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Advertisers MFSC - Malta Financial Services Centre Maltese-American Chamber of Commerce METCO - Malta External Trade Corporation Ltd.
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Telecommunications industry welcomes privatization and liberalization
The privatization of Telemalta was of vital importance to development of the economy. For many years the company had been used to decrease unemployment figures. With a bloated workforce, costs were high and inefficiencies even higher. In a market controlled by a monopoly, this meant poor and expensive service, as well. In 1987, Malta had only 60,000 telephones and a six-month waiting list.
The nationalist government, elected in 1987, decided that telecommunications could be the motor of the economy. Telemalta began a period of modernization and a digital exchange with fiber optics was installed. Malta was the first company in the region to be fully digital, said Maurice Zarb Adami, chairman of Maltacom.
The privatization also affected Vodaphone, the cellular operator that is 20 percent owned by Maltacom. In 1990, Vodaphone received a 20-year license to operate as a monopoly. During Telemalta’s privatization, Maltacom was also given the right to continue its monopoly until 2010, to give the company enough time to reduce employment, modernize its systems and work on ways to reduce costs while maximizing shareholder value. However, the government decided that 10 years was too long a time period and that consumers deserved to see the benefits of privatization earlier. In July 2000, the legislature voted to liberate the cellular market immediately and to allow the fixed telephone monopoly to last until 2003.
However, Maltacom is well aware that the company faces many challenges, including lowering phone call prices without affecting the value of the stock, transforming government workers to entrepreneurs, improving customer service and maintaining service quality.
With market liberalization comes competition in all areas. To prepare for competition in the wireless sector, Vodaphone has begun to offer many advanced cellular services. Melita Cable plans even higher- speed Internet services and may enter the fixed telephony market when it liberalizes in 2003. Maltacom created Go Mobile.
Go Mobile is busy preparing to take advantage of the new laws. Although the company is 100 percent owned by Maltacom, it is being set up as a separate business unit, one insistent on operating by international standards and one focused on low costs, high efficiencies and modern technology. As part of its efforts to be one of the most efficient mobile companies in the region, Go Mobile signed a $24 million agreement with Nortel to provide a turnkey network solutions, including hardware, software and systems. Go Mobile will have an early GPRS test site and will build wireless Internet application centers. Juanito Camillieri, chief executive officer of Go Mobile, wants to start the company’s operations with a state-of-the-art national network. He believes that his company can be a showcase for sales around the region.
The public already believes in the potential of Go Mobile. During the annual International Trade Fair, the company signed up more than 5,000 new subscribers; clients received a phone number, but no service until the end of the year.
The market for cellular telephony is huge. Camillieri explained that mobile phones have only a 12 percent penetration at the moment. However, the Mediterranean culture likes their cellular phones. In Italy there are more cell phones than fixed lines.
To compete in this liberalized market, Maltacom has already jumped on the e-commerce bandwagon. With the Internet becoming a vibrant marketplace, companies are discovering that Internet commerce must be a vital part of their marketing plans. E-commerce can provide new sales, more market opportunities and better customer service at a lower cost. To position Malta as a center for e-commerce, Terranet Limited was launched. This wholly owned subsidiary of Maltacom was set up in 1995 to conquer the e-commerce market. With e-commerce expected to become a multi-billion dollar industry, Terranet wants to make sure it gets a piece of the Internet pie.
E-shore is an e-commerce solution created by Terranet so that it can get involved in the business-to- business market. In the world of the Internet, Malta being an island in the Mediterranean is completely irrelevant. What matters is that Malta provides a high-quality, cost-effective locale for servers or for processing transactions.
Other interesting concepts being developed are e-shore’s electronic brokerage and trading services. With the former, the merchant can process electronic transactions on e-shore servers, which act as a transaction broker on the merchant’s behalf. This service can help lower marketing and sales operational costs and allows the merchant to take advantage of certain fiscal advantages. Although the virtual shop can be located anywhere in the world, companies may decide to add value and to locate their shop on e-commerce’s servers, thus centralizing their e-commerce establishment in one locale that provides high- quality maintenance.
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Table of Contents Building bridges and embracing the future |
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As part of the Labor government’s decision to liberalize and modernize its society to prepare Malta for globalization, Telemalta, the state-owned telecommunications company, was partially privatized. Today, the public owns 40 percent of Maltacom (the new name for the company), while the remaining 60 percent is still in government hands. The management of Maltacom has already embarked on a worldwide search for a strategic partner that could buy the bulk of the remaining shares and bring advanced technology and knowledge to Maltacom. The privatization process showed Malta and the rest of the world what the island can achieve and set the government permanently on the road of future privatizations.
As telecommunications becomes more digital, mobile and personal, Maltacom, Vodaphone and Melita Cable are all preparing to offer their customers high-quality, low-cost telephony. With its fully digital national and international switching and transmission network that covers the entire country, its advanced technology and services, such as high-speed data services, ISDN and optical transmission, Maltacom is well on its way to transforming itself from a bureaucratic monopoly to a dynamic enterprise.