Madagascar - Digital - A very dynamic ICT sector

This sector has already grown considerably, following a decade of massive investment by private operators. This productive sector has a significant impact on national income and plays a vital role in the business climate.

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The sector has seen significant improvements in the coverage of the territory by the various operators' infrastructure and in access to mobile phone and internet services for the population; in the availability of international capacity, thanks to the interconnection between the country and the rest of the world via submarine cables; and finally, in the improvement of service offerings to the population, including the launch of new applications such as mobile payment. This very positive development, however, remains limited by a suboptimal legal and regulatory framework in the sector, which has a negative impact on the communications industry environment.

The State reinforced its commitment to liberalizing the fiber optic market during the Government Council meeting of June 28, 2019, by amending Article 4 of Decree No. 2014-1652. This article prohibits licensed operators from "constructing, installing, or deploying new fiber optic transmission capacity that duplicates existing national links," leaving other operators with only one alternative: the use of microwave links. Following Telma, Gulfsat Madagascar is now offering fiber optic connections to its customers. Gulfsat is thus the second operator to invest in this market.

The fiber optic network is being deployed nationwide, connecting major Malagasy cities. The incumbent operator, Telma, plans to invest an additional €10 million, on top of existing investments, to extend its network by 1,000 km, adding to the existing 10,000 km, starting in 2019. Wireless broadband access networks are also being deployed, enabling the convergence of voice, data, and other services (finance, entertainment, etc.).

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Today, telecommunications operators are subject to excise duties of 10%. In Madagascar, fewer than 4 out of 10 people have access to mobile phone services. For internet access, this figure drops to fewer than 2 out of 10. Madagascar is fully participating in the wave of investments in Africa aimed at improving digital connectivity, the total of which is estimated at $10 billion for the coming years.

Revenue growth in telecommunications services in Madagascar between 2018 and 2023 will be driven by growth in the fixed broadband, mobile voice and mobile data segments.

This is also supported by a healthy economic environment.

The government has reduced the excise tax on telecommunications. The tax, which had increased from 8% to 10% in the 2020 budget law, much to the discontent of telecom operators and consumers, is set back at 8% in the draft 2021 budget law. However, the Ministry of Posts, Telecommunications and Digital Development (MPTDN) has planned strict monitoring of operators to ensure a genuine price reduction, and not just for social media users as was the case in the past.

Key areas of development in telecommunications
• Madagascar will soon host the Africa-1 cable system, financed by 19 telecom operators for an amount of • 1.2 billion euros, which is expected to be operational in 2021 (connecting 8 African countries: Somalia, Kenya, Tanzania, • Madagascar, South Africa and Sudan, Djibouti and Egypt, plus Pakistan, the United Arab Emirates and Marseille.)
• National backbone network extended to 9,000 km
• Operators are expanding LTE services
• The METISS and Indian Ocean Xchange (IOX) cables will soon be connected
• The national deployment of fibre optics
• Taxes on telecommunications services increased to 10%