Focus: ICT

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Ready to Call

May. 9, 2013

The introduction of two important infrastructure projects, namely SEACOM and EASSy cables, revolutionized both access to the internet, improving the environment for international business, but also stimulated growth in the internet service provider (ISP) sector. These two infrastructure links are based on submarine optic fibers along the Indian Ocean, and bring more access to the internet and data communications at lower costs. There are currently more than 20 ISPs in Mozambique, breaking the old monopoly of state provider Telecomunicações de Moçambique (TDM) in the 1990s. According to Hermann Woithe, the CEO of one such provider, Internet Solutions, the drop in price since the installation of the cables has been remarkable. He told TBY, “In 2007, we were selling bandwidth for over $6,000 per megabyte. When SEACOM came, within six months that price came down to $1,500. If you buy small quantities today, you're looking at $500 or $600."

Nationally, the infrastructural backbone is being expanded and modernized by the national telecommunications company TDM. The backbone connects all the provincial capitals in the country and is being enhanced by replacing microwave and VSAT links by optical fiber broadband links, capable of carrying voice, data, and images, with the challenge of expanding connections up to the district level left remaining. In addition to the national backbone, other ICT infrastructure projects are being implemented countrywide by telecommunications operators, improving availability levels. TDM retains its monopoly over fixed-line telecoms services, though the influence of this market is waning as mobile connectivity becomes the main game.


The access infrastructure for the “last mile" is still a challenge in Mozambique, where the ICT infrastructure for voice, data, internet, and to some extent TV is provided through fixed-leased lines, mobile telephony networks, wireless networks (wi-fi/WiMAX), satellite, and cable TV. Private sector initiatives are taking place, mainly in the cities and towns, where several wireless networks, based on wi-fi or WiMAX technologies, are being implemented in response to the demand for access to data communications and internet by companies and institutions. Hotspots are also being implemented in many public locations, allowing citizens to have access to the internet. Cities are also being covered by cable television, which also provides subscribers with internet access, increasing the number of families with access to this important tool. Most Mozambicans cannot afford to have individual connections because the costs are too high compared with other countries in the region. A 1 Mbps leased line costs $4,000 per month, while a 1 Mbps ADSL residential line/month costs $175. Public and community access points are being deployed, in the form of internet cafés and Provincial Digital Resource Centers (CPRDs) in the provincial capitals and cities.


Over the next five years, Africa will be the second fastest growing region in total connections and the fastest growing in subscriber numbers. According to the 2011 African Mobile Observatory report, Mozambique represents 1% of total African mobile connections, while its neighbors Tanzania and South Africa represent 4% and 10%, respectively. Fellow energy rich and former Portuguese colony Angola stands at 2%.

In 2000, there were fewer than 20 million fixed-line phone connections across Africa, a number that had accumulated slowly over a century, and a waiting list of a further 3.5 million. With a penetration rate of just over 2%, landline phones were to be found only in offices and the wealthiest households. But the coming of the mobile phone has transformed communications access. By 2012, there were more than 500 million mobile subscriptions in Africa, more than in the US or the EU, making Africa the fastest growing region in the world for mobile connectivity.

Since the opening of the Mozambican telecommunications market, in 2003, competition has helped drive prices down and penetration has increased. There are currently three licensed mobile operators; mCel, established in 1997; Vodacom, which entered the market in 2003; and new entrant Movitel, a Vietnamese-Mozambican company set to build its base in the rural market, having invested heavily in nationwide fiber-optic infrastructure.

The market leader, and state-owned mobile phone provider mCel, reported a market share of 56% in its 2011 annual report. Coverage is growing year on year with 89% of the country's population covered by the network, which corresponds to 62% of its territory. The market's second leading mobile phone provider, Vodacom, has said its subscriber base has been growing 20% year on year. Competition between the rival mobile service providers is fierce, with Vodacom and mCel racing to capture the growing market. According to government statistics, mobile phone penetration is up at least 8% from 32.7% at the end of 2010 and to now pushing 40% with more than 9 million subscribers.

The regulatory body, the Instituto Nacional das Comunicações de Moçambique (INCM), is an autonomous organization that supervises the communications sector, including radio frequencies. Following the liberalization of the communications market in 2003, Mozambique embarked on the establishment of an open and competitive market. The licensing regimes are being improved and fixed telephony, which was a monopoly held by TDM, is now liberalized. International telephony and data are also liberalized, while VoIP is still not regulated. The Mozambican Electronic Transactions Law is now drafted and waiting for approval by the government. Expectations are that policy makers and the regulator will continue a pro-private sector stance, licensing more operators and defining new policies for the expansion of communications to rural areas. All three operators have national coverage and operate both 2G and 3G networks. Mobile consumers currently favor 2G phones, but falling prices combined with improved connectivity and quality of service have seen the smartphone market grow.


Improved communications in the future are seeing global technology leaders lining up to do business in Mozambique. International technology solutions companies like Ericsson, Oracle, Microsoft, and Huawei are keen to move in and take advantage of Mozambique's business boom. The mobile phone sector has already seen Ericsson team up with market leader Mcel, and Huawei has close relationships with both Vodacom and market newcomer Movitel. As the SEACOM cable is upgraded and the critical mass of users increases, the question that remains is how fast the market will grow.