Strategy: 2.1 TELECOMMUNICATIONS

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 -

(a)    introducing commercial accounting systems which will permit financial reports to be produced to international standards and provide a solid basis for accountability, and for improved internal reporting and control;

(b)    training of staff in commercial aspects of their work, such as marketing and customer services;

(c)    separating the postal and telecommunications business;

(d)    clarifying the financial tar-gets that Telecommunication and Posts have to meet.

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 -

•  an initial financial investment In the business and a continuing commitment to the investment programme in order to accelerate substantially the rate of expansion and modemisation of the national network;

• the transfer of technology, systems and software, and commercial know-how; and

• a staff baining programme.

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 -
 

2.1.6.1 National Network Operation

National operators are those telecommunication enterprises who are
obliged to provide basic telecommunication services to the public
throughout the country. Telephone and telex services will be classified
as basic services under the act.
Malawi Telecom will be designated as a national operator for basic services. No other operator will be designated as a national operator for a period of five (5) years from the date of its incorporation to allow time for Malawi Telecom's operations to be modernised and commercialised. The Government may consider an extension of this exclusivity initially up to one year upon the operator's satisfactory performance of its licence obligations.

It will be the responsibility of Government in consultation with MACRA to decide whether or not to issue a licence to a second national fixed network operator.
 
Malawi Telecom will be issued a licence for basic services that will -
 

(a)    authorise the installation and operation of network equipment, and convey rights of access to land and premises for this purpose;
(b)    set out the obligations to provide basic services placed upon it and the standards of service expected of it; (c)    guarantee non-discriminatory access to services and regulate the relationship of the operator with customers; (d)    regulate the terms of interconnection with other operators;
(e)    ensure open and efficient, access to its network for other operators; and
(f)     be valid for fifteen (15) years from the date of award with provision for amendment and for renewal subject to conditions.
Performance of Malawi Telecom under its licence will be monitored annually of at moore frequent intervals, as MACRA considers appropriate.

2.1.6.2 Local Operators

Local operators are telecommunication enterprises permitted to provide telephone services to the public within a district and to connect to the network of a national operator.
 
MACRA will issue a local operator licence to provide service in any district of the country; provided that the operator accepts obligations for that district that are equivalent to those imposed on Malawi Telecom. Local operators will connect their network to Malawi Telecom's network for traffic ou tside the district.
 
2.1.6.3 Cable TV Networks

Cable TV Networks are already a significant private initiative to improve communications. Telecommunication licences will be issued to existing Cable TV operators and to others, principally to ensure that they treat their customers fairly and conform to general rules governing the installation of equipment on public and private land. Cable TV operators willing to accept appropriate service obligations will also be allowed to provide local telephone services connected to the national network.
 
Under the new Communications Act, Cable TV networks will be. required to adhere to the code of conduct of broadcasters.
 

2.1.6.4 Non Basic Telecommunicatfons Service Providers
            (Data, Internet and other Value Added Services, Service Providers)

Licences for data communication, Internet, and other value added services will be made available without restriction as to number.
 
Providers of these Services, or their customers, will normally lease the transmission capacity they require from national and local operators. In exceptional circumstances where the transmission capacity required is not available from an operator, they will be permitted to provide the Capacity themselves under the guidance of MACRA.

2.1.6.5 Mobile Radio Service Providers

Telecom Networks Limited has already been authorised to Provide cellular mobile services. Demand has exceeded expectations and the service is now profitable. For the future, the priorities should be to improve cellular coverage, to liberalise the sale of handsets, and to lower the cost of service to users.

A further cellular mobile licence will be issued in the near future.

New interconnection arrangements will be made which will eliminate congestion and permit international calls to be made by users of the cellular network.

Licences for radio paging and other mobile radio services will be available without restriction as to number, subject only to any limitations on the availability of appropriate radio frequencies.

2.1.6.6 Private Networks

Operators of private networks to which the public does not have access will not need to have a telecommunications licence although a radio licence may be necessary.

2.1.6.7 VSAT Networks

Private communication links by satellite (often called VSAT networks where VSAT means Very Small Aperture Terminal) will not require a telecommunications licence if they are not connected to the public switched telephone network. This exemption will apply, for example, to television receive only terminals (TVROs) of course, all VSATs that transmit radio signals will require a radio licence.

In accordance with the policy in other SADC countries, where connection with the Public network takes place, whether within or outside Malawi, VSAT networks will require a telecommunications licence. Such licences will be granted provided that the main Purpose of the VSAT network is not to bypass the national operator.

This will mean that VSAT licences will be limited to organisations that have a legitimate business interest in operating a VSAT network and that are not providing a telecommunication service to others.

2.1.6.8 Telephone Service Providers

Telephone service providers will be licensed to offer to the public payphone services, bureaux and telephone houses.

Licences for voice telephony will be awarded individually to service providers, who will have to comply with the terms and conditions set by MACRA.

In licencing each telephone service provider, MACRA willl take into account the views of the local community.