Maputo — The Mozambican government on Thursday presented a bill to the country's parliament, the Assembly of the Republic, intended to liberalise fully the telecommunications market.

A law of 1999 opened the market to private initiative, and it was on this basis that a second mobile phone operator, the South African company Vodacom, set up a subsidiary in Mozambique to compete with M-Cel, the cell phone company that is currently 100 per cent owned by the public telecoms company TDM.

The new bill goes much further, and its key aim is to introduce competition in the fixed phone network.

Introducing the bill, the Deputy Minister of Transport and Communications, Antonio Fernando, said the government fully intended to privatise TDM, and end its monopoly over the fixed phone service.

Privatisation would involve finding a "strategic partner" to take a majority stake in TDM, and attract funding for expanding the network. Three years after privatisation, or by 31 December 2007, whichever comes first, TDM will lose its monopoly. In other words, the government intends to privatise TDM this year. "We believe that by 2007 TDM will have become sufficiently muscular to compete with other giants", said Fernando.

The justification for privatisation is that very large investments need to be made, and the Mozambican state cannot provide all the funding. Fernando pointed out that Mozambique has the second lowest teledensity in the region. The country has just 0.46 fixed phones per 100 inhabitants. Of all the SADC (Southern African Development Community) members, only Malawi has a lower teledensity.

Overwhelmingly, phones are an urban phenomenon. Fernando said that the 30.9 per cent of the population classified as urban is served by 99 per cent of the country's telephones. Only one per cent of phones are in the rural areas where 69.1 per cent of the population lives.

The government's target is to reach a teledensity of two telephones per 100 inhabitants by 2007. That would require investment of 1.3 billion US dollars.

"We recognise that this is an ambitious plan, but it is feasible", said Fernando. "We must adopt policies and legal instruments that promote greater investment in telecommunications, with the involvement of the private sector".

Fernando called for an "environment of trust" between the operators, the consumers and the regulatory agency, the National Communications Institute of Mozambique (INCM). The bill thus describes in great detail the structure and powers of the INCM.

The bill establishes principles for interconnection charges.

These should be based on the real costs of interconnection, and different operators should only fix different interconnection charges "if these are objectively justified".

The purpose, stressed Fernando, was to ensure that the final price charged to the consumer was "a just one".

The bill establishes that tariffs must not be discriminatory. They must be "reasonable", and they must be approved by the regulator. Operators must inform the public in advance of changes in their tariffs, by publishing them in the country's largest circulation newspaper.

Operators must also contribute to a "Universal Telecommunications Service", which will ensure that phone services are made available in areas where telecommunications cannot be expected to make a profit (i.e. much of the Mozambican countryside).

The Assembly will debate the bill next week.