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Saturday, 13 December 2008

A model for restructuring ZAMTEL

We have been discussing how best to deliver new capacity investments involving some element of shared infrastructure among providers. The government is asking for solutions to many of our problems, and this website is all about developing creative alternatives. I believe the model summarised by Yakima, as developed in the discussions here, is worth considering especially as directly applied to ZAMTEL. We think the model can also be extended to ZESCO and other areas where significant shared infrastructure exists. Would be interesting to hear what others think and particularly ways in which the model can be further developed:

Incremental Ownership Transfer via Consumer-Driven PPP in Increased Capacity Investments, Possible Zamtel Applications:

Step 1: Segment the present Zamtel corporation into two separate entities, one encompassing domestic telecom delivery and customer service (Zamtel-Dom), the other managing the international gateway and related long distance infrastructure (Zamtel-Int). Restructuring of Zamtel-Dom and Zamtel-Int can then be treated as separate challenges, and unique solutions devised for each. The aim of this proposed model is to provide a solution for Zamtel-Int primarily, with provisions imposed on Zamtel-Dom solely for purposes of compatibility with Ztel-Int in its new form, and identical to impositions on other domestic market participants.

Step 2: Determine an appropriate base-tariff rate to be charged to domestic corporations by Zamtel-Int for access to a certain amount of transmission capacity or bandwidth, whatever standard metric is agreeable to regulators and sector participants, which are herein referred to as "slots" solely for convenience. The tariff should be sufficient to sustain normal operations, as well as a reasonable margin for error or profit, but not both.

Step 3: Determine an appropriate minimum base-rate for investment in new or improved international gateway and related long distance infrastructure, to be collected from domestic telecoms at the same time as the tariff for each slot they obtain. Domestic telecoms will then presumably pass this cost on to customers in the form of user fees on long distance calls made. These investment tariffs will be deposited and managed in an Increased Capacity Investment Fund (ICIF) until such time as Zamtel-Int, in conjunction with regulators, determines that the accumulated amount is sufficient to undertake a project to increase long distance telecom capacity.

Step 4: Divide nominal ownership of (but not operational or policy control over) increased capacity, or "new slots", between Zamtel-Int and domestic telecoms 50-50%, with any amount determined by regulators to have been expended on avoidable or unreasonable cost overruns or other mismanagement deducted from the Zamtel-Int share only. New slots would then be allocated to domestic telecoms in direct proportion to their relative contributions to the ICIF expenditures on the project.

Step 5: Going forward, slots which are owned by domestic telecoms would be made available to them on a single-bidder, non-transferable basis, at the base-tariff and base-investment tariff rate. Should they be unwilling or unable to make use of their slots temporarily, they would revert to the general Zamtel-Int pool of slots available for auction. All slots in Zamtel-Int control would be auctioned off to the highest bidder(s), with any excess above the base-tariff being deposited in the ICIF, and credited to the domestic telecom and Zam-Int at the standard 50-50% split.


  1. Business Day is reporting that planned private sector investment in broadband infrastructure to serve the African market is likely to drop, with roughly half of projects to be canceled.

  2. Telecom experts- a question:

    What would the benefits be for maintaining a fixed line infrastructure, apart from being a conduit for ADSL and possibly for secure communications reasons? I would guess that a substantial amount of Zamtel's expenses relate to fixed line infrastructure. Is fixed line infrastructure necessary in light of mobile voice/data communication alternatives?


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