articles of Association, and, as applicable, with the shareholders agreement.

2.1.3 Strategic Partner for Malawi Telecom

The development of telecommunications will proceed more quickly if Malawi Telecom is permitted access to a wider range of financial and technical resources than can be found within the business or within Government.

Capital markets are greatly interested in financing investment in the sector, and some African countries, notably Ghana and South Africa have already demonstrated the benefits from tapping into the resources of world class telecommunication companies.

The Government has therefore decided to seek a strategic partner for Malawi Telecom through an international competitive tender.

The chosen partner will work with Malawi Telecom to expand the national network and meet the demand for telephone connections, to plan and implement the modernisation of network infrastructure, to introduce modem systems of management accounting and customer service and to develop the skills and knowledge of employees.
The specific contributions that the strategic partner is expected to make include -


2.1.4 Flotation of Malawi Telecom

Dependent on the advice of its advisors the Govemment may sell a minority interest in Malawi Telecom through an initial public offering of shares. The proceeds from the sale will be used primarily to finance investment in network expansion and modemisation.

2.1.5 Finance and Tariffs

The planned improvements in service will only be sustained in the long term if operators can raise sufficient revenues to cover the costs of providing the services. At the same time, the ability of most households to pay more in real terms for telephone services is limited.

The Ministry will agree with Malawi Telecom on an annual financial target that is consistent with its investment plans and service obligations. The financial target, together with increased revenues from expansion and improvements in efficiency, will also enable Malawi Telecom to reduce the level of telephone tariffs in real terms.

Recognising the need to balance the remuneration of investment in the sector with the protection of potentially vulnerable groups of customers, MACRA will develop and agree with Malawi Telecom a medium term strategy for telephone tariff-s. The main focus of this strategy will be to link the level of revenue that can be raised from users through tariff-s to the scale of investment being made in expanding and modernising the network.

At present, installation and rental charges for telephone are based on unit cost per unit distance from the nearest exchange. This means that since telephone exchanges are located in urban or district centres, the further away from the centre, the higher the installation and rental charges. This in turn means that installation and rental charges are higher in rural areas than they are in urban centres. To reverse this situation MACRA will ensure uniform installation and rental charges regardless of the distance from the telephone exchange.
2.1.6 Teleconmunications Liberalisation

Consistent with the policy aims set out, the provision of telecommunication services will be liberalised.    Under the new Communications Law, the activities of providers of public telecommunications services will be regulated primarily by licences issued by MACRA. Licences will be issued for specific types of network and service as outlined below -

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