Operator
Botswana Telecommunications Corporation Gambia Telecommunications Corporation Swaziland Posts and Telecommunications Corporation
Uganda Posts and Telecommunications ' Corporation
Zimbabwe Posts and Telecommunications Corporation
1992/93 46,8 75,0 56,5
72,0 (1991/92)
47,0
1991/92 66,6 99,0 52,5
85,1 (1990/91)
46,2
127. For the past five years the company has operated quite profitably, with net income
ranging between 24 per cent to 26 per cent of revenues from 1988/89 to 1992/93. All the profit is retained for investment since the company is exempt from income taxes and dividends payments up to 1995. Internally generated funds accounted for 75% of total source of funds in
1992/93, down from 99% in 1991/92 period.
(C) Swaziland Posts and Telecommunications Corporation (SPTQ
128. The Corporation, which was established in 1986, is a State owned Public Enterprise and is directly supervised by the Ministry of Transport and Communications. It is responsible for the operation, maintenance and development of postal and telecommunications services nationally and internationally.
129. The financial performance for the fiscal year 1992/93 was rather poor, with a net income of 7.6 per cent of revenues. This was mainly due to increase in operating costs and loss on
foreign exchange. Nevertheless, the Corporation was able to source up to 56.5 per cent of
required funds from accumulated fund.(d) Uganda Posts and Telecommunications Corporation fUPTO
130. UPTC is a wholly owned Government enterprise responsible for the provision, operation,
maintenance and development of posts and telecommunications services in the country. It also
operates a Post Savings Bank.131. For the fiscal year 1991/92, the Corporation realized an operating income of 44.2 per cent of sales, but a net income of only 1.4 per cent of sales, mainly as a result of foreign exchange losses. Internally generated funds accounted for 72% of total funds applied in the same period.
(e) Zimbabwe Posts and Telecommunications Corporation
132. The Zimbabwe Posts and Telecommunications Corporation operates both postal services and telecommunications. It is wholly owned by the Government under the supervision of the Ministry of Information, Posts and Telecommunications.
133. The Corporation's financial performance in the last five years has been excellent, with internally generated funds accounting for about 50 % of capital expenditures. Telecommunications business has performed better than the postal services during this period.
TRANSCOM/946/Rev.l Page 47
134. The above high profitability may be partly attributed to the generally high tariffs of African telecommunications, especially the international rates. However, telecommunications operators in Africa, especially in Sub-Sahara region where telephone penetration is very low, generate the highest revenue per line of telephone in the world. On the average, revenue per line in Africa was US$ 1,225 in 1992, compared to the world average of US$ 7381'. This implies that demand far exceeds supply and customers are willing to pay the high tariffs and/or there are many users of an installed line. There is therefore significant room for expansion of services.
135. Why then are African telecommunications not expanding to meet the high demand, given their generally high profitability?
136. It is to be recalled that Africa has the lowest penetration of telephones per hundred population in the world. Various factors combine to inhibit the rapid expansion of telecommunications systems which are required to support the economic and social development of the region, key among which are the following:
(a)
(b)
Lack of foreign exchange to purchase telecommunications equipment, given the lack of local manufacture and high import taxes;
(c)
High cost of installing new lines (in Africa, the average cost of each additional line is US$ 5,600, compared to the world average of US$ 1,500). This partially results from low volume of purchases, lack of local manufacture, as well as the lack of economies of scale of the networks;
Restrictive regulations of public corporations which result in inefficient structures (low domestic tariffs, no discounts for off-peak calls, etc).
137. The challenge to African telecommunications policy makers regarding financing is essentially to find methods to broaden the funding base for telecommunications development so as to better mobilize the requisite resources. The strategies adopted will of course vary by country, but it is generally agreed that the policy options include: private sector participation;
competition, regulatory framework; political commitment to development and regional cooperation.
138. In particular, in view of the fact that telecommunications operations are or can be profitable in Africa, governments should establish a suitable framework for increased private sector participation in development. This may be in the form of one or several of the following:
(i) Telecommumcations users, especially the business sector, could participate in financing specific expansion programmes and the revenues generated from the additions may be deployed to expand services in other areas so as to meet the high backlog of waiting list;
21 FTU: African Telecommunications Indicators, 1994.
(ii) New entrants should be allowed to provide additional services, such as mobile or cellular telecommunications services. This will introduce competition and eliminate monopoly;
(iii) Private investment should be encouraged through establishment of capital markets or promotion of joint venture, development of local entrepreneurship and other mechanisms such as Build- Operate- Transfer (BOT) arrangements. This method enables a country to borrow and pay, while making use of the services of the infrastructure in question, which is ultimately transferred to the country with sufficient useful life left in it. Africa's efforts to finance the development of modern transport and communications infrastructures and operate them efficiently should therefore also explore the BOT systems.
(iv) Privatization of state enterprises is another approach which is being implemented in some African countries as a means of increasing investment in telecommunications. Special provision can be made to ensure that a proportion of the shares in the corporation is reserved for its employees, the public at large and local investors.
A
FIGURE 5