The Telecoms Sector in Mozambique - Going with the flow

Mozambique has amongst the weakest telecommunications indicators in Sub-Saharan Africa, having less than one fixed telephone per 100 inhabitants and a relatively low mobile penetration rate. These indicators are mostly explained by a long civil war and reflect the country's GDP per capita of US$ 593 in 2013, making Mozambique one of the poorest countries in the region.

However, recent mineral resource discoveries should make Mozambique one of the largest LNG and coal exporters before the end of the decade. These discoveries created a very favorable economic outlook that should fuel the telecoms sector's growth during the next few years. Economic growth should provide additional purchasing power to the population, increasing the number of telecommunications subscribers and allowing actual subscribers to spend more money in telecommunications services.

Like it happens in most of its African peers, the mobile segment in Mozambique is the most successful segment with around 12.4 million subscribers, c. 48 subscribers per 100 inhabitants. Mobile operators benefit from the poor fixed line infrastructure and the fact that it is easier and cheaper to expand a mobile network. The mobile market should expand quickly in the coming years and end 2017 with around 18.5 million subscribers, implying 6 million net additions and a CAGR 2013-2017F of 10.5%.

Nevertheless, some challenges lie ahead for the telecoms sector, mainly to increase: (1) service coverage; (2) service affordability; and (3) competition in the wireline. The authorities' role is crucial to tackle these challenges. The approval of the new telecommunications act will be an important improvement in the country's regulatory framework. It is also necessary to have all specific regulation ready on time. Specific regulation on issues like infrastructure sharing and sharing obligations would probably be one of the best ways to boost services' coverage. At the same time such measures would decrease investment needs and costs, which would also benefit customers.