[kictanet] AFRICAN SNOs – LAST YEAR’S MODEL STRUGGLES AT THE START GATE

[alice]

FROM BALANCING ACT: AFRICAN SNOs – LAST YEAR’S MODEL STRUGGLES AT THE 
START GATE

Africa’s Second National Operator licence processes run the danger of 
becoming the beached whale of regulatory liberalisation. The latter 
usually runs through the following stages: single monopoly operator, 
same plus mobile operators, and then reaches for a wider and more 
complex competitive ecology.

The SNO is the cautious regulator’s option for introducing competition. 
In the early stages of liberalisation it allows the 
vertically-integrated monopoly of the incumbent to be converted into a 
duopoly operated by two vertically-integrated companies.

So Senegal’s announcement in 2001 that it would introduce an SNO to 
compete with incumbent Sonatel perhaps fitted the pattern. But here we 
are six years later and there is still no SNO announcement from the 
Government and political timetabling (the recent President elections and 
the latter assembly elections) dictate that there will probably be no 
announcement until the Autumn. Sonatel has continued to entrench its 
de-facto monopoly and controls 80-90% of any market worth having. In any 
other country this degree of monopoly would be the subject of a legal 
anti-competition challenge.

Malawi’s SNO bidding process (started in April 2006) appears to be going 
into a similar holding pattern. A local report leaking the conclusions 
of the evaluation process for the SNO bidders seems to show that MACRA 
will not proceed with appointing an SNO if it follows the evaluation 
report.

There were three bidders: Access Communications, African Communications 
Ltd; and AirTel Communications. Terracom (the bidding vehicle of former 
Telecel owner Rwanda Miko Rwayitare) asked for a licence to do data and 
VoIP services. The three formal applications are all Malawian. However 
regulator MACRA’s Acting Director-General Mike Kuntiya says that a 
successful bidder will be known when the Government has made a final 
decision. Kuntiya maintains that all its evaluation report has done is 
make recommendations and the final decision must be made by Government.

Speed is not a characteristic of the SNO process as it is unlikely that 
a decision will be made before April, several deadlines having already 
come and gone. Based on a number of different criteria including 
ownership and control, the technical and business plans, experience and 
credibility, the evaluation’s author ranked the three companies as 
follows: Airtel (86.83 points), Access Communications (73.57), Aircomms 
(69.5) and Terracom (14.52). The Government’s Information Minister said 
it was considering the company that scored the highest markets as it 
only had weaknesses in certain areas and MTL needed competition.

The wheels have also come off Kenya’s SNO process when the selected 
winner Vtel Consortium failed to make the first licence payment. After 
Vtel failed to make its first payment, Reliance was give a week to raise 
its similar first payment otherwise the process would be cancelled. No 
news has emerged since that point. The curse of the SNO Licence 
procedure? We shall see.