POTRAZ

POTRAZ

COMPANY PROFILE

2013

Increasing mobile & datapenetration in rural areas

The telecoms industry provides us with phones, internet, wireless communication, data services and many more benefits. In Zimbabwe, POTRAZ looks after the whole industry. IndustrySA takes a closer look at recent projects that POTRAZ have been involved with.

Being a developing continent has meant that Africa has seen vast changes in the way business is done over the last two decades. It is probably technology that has changed the most with internet access at all time high levels.

In South Africa, the government has stated a demand for increased broadband connectivity and projects like the West African Cable System (WACS) have been put in place to ensure that high-speed internet is provided to everyone who wants it by 2020.

The technology advances that have had the biggest effect on business have been communication based. Globally, the telecommunications industry is worth so much money it is not worth thinking about. Can you imagine doing business in an environment where communication is not instant?

Instantaneous dialogue with customers, staff and stakeholders is now the norm and even in Africa, a continent still coming online with the speed of the

developed world. Without this fast paced communication link, business becomes tedious.

In Zimbabwe, POTRAZ (The Postal and Telecommunications Regulatory Authority of Zimbabwe) is responsible for the postal and telecommunications industry, effectively influencing everyone in the country; individuals and businesses.

POTRAZ is tasked with ensuring that all people in Zimbabwe are adequately provided with postal and telecommunication services, a monumental task considering the population is estimated to be almost 13 million, spread over an area of nearly 400,000 km².

RURAL INVESTMENT One of the important targets that has been identified

by POTRAZ is helping to build telecoms services in the more remote areas of the country. In 2012, the regulator announced that it would install 54 cellular base stations in underserved and remote areas across the country by 2014.

Increasing mobile & datapenetration in rural areas Editorial – Joe ForshawProduction – Chris Bolderstone

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PAGE 2 MAR 13

Increasing mobile & datapenetration in rural areas

POTRAZ issued a tender for construction of the bases in August last year, a contract reported to be worth US$24 million.

POTRAZ Director General, Alfred Marisa, told the Zimbabwe Herald that installations of the bases are already underway saying: “The first phase of the project had eight terminal sites and three repeater sites while the second phase is targeting a total of 43 sites. Our target is to reach all underserved areas in Zimbabwe. The areas targeted and prioritised are remote rural areas.

“Operators are already sharing infrastructure. Sharing infrastructure has been hampered by old designs, especially towers, which were originally not designed to carry more than one operator and, in some cases, inadequate backhaul infrastructure.”

This project will be funded by the Universal Services Fund (USF), a fund which sees generation from all telecoms operators paying in an amount equal to 2% of their revenues every year.

The government put POTRAZ in control of the fund, a decision that Mr Marisa says is helpful to the regulator as without that control funds may have been rerouted to different areas, away from where they are needed – in the development of telecoms in rural regions.

“The tender has not yet been approved,” Mr Marisa

told the Herald. “The tender was supposed to be closed in October but it was closed in November because bidders requested for more time. On our part, we did the financial and technical assessment and at the moment we are just waiting for the tender to be awarded then we can proceed.”

Last year, the country’s biggest mobile services provider Econet Wireless, said it wanted the USF scrapped arguing that contributions were not being fully utilised.

Mr Marisa is also keen to ensure businesses that paying into the fund is not a straight up loss on the accounting sheets; it will ultimately bring about opportunities and successes in the future.

The fund allows for greater connectivity, with which comes the growth of business, nationally and regionally. Through this comes increased traffic and subsequently, increased operator revenues.

AFRICAN INDUSTRYIn 2012, professional services firm KPMG published

a report following the company’s Telecoms Professionals at Innovation Africa Digital Summit 2012.

The report made it clear that Africa is one of the most attractive markets for telecoms organisations.

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MAR 13 PAGE 3

In Zimbabwe, it is estimated that just 16% of the population are internet users (2011 est.) and while this is a vast increase from a figure of just 0.4% in 2000, it is still a figure that POTRAZ would like to see increase.

The functions and powers of POTRAZ are guided by Section Four of the Postal and Telecommunications Act [Chapter 12:05]. These functions include; ensuring that reasonable demands for postal and telecommunication services are satisfied, promoting and encouraging the expansion of postal and telecommunication services, furthering the advancement of technology relating to postal and telecommunication systems and services and representing Zimbabwe internationally in matters relating to postal and telecommunication services.

Considering these functions are in place, why does the country still have a relatively low internet penetration rate?

Could it be because POTRAZ still charges US$2-4 million dollars for ISPs to obtain a license? Considering the fact that in 2009 there were 28 official ISP’s in a country which is still developing its connectivity technology industry, it looks as though the price tag is not turning companies away.

The KPMG report suggests that complexity of the market is often a challenge, especially for foreign investors.

“Telecommunications firms are faced with accelerating complexity competing on brand leadership, operating models, growth strategies, network synergies and footprints.

Consumers increasingly demand enhanced converged services and operators are under pressure to be ready for change.

“Since Africa is made up of 55 individual countries, the regulatory environment is comparable to that of Europe. When combined with an industry in transition from voice to data, the mobile market in Africa is far more complex compared to other industries.

“Only those organisations who have streamlined their operations, are well capitalised and have a sound strategy in place will be positioned to succeed in such a challenging and complex environment,” the report says.

Considering the fact that Zimbabwe still has a long way to go to achieve penetration levels similar to leading African nations, it seems that mobile internet access and mobile telecommunication will be the markets for POTRAZ to monitor and encourage, as these hold key growth potential – especially for internet penetration figures.

“Mobile data and broadband technologies are increasingly being used as a substitute for poor or non-existent fixed-line infrastructure in Africa,” says the KMPG report.

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INDUSTRY PERFORMANCEWhile broadband internet penetration is low compared

to international statistics, mobile penetration and tele-density grew again last year. A POTRAZ report suggested that the country’s tele-density rate was now over 100% and mobile penetration now at 97%.

Tele-density measures the number of active mobile phone SIM cards and land-lines as a percentage of the country’s total population and these statistics (which are still under review) will be encouraging for POTRAZ.

“A number of factors have contributed to the increase of tele-density over the years,” Mr Marisa told the Sunday Mail. “We expect it to continue increasing as more people pursue these new technologies. The rural populace that has previously been marginalised is also moving in to close the gap.”

Many people site the country’s change to a dual currency system in 2009, something which helped to stabilise the economy, as a driver behind the increases in statistics.

NetOne, one of the country’s leading telecoms providers, has seen its mobile subscriber base grow significantly since 2009 and recently demonstrated how well the industry is performing by completing a US$45 million service improvement program.

Completed in November, the project saw NetOne install over 300 base stations across the country, helping to improve services for its customers.

NetOne Managing Director, Reward Kangai, told the Sunday Mail that the upgrades are beneficial for the country as well as the industry.

“These new 350 base stations are going into new green field sites and also replacing old equipment that we had, particularly in Harare. We should see a tremendous improvement of quality of service.

“There are a number of problems that were beginning to emanate from the use of this equipment, but I am happy that the replacement of the old equipment has been moving quite well.

“In addition to that, we have extended our Internet 3G and also the new base stations will provide Internet access in the various areas that we have covered with this equipment , supplied by Chinese company Huawei Tech¬nologies.

“This has seen an upsurge in the uptake of data services. We are also going right into rural areas

“There has also been tremendous progress from POTRAZ in utilising the USF that operators have been contributing to. What POTRAZ has done is taken that money and put base station towers where operators can go and install their equipment. I think in every province so far they have identified two areas that would benefit from the USF.”

Mr Kangai concluded by commenting on the importance of telecoms and the IT sector to the economy, saying: “ICT is the engine that drives the economy. I think Zimbabwe, because of its levels of education, is best placed to take advantage of the opportunities that the ICT sector can bring about.

“The government needs to put much more investment in the ICT sector in terms of the infrastructure required. We should mobilise resources to make sure that ICT services are abundantly available in Zimbabwe because we can generate a lot of additional wealth.

“ICT can also improve the effi¬ciency of other industries like in agriculture.”.

“Telecommunications firms are faced with accelerating complexity competing on brand leadership, operating models, growth strategies, network synergies and footprints.”

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NetOne is the first cellular network operator in Zimbabwe based on Global System for Mobile Communications (GSM). The company was launched with 500 lines during the World Solar Summit in September 1996 in Harare. NetOne, a private company wholly owned by government, was formed as a subsidiary of the Posts and Telecommunications Corporation (PTC) in 1996. Its main focus and objective was to introduce and offer mobile cellular telecommunications to complement the fixed line telecommunication services offered by PTC. Since then, service has been extended to all cities, towns, tourist resorts, mining, farming and rural areas. NetOne boasts of the widest coverage in Zimbabwe.

NetOne over the years has pioneered routes for coverage, building a strong footprint of coverage in all provinces, major

highways, towns, growth points, township centres and farming areas. The network has since expanded from five hundred to an aggregate customer base of more than a million subscribers. Apart from offering the basic telephone service, NetOne also offers supplementary and Value Added Services (VAS) e.g Vehicle Tracking System, Short Messaging Services (SMS), International Roaming, Mobile Fax, Broadband Services, Mobile Financial Services.

The mobile network operator recently commissioned the Ascot Mobile Switching Centre based on Bulawayo, the second largest city in Zimbabwe situated in the Southern region of the capital Harare.

This event was momentous in NetOne’s history as it marked new growth paths in terms of service provision and capacity to handle more subscribers.

NetOne

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