Zamtel Undertakes $23 Million Digitalisation Project

Zambia Telecommunications Company (Zamtel), the country’s state-owned fixed line incumbent, has reportedly commenced the first phase of a project costing around USD23 million under which it will decommission its analogue exchanges, according to Telecompaper.

It is understood that Zamtel will replace the old analogue exchanges with digital alternatives, which it claims will allow it to offer its fixed line customers additional features, including broadband, audio and video conferencing and missed call notifications.

The first phase of the programme, which follows a successful pilot at the Woodlands exchange in Lusaka, will run until January 2011, during which time exchanges in Ridgeway, Chinika, Emmasdale and Lusaka will be upgraded. According to Zamtel’s chief communications officer, Amon Jere, the second stage of the project will see the digital upgrades take place nationwide, and will begin in the first quarter of 2011.

Zamtel Spends US$34 Million In Fibre-Optic Project

Zambia’s monopoly fixed line operator Zambia Tele- communications Company (Zamtel) claims to have spent approximately USD34 million on laying fibre-optic cable across the country, AllAfrica reports.

The investment figure was revealed by Transport and Communications Deputy Minister Mubika Mubika in Parliament, who in responding to questions about the telco’s future spending plans noted that it remained unclear whether Libya’s LapGreen Networks, which recently acquired a 75% stake in Zamtel, would continue the current fibre rollout project.

LapGreen Networks submitted a USD257 million for the majority stake in Zamtel, and it was announced last month that it had beaten out bids from Russian telecoms investment firm Altimo and Unitel of Angola for the majority holding to win the holding. The government meanwhile has retained the remaining 25% stake, although it may sell this at a later stage through an initial public offering on the Lusaka bourse.

MTN Wants Interconnection Fees Investigated

MTN's Zambia subsidiary has submitted a request to the Zambia Competition Commission (ZCC) to investigate the interconnection charges it pays for terminating calls onto other networks. MTN's chief marketing officer, Ernst Fonterne­l told the Zambian Chronicle that the ZCC should determine the causes of high interconnectivity costs in Zambia, to help to come up with solutions on how to reduce the costs.

"We have put up an application through ZCC to look into the high connectivity rates within Zambia between the local players," he said. He added that  PricewaterhouseCoopers was also conducting a study on the high interconnectivity rates which would be completed by the end of next month.

The country currently has three mobile network operators with the following market shares; Zain (70%), MTN (20%) and Zamtel (10%) - based on statistics from the Mobile World subscriber database.

Three Remain for Telcos Zamtel Bid

Of the four companies left in the running to acquire a stake in Zambian fixed line incumbent Zambia Telecommunications Company (Zamtel) only three have submitted final binding bids, with Indian state-owned telco Bharat Sanchar Nigam Ltd (BSNL) dropping out of the process after conducting due diligence.

According to Reuters, the withdrawal of BSNL leaves Libya’s LAP Green Networks, Unitel of Angola and Russian telecoms investment firm Altimo chasing the up to 75% stake that the Zambian government plans to offer in the operator.

Commenting on the development, Henry Sakala, the privatisation manager at the Zambia Development Agency (ZDA), said: ‘These bids will be subjected to an evaluation by the ZDA and after the evaluation they will be presented to the ZDA board who are going to make a decision as to which ones to shortlist for negotiations.’ In addition Sakala noted that the ZDA board would appoint an independent team to undertake the negotiations with the successful bidder(s).

Zambia Plans To Transfer Fibre Lines From Zesco to Zamtel

AllAfrica.com reports that the Zambian government is planning to put a number of fibre pairs currently controlled by state-owned power company Zesco in to the hands of Zambia Telecommunications Company (Zamtel). It is understood that the move is part of the state’s plans to make the telco more attractive to potential buyers, as the privatisation process of the operator moves forward.

Under the proposals the government will transfer seven of twelve fibre pairs that Zesco has; of the remaining five, two are used by Zesco to manage its power network, one is used by South Africa-based MTN, which owns a mobile operator in Zambia, while the last two are not currently in use.

Local ISPs have voiced their concerns about the proposals however, with one unnamed market operator stating: ‘All the ISPs don't want this to happen. We have a good relationship with Zesco and we put a lot of capacity through their link. If it happens, I'll have to lay fibre routes and that's not my business. We're looking at VoIP offerings because the current prices of international calling are still USD1.10-USD1.50 a minute.’

At present Chinese vendor Huawei is in the process of rolling out a fibre backbone for Zamtel, but it remains incomplete and by comparison to Zesco’s existing infrastructure is significantly less expansive. Zesco’s fibre network spans the economically active central part of the country from Lumwana and Solwezi in the north to Sesheke in the south.

The Zambian government first announced plans to divest a portion of its stake in Zamtel in December 2008. In September 2009 it revealed it would sell 75% of the struggling operator, and one year after initially unveiling its intention to sell, the Zambia Development Agency (ZDA), which is handling the process, announced the shortlist of bidders: India's Bharat Sanchar Nigam Ltd, Unitel of Angola and Libya's LAP Green Networks. Russia’s Altimo was subsequently added to the list, despite submitting its bid after deadline.

LAP Aquires 80% Stake in Sudan's Gemtel

Libyan government investment vehicle Libyan African Investments Portfolio (LAP) has acquired an 80% stake in Southern Sudanese telecoms operator Gemtel via its telecoms arm, LAP Green Networks, Ugandan news source The New Vision reports.

Gemtel was licensed by the Government of Southern Sudan (GoSS) in 1996 and launched commercial GSM services shortly after in the cities of Juba and Yei. By mid-2009 the company had expanded its footprint to cover Waw, Torit, Bor and Rumbek.

Gemtel uses the dialling code of Uganda (+256), thanks to an interconnection agreement with Uganda Telecom (UTL) signed in September 2006, which allows the cellco to use the gateway for USD50,000 in interconnection fees per month.

LAP Green already operates in East Africa through its 80% shareholding in Rwandan fixed line and mobile telephony operator Rwandatel and 69% stake in UTL. The company also holds an interest in Sahelcom and Sonitel of Niger, and controls Oricel Green, a mobile operator in Cote d’Ivoire.

According to a statement from LAP Green, the firm has been shortlisted to buy a 75% stake in Zambia’s sole fixed line operator, Zambia Telecommunications Company (Zamtel).

Four Listed For Zamtel Acquistion

Four bidders have been shortlisted to take a 75% stake in the state-owned telco, Zamtel. The bidders who shall proceed to the next round are India's BSNL, Libya's LAP Greencom, Unitel /Angola Cables of Angola and Russia's Altimo Holdings/VimpelCom.

The ZDA Board at meeting held on January 11, 2009 approved the recommended shortlist after detailed analysis conducted by an Evaluation Committee.

Commenting on the shortlist at a press briefing to announce the successful bidders, Mr. Muhabi Lungu, Acting Director General of the ZDA said he was happy with all four participants who have gone through to the next stage of the process. "The bids submitted were compelling, and set the stage for an exciting next phase," he added.

The four bidders will now be invited to participate in the next round of bidding, which is expected to begin during the week commencing 18 January, 2010. At the begining of this phase shortlisted bidders will be given details of the requirements and timing for the next phase of the process. Details of the bids will not be disclosed at this stage as doing so would prejudice future phases of the privatisation process.

Four ZAMTEL Bidders Submit Bids

Of the eight companies shortlisted in the sale process of a 75% stake in Zambian fixed line incumbent Zambia Telecommunications Company (Zamtel), only three have submitted bids. According to the Times of Zambia the three foreign companies to submit their offers to the Zambia Development Agency (ZDA) for the telco are India’s Bharat Sanchar Nigam Ltd (BSNL), Unitel of Angola and Libya-based LAP Greencom.

A fourth bid, from a consortium of Russia’s Vimpelcom and the telecoms arm of the Alfa Group, Altimo, was understood to have been sent on time, but reportedly arrived at the ZDA offices five minutes after the submission deadline as a result of ‘logistical reasons’. The bid however was still considered, and the ZDA board confirmed that Altimo’s non-binding offer had been accepted today. The four companies that had been shortlisted but chose not to bid were Telkom South Africa, BSNL’s fellow state-owned Indian telco Mahanagar Telephone Nigam Ltd (MTNL), Portugal Telecom and a consortium of Egypt-based Orascom Telecom and its subsidiary Telecel Globe.

ZDA acting director general, Muhabi Lungu, after opening the bids said the ZDA would now study the offers, while also passing the details on to the board of Zamtel for its evaluation. Mr Lungu has stated that the ZDA will announce which of the companies will move on to the next stage in the sale process on 11 January 2010, where another due diligence would be undertaken before the successful bidder is chosen.

New Zamtel Owner To Revitalise Company

­Zamtel's new owner could revitalise the company, gaining a 19% share of the mobile market by 2015, up from its current 4% share. According to Onda Analytics, the privatisation will lead to a major operator taking over Zamtel, providing a serious threat to existing Zambian mobile operators, Zain and MTN.

Interested parties, including MTNL, Telecel Globe (a subsidiary of Orascom), Telkom SA and Vimpelcom officially began due diligence this week.

According to report lead author, Daniel Jones (Partner), "The new investor will have to turn around an operator in crisis. A strategy along the lines of a new entrant will be needed, as Zamtel has fallen further and further behind in the mobile market. High mobile tariffs and low penetration in Zambia present an opportunity for the buyer. Aggressive price competition and going after subscribers new to the market will help Zamtel grow its market share and challenge its competitors".

Onda Analytics' new report considers the strategies that a new owner will need to adopt in order to turn the operator into a significant mobile player in Zambia. Under the right strategy, Onda Analytics forecasts Zamtel to grow its mobile market share from 4% in 2009 to 19% by 2015, increasing its subscriber base from 160 000 to 1.8 million. The report also analyses the strategic importance of Zamtel's other assets, including its fixed line network and the WiMAX network currently in deployment.

On top of increasing revenues, Zamtel will need to keep a close check on costs. "Zamtel's bloated cost base, as a result of its large headcount, has led it to insolvency and the current privatisation process" explains report co-author, Tom Harden, Partner at Onda Analytics. "Today, all the operator's unionised staff have agreed voluntary redundancy. A massive staff reduction programme will be need to be carried out by whichever company takes over Zamtel. The union has recognised this, hoping to get the best redundancy packages for its members by negotiating the government now, rather than the new owner later" explains Harden.

Zambia Again Plans to Sell 75% of Zamtel

Zambia's government has announced plans to sell three-quarters of its stake in the state-owned Zambia Telecommunications Corporation (Zamtel) to a private investor and eventually float the remaining 25% onto the local stock exchange.

President Banda said the partial privatization of the company was the only way to resolve the financial problems the company is facing.

It is estimated that the company needs a capital injection of around US$200 million, which cannot come from the government without affecting other services.

Although the privatisation will result in the liberalisation of the international call gateway, to the benefit of the other private operators, no new operator license will be offered in the country until Zamtel has returned to economic viability.

An attempt to sell the stake earlier this year to a private equity group became mired in political controversy after a judicial investigation was ordered into Communications and Transport Minister, Dora Siliya.

Shew was alleged to have engaged a private consultancy firm based in the Cayman Islands to carry out an evaluation of the assets of Zamtel without following tender procedures and ignoring legal advice in the process.

The country currently has three mobile network operators with the following market shares; Zain (70%), MTN (20%) and Zamtel (10%) - based on Q1 statistics from the Mobile World subscriber database.

MTN Zambia Lays out Plans to Double Customer Base

MTN's Zambia operations plans to invest US$95 million upgrading its network this year as it seeks to double its customer base to at least 1.4 million.

"We are looking at growing the business by double this year through purchasing new equipment and investing in support systems to improve our network," Chief Executive Officer, Per Christer Eriksson told the Reuters news agency. "The total cost of our expansion programme for this year is about $95 million and we are looking at increasing our market share to about 30 percent," he added.

The company invested US$80 million on its network in 2008.

MTN Group recently announced that Mr Erik van Veen, the current COO of MTN Uganda, is to take over as CEO of MTN Zambia.

According to figures from the Mobile World tracker, MTN ended last year with just under 700,000 customers - and a market share of around 18%. The country itself has a population penetration level of just 31% and two other operators, Zamtel and Zain, which is the market leader with 2.7 million customers.

Controversy As African Governments Sell Off Phone Companies

As African governments move to sell off incumbent telecommunications companies to save them from collapse, controversies that may scare away potential investors are clouding the privatization process.

Several African governments are privatizing incumbent telecom companies after failing to recapitalize them, hoping that new owners will roll out new plans and services including data, video conferencing and Internet backbone offerings in addition to voice services.

The financially troubled telecom companies need a quick cash injection to save them from collapsing, but deregulation is being marred by accusations of illegal activities in the privatization process and the selection of investors.

In Ghana, the sale of Ghana Telecom to Vodafone International of the U.K. has been taken to court, while in Zambia, the sale of the Zambia Telecommunications Company (Zamtel) by Minister of Communications and Transport Dora Siliya is also being challenged in the courts of law.

Members of the opposition Convention People's Party (CPP) in Ghana are challenging the constitutionality of the sale agreement, stressing that the process adopted by the government in selling Ghana Telecom contravened the company's code and the country's constitution.

Ghana Telecom was sold in July last year to Vodafone at an approximate value of US$1.3 billion plus a cash injection of $500 million to boost the company's operation, bringing the total to $1.8 billion.

In Zambia former Minister of Communications and Transport William Harrington is challenging the sale of Zamtel, claiming that Minister Siliya has not correctly followed the privatization process.

"Siliya's actions need to be investigated because it is allegedly a total breach of parliamentary and ministerial code of conduct," Harrington said.

In December last year, Siliya signed a memorandum of understanding with RP Capital of the U.K. on behalf of the Zambian government in connection with a $2 million contract to value Zamtel's assets and liabilities and find a buyer of a percentage of shares in the company to make it viable.

Zamtel is a government-run communications utility that provides mobile, fixed and internet services.

Last week, Siliya said time is of the essence, so that the Zambian government does not have to continue to subsidize Zamtel. At the same time, Siliya said the Zambian government does not want to just give away the company to an investor, which is why RP Capital was awarded a contract to value the company.

Siliya added that mobile costs in Zambia were the highest in the region due to Zamtel's monopoly of the international gateway and its inefficiencies.

Zambian President Supports Probe Over ZAMTEL Sale

Zambian President Rupiah Banda on Friday said that he welcomed a decision by the country’s chief justice to set up a tribunal to probe Communications and Transport Minister Dora Siliya over her role in the partial sale of the giant state owned telecommunications firm ZAMTEL.

Acting Chief Justice Irene Mambilima said on Thursday that she would set up a tribunal in accordance with the law after public complaints about the conduct of the minister were lodged at the Supreme Court in Lusaka, the capital.

The Zambian Constitution stipulates that the Chief Justice must set up a tribunal to probe alleged misconduct by ministers and Members of Parliament, if a member of the public complains.

In this case, a member of the opposition Patriotic Front (PF) who is also a former minister of communication and transport, William Harrington wrote to the Chief Justice over the alleged misconduct of Siliya in the deal.

Siliya is alleged to have engaged a private consultancy firm based in the Cayman Islands to carry out an evaluation of the assets of ZAMTEL without following tender procedures and ignoring legal advice in the process.

President Banda and vice president George Kunda have both defended Siliya of any wrong doing and instead criticised those questioning the ZAMTEL sale.

But on Friday President Banda said he supported the decision made by Justice Mambilima and directed the Secretary to the Treasury to ensure that funds for the tribunal were made available.

He also urged members of the public to stop debating the ZAMTEL sale so that the tribunal could carry out a professional job and determine whether Siliya was in breach of acceptable procedure by her actions.

Should Siliya be found to have breached procedure, she risks losing her parliamentary seat, which will leave President Banda with no option but to sack her.

Zambian Government Seeks Zamtel Partner

The Zambian government on Friday stated that it was seeking an equity partner to help run the Zambia Telecommunications Company (ZAMTEL) because government has no funds to revive the giant state-owned firm.

Communications and Transport Minister Dora Siliya said this in a ministerial statement to parliament on Friday. The minister’s comments come after days of controversy surrounding the sale of the cash strapped firm, prompting the Speaker of Parliament to order government to issue a statement on the matter.

The government has been accused of using corrupt methods to sell off the company, by engaging a consultancy firm based in the Cayman Islands to carry out the evaluation of the company without following proper procedures.

Government procedure forbids the engagement of a single consultant without first inviting bids from prospective consultants and then selecting the best bid.

In the case of the Cayman Islands firm, Siliya is alleged to have engaged the firm without inviting bids from other consultants.

But Siliya told parliament that the government’s urgent intention is to save ZAMTEL from total collapse, and an evaluation of its considerable assets have to be done first before bringing in a partner.

The firm is on the brink of collapse and owes former employees and others over 600 billion kwacha (115 million US dollars).

She said government recognised that ZAMTEL is a strategic institution, hence the decision to only partially sell it off and maintain an interest in it.

She dismissed reports that government would pay the Cayman Island consultant two million US dollars to evaluate the assets of the company, and said the company would only be paid 250 million kwacha (48,000 US dollars).

Zambian President Defends ZAMTEL Sale

­Zambian President Rupiah Banda on Monday defended government over allegations there was some improper handling of the partial sale of ZAMTEL, the state owned telecommunications giant.

Banda told journalists at Lusaka International Airport on Monday just before departure for Tanzania on an official visit that the public needs to give the minister of transport and communications a chance to explain her side of the story.

The minister in question, Dora Siliya, has been heavily criticised for apparently ignoring legal advice from the office of the Attorney General on the procedure of selling the company.

ZAMTEL has faced numerous financial problems, prompting government to begin a process to find an equity partner to help manage the commercially viable company.

However, the decision by the minister to engage a private company from the Cayman Islands to carry out an evaluation of ZAMTEL’s assets before finding it an equity partner at a cost of two million US dollars has raised concern.

The private firm was selected without following normal government procedure and Siliya went ahead to sign an agreement with the evaluation company against the advice of the Attorney General.

There have been allegations that have so far not been denied by government that one of Banda’s sons is involved in brokering the deal between government and the Cayman Islands based firm.

But Banda said he was not involved in any of his son’s business dealings, and urged the public to allow the minister to make a statement on the matter before condemning her.