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article imageMozambique launches tender for third mobile operator

By Sharon Davis     Apr 15, 2010 in Technology
The Mozambican government recently launched an international tender for the third mobile telecommunications license in the southern African country at USD 25mn.
The proposed license fee is USD 10mn more than Mozambique's second operator, Vodacom, was asked to pay in 2003. The winning operator will however be required to share infrastructure with mCel and Vodacom.
“This is good for the environment and reduces the new entrant's capital expenditure. This will also translate into something of a competitive advantage, as the winning bidder will be able to focus on services provision instead of infrastructure investments," said Frost & Sullivan ICT analyst Silvia Hirano Venter.
However, Venter warns that this might not be without its difficulties. Due to the small size of the market, the current operators may decide to overcharge the new entrant for the use of their infrastructure as a way to maintain their market share.
The monopoly on infrastructure held by the country’s telecoms group, TDM, makes it difficult to compete fairly. Vodacom has struggled in this market since its launch in 2004.
“Besides TDM’s strength, there are other serious challenges the third operator will face,” said Venter. Mozambique has extreme levels of poverty, with 80% of the population living on under $1 per day. Only 50% of Mozambicans are literate and this is also an enormous country, 3,000 km long, with almost limited basic infrastructure in the remote areas.
However, the Mozambican market is still seen as appealing. The country has almost 6mn mobile subscribers, which represents a penetration rate of less than 30%, and broadband penetration is only around 0.5% -- so there is huge potential for growth.
The SEACOM, EASSy and TEAMs undersea fibre-optic cables are expected to lead to a reduction in prices and increased competition. But Venter warns that TDM’s share participation in these consortia is likely to benefit the group at the expense of its competitors.
The Mozambican government expects to have the license awarded before the end of this year. Frost & Sullivan believes that the main potential candidates for the new license are Portugal Telecom (PT), MTN and Bharti Airtel, which is positioned to purchase Zain's African assets.
More about Mozambique, Tender, Telecommunications, License, Mobile operator
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