CRAN hints at telecommunications monopoly
A report released by the Communications Authority of Namibia (CRAN) suggests that the telecommunications industry is monopolistic. The report is based on developments monitored in 2014. A number of regulatory strategies are currently under development by CRAN which are expected to turn the tide. According to the Telecommunications Sector Performance Review of 2014, Telecom Namibia will need substantial funds to invest into mobile and fixed broadband infrastructure in order to compete in the short to medium term. MTC has in the mean time aligned its guns to deal with a rise in the mobile telephony space and has over a six year period re-invested approximately N$1.6 billion in preparation of a data surge.
Proof of that is the fact that usage of third generation mobile technology increased by double figures at the end of 2013. Additionally, the state owned operator was dealt a heavy blow when international ratings agency Fitch downgraded its credit rating in 2014. Due to the declining business model of Telecom and inadequate fixed broadband offerings the report from CRAN has found that Telecom is loosing voice and data income to its competitor MTC. Equally distressing is the lack of funding available for the roll-out and a delay in the installation of intended infrastructure.
Telecom Namibia subscriber numbers took a nose dive. Total traffic peaked with post-paid subscribers by 2 million minutes in 2013 leading to less capital to build a mobile network that could compete with MTC.
On the other side of the spectrum it was established that MTC was competing against itself, with the post-paid end of the business fighting the pre-paid end for subscribers the report found. There are currently an estimated 2.3 million pre-paid customers according to MTC. The increasing profit payout of more then triple dividends paid by MTC triple the past eight years the reads as a concern since it could be an indication of a lack of effective competition in the market the report found.
The method for making the comparison did not take into account the large amounts of free minutes and Short Message Servicing (SMS) that are bundled with some of MTC’s pre-paid products. It is based on advertised prices for a fairly low use per month of 30 calls and 60 SMS leaving the country with a quasi-mobile and an actual fixed-line monopoly, both majority state owned.
The CRAN findings suggest that it could be due to unsuccessful customer attraction and retention strategies, billing problems or a decline in quality of service. CRAN’s 2014 findings are worrying and could reflect a serious problem in the operations of the mobile operator.
A comparison between the cost of the cheapest prepaid mobile products for each mobile operator with a 40 calls and 60 SMS’ basket was made. It was concluded that MTC was the cheapest operator until the first quarter of 2014 when TN mobile finally launched competitive products. Mobile Prepaid Voice Prices have not increased in Namibia but have fallen quicker in other countries with effective competition CRAN established.
The number of active Subscriber Identity Module (SIM) cards would increase without a corresponding increase in voice revenue, and would lead to a lower postpaid voice calls. In the next report the Authority aims to incorporate the impact other current and future operators such as Paratus Telecom (Pty) Ltd, Mwireless (Pty) Ltd which trades as Africa Online, Schoemans (Pty) Ltd and MTN.