Political Economy

of Internet and Mobile Phones:

Malawi

Research Coordinator: Dr. Last Moyo

Country Researcher: Rex Chapota

Political Economy of Internet and Mobile Phones: Malawi

FOREWORD
In 2010 the Department of Media Studies at the University of the Witwatersrand, with
support from the Open Society Initiative of Southern Africa (OSISA) embarked on a twoyear long project titled, ICT Policy and New Media Cultures in Southern Africa. The
research project involved a two-tiered initiative aimed at exploring the political
economy of new media industries in five Southern African countries; South Africa,
Mozambique, Malawi, Zambia and Zimbabwe. The first tier of the project entailed
detailed ICT policy reports on each of the countries, while the second tier involved
ethnographic studies on the use of ICTs by ordinary citizens, civil society and social
movements.
With a keen interest on the internet and mobile phones in particular, the research
sought to examine the extent to which forms of ownership and financing of these media
enhance or militate against universal access of citizens to these media. The focus on
universal access remained crucial to the study, given that it is seen as corollary to the
empowerment of citizens and the unleashing of their democratic and developmental
potential in social, political, and economic processes.
In a continent that is generally lagging behind in the digital age, the internet and mobile
phones are being seen as key to leapfrogging into the future. With the social uprisings of
the Middle East and North Africa, questions about the role of the internet and mobile
phones, particularly in relation to citizen empowerment, are becoming more and more
important. As such, mapping the development of these technologies in terms of
emerging ownership patterns and regulatory systems and norms becomes critical, as
these have direct implications for citizen access.
The following report is part of a series of five country reports compiled in fulfilment of
the first tier of the project. The reports specifically address questions of ownership,
financing and regulation of the specified Internet and mobile phone industries and how
this affects universal access to new media services by citizens in terms of affordability,
accessibility, and availability. Weak regulatory bodies across region are perhaps the
strongest link across all five reports. The result is ensuing problems of lack of
competition, hostile markets environments for new comers and the incumbent factor of
exorbitant tariffs rates. Despite the more common assumption of the digital divide
segregating Africa from joining the digital revolution issues of accessibility and
affordability are actually at the forefront of this challenge. The five country reports
explore this phenomenon with an overwhelmingly strong trend vindicating fragile
regulatory structures as the chief culprit. Similar trends include restrictive national ICT
policies which present unwelcome barriers to broader initiatives of universal access.

Political Economy of Internet and Mobile Phones: Malawi

TABLE OF CONTENTS
FOREWORD .............................................................................................................................................. i
TABLE OF CONTENTS............................................................................................................................... ii
LIST OF TABLES ....................................................................................................................................... iv
EXECUTIVE SUMMARY ............................................................................................................................ 1
INTRODUCTION ....................................................................................................................................... 2
1.

2.

3.

4.

5.

COUNTRY FACTS.............................................................................................................................. 3
1.1.

Political Structure .................................................................................................................. 3

1.2.

Economic Structure ............................................................................................................... 4

1.3.

Socio and Economic Setting .................................................................................................. 5

CONSTITUTION................................................................................................................................ 6
2.1.

Freedom of Expression ......................................................................................................... 6

2.2.

Policy and Institutions .......................................................................................................... 8

MEDIA AND COMMUNICATIONS LANDSCAPE .............................................................................. 10

3.1.

Print Media ........................................................................................................................... 10

3.2.

Electronic/Broadcasting Media............................................................................................. 11

3.3.

Telecommunications companies .......................................................................................... 12

3.3.1.

Telecom Networks Malawi (TNM) ................................................................................ 12

3.3.2.

Airtel .............................................................................................................................. 13

3.3.3.

G-Mobile ....................................................................................................................... 14

3.3.4.

Celcom Limited.............................................................................................................. 14

INFRASTRUCTURE ......................................................................................................................... 14
4.1.

Telecom Infrastructure ......................................................................................................... 14

4.2.

Fibre/Wireless Networks ...................................................................................................... 17

4.3.

3G and 4G Mobile Technology .............................................................................................. 17

STATUS OF INTERNET AND MOBILE PHONES ............................................................................... 18

5.1.

Status - Internet Penetration ................................................................................................ 18

5.1.1.

Access ............................................................................................................................ 18

5.1.2.

Number of Internet Service Providers .......................................................................... 18

5.2.

Status - Mobile Phones Penetration ..................................................................................... 20

5.2.1.

ii

Access ............................................................................................................................ 20

Political Economy of Internet and Mobile Phones: Malawi

6.

PRICING STRUCTURE AND COST ................................................................................................... 21

6.1.

Pricing Internet................................................................................................................... 21

6.2.

Pricing Mobile Phones........................................................................................................ 21

6.2.1.

Tariff Rates .................................................................................................................... 21

7.

POLITICAL ECONOMY PERSPECTIVES ............................................................................................ 25

8.

CONCLUSIONS AND RECOMMENDATIONS ................................................................................... 28

8.1.

Conclusions ........................................................................................................................... 28

8.2.

Recommendations ................................................................................................................ 28

REFERENCES .......................................................................................................................................... 31
LIST OF ACRONYMS ............................................................................................................................... 32

iii

Political Economy of Internet and Mobile Phones: Malawi

LIST OF TABLES
Table 1: Malawi national indicators (2010) ............................................................................................ 5
Table 2: Current newspapers on the market in Malawi ........................................................................ 10
Table 3: ICT indicators (December 2010) ............................................................................................ 15
Table 4: Telecommunication licenses ................................................................................................... 16
Table 5: Fixed line and mobile phone operators ................................................................................... 16
Table 6: Licensed ISPs.......................................................................................................................... 19
Table 7: Tariffs - Prepaid Local ............................................................................................................ 22
Table 8: Tariffs - Prepaid International................................................................................................. 22
Table 9: Tariffs - Post-paid ................................................................................................................... 23
Table 10: Tariffs - TNM ....................................................................................................................... 23
Table 11: Tariffs - Prepaid International (peak) ................................................................................... 23
Table 12: Tariffs - TNM Post-paid for national calls and SMS ............................................................ 24
Table 13: Tariffs - Talk price plans ...................................................................................................... 24

iv

Political Economy of Internet and Mobile Phones: Malawi

EXECUTIVE SUMMARY
Malawis media sector is one of the most underdeveloped on the African continent.
Despite gaining independence from British colonial rule in 1964, Malawi remained
governed by a one-party authoritarian state until the mid-nineties which ushered in
multi-party democracy. The entrenchment of media freedom into the constitution
following this unfortunately did little to improve the countrys media landscape. Despite
a seemingly democratic political climate, Malawian media under President Bingu Wa
Mutharikas administration remained a tightly regulated sphere dominated by key
players.
As one of the poorest nations in the world, Malawi faces massive socio-economic
hurdles such as food security and poverty as such the countrys ICT sector has been
sluggish in growth and way below continental developmental standards. Exacerbating
the problem further is the landlocked geographical structure of the country that
complicates modern forms of access such as the fibre-optic cable, which has for many
other African nations brought much needed respite. Internet accessibility in the region
remains an elitist privilege that predominantly serves a rich minority residing in the
capital city Lilongwe, the commercial hub of Blantyre or Mzuzu, the third-largest city.
Coupled with this are exorbitant tariff rates that remain well beyond the reach of the
vast population.
Mobile phone subscription in Malawi has shown steady growth and remains one of the
fastest growing ICT sectors in the country. Despite this consistent growth, mobile phone
tariffs are extremely high primarily as a result of a lack of competition in the industry. In
spite of four licensed mobile service providers only two, TNM and Airtel, are currently
in operation. The duopoly dominates the market, offering services at conspiratorially
similar charges, which do little to benefit end users. A lack of competition laws
instituted by regulatory body MACRA has similarly compounded the situation,
rendering Malawi the country with the highest mobile prepaid tariffs in Africa,
according to Research ICT Africa in January 2012.

Political Economy of Internet and Mobile Phones: Malawi

INTRODUCTION
This report focuses on the political economy of new ICTs in Malawi. Among other
factors, it adopts a broad but comprehensive approach to structural and institutional
questions of ownership, funding and financing (business models), and the policy and
regulation of the Internet and mobile phone networks in the country. The central issues
addressed in the study are:

What types of telecoms ownership models are prevalent in the country? How are
the observed forms of ownership enhancing universal access and fair
competition between players?

What funding and financing models do mobile networks and ISPs follow and how
do they generally balance profit maximisation with universal access?

What types of regulatory regimes are in existence and to what extent are they
independent from power?

The report also gives an overview of the entire media and communications industry.
Malawi has about 760 400 Internet users and 3 037 469 mobile subscribers, which
represent 4.5% and 27% respectively of Malawis population of about 16 million people.
In the age of convergence, telecommunications is increasingly merging with
broadcasting and print media. The new ICTs such as mobile phones and the Internet
have essentially become tools with which media produce and disseminate their content
and audiences consume media texts. Implications of access to digital media platforms by
citizens therefore have a far-reaching impact on public access to information and the
general free flow of information in society.

Political Economy of Internet and Mobile Phones: Malawi

1.

COUNTRY FACTS

1.1. Political Structure

Apart from Swaziland and Zimbabwe, most countries (including Malawi) in southern
Africa have constitutions that guarantee fundamental human liberties and media
freedoms. Most constitutions now acknowledge and recognise the value of the free flow
of information and access to information. For some countries this recognition has come
with the facilitation of citizen access to new ICTs such as computers and mobile phones
where customs duties for traders have been significantly lowered or eliminated
altogether. However, the unstable and often authoritarian political environments, in
most cases, have undermined these citizen and media freedoms. Often, in politically
volatile environments, the use of new ICTs and the media is very constrained by
draconian laws and extrajudicial tactics mostly used by the state to limit civic
participation on national issues of concern. Malawi has not been an exception in this
culture as its politics have been characterised by constant opposites of progression and
regression.
On the political front, the country was formerly known as Nyasaland, and was a British
protectorate until 1891. A 1915 uprising seeded the growth of nationalism, and the
country gained independence in 1964 under the late Dr Kamuzu Banda. After a 30-year
rule characterised by gross violation of human rights, Banda was ousted in a 1993
referendum that culminated in a multi-party democracy whereby the president is
elected by popular vote to serve a five-year term and is eligible for a second term. The
first democratic elections took place in 1994 and were won by Bakili Muluzi. The Muluzi
government lasted 10 years and was characterised by an economic malaise, falling
standards and widespread corruption. Thereafter President Bingu Wa Mutharika was
elected in 2004 and re-elected in 2009 to serve a second term. In as much as his first
term was characterised by good economic turnaround, his second term was riddled
with challenges on both the economic and political front. In 2011, there were several
national protests that sought to challenge state authoritarianism. Ironically, these
protests were allegedly organised by social movements through new digital media
platforms such as Facebook, Twitter and mobile phones. These became central in the
mobilisation and co-ordination of political action as the late President Bingu Wa

Political Economy of Internet and Mobile Phones: Malawi

Mutharikas government allegedly became very intolerant and repressive against antistate discourses.
His sudden death on 5 April 2012 resulted in Vice President Joyce Banda being sworn in
on 7 April 2012. Bandas ascension into the presidency has been seen as a watershed
moment in Malawis history as she is the first woman to lead the nation. Bandas
immediate reshuffling of cabinet, including the sacking of high-profile ministers, is part
of a series of government shake-up policies designed to revive the Malawian economy,
re-establish links with donors and place priority on the countrys dire socio-economic
sector including the pressing issue of HIV/AIDS, nutrition, disaster management and
civil service.

1.2. Economic Structure

Generally speaking, the countries with the most vibrant economies in southern Africa
tend to have plural and vibrant media and telecommunications industries. Similarly,
poor countries in the region are negatively affected at all levels especially in terms of
the availability, accessibility and affordability of qualitative telecoms services. The
economy is thus central in influencing how much media and telecommunications are
available to the citizens of a country. Malawi is ranked as one of the worlds least
developed nations (CIA World Fact Book, 2010). With more than half the population
living below the poverty line, the country faces massive socio-economic challenges.
With a GDP of 6.6% the economy is chiefly agricultural accounting for 90% of export
earnings and providing over 80% of total employment in Malawi. Agriculture
contributes 39% of GDP and takes up over 5.3 million (out of 9.4) hectares of Malawis
land mass (Malawi Government, 2010). The tobacco sector is key to the economy.
However, the food-supply chain has proved to be unreliable as natural disasters on both
extremes of the spectrum, from drought to heavy rainfall, result in thousands of tons of
food aid being required every year (BBC Country Profile, 2012). Malawis economy
depends in large part on economic assistance from the IMF, World Bank and individual
donor nations. In 2006 the country was approved for relief under the Heavily Indebted
Poor Countries (HIPC) programme (CIA World Fact Book, 2012).
Developing a market economy, improving educational facilities and combating the
serious HIV pandemic are just some of the serious challenges facing Malawis economic

Political Economy of Internet and Mobile Phones: Malawi

development. Since 2009 these challenges were further exacerbated by the shortage of
foreign exchange and fuel, both of which posed huge hindrances to the overall
productivity of the country. A 23% drop of investment in 2009 followed by a gradual
decline in 2010 has had drastic implications for the Malawian economy. Following an
unfavourable IMF report on governance, various donors suspended their funding in
2011. Below in Table 1 are some of the major indicators for Malawi as of 2010.
Table 1: Malawi national indicators (2010)

Indicator

Current status

Population living below US$1.00 per person per day

39%

Inflation rate

7.5%

Telephone lines subscribers per 100 people

2.3%

Cellular subscribers per 100 people

21%

Internet users per 1000 people

10.5%

Source: Adapted from Ministry of Economic Planning and Development (2010), 2010 Malawi Millennium
Development Goals Report, CIA World Factbook (2012)

Given the high unemployment rate in the country and the population living below US$1
a day, accessibility to new ICTs for citizens and government may not be of high priority
compared to other pressing requirements in the areas of food, health, clean water and
sanitation. Consequently, it is not surprising that apart from Swaziland, Malawi has one
of the lowest national rates of mobile phone subscribers and Internet users per 100
people.

1.3. Socio and Economic Setting

Although Malawi became independent from British colonial rule in 1964, the country
remained under authoritarian one-party state rule for almost three decades until the
mid-nineties when multiparty democracy began. The country is currently a
constitutional democracy with freedom of expression and freedom of the press
expressly guaranteed. Malawi has a total population of about 16 million, and only 20%
of Malawians live in urban areas while the rest are based in rural areas. As is the case
with most southern African countries, telecommunications and mass communications
in Malawi are mostly concentrated in urban areas such as Lilongwe (capital city),

Political Economy of Internet and Mobile Phones: Malawi

Blantyre (commercial capital), Mzuzu and Zomba, while rural areas tend to be
marginalised. However, compared to newspapers and television, there has been a great
improvement in mobile phone and radio access in rural areas over the years. The two
are increasingly playing a significant role in the free flow of information and
information access in rural areas where the bulk of Malawis population resides.
Literacy, a cornerstone to other technological literacies that underpin active citizenship
in the digital age, is one of the lowest in the region at only 63%. Although Malawi has
only two official languages (English and Chewa), the country has many other languages,
namely Nyanja, Tumbukae, Yao, Lomwe, Sena, Tonga, Ngoni and Ngonde. Language is
very important in the question of access and use of most of the ICTs. This has a domino
effect on how the general public participates in issues of public concern through the
mainstream media using new ICTs such as the Internet and mobile phones.

2.

CONSTITUTION

This section looks at the constitutional landscape of the media in Malawi through an
analysis of the guiding policies and legislations currently institutionalised in the
country. These include the constitution, the communication policy and the
communication act. In addition, this section endeavours to provide an overview of the
media landscape in the country by accounting for the nations print and electronic
sector and its degree of policy and regulation. In a period of media convergence,
telecommunications, broadcasting and the print media are highly integrated. The access
to information and popular participation in the media are always intricately tied to
levels of access and use to new ICTs by the public and the media themselves.

2.1. Freedom of Expression

The constitution of Malawi recognises the presence of media freedom under section 3437. Section 34 under Freedom of opinion stipulates that
every person shall have the right to freedom of opinion, including the right to
hold opinions without interference to hold, receive and impart opinions. Section
35 on freedom of expression recognises that every person shall have the right to
freedom of expression. Section 36 regarding freedom of the press, says that the

Political Economy of Internet and Mobile Phones: Malawi

press shall have the right to report and publish freely, within Malawi and
abroad, and to be accorded the fullest possible facilities for access to public
information (Constitution of Malawi, 1994).
Lastly section 37 under access to information sanctions that,
Subject to any Act of Parliament, every person shall have the right of access to
information held by the State or any of its organs at any level of Government in
so far as such information is required for the exercise of his rights (Constitution
of Malawi, 1994).
However, (Chirwa et al 2001: 98), noted that
although freedom of expression and other freedoms related to media are
guaranteed in the constitution, journalists cannot be said to be free from both
official and unofficial intimidation and harassment that takes the form of abuse
of the laws of sedition and insulting the president among others.
In September 2010, the ex-president Bingu Wa Mutharika issued threats that he would
clamp down on any media house that is critical of his government, which the National
Media Institute of Southern Africa (NAMISA) condemned during a press release on the
state of the media1 .
Apart from political interference in the media, there are numerous contradictory pieces
of legislation that are seen as a massive hurdle to media freedom in Malawi. For
example, the most glaring example is the Penal Code. Sections 200 and 202 of the Penal
Code criminalise libel stating that:
Any person who, by print, writing, painting, effigy or by means otherwise than
solely by gestures, spoken words or other sounds, unlawfully publishes any
defamatory matter concerning another person, with the intent to defame that
other person, shall be guilty of misdemeanour termed libel (African Media
Barometer, 2010)

http://www.mw.misa.org/index.php?option=com_content&view=article&id=79:misa-malawi-statement-onthe-state-of-media-freedom-and-freedom-of-expression-in-malawi. Retrieved on 13 September 2011

Political Economy of Internet and Mobile Phones: Malawi

Currently there has been an outcry on the amended section 46 of the Penal Code that
was institutionalised in 2011. The amendment permits government officials to ban
publications that are deemed unfavourable under the banner of public interest. The
amended section reads:
If the Minister has reasonable grounds to believe that the publication or
importation of any publication would be contrary to the public interest, he may
by order published in the Gazette, prohibit the publication or importation of such
publication (Chikunkhuzeni, 2011).
The section provides a huge hurdle for media workers and journalists in particular and
appears in stark contrast to section 36 of the constitution, which enshrines journalistic
freedom as detailed earlier. Since signed in by the late President Bingu Wa Mutharika,
the amendment has been hotly contested and, following threats by donors to withdraw
funding, the legislation has been referred to the Law Commission pending further
consultation. While the referral has been welcomed as a forward-thinking initiative
towards law reform, positive feedback remains unlikely. Institutional biases are likely to
stunt any progressive reforms to the act along with long-winded consultation processes
that eventually fade into the background away from public agenda (Chikunkhuzeni,
2011). Furthermore the consultation process on media legislation is limited to key
players and stakeholders which rarely engage the general populace (African Media
Barometer, 2010). While the Malawian constitution advocates media freedom at various
points, contradictory amendments and laws seriously compromise the potency of the
constitution. Media within the country remains a contested terrain and attempts to
control the media are blatant. The year 2011 was particularly stifling for the media,
facilitated by a hostile legislature. Selective enforcement of the law, along with the
arrest-and-drop-charges tactic, are just some of the ways in which the Malawian
government has managed to harass journalists and control media output
(Chikunkhuzeni, 2011).

2.2. Policy and Institutions

The telecommunications market sector is regulated by a number of regulatory
frameworks that include the National ICT Policy of 2003, the Rural Telecommunications

Political Economy of Internet and Mobile Phones: Malawi

Policy of 2002, the Malawi Communications Act of 1998 and the Communications Sector
Policy Statement of 1998.
The National ICT Policy, 2003, is aimed at guiding the utilisation and development of
ICT for socio-economic development and minimising the digital divide. The Rural
Telecommunications Policy, 2002, outlines the plan for the Malawian government to
provide basic telecommunication services to rural and underserved areas which are
deemed unprofitable areas in which to build and operate networks. The major
initiatives under this policy have been establishment of the Rural Telecommunication
Forum (RTF) and a Rural Telecommunication Development Fund (RTDF). The Malawi
Communications Act of 1998 provides the framework for the regulation and provision
of services in the communications sector. The Communications Sector Policy Statement
outlines the national policy for the communication sector which is broadly defined as
encompassing broadcasting, telecommunications and postal services. This policy is
what was provided for in the formation of the regulatory authority Malawi
Communications Regulatory Authority (MACRA).
MACRA was established following the enactment of the Malawi Communications Act of
1998. Its objectives are to supervise and regulate communication services and to
promote efficiency and competition between operators in this sector for the good of the
citizens of Malawi (MACRA, 2005). MACRA is headed by the Director General who is
appointed by the board. The board is appointed by the President. The institution has
directorates that are headed up by a director. The major directorates are
telecommunications development, frequency management, finance and administration,
legal and broadcasting.
MACRA is responsible for issuing licenses under the telecommunication sector. Licences
are classified as either general licenses or individual licenses. The individual license
class includes fixed telephone lines, cellular mobile operators and international
connection services. General licenses include radio and paging services, Internet service
providers, value added services and VSAT operators.

Political Economy of Internet and Mobile Phones: Malawi

3.

MEDIA AND COMMUNICATIONS LANDSCAPE

3.1. Print Media

Despite the mushrooming of various newspapers at the dawn of multi-party politics in
1994, Malawis print media sector remains concentrated in ownership and dominated
by titles from the two biggest publishers, Nation Publications Limited (NPL) and
Blantyre Newspapers Limited (BNL). Sky News, a publication specialising in political
characters, is a new addition to the industry and has links to the ruling Democratic
Peoples Party (DPP). The two biggest publishers have a circulation of 10 to 18
thousand copies, a stark signifier of the elitist nature of print media in the country. With
massive socio-economic hurdles such as food security challenging the majority of
Malawian people, newspapers remain a luxury of the rich. Rising from MWK120 (about
US$0.73) in 2010 to MWK200 (about US$ 1.22) in 2011, daily newspapers face constant
survival threats exacerbated by fuel and water shortages, power outages and a lack of
foreign exchange. Contributing to an already low-market size as a result of a general
low-income status is the switching to online media phenomenon which consumers view
as a free source of news and information (Chikunkhuzeni, 2011).
Table 2: Current newspapers on the market in Malawi

Name of newspaper

Frequency of publication

Ownership

Daily Nation

MondayFriday

Nation Publications Limited

Weekend Nation

Saturdays

Nation Publications Limited

Sunday Nation

Sundays

Nation Publications Limited

Daily Times

MondayFriday

Blantyre Print and Packaging

Malawi News

Saturday

Blantyre Print and Packaging

Sunday Times

Sundays

Blantyre Print and Packaging

Weekend Times

Fridays

Blantyre Print and Packaging

Guardian

Wednesdays

Guardian Publications Limited

The Malawi newspaper industry is therefore characterised by a lack of diversity, and

this impacts popular participation in the media. Although most of these newspapers are
online, public access is limited by the digital divide, especially geographically and

10

Political Economy of Internet and Mobile Phones: Malawi

economically, as most people in rural and urban areas can barely afford home access to
the Internet. The growth in mobile Internet has a potential to bridge this divide, but
access and use of this facility by the public is not very consistent.

3.2. Electronic/Broadcasting Media

Radio is the cheapest media form accessible in Malawi. There are 23 radio stations, six
of which are privately owned commercial stations. Radio One and Radio Two are
national networks run by state broadcaster Malawi Broadcasting Corporation (MBC).
The government-controlled MBC still dominates radio broadcasting in Malawi which,
according to the Communications Act of 1998, must operate without political bias and
be independent of any political party. It must support the democratic process, refrain
from broadcasting any matter expressing its own opinion on current affairs, provide
balanced election coverage, and have regard for the public interest2. The most popular
private commercial stations are Capital Radio, FM 101, Star Radio and Zodiac
Broadcasting Corporation. However, huge disparities in access are of real concern.
While some parts of the country can receive up to seven stations, remote parts of
Malawi such as Nsanje in the south have no access to radio, creating a void in local news
and information (African Media Barometer, 2010).
Television broadcasting in Malawi is also dominated by the national television station
run by the state-controlled Malawi Broadcasting Corporation (MBC TV) and two
religious channels, Calvary Family Television and All for Jesus Television3. A very small
percentage of the population subscribe to satellite DSTV. The national television station
in the country, the state-run MBC, is a public broadcaster. Its goal is to foster unity and
development and to provide civic education and information. It must support the
democratic process, refrain from broadcasting any matter expressing its own opinion
on current affairs, provide balanced election coverage and have regard for the public
interest4. The MBC is governed by a board of six members and the Secretary of
Information who serves as an ex-officio member and also sits on the board of MACRA.
The President is responsible for appointing the chairperson of the board and the Public
2

http://www.pressreference.com/Ky-Ma/Malawi.html

http://www.pressreference.com/Ky-Ma/Malawi.html

http://www.pressreference.com/Ky-Ma/Malawi.html

11

Political Economy of Internet and Mobile Phones: Malawi

Appointments Commission (PAC) is responsible for selecting the other board members.
However, the PAC has continually come under criticism for being a puppet body that
merely officiates the decisions of the Presidency.
All new networks that wish to establish radio and television stations have to get a
license from MACRA, which is responsible for regulating the provision of broadcasting,
licensing of broadcasting providers and planning and allocating the use of the frequency
spectrum. MACRA has the discretion to limit foreign ownership of companies receiving
licenses and to limit the proportion of airtime devoted to advertising, provided that
such limitations are applied equitably. MACRAs role as the broadcasting license issuer
has been criticised and charged with allegations of censorship as non-governmental
organisations, religious groups and other bodies struggle to obtain licenses (African
Media Barometer, 2010). MACRA has issued television broadcasting licences to four
new television stations namely Galaxy TV, African Bible College (ABC), Channel for All
Nations (CAN) and Gateway TV. Since then media reports have alleged that Galaxy
belongs to ex-President Bingu Wa Mutharikas family. Eight new radio broadcasting
licenses were granted out of a total of 30 applicants. These included Maziko Radio,
Mulhako Radio, Galaxy Radio and Usisya Community Radio. The awarding of a license to
the Mulhako group in particular has been received with increased scepticism as
Mulhako wa aLhomwe, an ethnic grouping for the Lhomwe tribe, was a strong
supporter of President Wa Mutharika. Unsuccessful license applicants Zodiac
Broadcasting Station and Joy Radio, owned by former president Bakili Muluzi, have
fuelled speculation that authorities do not grant licences to applicants of rival factions
or bodies who pose a substantial influential threat (Chikunkhuzeni, 2011).

3.3. Telecommunications companies

3.3.1.

Telecom Networks Malawi (TNM)

TNM is the first mobile operator in Malawi. It was established in 1995 as a joint venture
between Telekom Malaysia (60%) and Malawi Telecommunications Limited (MTL
40%). TNM started operating in January 1996 and was a pioneer in southern Africa as
Malawi became the second country and third operator to introduce mobile telephony in
the region after South Africas Vodacom and MTN, who launched services six months

12

Political Economy of Internet and Mobile Phones: Malawi

earlier. In April 2007 Telekom Malaysia sold its 60% majority stake in TNM to MTL
which owned the remaining 40% for 16 million USD. Although Telekom Malaysia
initially struck a deal with Econet Wireless for the sale, MTL successfully appealed
against the sale citing contract clauses privileging MTL as the first option for
prospective buyers. In 2008 TNM listed on the Malawi Stock Exchange and is now a
wholly Malawian owned company with the following shareholding: Malawi
Telecommunications Limited (MTL) 44.44%, Livingston Holdings Telecom Ltd 12.92%,
Press Corporation Limited 10.46%, Old Mutual 10.46%, Public and other 21.72%.
Geographically TNM network covers over 74% of Malawi. TNM operates 3.5G
generation network enabling advanced high-speed broadband multimedia services in
addition to GSM/GPRS/EDGE networks. TNM offers a comprehensive range of pre-paid
and post-paid services; these include voice and data connectivity. TNM has been a
pioneer of many services in Malawi, and became the first mobile operator in Malawi to
launch 3.5G broadband services offering cutting-edge services such as video calls, video
and music streaming, and high-speed wireless Internet access services5.
3.3.2.

Airtel

Airtel Malawi is Malawis second mobile service provider. It was awarded a mobile
license in 1999 and was launched in September 2000. The company traded as Celtel
until August 2008 whereupon the name was changed to Zain. In 2010, Zain sold its
African operations to Bharti Airtel for US$10.7 billion. The rebranding from Zain Malawi
to Airtel was officially announced on Tuesday, 24 November 2010, with plans of
investing

over

MWK14

billion

(around

US$100

million)

to

improve

the

telecommunications network in the country for the next three years6. Airtel is the only
service provider in Malawi that offers mobile phone booths. Bharti Airtel is a leading
Indian telecommunications service provider with operations spread over 17 countries
of Africa, Sri Lanka and Bangladesh. The companys chairman and managing director,
Sunil Bharti Mittal owns a majority shareholding in the company.

http://www.tnm.co.mw/companyprofile.html. Retrieved on 13 September 2011.

http://www.mw.misa.org/index.php?option=com_content&view=article&id=86:mobile-phone-companyzain-malawi-switches-to-bharti-airtel. Retrieved on 13 September 2011.

13

Political Economy of Internet and Mobile Phones: Malawi

3.3.3.

G-Mobile

G-Mobile is Malawis third mobile network that was awarded a mobile license in 2008.
Beryl Telecoms, a Johannesburg-based telecommunications company, owns a majority
stake in G-Mobile. Private equity investor Musa Capital, who owns 50% of Beryl
Telecoms, invested about US$30m into G-Mobile. Beryl Telecom has a core business
focus on the distribution of airtime in African countries such as Zimbabwe, Burundi and
Malawi. Following Beryl Telecoms successful tender for G-Mobile to MACRA in 2008,
Telkom Managed Services - a division of Telkom South Africa - was roped in to manage
G-Mobile. Peter Davies, CEO of G-Mobile, noted: The companys goal is to establish a
high-quality service to distinguish it from its competitors. However, since being
licensed G-Mobile failed to meet three roll-out dates set out by MACRA and, in May
2010, MACRA fined G-Mobile US$6.9m for the failure to deploy the network. On 20
September 2010, MACRA revoked G-Mobiles license, an action G-Mobile appealed
against at the high court in Zomba, Eastern Malawi. The court granted the company an
injunction preventing MACRA from revoking its license on the grounds that MACRA had
acted in contempt of court since the fine was still undergoing judicial review. To date GMobile has failed to commence operations in Malawi.
3.3.4.

Celcom Limited

Celcom Limited, Malawis fourth mobile network was awarded a dual fixed and mobile
telephony licence by MACRA in May 2011. The network plans to commence services
before the October 2012 launch deadlines set out by MACRA. Celcom is 100% owned by
one of Malawis business conglomerates, the Mulli Brothers. The Mulli Brothers are one
of Malawis largest business corporations with strong ties to former President Wa
Mutharikas administration.

4.

INFRASTRUCTURE

4.1. Telecom Infrastructure

Generally, the ICT infrastructure is regarded as poor with a ranking of 136 on mobile
Internet subscription, 131 on Internet bandwidth, 126 on Internet in schools and 123
Competitiveness Index (African Development Bank Group, 2010). However, the
telecommunications sector has undergone a number of reforms in recent time. As

14

Political Economy of Internet and Mobile Phones: Malawi

already alluded to, the Malawi Posts and Telecommunications Corporation (MPTC) used
to be a department in the Ministry of Information until 1995 when it was converted into
a body corporate headed by the Postmaster General. The conversion was necessitated
by the loan conditions set out by the Africa Development Bank (Clarke et al, 2003). In
August 1998, the Ministry of Information issued the communications sector policy that
set the stage for the enactment of the Malawi Communications Act (1998) that ushered
in MACRA, the establishment of an independent regulator.
The new act led to the restructuring of the MPTC into two new entities of MACRA itself,
Malawi Telecommunications Limited and Malawi Posts Corporation (afrISPA, 2005).
Since then the current telecommunications infrastructure in the country is regulated by
MACRA and has been growing in the last few years though penetration rates in all
sectors of the telecommunications market are still well below regional averages
(Malawi Telecommunication Study, 2010). According to Wetts, an independent
Malawian owned engineering consultancy firm, there has been a steady increase in the
connections of both mobile and fixed subscribers between 2006 and 2010 from 500 000
to 3 million subscribers, while the teledensity has also increased from 5 to 15 in the
same period. It is currently estimated that Internet subscribers increased from around
60 000 to just over 140 000 between 2006 and 2009 with ICT contribution to the GDP
being from 2.5% in 2007 to 4.5% in 2010.
Table 3: ICT indicators (December 2010)

Parameter

Statistical indicator

Teledensity

21.92%

Fixed telephone subscribers

152 108

Fixed teledensity

1.05%

Mobile subscribers

3,037,469

Mobile teledensity

20.87%

Internet subscribers

305, 000

Internet teledensity

2.26%

Population with localities of public Internet access point

<0.5%

Population covered by mobile signal

84%
Source: MACRA, 2011

15

Political Economy of Internet and Mobile Phones: Malawi

Some of the major initiatives under way in the telecoms sector include rolling out
terrestrial fibre from Lilongwe to a landing point in Tanzania, the establishment of a
virtual landing point in Lilongwe and the establishment of Internet points of presence in
rural areas of Malawi.
Some of the challenges faced by the sector include challenging regulators decisions in
court, the high cost of telecom services in the country due to a low level of competition
and the cost of doing business, the unavailability of ICT infrastructure in most of the
rural parts and the need for clarity in the roles of MACRA and the parent ministry
(WETTS, 2011). Other challenges include private mobile radios, the renewal of licenses
and the issue of spectrum management where pirate radios just pick up any wave band
issued to licensed ICT operators.
Table 4: Telecommunication licenses

Category

Licenses to date

Fixed line services

Mobile services

Carrier of carriers

International gateway

Internet service provision

12 operational

Broadband wireless

VSAT

154
Source: Source MACRA, 2011

As indicated in the above table, the telecommunications industry in Malawi is fairly

diverse in terms of the structure of ownership. MACRA has licensed two fixed telephone
line services (Malawi Telecommunications Limited and Access Limited), four operators
for mobile phones (Airtel, Telecoms Malawi Limited, G Mobile and Celcom), one carrier
of carrier (Electricity Supply Commission of Malawi-ESCOM) and four international
gateway operators (MTL, TNM, Airtel and MAREN).
Table 5: Fixed line and mobile phone operators

Operator

16

Political Economy of Internet and Mobile Phones: Malawi

Malawi Telecommunications Limited

Access Communications Limited (ACL)
Airtel
Telecom Networks Malawi (TNM)
G-Mobile
Celcom Limited

4.2. Fibre/Wireless Networks

Optic fibre connection is one way of modernising the ICT industry, more especially in
making the Internet available around the world. In Malawi a number of companies have
started developing such infrastructure, led by MTL and ESCOM. According to MACRA
(2010) MTL has invested about US$50 million in its fibre-optic cable network project
that will see the country enjoying a bandwidth of 10 gigabytes per second. ESCOM fibre
cables run on power lines where one fibre cable operates between Blantyre and
Lilongwe. Another cable is connected to Mozambique and terminated in Maputo, where
implementation is under way. The ESCOM portion will be terminated at Zobue and then
get connected to TDM fibre up to Maputo. MTL has underground fibre cables running
between Blantyre and Lilongwe; however they are suffering because of vandalism.
Plans are currently under way to link the major cities of Blantyre and Lilongwe with
fibre cable. There is now a leasing arrangement in place to lease capacity on ESCOM
fibre due to its reliability as the MTL cable gets vandalised quite often because it is
underground. Intercity fibre leasing between Lilongwe and Blantyre was established in
2011. In early 2012 MTL product manager Esther Masi told Business Times that the
links have enabled MTL to provide good quality voice and Internet services to
customers. Plans are currently under way to lay another fibre cable between Lilongwe
and the Mchinji border to link with Zambia. The cable will terminate in Dar es Salaam,
completing a ring network topology to the submarine cable in the Indian Ocean.

4.3. 3G and 4G Mobile Technology

Airtel was the first network to introduce 3G services in Malawi in 2010. The company
was awarded a 3G license in November 2009 after prompting discussions with MARCA

17

Political Economy of Internet and Mobile Phones: Malawi

in 2006. Fellow competitor TNM followed suit shortly after, and now also offers 3G
services to its customers. At the moment 3G services are concentrated in major towns
with plans to cover wider areas. The service has promised to improve quality, cost
efficiency and speed.

5.

STATUS OF INTERNET AND MOBILE PHONES

5.1. Status - Internet Penetration

5.1.1.

Access

Internet penetration rate in Malawi is 4.60%. In 2010 Malawi registered 716 400
Internet users. The Internet sector is competitive with 23 licensed ISPs (MACRA, 2011).
There is limited availability and high costs of international bandwidth, which has held
back growth and kept prices high. Several ISPs are rolling out WiMAX wireless
broadband networks, and the CDMA2000 networks of MTL and ACL support broadband
speeds with the EV-DO technology being used. MACRA is responsible for issuing ISP
licenses. Prospective service providers are required to complete an Invitation to Apply
(ITA) for a license to provide Fixed Public Telecommunications Services in Malawi. A
non-refundable application fee of MWK50 000.00 is required for the application. Once
licensed, ISPs in Malawi pay an annual license fee of $1 000 plus 5% of net operating
profit. An annual license renewal fee is also payable, the amount of which is determined
on or before the renewal date. Malawi Internet Service Providers Association (MISPA)
is an independent voluntary association dedicated to serving the interests of ISPs in the
country whose mission is to provide a non-profit forum in which Internet Service
Providers can address issues of common interest and interface with industry
stakeholders so that end-users receive world-class service and industry participants
earn a fair return on their investments. (MISPA, 2011).

5.1.2.

Number of Internet Service Providers

MalawiNet is the largest Internet service provider in the country since establishment in
1997. It was the first commercial ISP to operate in Malawi. The companys shareholding
is 64% US Comnet and 36% Malawi Telecom Ltd. SkyBand began operations in July
2000. It was the first ISP to offer wireless broadband Internet services in Malawi in May

18

Political Economy of Internet and Mobile Phones: Malawi

2001. In January 2005 Skyband merged with Laser Group to consolidate services in
Lilongwe.
Table 6: Licensed ISPs

No.

Operators name

Licence number

1.

Skyband

00012

2.

Computer Land

00015

3.

Epsilon & Omega

00016

4.

MalawiNet Limited

00017

5.

Malawi SDNP

00023

6.

NCR Gestetner

00049

7.

Standard Bank

00129

8.

Globe Internet Malawi Ltd

00161

9.

Burco Electronics Ltd

09283

10.

Broadband Internet (PTY) Ltd

09596

11.

Malswitch (Reserve Bank of Malawi)

10156

12.

Commuteck Limited

10637

13.

Computech Business Services Limited

10638

14.

Malawi Telecommunications Limited (MTL)

10793

15.

Vital Internet Limited

10883

16.

Foris Telecom (FTM) Limited

10913

17.

Datacom.com

10939

18.

Telnet Communications dotcom

10959

19.

Morse Communications Ltd

10963

20.

Broadmax

10972

21.

Ultinets

10975

22.

Tonse Solutions Ltd

11020

23.

Computer Automation

Affordability remains the greatest challenge to Internet accessibility and penetration in

Malawi. With a connection charge of US$3 000 per megabyte, Malawis connection
charges remain the highest in the region, with other African countries like Uganda and

19

Political Economy of Internet and Mobile Phones: Malawi

Kenya paying only US$400. Malawis exorbitant Internet tariffs are said to be 750%
higher than neighbouring countries. The high tariffs are largely due to poor electrical
infrastructures that are not conducive to affordability. However, Internet costs are
currently on the decline and, while still comparatively high, they have improved when
compared with previous years. The presence of the optical fibre cable holds huge
promise for Internet affordability in the country. The optical fibre backbone already
established in parts of Malawi has begun yielding results as tariff rates are gradually
declining. Once the entire project is complete, linking Malawi to Zambia, Tanzania,
Mozambique and South Africa, Internet rates are likely to drop drastically. This drop in
Internet rates is highly probable as the cable links will provide a means of combating
Malawis greatest obstacle to interconnectivity, which is being landlocked.

5.2. Status - Mobile Phones Penetration

5.2.1.

Access

In 2011, Malawis mobile penetration was rated as 24%, less than half of the African
average. Both G-Mobile and Celecom Limited harbour great growth potential for the
industry since they can enable the market to move beyond the duopoly currently held
by Bharti-Airtel and Telecom Networks Malawi (TNM). Malawi mobile market
generates over US$200m per annum. In the last three years, the market has grown
exponentially because of the low cost of handsets which has led to more customer
acquisitions.
The phone prices range from less than MWK3 500 ($25) up to greater than MWK75 000
($497). There are also other brands from China featuring fake models such as Nokia,
Samsung, Blackberry and I-phone. In recent years, there has also been an influx of smart
phones in the Malawi mobile market such as Blackberry, Nokia N-series and E-series,
Samsung and I-phone. These remain mostly status phones for the Malawian elite.

20

Political Economy of Internet and Mobile Phones: Malawi

6.

PRICING STRUCTURE AND COST

6.1. Pricing Internet

Across the world, mobile networks as businesses tend to be motivated by profit
maximisation and not universal access. This applies equally to private players and stateowned monopolies that usually compete at the level of infrastructure and service
provision. Private players tend to be less motivated to build infrastructure, preferring
instead to rent the state-owned backbone. This tends to raise the cost of service usage
because the costs incurred from the infrastructure providers are usually passed on to
the consumers.
In recent years, mobile Internet has increasingly become a very popular product across
the board. As the mobile networks compete, prices are increasingly becoming affordable
for a significant minority in the country although there are still many people who are
cut off by the economic divide due to high poverty levels in the country.

6.2. Pricing Mobile Phones

6.2.1.

Tariff Rates

The Malawian experience in terms of infrastructure and service provision is not

radically different from global and regional trends. MTL owns most of the key
infrastructure in the inter-network connections. The two main mobile networks in
Malawi, Airtel and TNM provide a range of mobile products to consumers. Both have the
following products available to the public: post-paid (contract), prepaid (pay as you go),
SMS, Internet (3G Broadband), money transfers, roaming and I-tunes. The most popular
product is the pre-paid, which is a mass product targeting ordinary Malawians. The
contract is targeted more at the niche market of the middle and upper classes that have
a stable income.
Service charges are categorised on the time frames of peak (7am-10pm) and off-peak
(10pm-7am). Although MACRA regulates the pricing, Airtel and TNM compete for the
market and offer slightly different prices as part of their pricing strategy. One of the
most popular products is the Call Me Back which is targeted at poor people. This is

21

Political Economy of Internet and Mobile Phones: Malawi

based on a social network concept where people can call each other depending on who
has air time at a given moment. Mobile advertisers also use this facility where social
services such as HIV testing, etc. can be sent out with the call-me-back message. Below
are the rates for all the networks:
Table 7: Tariffs - Prepaid Local

Peak (7am10pm)
Cost/sec

Off peak (10pm7am)

Cost/min

Cost/sec

Cost/min

Airtel

83t

MWK50

37t

MWK22

Other

93t

MWK56

47t

MWK28

SMS local
Data

MWK10.25

MWK10.25

MWK11 per 1MB

The pricing strategy is based on the peak and off-peak tariffs. This means that prices for
voice calls and SMS are relatively low for off-peak hours. However, call charges
generally remain exorbitantly high for ordinary people to use mobile phones
productively within a converging media environmental context. This means that people
are able to buy airtime and some data bundles, but not in a way that allows them to
make calls to the media and participate in issues of public interest.
Table 8: Tariffs - Prepaid International

Per second
SADC

Per minute

1.7t

MWK102.52

3.75t

MWK225.54

ROW

4.1t

MWK 246.05

SMS

24.6t

MWK 24.6

Other destinations

SADC countries include: Angola, Botswana, DRC, Lesotho, Madagascar, Mauritius,

Mozambique, Namibia, Seychelles, South Africa, Swaziland, Tanzania, Zambia, Zimbabwe

Whereas the global pricing strategies on prepaid tend to be based on a strategy of

lower user schemes (raising usage and lowering fixed charges such as rental and
connections), Malawi and most countries in the region tend to use a high use and high

22

Political Economy of Internet and Mobile Phones: Malawi

fixed strategy where prepaid consumers pay high prices for voice calls and textmessaging. The monolithic telecommunications structures exacerbate the plight of the
prepaid users as there are not many players.
Table 9: Tariffs - Post-paid

Cost/min
Airtel

MWK 30.76

Other

MWK 38.96

Fixed local

MWK 38.96

SMS

MWK 10.25

The post-paid category is also equally prohibitive. However, this product is targeted
more to a fairly affluent niche market where affordability of service is not so much on an
impediment to use. It is however true that the lower end of the users in this category
use the services sparingly as they are still considered expensive.
Table 10: Tariffs - TNM

Peak (7am10pm)

Off peak (10pm7am)

TNM

77t/sec

MWK 42.20/min

36t/sec

MWK 22/min

Others

90t/sec

MWK 54/min

45t/sec

MWK 27/min

SMS

MWK 10

MWK 10

On the surface, one can think that the two mobile networks use competitive pricing as a
strategy although the differences are not that big. Because of a monolithic structure,
collusion and cartelling in prices of products is more than likely.
Table 11: Tariffs - Prepaid International (peak)

Per second (peak)

Per minute (off peak)

SADC and COMESA

MWK 1.25

MWK 75

G20

MWK 1.80

MWK 180

SMS

MWK 15

MWK 15

23

Political Economy of Internet and Mobile Phones: Malawi

Table 12: Tariffs - TNM Post-paid for national calls and SMS

Anytime, any day

Rates in Kwacha

Calls to TNM and other local networks (per second)

MWK 0.46

SMS local TNM (per message sent)

MWK 10.00

SMS local other network (per message sent)

MWK 15.00

The International rates for TNM are relatively higher compared to Airtel. Calls to the
SADC region countries are at MWK 1.35 per sec while to G20 countries they cost 65t
more. SMS is MWK 15 while data (per kb) is MWK 0.01.
TNM also offers post-paid customers two contract price plan options which they may
choose from, Business price plan and Talk price plan. The Talk price plan has four
variations which include national minutes, 100 free SMSes and 100 free MBs for
Internet usage. Both the Business and Talk price plans are independent of peak and offpeak hours.
TNM also uses the Airtime Option pricing strategy, where users have an option of
acquiring handsets that come with airtime. This strategy groups airtime, text-messaging
charges and fixed charges. For example, the following table shows a Talk 100 plan,
where users get corresponding minutes such as 100 minutes of calling and 100 text
messages.
Table 13: Tariffs - Talk price plans

Price plan
Talk 100

Monthly fixed
fee
MWK 3.800.00

Inclusive
minutes
100

Inclusive
SMS
100

Inclusive
data (MB)
100

Out of
bundle/min
MWK 28.00

Talk 200

MWK 6.000.00

200

100

100

MWK 28.00

Talk 500

MWK 13.000.00

500

100

100

MWK 28.00

Talk 1000

MWK 24.000.00

1.000

100

100

MWK 28.00

Compared to South Africa, Malawi is weak on the Discount pricing strategy as the two
players are not under pressure because of lack of competition.

24

Political Economy of Internet and Mobile Phones: Malawi

7.

POLITICAL ECONOMY PERSPECTIVES

Malawis ICT penetration rates remain one of the lowest on the African continent
primarily due to a constellation of factors such as the countrys weak and ailing
economy and bad governance. With the more pressing concerns of food security and
healthcare, the countrys ICT sector has understandably been sluggish in growth
compared to its African neighbours. The countrys new ICT industry faces a number of
problems at ownership, funding and regulatory levels. These problems have affected the
general free flow of information and access to information by citizens, including their
participation in the mainstream media. In an increasingly convergent environment, new
ICTs such as the Internet and mobile phones offer the means by which popular
participation in the media and public policy is achieved.
In terms of ownership, the mobile phone industry is concentrated mainly in the hands
of private and state monopolies. This is the general trend in the region where the state
is a major player, especially in infrastructure and service provision, and private players
are mostly foreign owned, with compensatory shareholding from the locals. Malawis
mobile phone industry is one of the starkest signifiers of an uncompetitive market
structure. With just two operating mobile phone companies, the mobile phone market is
dominated by a duopoly between Telecoms Network Malawi (TNM), a public operator,
and Airtel, a private phone operator. Airtel has the largest subscriber base and is a
subsidiary of telecommunications giant Bharti Airtel of India. With operations
throughout Africa, Airtel enjoys a regional monopoly of the mobile phone market. The
company operates on a minute-factory model (lowest-cost/min) that partners with
local players for basic infrastructure needs, and hence converts fixed costs to variable
costs (moneyworks4me.com). Airtel undeniably enjoys a competitive advantage in the
industry due to its global brand name that would be easily distinguishable from
fellow/smaller competitors.
TNM has a substantial foothold in the telecommunications industry as MTL, its largest
stakeholder (44.4%), is also the most prominent fixed line operator in the country. Until
2000 MTL remained a state-operated organ. However, since privatisation Telecomm
Holdings Limited (THL) holds an 80% share while the Malawian government has
maintained the remaining 20%. TNMs other shareholders include Livingstone Holdings

25

Political Economy of Internet and Mobile Phones: Malawi

Telecom Ltd 12.92%, Press Corporation Limited 10.46%, Old Mutual 10.46%, Public
and other 21.72%. Livingstone Holdings Ltd is a telecommunications holding company
with investments in various sectors of the Malawian economy. Press Corporation
Limited (PCL) is a company with diversified interests in fuel, beverages, trading, food
and packaging, property, telecommunications, agriculture, clothing, transport, tobacco
processing and financial services. PCL control TNMs voting rights by virtue of a 54.91%
stake. The majority stake is a result of the direct 10.46% shareholding in TNM combined
with MTLs majority share (44.4%), which PCL exercises since PCL owns the bulk
interest in Telecomm Holdings MTLs owner. Cross-ownership patterns are rife within
Malawis limited mobile phone industry. Media giants Airtel and TNM, with their
prominent stakeholders, have established firm grounding in the industry.
Ownership remains the greatest hurdle to mobile phone penetration and accessibility in
Malawi. With a lack of competition, the TNM and Airtel duopoly exists fairly
unchallenged, and the motives of profit generation seem to receive pre-eminence above
universal service. Diversity in the industry is most crucial, so G-Mobile and Celcom hold
much promise. With the potential to provide competition in the market, the two latest
licensed networks are a welcome addition to the industry. However, G-Mobile with its
delayed roll-out plans and ensuing court battles opposing the revoking of its license has
failed to provide much needed respite. Furthermore Celcom, Malawis most recent
mobile phone licensee who beat various other applicants, has emerged on the scene
bearing various reservations. Celcom is 100% owned by one of Malawis business
conglomerates, the Mulli Brothers. The Mulli Brothers are one of Malawis largest
business corporations with strong ties to former President Wa Mutharikas
administration. President Wa Mutharika was a business partner of the Mulli Brothers
whose core business entities are grain and transport. During Wa Mutharikas
presidency, the Mulli Brothers were one of the DPPs biggest sponsors. Numerous loans
and tenders awarded to the Mulli Brothers have been criticised as corrupt. Since Wa
Mutharikas passing earlier this year, the corporation has voiced its determination to
support newly elected President Joyce Bandas government.
Concentration of ownership in the mobile phone sector therefore presents a massive
hurdle to its progress. With major conglomerates dominating the scene and budding
networks boasting equally mighty ownership structures, issues of concentration and

26

Political Economy of Internet and Mobile Phones: Malawi

monopolisation remain a threat. Malawis mobile phone tariffs are one of the highest on
the continent. While a lack of competition in the sector could be seen as a leading agent
in this, similarly tax-policy regimes and regulatory frameworks also have a part to play.
However, MACRA has also insisted that an increase in mobile phone operators would
result in a decrease in tax policies since fees would be equally shared amongst
operators.
Malawi has a small Internet sector with a penetration rate of only 4.60%. Although the
ISP market is competitive, MalawiNet - the longest serving and largest ISP - dominates
the market. MalawiNet was the first licensed ISP in the country despite various
applicants prior to it. MTLs 36% stake in MalawiNet has spurred on criticism for
MACRA for unduly licensing MalawiNet first. Internet in Malawi remains an elitist
privilege of a minority rich since exorbitant tariff rates render the medium inaccessible
to the countrys vast majority. However, the expensive rates appear to be less the result
of ownership structures and business operations than they are outcomes of a poor
electrical infrastructure and digitally compromising geographical positioning. Malawis
dilapidated electrical infrastructure has seriously hindered efficient connectivity of the
Internet. Efficient connectivity has also been exacerbated by the landlocked nature of
the country. The combination of these two factors renders Internet services very
expensive. The optical fibre cable holds huge promise for connectivity in the region.
Once completed the cable is likely to reduce tariff rates and provide faster and more
efficient services.
MACRA is the only regulatory body in Malawi monitoring the communications sector.
The body is state controlled and functions under the Ministry of Information. All mobile
phone and ISP licenses are awarded by MACRA under the guidance of its board, a large
component of which are previously or currently serving officials in government. MACRA
functions under the mandate of the Communications Act and the Communications
Sector Policy Statement of 1998. It is financially sustained by a range of license and
regulatory fees issued by communications operators which are controlled by its finance
department. Using the Communications Act as its guiding principle, MACRA is similarly
subject to the amendments of acts according to political will and power. The notion of
universal access has repeatedly become part of MACRAs rhetoric in recent years.
However, tax policy and expensive license and renewal fees all appear in direct contrast

27

Political Economy of Internet and Mobile Phones: Malawi

to its mandate. These added pressures do little to ease the already costly nature of ICT
services in Malawi. Malawi Internet Service Providers Association (MISPA) is an
independent voluntary association convened to serve the interests of ISPs in Malawi.
The body appears to exist independently of MACRA. However, the real clout of the
organisation remains limited since it is not legally enshrined nor particularly powerful
in matters of license issuing or debate.

8.

CONCLUSIONS AND RECOMMENDATIONS

8.1. Conclusions
Malawis ICT sector is on the rise with penetration rates in both the mobile phone and
Internet sectors gradually growing. However, despite this improvement, the countrys
ICT growth rate remains sluggish and distant compared to its African neighbours.
Exorbitant tariff rates are the leading agent in this, and are a result of manifold issues.
The mobile phone industry is at the moment dominated by a duopoly of mobile
communication giants with rampant cross-ownership trends. The lack of competition
has undermined the universal access ideal to profit-generating initiatives. Ownership
issues are a huge hurdle to accessibility since links to political power and international
operations present a hostile consumer market. Malawis Internet status is lagging
behind in an information age moving at rapid speed. The political and economic
instability of the country has done little to uplift the ICT sector as improvements have
proved far too expensive and less serious compared to the human-centred dilemmas
facing its population. The fibre-optic cable initiative currently underway in Malawi
holds huge promise for the accessibility and affordability of ICTs. Furthermore
President Bandas new administration, which has seen reforms in various sectors of
administration, could present a much needed reprisal of the sector which has until early
this year received little attention from the previous presidency.

8.2. Recommendations
Many strategies of intervention are necessary so as to create a vibrant and robust ICT
industry that judiciously addresses questions of universal access. These include creating

28

Political Economy of Internet and Mobile Phones: Malawi

a truly independent regulation regime that can competently address problems of

concentrated ownership, cross-ownerships, predatory pricing and unfair competition.
For example, MACRAs impartiality is compromised by its lack of institutional autonomy
because its board is made up of political appointees. The president of the country
appoints the chair and six other members, including the Secretary to the President and
Cabinet and the Secretary for Information, who act as ex- official members. Invariably,
as the custodian of the communication industry, MACRA clearly represents the interests
of the state and political elite and not those of the citizens. Its history of interference
with the freedom of expression of journalists in radio and print sectors shows that it can
also curtail the same in more complex ways by denying telecommunications licenses to
perceived state enemies while favouring those perceived to be loyal. Needless to say,
from mobile phone networks to ISPs, it can also create a communications technological
regime that deliberately undermines the convergence of broadcasting and
telecommunications so as to undercut any technological transformations in radio
broadcasting that can result in forms of journalism that are robust, independent and
based on popular participation.
As a state institutionalised organ, MACRAs role in promoting an ICT sector with the
true purpose of universal access remains questionable. An independent regulatory
framework is much needed in the region. MACRAs determining status in either
approving or rejecting licence applicants is worrisome and, while the process is said to
be fair and honest, many incidents have proved sinister. An autonomous body has the
potential to promote diversity in the mobile phone and Internet sectors where
allegiances to corporate and political power will be less influential during regulatory
processes.
There is also a clear need to reduce taxes for ICT products so as to enhance universal
access. Considering the harsh economic climate of Malawi and the already exorbitant
costs of ICT services as a result of a poor electrical infrastructure and landlocked
geography, regulatory taxes present an unwelcome addition to rising costs. MACRAs
policy taxes are largely responsible for the high tariff rates on mobile phones and SMs.
Furthermore, the taxes imposed on ISPs monthly and annually have subsequent effects

29

Political Economy of Internet and Mobile Phones: Malawi

on end-user costs, exacerbating the situation. License fees and taxes should be revisited
and amounts settled should be prioritised according to a universal access motto.
Unfair competition also has to be regulated using robust and effective laws. The two
major players in the mobile phone industry are overly protective of their market as they
shoulder out smaller players who can bring diversity to the industry. While a
Competition Act is currently in place, implementation of it proved lax. Competition is a
much sought after resolution to Malawis mobile phone industry, which only comprises
two operators at present. With a firm foothold in communications in the country and
abroad, TNM and Airtel provide a hostile market for newcomers given their expertise
and brand recognition. Competition laws should therefore intervene in such
circumstances and provide an enabling market for a diversity of ownership and services
which would ultimately serve the interests of ICT users.

30

Political Economy of Internet and Mobile Phones: Malawi

REFERENCES
Online sources (websites)
Africa Development Bank < http://www.afdb.org/en/countries/southernafrica/malawi/> Accessed 6 July 2012.
CIA World Factbook < https://www.cia.gov/library/publications/the-world-factbook>
Accessed 6 July 2012. MACRA Website < http://www.macra.org.mw/> Accessed
3 July 2012.
Internet World Statistics < http://www.internetworldstats.com/africa.htm#mw>
Accessed 6 July 2012.
Malawi Internet Service Providers < http://www.mispa.org.mw/mix.html> Accessed 6
July 2012.
Reports
Cammark, D. (1998) Malawi communications reform and freedom of expression.
< http://www.article19.org/pdfs/publications/malawi-communications-reform.pdf>
Accessed on 10 October 2010.
Chikunkhuzeni, F. (2011) National Overview of Malawi in So this is Democracy, MISA <
http://new.misa.org/downloads/2011/Malawi_STID2011.pdf> Accessed 29 May
2012.
Chirwa, W., Kanyongolo, E., & Patel, N. (2000) Democracy Report for Malawi.
<http://www.idea.int/publications/sod/upload/Malawi.pdf>Accessed on 24
June 2011.
Clarke, Frew A., Gebreab, George R.G. and Mgombelo, H. R. Malawi Telecommunications
Reform Reports.
Malawi Millennium Development Goal Report < http://planipolis.iiep.unesco.org>
Accessed 5 July 2012.
Friedrich-Ebert-Stiftung (FES) & Media Institute of Southern Africa (MISA) (2010)
Africa Media Barometer Report on Malawi.

31

Political Economy of Internet and Mobile Phones: Malawi

LIST OF ACRONYMS
3G ........................... Third Generation Mobile Technology
4G ........................... Fourth Generation Mobile Technology
ACL......................... Access Communications Limited ..................................................................... Malawi
BNL ........................ Blantyre Newspapers Limited .......................................................................... Malawi
CAN ........................ Channel for All Nations ........................................................................................ Malawi
CDMA .................... Code Division Multiple Access
COMESA ............... Common Market for Eastern & Southern Africa
DPP ........................ Democratic Peoples Party.................................................................................. Malawi
DSTV...................... Digital Satellite Television
EDGE ..................... Enhanced Data Rates for GSM Evolution
ESCOM .................. Electricity Supply Commission of Malawi .................................................... Malawi
EV-DO .................. Evolution Data Only (or Optimised) optimised version of CDMA
G20......................... Group of 20
GDP ........................ Gross Domestic Product
GPRS ...................... General Packet Radio Service
GSM........................ Global System for Mobile Communications
HIPC....................... Heavily Indebted Poor Countries
ICT .......................... Information and Communications Technology
IMF ......................... International Monetary Fund
ISP .......................... Internet Service Provider
ITA.......................... Invitation to Apply ................................................................................................. Malawi
MACRA ................. Malawi Communications Regulatory Authority ........................................ Malawi
MAREN ................. Malawi Research and Education Network ................................................... Malawi
MBC ....................... Malawi Broadcasting Corporation .................................................................. Malawi
MBC TV................. Malawi Broadcasting Corporation .................................................................. Malawi
MISPA ................... Malawi Internet Service Providers Association........................................ Malawi
MPTC..................... Malawi Posts and Telecommunications Corporation.............................. Malawi
MTL........................ Malawi Telecommunications Limited............................................................ Malawi
MWK...................... Malawi Kwacha (currency) ................................................................................ Malawi
NAMISA ................ National Media Institute of Southern Africa
NPL ........................ National Publications Limited........................................................................... Malawi
PAC ........................ Public Appointments Commission .................................................................. Malawi
PCL ......................... Press Corporation Limited ................................................................................. Malawi
ROW ...................... Rest of the World

32

Political Economy of Internet and Mobile Phones: Malawi

RTDF ..................... Rural Telecommunication Development Fund .......................................... Malawi

RTF......................... Rural Telecommunication Forum ................................................................... Malawi
SADC...................... Southern African Development Community
SMS ........................ Short Message Service
TNM ....................... Telecoms Networks Malawi ............................................................................... Malawi
VSAT ...................... Very Small Aperture Terminal
WiMAX ................. Worldwide Interoperability for Microwave Access

33