Thomas K Thomas has been covering Indian telecom issues for a long time. His reflections on the lessons that need to be learned from Indian spectrum policy since 1994 are worth a read: Back in 1994, when telecom licences were given out for the first time, a flawed auction design allowed non-serious players to bid astronomical sums and then default on payments. In 2002, operators were given additional spectrum on subscriber-linked criteria without any upfront fee. This was the first time anywhere in the world spectrum was given based on number of subscribers. In 2008, the then telecom minister A.
My comments at the Main Panel session at IGF 2012. Question 1: What does it take to attract investment in infrastructure and encourage innovation and growth of ICT services, including mobile technology and how can these technologies best be employed to address development challenges? Indonesia is a success story in Internet use. In a six-country, representative-sample survey we conducted in 2011, we found the highest use of the Internet among the poor among the six in Java, where the most of the Indonesian population lives. Indonesia is one of the heaviest users of Facebook, in the top five.
In a widely reported speech, the President of Myanmar has announced the government’s intention to permit private investment in telecom: Thein Sein, who took office 15 months ago after the military handed over power to his quasi-civilian government, said there was a need to consider reducing the state role in several key industries, including telecommunications, electricity, energy, forestry, education, health and “financial matters.” “The privatization that is in the second wave of government reforms does not mean we are going to break them up and sell them,” he added. He said the government aimed to triple GDP per capita by fiscal 2015/2016 and there was a need for more foreign help in terms of aid and expertise to boost the economy. “If you observe developing nations, the government’s budget alone is not sufficient to achieve their development goals … that alleviate poverty and require international grants, aid, loans and technical expertise,” he said.
My previous post on the subject of ITU moves on the Internet elicited a response: a link to a speech made by the ITU Secretary General where he says the criticisms are ridiculous. This is good. Let’s see what his main argument is: There are many important issues that may be addressed at WCIT, but I would like to focus on one broader issue in particular: how do we ensure sufficient investment in broadband network infrastructure? . .
Bangladesh is on the cusp of transformative change. No certainty. It could miss the bus. Because of years of work on family planning, child health and womens’ education, its fertility rates are declining and the country is just entering the golden period in terms of demography: declining child dependency; increases in elderly dependency not yet started; and a bulge of unencumbered working-age people. But dividends come with dangers: if the demographic bulge finds no opportunities for making a living, they will rise in rebellion (e.
Sounds so 1960s, but . . . This should change investment risk calculations, in Africa for now. But how broad will the ripples run?
An op-ed written by Harsha de Silva, LIRNEasia’s consultant lead economist, has been published in the Daily Star in Bangladesh. Harsha emphasizes the need to ensure that an environment is created to encourage investment by the private sector to build on the success of delivering voice connectivity on wireless to take broadband to the people of Bangladesh. Digital Bangladesh is the centerpiece of the government’s ICT policy. Therefore, the government must consider the evidence, in both Bangladesh and in fast-developing Asia, on what infrastructure is likely to make Digital Bangladesh possible. Will Digital Bangladesh become a reality on wireless network platforms operated by well capitalised and managed mobile operators, or on some government-managed wireguide-based platform?
Talk about coincidence. Just yesterday, on the train to Brussels, I just finished answering a series of questions sent by Voice & Data, the leading ICT industry publication in South Asia. This included a question on whether it would be possible for Indian telcos to do business in China. My answer was “China is a market that is still heavily controlled by the government. I see possibilities for Indian equipment/software/apps suppliers to enter, but believe it is premature to think of Indian operators entering the Chinese market like they have entered African or South Asian markets.

Profits and investment

Posted by on February 11, 2011  /  1 Comments

In most countries in the early stages of liberalization, I get asked about the profits operators make and how they should be monitored. I tend to say that the priority should be on monitoring investments (not committed, but actually made) and that it’s not a bad idea for the regulator to have some knowledge about profits. The reason I give priority to investment is because that is what drives performance. If investment declines, the regulator can expect problems. Profits are relevant for two reasons: first, if they are below the norm (more on this below), investments will most likely be affected negatively.
Part of what Boards of Investment do is spin. According to the Chairman of the Sri Lanka BOI, telecom and power sector contributions will go down because tourism investments will increase, not because they are going down in absolute terms. “In the past telecoms and power sector contributed around 60 percent of FDI, while 40 percent came from other sectors,” Perera told reporters in Colombo. “In the future the telecoms and power sectors will come down to around 40 percent.” But we wonder whether this is the full story.
We didn’t quite think we’d be generating news at the conference, but apparently some of what was said was truly newsworthy. Capital investment in Sri Lanka’s telecom infrastructure has plummeted amid a price war and high taxation which will crimp expansion in the future and broadband roll out in the island, top telecom operators said. “Before the price war each operator was spending about 150 to 200 million (US dollars) a year in capital expenditure,” Dumindra Ratnayake, head of Tigo Sri Lanka said at a forum organized in Colombo by LirneAsia, a regional policy research body. “This year all operators put together may have invested about 150 million.”
Glimmerings of a return to the bad old days, when governments “nationalized” telecom companies. The end result was pillage by the government flunkies and bad/no service to the public. The Russians are back in this game, but this time through the courts and with a different beneficiary, the local partner oligarch. Already jittery investors were alarmed on Thursday when a Norwegian cellphone company announced that a Siberian court had seized its multibillion-dollar investment in a Russian joint venture and would turn it over to a company thought to be allied with a Russian oligarch. The decision signaled an escalation in a long-running dispute between the Norwegian company, Telenor, and the Alfa Group, an alliance of Russian businessmen that was also at the center of a separate fight with the British oil giant BP last summer.
The world is awash in telecenter pilots.  I thought all the lessons that could be learned, have been learned.  Apparently not.  Google is bankrolling another pilot in Kenya, including a USD 700/month broadband bill.  So, for sustainability we’d need around 700 users spending a tad more than USD 2 per visit?
In all networks, there is a perpetual debate about the growth of whatever flows across it (data, voice telephony, traffic. electricity) and what levels of investment are most appropriate for carrying the future load without deterioration of quality.  This debate is going on now, about the Internet and the load likely to be placed on it by proliferating video, the so called exaflood.  But then, profits are essential for investment.   The quote below is about a data drought that could drive down profits and cause all kinds of bad things to happen.
Meeting the traget of a billion dollars of FDI in 2008 seems to rest on foreign investment continuing at a high rate in telecom.  After all, in the first half of the year, telecom brought in USD 291 million, out of a total of USD 425.  However, the increasing hostility to the sector driven by the JHU plus the decline in people’s buying power pulled down profits last quarter.  The largest mobile operator, Dialog, stated that its capital expenditures for the coming year will be cut by about 25 percent at an investment briefing recently. One cannot draw conclusions from one quarter, but do not be surprised if the first half of 2008 turns out to be the high point of investment in the sector.
Contrary to jingoistic claims that foreign owned telcos draining out local resources, the telecom sector continues to bring in new investment from outside.  In Pakistan, at one point, 50% of the FDI was telecom.  If the breakdown is provided, it may well be that the telecom sector accounts for 50% of FDI in Sri Lanka too. “The BoI recognized Dialog Telekom as the company with the highest level of realized investment in 2007 totalling 328 million dollars in 2007.” Dialog Telekom, which has over four million subscribers, secured the top slot in investment rankings for the third year in succession having being recognized as Sri Lanka’s largest investor in 2005 and 2006 with investments of 90 million dollars and 150 million dollars.
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