Connecting Africa is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 3099067.

Investment

Huawei, Telcos Clash With Policymakers in Cape Town

Article Image
CAPE TOWN -- AfricaCom 2017 -- The enormous gulf between telecom players and policymakers in Africa was made painfully apparent at this morning's AfricaCom event in Cape Town, where executives traded barbed comments with African government ministers over the taxation and regulation of the telecom sector.

A senior executive from Chinese equipment supplier Huawei, which has expanded rapidly in Africa over the past few years, slammed one government authority in the region for its shortsightedness on digital transformation, contrasting its approach with that in other markets.

"In Tanzania 37% of GDP comes from using mobile financial services but the government wanted to promote that capability and you don't have that kind of success everywhere," said Paul Michael Scanlan, the chief technology officer of Huawei's carrier business group. "In another country in the north I sat with a minister who said we have to protect our banking industry. What would you rather do? Protect banking or grow the economy."

Huawei Technologies Co. Ltd. was not the only private sector company taking aim at government authorities. With networks in several African markets, India's Bharti Airtel Ltd. (Mumbai: BHARTIARTL) attacked government ministers for continuing to milk the telecom sector as a huge source of tax revenues.

During a morning panel session, Daddy Mukadi, the chief regulatory officer of Airtel Africa, told government ministers from Namibia and Zimbabwe that over-taxation of the telecom sector was to blame for high prices and disappointing take-up rates across the region.

Mobile penetration across Africa remains below 50% and broadband access prices are about 180% of average income in some countries, said Mukadi, complaining that Airtel pays a tax rate as high as 50% in certain African markets.

"Mobile operators are willing to invest more and want to cover rural areas and the question we keep asking is why … regulation is one of the biggest risks we face," he said.

The Airtel executive also took issue with the way that governments have charged for spectrum licenses, which operators need to provide mobile services. Spectrum costs rose by 250% between 2008 and 2016, he said.

Government figures hit back, with Zimbabwe's ICT minister telling Mukadi that private sector players were shirking responsibility for their own failings. "One of the challenges with the private sector is that they are always looking to blame others," said Supa Mandiwanzira. "What is the responsibility of the private sector to increase penetration and reduce costs?"

Mandiwanzira also turned the tables on the operators, insisting that some companies had stubbornly resisted government efforts to improve conditions for customers and reduce costs, including an attempt to scrap roaming charges across markets in sub-Saharan Africa.

But Airtel's Mukadi said that forcing operators to provide services could ultimately lead to bankruptcy for some players. Along with other executives at this week's event, he believes there is a need for greater collaboration and more "open debate" between the public and private sectors.

Infrastructure sharing, which has made limited headway in some African markets, might also help to lower costs for the region's telcos. "Costs per site [in Africa] are $150,000 plus $10,000 in maintenance per month," said Mukadi. "There needs to be a debate around infrastructure sharing and the cost of resources."

Herman Singh, the chief digital officer for South Africa's MTN, has similarly complained that his company may struggle to roll out higher-speed networks without new partners, and not just from the telecom sector. "We spend 25 cents out of every dollar we make in capital expenditure to build infrastructure and we are building as fast as we can but we cannot do it alone," he said at today's event. "Governments and OTT players … need to contribute."

Another spokesperson for MTN Group Ltd. complained at the event that government planning on digital transformation and the rollout of ICT services was not being matched by engagements with the private sector. "We need clarity about what to expect," he said. "If we have that we can see progress."

At least one regulatory authority took a more sympathetic line toward operators. Miriam Altman of South Africa's National Planning Commission said regulators have to be "fair" when imposing taxes on companies in the telecom sector. "We don't think mobile services should subsidize other sectors," she said.

Authorities in some markets have taken the opposite approach because telecom is often one of the only "scale" businesses in these countries, according to Altman. "In the Democratic Republic of Congo and other countries mobile operators are one of the few opportunities for tax revenues," she said. "You need that but to expand you need to bring down prices as well."

— Iain Morris, News Editor, Light Reading

Innovation hub

Story

Hot startup of the month: Pan-African fintech KamaPay

This month's hot startup is pan-African fintech KamaPay, which helps individuals and businesses make cross-border payments on the continent.

Story

Afretec awards $3.3M in grants to African research teams

The African Engineering and Technology Network (Afretec) has awarded grants worth $300,000 each to 11 university research teams across Africa to advance digital technologies.

More Innovation hub

Latest video

More videos

Sponsored video

More videos

Industry announcements

More Industry announcements

Flash poll

All polls

Africa Tech Perspectives

Story

Deep dive into East Africa's tech startup ecosystem

New survey reveals a lack of access to investors, reliance on international VCs and global recession trends as the biggest barriers for East African tech startups to access funds.

Story

Challenges and opportunities for women's tech careers

A new survey reveals that COVID-19, the cost-of-living crisis, skills shortages and a lack of mentorship have negatively affected women's career development over the past two years.

Story

Survey: Opportunities for Women in Tech

Take our new survey for women across Asia, Europe and Africa looking at the biggest challenges and opportunities for women-led enterprises and trends in tech careers for women.

More AfricaCom perspectives

Upcoming events

London Tech Week
June 13-16, 2023
Queen Elizabeth II Centre, Broad Sanctuary, London SW1P 3EE
Cybertech Africa 2023
August 1-2, 2023
Kigali Convention Center, Kigali, Rwanda
Africa Tech Festival, Home of AfricaCom and AfricaTech
November 13-16, 2023
CTICC, Cape Town
More Upcoming events

Guest Perspectives

Story

Omdia View: February 2023

By Omdia Analysts

In February 2023 key events in the Middle East and Africa included a major Internet project for Africa's underserved by Liquid Intelligent Technologies and Microsoft as well as a 5G launch in Tanzania – that and more in this month's Omdia View.

Story

Omdia View: July 2022

By Omdia Analysts

Kenya and Zambia move towards 5G with new spectrum allocations while Tunisie Telecom plans to shut down its 3G network - that and more in this month's Omdia View.

More Guest Perspectives

Partner perspectives

All Partner Perspectives

Like us on Facebook

Newsletter Sign Up


Sign Up