Madagascar - A very dynamic ICT sector

This sector has already grown considerably, following a decade of massive investment by private operators. This productive sector weighs heavily 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 infrastructure of the different operators and the access to mobile telephone and Internet services by the population; in the availability of international capacity, thanks to the interconnection between the country and the rest of the world by submarine cables; and finally by the improvement of the offer of services to the population, including the launch of new applications such as mobile payment. This very positive development remains, however, limited by a suboptimal quality of the legal and regulatory framework in the sector, which has a negative impact on the environment of the communications sector.

The State reinforced its commitment to freeing up the fiber optic market during the Government Council of June 28, 2019, by amending Article 4 of Decree No. 2014-1652, which prohibits licensed operators from "building, installing, or deploying new fiber optic transmission capacity duplicating existing national links," leaving other operators with only one alternative: operating microwave links. After Telma, Gulfsat Madagascar is offering fiber optic connections to its customers. Gulfsat is thus the second operator to invest in this market.

The fiber optic network is being rolled out nationwide, connecting major Malagasy cities. The incumbent operator Telma plans to invest 10 million euros in addition to the investments already made, to expand its network by 1,000 km in addition to the existing 10,000 km starting in 2019. Wireless broadband access networks are being deployed, enabling the convergence of voice, data, and services (finance, entertainment, etc.).

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Today, telecommunications operators are subject to the 10% excise tax. In Madagascar, fewer than 4 out of 10 people have access to mobile phone services. For internet access, the figure drops to fewer than 2 out of 10. Madagascar is fully embracing the wave of investment in Africa to improve digital connectivity, which is estimated at $10 billion in the coming years.

Growth in telecommunications services revenues 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 lowered the excise duty on telecommunications. The tax, which had increased from 8% to 10% in the 2020 Finance Act, much to the displeasure of telecom operators and consumers, has returned to 8% in the 2021 Finance Bill. However, the Ministry of Posts, Telecommunications and Digital Development (MPTDN) has planned strict monitoring of operators to ensure that there will be a real price reduction, and not just for social media users, as was the case in the past.

Key development areas for telecoms
• Madagascar will soon host the Africa-1 cable system, financed by 19 telecom operators for an amount of • 1.2 billion euros, which should be put into service 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 expand LTE services
• The METISS and Indian Ocean Xchange (IOX) cables will soon be connected
• The national deployment of optical fiber
• Taxes on telecommunications services increased to 10%