Madagascar - Telecommunications Sector Restructuring Project

Report No. PIC830 Project Name Madagascar-Telecommunications Sector Restructuring... Project Region Africa Sector Telecommunications Project ID MGPA1565 Implementing Agency Ministry of Post and Telecommunications (MPT) B.P. 8181 Antananarivo 101 Tel: 261-2-232-67 Fax: 261-2-358-94 Telex: 220 MIN PTT MG General Directorate of Post and Telecommunications B.P. 8181 Antananarivo 101 Tel: 261-2-346-56 Fax: 261-2-351-77 Telex: 220 MIN PTT MG Madagascar Telecommunications (MT) or Oprateur Principal (OP) Date Prepared April 1993 Projected Board Date June 1994 Project Objectives 1. The proposed project is designed to help remove constraints to increased private investment and productivity in the country by improving Madagascar's telecommunications infrastructure and management. It has two sets of main objectives: (a) laying the bases for development of an efficient, reliable telecommunications and information services network on a competitive, market-oriented basis through privatization of Madagascar Telecommunications (MT) -- or Oprateur Principal (OP) -- and market liberalization through early establishment of a competition-oriented regulatory and pricing framework; and (b) improving service coverage and quality to meet urgent unsatisfied (and expected new) private sector demand through: (i) financing immediately needed rehabilitation and modernization investments; (ii) improved telecommunications maintenance and operations by a private, commercially operated MT (OP), including a strong focus on staff training, recruitment and redeployment; and (iii) introduction of cellular operators in high demand segments of the market. Project Description 2. The project has three major components: (i) Sector Reorganization. To support sector restructuring, the project will provide technical assistance (a) in telecommunications -- establishment of a pro- competitive regulation and pricing framework, procedures for valuation of MT (OP) and for competitive bidding among qualified international companies for MT (OP) divestiture, and restructuring of the Ministry of Post and Telecommunications (MPT) to play its new role -- and (b) for  the creation of a fully autonomous postal entity; (ii) Telecommunications Sector Restructuring. This will include: (a) creation of a new single national telecommunications entity (MT or OP) through the merger of DT (the domestic service provider) and STIMAD (a semi-private enterprise providing international telecommunications services) operating with full autonomy as a licensed company; (b) privatization of MT (OP) within 18 months; and (c) capacity building in technical and commercial management; and (iii) Urgent Equipment Components. With a view to reestablishing communications in the country through modern inter-urban and rural networks, the project will provide for: (a) digitization of the central corridor, Antsirabe- Antananarivo - Toamasina and the associated local network; (b) setting up domestic satellite communication to connect isolated population centers and economic enclaves to the national network; and (c) rehabilitation and digitization of microwave backbone networks. Project Implementation 3. The implementing agencies will be MPT and MT (OP). The project will be implemented in two stages. In the first stage, MT (OP) will be set up as a separate entity through the merger of DT and STIMAD, and will be run by FCR (France Cble et Radio) as interim operator (under a management contract). MT (OP) will undertake urgent rehabilitation investments, as well as immediate staff strengthening and redeployment needs. Meanwhile, based upon agreed regulatory and pricing framework and privatization procedures, MT (OP) will be offered for privatization. In the second stage, once the privatization is completed, MT (OP) will be taken over by the winning bidder international company, which will be responsible for longer-run investments, corporate planning and staff development. Project Financing 4. The total estimated project cost of US$ 64.2 million will be financed as follows: US$ 26 million by IDA; US$ 26.2 million by CFD; US$ 4.2 million jointly by EIB, AfDB and others; and US$ 7.8 million by the Government of Madagascar. IDA granted an advance under the project preparation facility for US$ 0.45 million to MPT. Environmental Aspects 5. Since the proposed project involves extension of telecommunications networks, it has been classified as environmental category "B" project. A positive environmental impact could be expected because more efficient use of telecommunications services would substitute for personal and commercial transportation and correspondingly reduce environmental pollution and promote energy conservation. Contact Point : Public Information Center The World Bank 1818 H Street N.W. Washington D.C. 20433 Telephone No.: (202) 458-5454 Fax No.: (202) 522-1500 -2-  Note: This is information on an evolving project. Certain components may not necessarily be included in the final project. Environmental Analysis Since the proposed project involves extension of telecommunications networks, it has been classified as environmental category "B" project. A positive environmental impact could be expected because more efficient use of telecommunications services would substitute for personal and commercial transportation and correspondingly reduce environmental pollution and promote energy conservation. -3-