When people say PF are short-term oriented and more interested in making a quick buck at the expense of the future wellbeing of Zambia, it is decisions like trying to have five mobile operators in a small market like Zambia that prove it. On the face of it, people will be convinced that the new competition will reduce prices but things never work out like that all the time.
The more profitable the current providers are the better the service they will provide. A new entrant may take away 1million subscribers from both MTN and Airtel, and completely cripple Zamtel. We will not only witness a tariff war, but also a gradual deterioration in quality of services. With five operators, competition will squeeze profits and the operators will be forced to downsize their labour. Some operators might even pull out of Zambia bringing us back to where we were initially.
The claims by Minister of transport and communication, Brian Mushimba that market analysis indicates that five operators will be profitable must be clouded with confirmation biases. Nigeria has a population of 150 million but with 4 or 5 operators (including Etisalat, MTN, Airtel, Glo). South Africa has a population of 45 million with three operators, one of them, Cell C is even struggling to give chase to Vodacom and MTN, just like Zamtel.
Further, Government’s decision does not make business sense considering they own 100% shares in the industry lagger, Zamtel. The on-going turnaround of Zamtel will be frustrated such that Government will continue to pump money into Zamtel to keep it afloat. The move is gun shot in foot that will lose Government money. The ministry should be more interested in growing Zamtel as that will generate more money than what they would collect from the licences from two additional operators.
One thing we have to bear in mind is that voice call rates are already reducing world over, due to competition from social media platforms, streaming services and other internet based communication tools. It is interesting to see just how the market analysis took into consideration these dynamics. The important challenge the Minister should respond to is where he puts Zamtel and the money taxpayers have invested in the company, when we end up with 5 operators in a small market like ours.