From Africa Recovery, Vol.13#4 (December 1999), page 19 (part of special feature on information technology)

Privatization under way in Africa's telecommunications

At least 17 countries have fully or partially privatized their national telecommunications company, usually after separating the postal function. Foreign investors often come from the former colonial metropolis -- Portugal Telecom in Cape Verde, Guinea-Bissau and São Tomé and Principé; and France Télécom in Central African Republic, Côte d'Ivoire, Madagascar and Senegal. One exception is Telekom Malaysia, which has invested in South Africa, Guinea and Ghana.

Usually offered guaranteed monopolies for 5-10 years, foreign investors have paid relatively high prices for their equity. European telecommunications firms are typically valued at $1,000 to $1,500 per phone line, but for its investment in Senegal's Sonatel, France Télécom paid nearly $5,000 per line.

Other options for raising capital and improving national phone services include:

-- Offering shares to employees, financial institutions and the public.

-- Revenue sharing through build-operate-transfer (BOT) in which the government contracts an investor to install and operate the service for a share in profits in the initial period.

-- Management contracts with (usually) foreign private sector firms, without transfer of ownership (for example, Cable and Wireless' contracts with Botswana and Sudan).

-- Joint ventures in a limited area of service, such as cellular networks and Internet service provision (Madagascar).

-- Sale of bonds to people on the waiting list for a telephone.

-- Sub-regional collaboration for greater economies of scale.

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