Policy Brief 5, 2014
The entry of the new operator Movitel into the market in 2012 has shaken up the duopoly mobile and fixed monopoly markets that delivered poor services primarily in the major cities at high prices. Assisted by the reduction in the mobile termination rates in 2012, the market has become far more competitive with mCel and Vodacom Mozambique pressured into reducing their mobile prepaid voice tariffs. On the other hand, the fixed-line market dominated by the state-owned company TDM has been unable to increase the number of subscribers. In spite of significant investments having been made to upgrade the copper-based infrastructure and to connect the country to undersea cables, retail ADSL prices still remain high in comparison to other African countries.
Highlights:
1. The entrance of Movitel shook up the mobile market. In 2012, when the third mobile operator Movitel became operational, the Mozambique mobile prepaid voice market experienced a significant reduction of retail mobile tariffs.
2. Significant investments in infrastructure roll-out and upgrade. While Movitel has expanded network coverage to reach rural areas, both mCel and Vodacom have been increasing their investments in order not to lose their positions in the mobile market.
3. TDM monopoly lead-ing to a reduction of fixed-line subscribers. Although TDM has invested in fibre-optic infrastructure to improve broadband speeds and reduce prices, it has been losing fixed-line subscribers in the last three years, presumably some at least to mobile broadband operators.
4. Poor broadband performance and high ADSL prices. Although ADSL services are cheap for1GB basket compared to other African countries they are offered at narrowband speed of 126kbps, and become very expensive above 1Mbps speed.
5. Opening up fixed-line market monopoly to increase performance and reduce prices. As already demonstrated by the mobile market, increasing facility- or service-based competition in the fixed-line market, would lead towards a reduction of retail prices and improvement of broadband speeds.
