Africa: Telecoms privatisation

Wednesday, June 4

In the mid-1990s, African telecoms markets were dominated by state-owned fixed network (wireline) monopolies. African telecoms markets have been transformed since then by mobile networks. Fixed line teledensity is still under 4% and stagnant -- according to latest ITU figures (published in May). New mobile networks, by contrast, now cover most rural as well as urban areas:

• Continent-wide mobile teledensity has risen to 27%, with South Africa among countries achieving over 80%.

• Mobile phones now account for more than 90% of lines in most countries on the continent.

African governments have proved reluctant to privatise their telecoms operators - in spite of poor performance, fixed operators provided steady and significant revenue streams, while state ownership was strongly associated with national sovereignty.

Yet after the mobile revolution, telecoms privatisation plays a different role. Inefficient incumbents may be loss-making, rather than the 'cash cows' of old. Mobile operators often prefer to build their own backbone infrastructures rather than relying on legacy fixed network. And many fixed incumbents have failed to deal with management inefficiencies and overstaffing, or to adapt to customer expectations which have been raised by their mobile competitors.