Sure, countries of Africa are NOT the same as the Philippines. And sure, African monopolies are state owned.
Just to repeat. TEL-GLO’s deal makes their 4G company a monopoly. This firm may not be technically state owned, but such have been a product of prohibitionist- anti-competition legal environment. And no, they are hardly emblematic of a “natural monopoly”. That’s because again since their existence has been dependent on legal protection, hence they are instead “rent seeking” firms or crony firms.
4G is yet to exist here.
Moreover, because the competition of 4G will be the non-4G services brought about by the same owners of the 4G monopoly, in effect, TEL and GLO now functions as a cartel for non-4G services.
But as I have pointed out yesterday, 4G does NOT necessarily equal GROWTH. That’s because other factors come into play: price, income, monopoly and politics play important roles
My theory in practice:
From IGMENA.org
Algeria is at all times lagging behind in terms of Internet use, but this doesn’t necessarily mean that Algeria has an effective Internet situation. The Algerian Internet end-user knows better than anyone the extent of shortcomings in Internet services and broadband connectivity.
However, this reality is even more difficult to accept for citizens who realize that the poor and destitute grow everyday in Algeria in terms of utilizing IT services.
End-users in Algeria are in a catastrophic situation characterized by constant internet technical latency, high cost, frequent cuts of online Internet subscriptions.
The situation of the Internet in Algeria is still alarming. It is worth mentioning that a growing number of Algerian end-users have suffered for decades from bad connections due to state technical monopoly over Internet ISPs….
Recently, Algeria Telecom completed 279 Multi-Service Access Node Sites (MSAN) in the province of Algiers. It offers its customers a comprehensive range of 200,000 new connections to high-speed Internet. Algeria has, despite the introduction 4G, a long way to reach a place among the countries where high-speed Internet can be easily accessed by end-users.
From BMI Research (a Fitch company)
BMI View: The Q1 2016 East Africa report analyses the latest industry, regulatory and macroeconomic developments within the telecommunications markets in Burundi, Ethiopia, Malawi, Rwanda, South Sudan and Sudan. These six markets are characterised by several challenging business dynamics, including low consumer spending power, high infrastructure costs, large rural populations with poor access and, some cases, politically volatile environments. Limited competition in several of these markets, along with unfavourable fiscal regimes, creates considerable downside risks to market growth. 3G and 4G subscriber penetration rates, as well as their share of total mobile subscriber bases, are expected to remain among the lowest in the world for the foreseeable future.
Oh by the way, remember the movie Black Hawk Down?
The once stateless Somalia appears to have the cheapest and best telco services in Africa
From Wikipedia
After the start of the civil war, various new telecommunications companies began to spring up in the country and competed to provide missing infrastructure. Somalia now offers some of the most technologically advanced and competitively priced telecommunications and internet services in the world. Funded by Somali entrepreneurs and backed by expertise from China, Korea and Europe, these nascent telecommunications firms offer affordable mobile phone and internet services that are not available in many other parts of the continent. Customers can conduct money transfers (such as through the popular Dahabshiil) and other banking activities via mobile phones, as well as easily gain wireless Internet access.
After forming partnerships with multinational corporations such as Sprint, ITT and Telenor, these firms now offer the cheapest and clearest phone calls in Africa. These Somali telecommunication companies also provide services to every city, town and hamlet in Somalia.There are presently around 25 mainlines per 1,000 persons, and the local availability of telephone lines (tele-density) is higher than in neighboring countries; three times greater than in adjacent Ethiopia. Prominent Somali telecommunications companies include Somtel Network, Golis Telecom Group, Hormuud Telecom, Somafone, Nationlink,Netco, Telcom and Somali Telecom Group. Hormuud Telecom alone grosses about $40 million a year. Despite their rivalry, several of these companies signed an interconnectivity deal in 2005 that allows them to set prices, maintain and expand their networks, and ensure that competition does not get out of control.
More
From African Review
In Mogadishu Somalia, the report says, the average cost is $2.53. This is the cheapest anyway in Africa, with Zimbabwean operating charging the highest rates at an average $20.08.
The formulae used to compute the rates is based on one developed for OECD countries to measure cost of mobile tariff, based on 30 outgoing calls a month (on and off-peak) in three minutes, plus 100 text messages.The factors at play in determining price differences between countries include: Degree of competition, regulation of the sector; taxes applied to telecom services in a country and the differences between on and off-net calls. The extent to which the the US dollar exchange rate in a particular country is an accurate reflection of the purchasing power parity, also a critical factor.
In Somalia that suffered over two decades of war, and currently undergoing some stabilisation, mobile services are in the hands of private operators, with very little regulation. That could explain the good rates, thanks to less government controls and charges plus the benefits of stiff competition as opposed to monopolies.
Just to add Somalia just reestablished a transitional government in 2012 (Federal Government of Somalia)
Somalia’s Telecom boom occurred at the new millennium.
And presently, there are about 25 TELCO companies operating in the nation!
That by the way is an example of free market competition!
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