Emerging markets – The regulatory environment

Cesar Mesquita, mmC GROUP’s advisory board member and former PT executive, has sent me this post to be published and distributed through the blog. I recommend its reading. Best.

—

Emerging markets – The regulatory environment

When we look at the wide variety of reports on the telecommunications sector in Africa it comes to our eyes the following characteristics: (i) fast Growth penetration of the mobile voice services and SMS; (ii) slow growth of the data services; increase of competition on mobile services; gradual consolidation of operations among players – e.g. MTN, Orange, Vodacom and Zain.

We add to those aspects of the African telecom sector the regulatory environment. As a matter of fact the health of the telecom sector is most dependent on the regulatory policies. Almost fifteen years ago the sector was closed and monopolies were granted by licenses/concessions.  Subsequently the movement towards to liberalization had been to grant new licenses for the provision of cellular services – against the payment of certain amounts of funds, to help governments to reduce countries’ deficit accounts.

Nowadays governments still need to compensate deficit situation, telecom players are in the field, their needs for growth are still imperative, while facing competition, and customers demand new services. These days all sectors’ agents are discussing convergence of services, in order to make operators’ deliveries more and more efficient and to have customers satisfied.

The issue of new convergent licenses may by the way to satisfy all groups, establishing a new level playing field, without jeopardizing rights already attributed and obligations imposed. One effective and transparent regulatory way to accomplish the convergence of services is the issuance of service neutral licenses.

This was done by the Bostwana Telecommunications Authority in 2007 by issuing new licenses to Mascom and Orange, by which these two operators were granted with the permission to have their own long distance transmission and an international gateway and permitting BTA – the until then fixed incumbent operator – to provide mobile services despite the technology to be used.

Botswana mobile market rose 6% between 2006 and 2007 and rose spectacularly 20% since 2007 up to now; we may find out many good reasons to justify this path, but certainly the issuance of the neutral licenses is at the top of them. At mmC Group we think this initiative should create space for other National Regulators movements as basis for the rapid, but consistent growth of the telecom sector in Africa.

Lisbon, 9th December, 2008
César Mesquita