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The Competition Regulatory Authority (ARC) of Angola believes that there is an “excessive” state presence in the telecommunications sector, which is an “unfavorable reality” for promoting market liberalization and discouraging investment in the sector.
In a study conducted on competition in the telecommunications sector in Angola, which Lusa had access to today, ARC identified various competitive concerns, both of a structural and legal nature.
Among the structural concerns, it highlights the high degree of direct state participation, a high level of vertical and horizontal integration in the market, barriers related to the implementation of the Electronic Communications Infrastructure Sharing Regulation, a high level of market concentration, and exclusivity agreements and bundled sales in the subscription TV segment.
Regarding legal competitive concerns, it emphasizes the management model of human resources, regulator dependence on superintendence, barriers related to the implementation of regulatory initiatives, legal limits in the TV segment, and the risk of jurisdictional conflicts between INACOM (National Institute of Communications) and ARC.
In the study covering the period from 2014 to 2021, ARC notes that despite the presence of various operators in the telecommunications market, “state participation is remarkable,” both through state-owned companies that hold shares in other sector companies, such as Unitel and Movicel.
The state is a shareholder in Movicel and Unitel through its ownership of 25% of the shares held by the National Institute of Social Security (INSS) and 50% of the shares held by Sonangol.
The Competition Regulatory Authority also highlights the prominent position of MS Telcom and Angola Telecom (state-owned companies) in the fixed telephony and fixed internet segments in the shareholder structure of Unitel and Movicel, respectively.
The fact that these companies own infrastructure, including the Last Mile, and the competition in the mobile and fixed telephony market primarily involves companies with majority state ownership are cited as factors that “hinder” competition.
“This scenario is unfavorable for sector liberalization, as it diminishes the incentive for private companies to enter the market, given that they have state-owned operators as competitors,” notes ARC.
The current scenario could have negative effects on competition, “considering that it is a capital-intensive economic activity, so state-owned companies will always have an advantage, especially in recapitalization processes.”
Furthermore, state intervention in the telecommunications market through state-owned companies and mixed-capital companies that dominate the market has the potential to distort competition, warns the regulatory authority, considering that this can put “private operators at a disadvantage.”
The Public Aid Control Department, an organ of the ARC that conducted the study, also points out that the excessive state presence in the telecommunications sector inhibits its liberalization and contradicts the principles that guided the creation of the Government’s Privatization Program (ProPriv) in Angola.
For this reason, it argues that it is necessary to ensure the reduction of the state’s direct participation in the market, especially in telecommunications, as a guiding objective of ProPriv, with the aim of limiting the emergence of monopolies, ensuring market liberalization, and consequently increasing competitiveness among companies.
“The ‘excessive’ state presence in the market constitutes an unfavorable reality for promoting market liberalization and discouraging investment in the sector,” it asserts.
“Especially because such companies have the state itself as a competitor, acting in a conflict of interest situation, simultaneously being a market operator and a regulator,” it states.
ARC also recommends to the Ministry of Telecommunications, Information Technology, and Communication, which oversees the sector, and to INACOM, as the regulator, to ensure the reduction of the state’s direct participation in telecommunications by divesting from state-owned mobile telephony companies. This is aimed at contributing to increased competitiveness among operators and fostering a culture of healthy competition.
These bodies are also advised to ensure that state-owned companies cease to be shareholders in the operator’s shareholder structure, as a way to improve the sector’s operation and encourage the entry of new private operators.
