REPUBLIC OF MOZAMBIQUE MINISTRYOF TRANSPORTS AND COMMUNICATIONS MOZAMBIQUE’S COMMUNICATIONS NATIONAL INSTITUTE Consulting Services for Technical Assistance on Study for Rural Communications Viability in Mozambique FINAL REPORT Written by: Luís Rego and Hermínia Fernandes-Samuel MAPUTO, OCTOBER 2017 Final Report, October 2017 Table of Contents List of Abbreviations and Acronyms .......................................................................................... 3 1. Executive Summary ........................................................................................................... 5 2. Methodology .................................................................................................................... 8 3. Political and Economic Environment ................................................................................ 10 3.1. Political Environment ............................................................................................... 10 3.2. Economic Environment ............................................................................................ 11 3.3. Demographics.......................................................................................................... 13 3.4. Government Programs and Projects ........................................................................ 14 3.4.1. Five-YearGovernmentProgram 2015-2019 ....................................................... 14 3.4.2. GovernmentProjects in ICTs ............................................................................. 15 3.4.3. Electronic Government Network (GovNet) ....................................................... 15 3.4.4. Government Portal .......................................................................................... 17 3.4.5. System of Financial Administration of the State (e-SISTAFE) ............................. 17 3.4.6. Programs of Community Multimedia Centers (CMCs) ....................................... 17 3.4.7. Internet in Schools ........................................................................................... 17 3.4.8. Electronic Currency Platform............................................................................ 18 3.4.9. Project of National Network of Higher Education and Research (MoRENet) ..... 18 4. Doing Business in Mozambique ....................................................................................... 19 4.1. Investment Guarantee and Tax Incentives ....................................................... …….20 4.1.1. Registration Process ......................................................................................... 20 4.2. Paying Taxes ............................................................................................................ 21 4.2.1 Types of Taxes …………………………………………………………………………………………………22 4.3. Guarantees to Investment ....................................................................................... 23 4.3.1. Investment Guarantees .................................................................................... 23 4.3.2. Investment Incentives ...................................................................................... 24 4.3.3. National and Foreign Direct Investment ........................................................... 25 4.4. Access to Land ......................................................................................................... 25 4.5. Enforcing Contracts ................................................................................................. 25 5. Telecommunication Sector Analysis ................................................................................ 27 5.1. Policy and Regulatory Framework ............................................................................ 27 5.1.1. Telecommunications Market Regulator ............................................................ 27 5.1.2. Licensing .......................................................................................................... 28 Study on Rural Communications Viability in Mozambique Page 0 Final Report, October 2017 5.1.3. Network sharing .............................................................................................. 28 5.1.4. Interconnectivity .............................................................................................. 30 5.1.5. Fair Competition .............................................................................................. 30 5.1.6. Quality of Service ............................................................................................. 31 5.1.7. Spectrum Management ................................................................................... 31 5.1.8. Telecommunications Taxes and Fees ................................................................ 32 5.1.9. Spectrum Charges ............................................................................................ 32 5.1.10. Universal Service Access Fund (USAF) .............................................................. 32 5.1.11. Consumer protection ....................................................................................... 34 5.1.12. Remove Market Barriers .................................................................................. 35 6. Market Structure ............................................................................................................. 36 6.1. Voice Market ........................................................................................................... 36 6.1.1. Fixed Market .................................................................................................... 36 6.1.2. Mobile Market ................................................................................................. 37 6.2. Broadband and Internet Market .............................................................................. 39 6.2.1. Fixed Market .................................................................................................... 39 6.2.2. Mobile Market ................................................................................................. 40 6.3. Market Revenue and Investment ............................................................................. 40 6.3.1. Revenue of Mobile Market............................................................................... 40 6.3.2. Revenue of Fixed Market ................................................................................. 40 6.3.3. Investment of Mobile Market .......................................................................... 41 6.3.4. Investment of Fixed Market ............................................................................. 41 6.4. Market Players ........................................................................................................ 42 6.5. Backbone Infrastructure .......................................................................................... 43 6.6. International Connectivity ....................................................................................... 45 6.7. Middle-Mile (Backhaul) Infrastructure ..................................................................... 47 6.8. Access Networks ...................................................................................................... 47 6.9. International Services .............................................................................................. 47 7. Merging State-Owned Operating Companies ................................................................... 48 8. Reforming the Market ..................................................................................................... 49 9. Business Opportunity ...................................................................................................... 49 9.1. Rural Area................................................................................................................ 49 9.2. Urban Area .............................................................................................................. 50 Study on Rural Communications Viability in Mozambique Page 1 Final Report, October 2017 9.3. Potential Financing and Funding Partners for Rural Telecommunications Infrastructure ...................................................................................................................... 50 10. Barriers to Investment..................................................................................................... 51 11. Conclusion and Recommendation ................................................................................... 53 11.1. Conclusion ........................................................................................................... 53 11.2. Recommendation ................................................................................................ 53 12. References ...................................................................................................................... 54 13. Annexures ....................................................................................................................... 56 13.1. Annexure I: Bureaucratic and Legal Steps to Incorporate and Register a New Firm .......... 56 13.2. Annexure II: Labour Regulation ............................................................................ 59 13.3. Annexure III: Licensing and Numbering Fees ....................................................... 60 13.4. Annexure IV: Spectrum Charges and Fee Formula ...............................................