Somalia counts on telecoms sector for revival of economy.

It may be two steps forward and one step back, but Somalia is beginning to pick itself up off the ground after years of civil war. But still, in the absence of regulation, a telecoms sector has developed.

In the absence of tax and regulation, the mobile sector has flourished and penetration is just under a quarter of the population, with around 2.3 million subscribers at the end of 2012.

There are five main players in the mobile market: Hormuud Telecom (HorTel), Somafone, Telesom, Nationlink and Telecom Somalia.

HorTel is by far the biggest player with a market share of just over 40 per cent. Some operate only in Somaliland and Puntland, whereas others provide something approaching a national service. Some part of these networks offer GPRS/Edge and 3G.

There are several mobile money services, the most popular seeming to be Telesom’s Zaad service. In the absence of a banking sector, these services are vital for transferring money into the country from the diaspora and around the country.

Mogadishu’s Transitional Federal Government (which has been replaced by the current government) set up a Ministry of Information, Posts and Telecoms and it adopted the 2012 Telecoms Act, which sets out the setting up of a regulator to be called the National Communications Commission.

Once this gets off the ground, it will be a converged regulator dealing with both media and telecoms.

However, the government has bigger concerns than trying to get this kind of legislation implemented; a legislation the operators have campaigned vigorously against, saying more regulatory control and taxes are not a happy prospect.

It is fair to say that there’s a connection between high levels of competition, the absence of taxes and low user prices. Nevertheless, for a state to function, it needs revenues, and the telecoms operators are the most successful businesses in all parts of the country.

As World Bank economist Tim Kelly sees it: “The telecoms sector is vital to the recovery of Somalia. International call income is the biggest source of foreign exchange revenue after diaspora remittances. None of that revenue benefits the government. It needs some of that revenue without taxing the operators to death.”

Somaliland is currently connected to international fibre via Djibouti but Mogadishu does not yet have such a connection. Currently all international communication to Mogadishu is by satellite, which is very expensive.