Afghanistan Roshan Progress

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Afghanistan Roshan Progress
Samir SatchuDirector Telecommunications
PolicyKabul National ICT Conference April 26,
2006
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Agenda Telecommunications Update

• GoA and Private Sector Progress since 2003
• Factors that have contributed to Growth since
  2003
• Where do we go from here?
• Factors that may constrain Growth and Limit
  Future Investment

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Afghanistan - January 2003

• 85K users
• 20K Fixed Lines
• 35K Thuraya
• 30K Mobile
• Entry barrier very high ( 400)
• Call charges high (up to 2/Min)
• Service available only in 4 cities
• Low Quality
• No Regulatory Framework

Only 3 out of every 1,000
Afghans were connected
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What has happened since January 2003?

• Introduction of Competition Roshan (2003),
  Areeba (2005)
• - 5 Mobile Operators by end 2006
• Roshan has invested approximately 200m since
  January 2003
• - Private Sector has invested over 350m into
  Afghanistan Telecommunications
• Emerging Light Touch Regulatory Framework
• - Telecom Law has been passed
• - TRB has become ATRA
• Afghan Telecom has been Corporatised
• Corporatisation is the first step towards a
  privatisation

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Afghanistan Coverage - Today
A new Roshan BTS is put on air every 3 days
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Then (January 2003) Now (2006)
Today 50 out of every 1,000 Afghans are connected
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How do we compare internationally?
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And Jobs
Direct Indirect Impact on Employment
)))
Employees
Contractors
Suppliers
Dealers
Distributors
700
1500
5000
5500
2500
)))
Roshan directly/indirectly employs over 15,000
Afghans
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Factors Contributing to Growth

• Unrelenting Demand After 30 years of Fighting,
  people want to Talk
• Access to telephony is a necessity not a luxury
• Easier to do business, access information, talk
  to your family
• Vital in an environment with limited
  infrastructure
• Competition, Competition, Competition
• The Market is Driving down Prices 5 operators
  by end 2006
• A competitive market place removes the need for
  MoC to intervene e.g. on retail pricing
• Ministry of Communications Private Sector
  Partnership
• Dialogue between GoA and Private Sector Tax
  Settlement
• MoC Policy - Not to operate but to create an
  enabling environment for operators
• Light Touch Regulation So Far..
• No intervention so far on tariffs, facilities
  sharing, coverage
• Principle that Regulator should only intervene if
  operators are abusing their position or in market
  failure situations e.g. TDF

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Where will we go from here?

• 5 Penetration 35-40 Population Coverage
  Massive Unaddressed Market for 5 operators to
  compete over
• N.b. Operators must be able to fund continued
  network expansion over the next 5 years
• Ministry of Communications 10 Year Plan
• 10 Mobile Penetration - 2008
• 30 Mobile Penetration 2013
• Industry Forecasts
• 10 Mobile Penetration will be reached in 2007
• By 2010 Mobile Penetration will be between 17
  23 (App. 4 million)
• But 30 Mobile Penetration by 2011 would not
  completely surprise us

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This will only happen IF

• Private Sector Constitutional Commitment (Article
  10 Engine of Growth) is adhered to in the
  broadest terms by the Government of Afghanistan
• Nationalisation of International Gateway will
  strangle all foreign direct investment into
  Telecommunications and other sectors MoC
  understands this
• Tax Treatment of Telecommunications Sector is
  Predictable and not Short Termist
• Over-taxation will slow down investment
• Growth in Mobile Penetration has a positive
  impact on GDP growth
• Businesses need long-term predictability on
  taxation
• Nuisance Taxes stifle all commercial activity
• Regulatory Approach must be Less is More as
  it has been so far
• Price Controls, Forced Sharing stifle investment
• Market is addressing MoCs policy objectives
• Continued Development of Investor Friendly Legal
  Environment
• Private Investment Laws etc. are investor
  friendly
• Adequate Dispute Resolution

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RoshanNazdik Shodan