10 CONCLUSIONS AND RECOMMENDATIONS Similar to other African countries, the telecommunication sector in Mozambique is predominantly mobile. Competition in the mobile market intensified in 2012, following the launch of the third mobile operator, Movitel. Its strategy of rolling infrastructure in rural areas and providing low-cost services led to lower costs for communication services in Mozambique. Despite increased competition and the low cost of prices in Mozambique, mobile phone penetration in Mozambique remains far below the African survey average. Mozambique recorded the highest gender disparity (41%) in the adoption of mobile phones among surveyed countries. The disparities are more pronounced among Internet users, at 50 percent. The location gap is even more pronounced (85%), with 24 percent of the urban population 15 years and older using the Internet, while only a few (4%) in rural areas use the Internet. The low levels of Internet usage in the country is attributed to issues relating to affordability, education and lack of electricity in rural areas. About eight out of ten of those who do not use the Internet stated that they do not have Internet-enabled devices- computers or smartphones, while more than a third (37%) stated that they do not have mobile phones due to lack of electricity. Of concern is the decline in telecom sector revenue since 2011. This decrease in sector revenue is attributed to the continued significant drop in the fixed-line service revenue and subscriptions. Furthermore, continued competition in the mobile sector, with operators undercutting each other, has significantly decreased revenues as well. Despite this, the dominant operator, Vodacom, reported an increase in its revenue in 2018. Its revenue increased by 18 percent, which it attributes to strong growth in mobile voice revenue and an 18 percent increase in subscribers. Reacting to Vodacom’s strategy, Movitel further reduced its 1GB data prices to become the cheapest operator in Q1 2018. For countries to see the economic growth associated with investment in broadband infrastructure, a critical mass of 20 percent has to be reached. With only 10 percent penetration, Mozambique will not enjoy the network effects and positive multipliers associated with broadband connectivity. With evidence that prices of devices and even lowpriced services are not affordable to most Mozambicans, government needs to find ways to support the reduction of these costs and provide additional complementary public access. Government needs to create an enabling environment for operators to transition to data services, which can complement licensed networks, (for example via the hand-off from GSM to public WiFi, which now also has backhaul application), and expand broadband access in low-cost, last-mile access and backhaul. Extending unlicensed spectrum to new frequency bands can spur investment and innovation, and lead to the introduction of technologies. The ‘free’ over-the-top (OTT) services such as WhatsApp offer price-sensitive users substitutability for higher-cost traditional voice and text services. To create this enabling environment, the government could: • remove all excise duties on feature and entry level smartphones • review universal services levies and funds that are not meeting objectives – review the negative impact of premium secondary taxes on cost of services, and direct existing taxes to free public WiFi to offer complementary access to price-sensitive users • leverage private investments for servicing public sector connectivity in under-serviced areas by creating incentives through smart procurement and offer anchor tenancies on the basis of aggregating public sector demand, which can shift costly capital expenditure by government to much lower-cost OpEx • produce incentives for infrastructure-sharing and wholesale regulation of facilities and bandwidth to reduce input costs for service providers and private networks, but this requires a fair, competitive Conclusions and recommendations 13