Controversy dogs Malawi's second fixed-line service deal

The Malawi Regulatory Authority (MACRA), accused Information and Civic Education Minister Patricia Kaliati of personally directing it to award a licence to ACL in October 2006.

Minutes of the MACRA Board's meeting of October 2006 resolved to re-advertise because four companies that applied for the licence did not meet most of the crucial requirements.

“Although Lilongwe based AirTel Communications scored the highest followed by Access Communications, the two companies did not qualify on other areas,” the minutes says.

However, early last year, Kaliati directed the board to award the licence to ACL without any valid reasons.

“Following the Minister's directive the board held an extra-ordinary meeting on May 25, 2007 where it adopted the directive and warded a licence to Access Communication Limited,” reads the Board Statement released at the end of last year.

In reaction to these revelations, Kaliati said in an interview that she made the mistake of making the directive because she was misled by officials and the Malawi Communication Regulatory Authority.

“I blame MACRA officials because they were dishonest. They never informed me that the process had impeccable anomalies (sic),” she said.

She declared that the whole process be nullified.

ACL had proposed to roll out 80,000 telephone lines to subscribers in five years.

When the warding of licence to ACL was announced last year Kaliati said she hoped the new company would bring competition against the sole fixed-line provider, Malawi Telecoms Limited, which has been around for over 50 years; she said this in turn would also enhance quality services to the telecommunication industry.

ACL had said it will invest over US$56 million in implementing their operations and the company was expected to start its activities in three months' time upon getting the licence.

Malawi Communications Regulatory Authority (MACRA) Spokesperson Clara Mlonya then aid ACL would provide 20,000 lines in the first year of its operations and expand as time goes.

“MACRA expects to see people have easy access to lines in their homes as well as in their businesses. This will create competition which will definitely result in high quality services for the consumer,” Mulonya quipped.

Four Malawian companies have stakes in ACL and these include Gestetner with 23.03% shares, Dynamic Communications holding 25.97%, Fags Investments Limited 27% and Voicecom Investments 24%.

Kaliati said MACRA received an overwhelming response after a number of interested investors applied to provide the services.

“For years the country's sole ground telephone operator has been failing to expand its services to rural masses and government took its time scrutinising the applicants in order to make a decision whether to issue a licence or not,” she said.

Kaliati said government has developed what it calls Universal Access Policy, which intends to give rural masses access to affordable communications facilities, which it says MTL alone would not have helped achieve it.

The other two companies that applied for licences are Terracom Communications of Rwanda and African Communications Limited based in Malawi's Commercial Capital of Blantyre.

Between 2002 and 2004, government embarked on a massive telecommunication Phase 1 and 2-expansion project totalling over US$200 million.

MACRA said there were a number of conditions attached to the nature of licence it has to issue to the successful second fixed line service provider.

“One of the conditions contained in the licence include satisfying the emergency services, where the licensee shall provide a 24-hour Public Emergency Call Services and to any other licence operator or service provider authority to connect to the Public Emergency Call Services,” said Mulonya.

She said these services would be provided in all cases free of charge to users.

She pointed out that the company would also need to interconnect with other operators, in that scenario notify MACRA on points of interconnection, and in turn provide for capacity to allow other licensed operators and service providers' access its public telecommunications network.

She said the new operator was also expected to enter into an interconnection agreement on non-discriminatory terms with any licensed operator upon request and anyone authorised to interconnect with them.

“The licensee shall use its best endeavours to conclude such interconnections agreement as soon as possible and to implement them before the start of operations for other operator, as provided for in that operator's license,” she said.

Government sold the only fixed-line operator in the country on December 13, 2005 to a consortium called Telecom Holdings Limited (THL) against heavy opposition from the civil society organizations.

The company was sold at US$25.7 million, which the civil society institutions contended was too little.

At the time of sale, MTL was believed to be making a total of US78.5 million in sales from fixed lines a year, which was three times the value of its sale price.

MTL has over 80, 000 lines but has been unable to reach out all the areas in need of the services in the country.

Malawi has two mobile phone providers Telecom Networks Malawi and Celtel, which collectively provides to over half a million subscribers.

Two years ago the Government issued a licence to a third mobile-phone service provider called Malawi Mobile Limited, but the project has been failing to get off the ground due to a litigation against one of its share holder who is accused of giving out kickbacks to facilitate the acquisition of the investment. The matter is still in court.