years without a central government and an economy in ruins,
the success of Somalia’s telecommunications sector
comes as something of a surprise.
several years, the country was, to all intents and purposes,
disconnected from the rest of the world.
to 1991, when Somalia last had a national government, this
country of nearly 10 million people had only 8,500
operational fixed lines, most of which were in the capital,
the ensuing political turbulence, that infrastructure was
destroyed, along with its Public Switch Transmission
Network. This left Somalis without the means to connect to
the large expatriate community of friends and relatives
outside the country.
time, VSAT was installed by private operators and the
services of international companies such as AT&T and
Telia were employed to provide transit facilities for
incoming and outgoing calls.
had to be built from scratch but the situation has developed
quickly off a low base. There are now an estimated 68,000
phone lines, divided between fixed (48,000) and mobile
(20,000), according to the Somali Telecom Association.
Internet services have 4,500 subscribers and an estimated
International Telecommunications Union estimated the total
number of lines at the end of 2000 at 15,000.
operators have moved quickly to take advantage of the lack
of restrictions and regulation made possible by the lack of
a functioning central government. This environment also
allowed equipment to be brought in cheaply.
currently has one of the cheapest call rates in the world,
at $1 a minute on average.
of 74 towns in Somalia, 47 have got telephone coverage over
the past eight years, the association says.
is a no-man’s land. Anyone can bring in equipment and no
licences are required,” says Secretary General of the
Somali Telecom Association, Abdigani Jama.
at the recent ITU Telecom
Africa 2001 show in Johannesburg where a large
telecoms contingent of Somalis was present, he said the
companies were 100 percent Somali. “No one else is
prepared to take the risk.”
in the diaspora have come back after seeing the
opportunities in telecoms and started their own
is high for contact with family and friends outside the
country. Incoming traffic is almost 10 times as high as
are four telecoms companies, down from five a few years ago.
They include Al-Barakaat, the company currently battling
with terrorism allegations and frozen assets (see page 45),
and the Somali Telecom Group, an umbrella for a number of
have mobile operations in addition to fixed line, while the
other two, Somtel and Telecoms Somalia, are looking at
setting up mobile operations. Three of the companies provide
there is no longer a formal banking system in Somalia, much
of the investment money is routed through the famous money
remittance systems which are short on paperwork and big on
companies are headquartered in Dubai. Al-Barakaat is the
biggest, with operations in 40 countries. Although it
commands an estimated 37 percent market share with
operations across Approved projects cannot be nationalised,
expropriated or confiscated.
to the ministry, a number of large multinational companies
have taken advantage of this. They include Microsoft, IBM,
FranceTelecom, Vodaphone, Alcatel, Nortel, Cisco, Ericsson,
Oracle, Siemens and Lucent Technologies.
the past year, the number of companies investing in Egypt
has doubled while investment in the sector rose from $75
million in 1999 to $150 million in 2000.
and Information Technology Minister Dr Ahmed Nazif says the
government has welcomed the input of the private sector.
with any developing nation, we were faced with a change from
a monopoly regulatory environment to an open environment to
allow the stronger participation of the private sector.
started the process in the mid 1990s. Egypt was one of the
early countries to introduce competition in mobile
telecoms.” It has two mobile operators and is scheduled to
licence a second fixed-line operator
by the year end.
Egypt has 8.5 million lines – one of the highest in
new operator will work on a revenue sharing basis with the
incumbent to provide services, using its infrastructure.
says any new operator coming into the market will have to,
for some time, have a strong interconnectivity agreement
with Telecom Egypt and piggy-back on some of its services.
“This is a slow process. It is difficult to compete with
decades of investment,” he says.
are no impediments for a new operator to build its own
infrastructure but it does not make economic sense at the
moment. Once the new operator starts to expand, they can
look at it again. But for practical reasons, I don’t see
this happening before the next three to five years.”
says he will be watching the situation in South Africa with
interest to see how it carries out its plan to add a second
fixed-line operator to a market dominated by a government
parastatal, a situation similar to Egypt.
have our own formula for it. It is going to be
diversified.” He says, for example, that a company has
been formed by power distribution companies to provide
bandwidth and fibre optic cables. Other diversification of
this nature is expected to take place.
decision has been taken in principle to privatise the
state-owned incumbent but the market conditions are not
right at present for selling off shares, says Nazif. There
is, as yet, no timeframe to do so. “We wanted to have it
done by last year but didn’t go ahead because of the
declining value of telecoms companies.
problem is not the price but finding a buyer. But the
company is doing very well. It does not have financial
problems and telephone density is at 10 percent. So we are
not in a position where we have to privatise immediately.”
Egypt is planning to introduce private equity through
partnerships with strategic investors, as well as to make a
public offering of part of its shares. In anticipation of
this IPO, the corporation invested $620 million in its
infrastructure in 2000. The analogue switching system was
upgraded to digital in major cities, the data backbone was
enhanced and there was a more than 60 percent reduction in
the cost of access.
are 8.5 million lines in Egypt, of which 6.5 million are
being utilised. Mobile penetration is at 5 percent in this
country of around 65 million people.
most dramatic changes in the sector have been brought about
by the introduction of competition in mobile communications
and internet service provision.