By: Nghiinomenwa Erastus
To lower broadband/data costs in the country, the communication regulator calls for further competition and, as a remedy, has advised the government to give up management control in MTC.
Secondly, the government, which is the main shareholder in Telecom Namibia, should sell the mobile segment, TN, to the private sector, the Communication Regulatory Authority of Namibia (Cran) advised.
This is according to a presentation done by Helene Vosloo, head of Economics and Sector Research, to stakeholders at the end of March 2022- based on their 2020 market assessment.
Cran’s assessment revealed that insufficient competition leads to higher prices and inadequate investment for fast and affordable Internet for all segments of society.
According to Cran, a reasonable price per GB would be N$15 per GB and lowering the cost of data to such levels will involve various remedies, one of them being increased competition and investment.
Namibia’s ICT sector is characterised by state ownership and insufficient competition, the body stated.
The regulator explained that the absence of competition led to higher, not lower broadband prices in the past four years, contrary to global trends.
As a result, the regulator proposed “selling a share of MTC and management control to a private investor.”
MTC was listed in November 2021, but the state has not given up management control of MTC, Cran’s presentation revealed.
Another proposal to deepen competition in the communication sector is to sell the mobile business of Telecom Namibia to a private investor, preferably an international operator group.
“A larger operator group would have the capital to modernise Telecom Namibia’s mobile broadband network, expand its reach and compete with MTC,” explained the regulator.
This will be through utilising economies of scale in access to international telecommunication equipment markets.
The recommendations are coming at the point where not only is the average download speed in South Africa three times the speed of Namibia, but most SADC members also have faster broadband services. This includes Angola, Zimbabwe, Lesotho, Eswatini, Tanzania, Madagascar and Mauritius.
According to Cran, this has meant insufficient investment in last-mile connectivity, most notably mobile 4G broadband, low quality of service and potentially high end-user prices.
Namibia’s 3G can barely be called broadband- the average download speed on 3G was 1Mbps, while 4G speeds are reasonable at 19.33 Mbps.
While Africa has seen rapidly declining mobile broadband prices, in Namibia, they have increased, the regulator revealed.
Cran indicated that competition issues in the communication sector are even more severe compared to South Africa, where four mobile operators compete, and only one of them has partial state ownership.
In Namibia, the only two national operators are both owned by the same holding company. As it stands, MTC has sold a portion of the company to the public.
Cran’s assessment in their 2020 report indicated that MTC’s price of 1GB prepaid data per month increased by 41 per cent since Q1 2016, while operators in Botswana, Zambia, Mozambique and even South Africa decreased their prices significantly during the same period.
The main trend since 2014 has been the nationalisation of the ICT sector before MTC was listed. Telecom Namibia took over the privately owned Leo (Powercom) in 2014.
In 2018, NPTH increased its shareholding in MTC to 100 per cent.
Both MTC and Telecom Namibia were 100 per cent owned by NPTH, which itself is 100 per cent owned by the state- before the public listing of 49 per cent of ordinary shares of MTC.
Before the listing, the state controlled 92 per cent of ICT sector assets and 82.5 per cent of ICT sector revenues.
Cran indicated that MTC dominates mobile infrastructure.
MTC owns 72 per cent of all radio access networks (RAN sites), Telecom Namibia 25 per cent and Paratus only 3 per cent.
Paratus only has RAN sites in four regions, Erongo, Hardap, Khomas and Otjozondjupa, while MTC and Telecom Namibia operate RAN sites in all regions.
Nearly 1,8 million mobile SIM cards use data in Namibia, or 61 per cent of active SIM cards are used to access the Internet.
Namibia’s reliance on mobile for internet access is a result of many factors, such as the cost of laptops and other devices as such people utilise mobile phones.
Namibia’s current per capita International bandwidth usage is half that of South Africa and Mauritius and similar to Botswana’s.
While Namibia has a submarine cable landing at its shores, the capacity utilised by Namibian operators for their customers falls short of its Southern African neighbours.
Botswana does not have a submarine landing station and still has similar connectivity to Namibia.
Cran indicated that even though Telecom Namibia took over the only privately owned national mobile network operator Leo in 2014, the company is also highly leveraged with debt five times higher than equity.
Telecom Namibia also owns 100 per cent of Powercom (previously Leo) and would now have to pay US$25 million if it were to sell Powercom.
The assessment revealed that Telecom had negative shareholder equity since 2016 but reduced its negative equity from US$38.3 to -25.2 between 2016 and 2020.
As for MTC, it is run as a cash cow, and there is no investment in innovative new income streams, Cran’s presentation revealed.
This is reflected in its investment pattern.
Additions to property, plant and equipment (PPE) dropped from 59 per cent to 41 per cent of net profits between 2012 and 2020.
MTC was mostly equity-financed in 2020. When the assessments were done, shareholders’ equity doubled its total liabilities (financial leverage of 0.5).
According to Cran, MTC can potentially increase profitability by replacing equity through debt.
It also means that it could use debt to expand its services, for example, by rolling out fast mobile broadband and fibre to the home (FTTh), the regulator indicated.
In Namibia, 10 out of 14 regions had 4G population coverage of below 90 per cent, and seven had 3G coverage below 90 per cent.
Kunene, Kavango West and Omaheke had less than 50 per cent 4G population coverage. Kunene and Omaheke also had low 3G population coverage with 50 per cent and 66 per cent, respectively.
Email: erastus@thevillager.com.na
