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accusations of political interference in business operations, on the one hand, and failure to invest, on the other.18 The privatization of state-owned telecommunications companies has long-term implications for the sector. The immediate effect is to raise government revenue upon initial sale. A medium-term effect is avoiding the economic cost of state ownership arising from nonpayment of taxes and the low productivity of state operators. Privatized operators typically grow as money is invested in them and become more efficient. This generates economic growth and increases government tax revenues, but the long-term benefit of privatization is felt by the sector as a whole. Once an operator has been sold to private investors, little incentive is seen for the government to bias regulatory or tax rules in its favor. This creates a more competitive market, which in turn is more efficient and more productive and thus benefits the wider economy.
Greenfield Investments The majority of private investment in the telecommunications sector has been through greenfield investments. These result from the acquisition of a license—usually some kind of mobile telecommunications license or a data services/ISP license—either procured directly from the government or through the acquisition of an existing licensee. A wide range of investor types can be identified; the size of their investments also varies, from the usually small investments made in ISPs to the very large ones made in mobile operators (see chapter 4). A significant recent trend in the mobile segment of the telecommunications market in SubSaharan Africa has been the emergence of multinational mobile operators. These pan-African investors account for over 80 percent of mobile subscribers in the region. The top eight pan-African investors accounted for about three-quarters of mobile subscribers in the region in 2009 (table 3.3). A summary of the commercial interests of these multinational operators in Africa appears in appendix table A2.7. The emergence of large regional operators has benefited telecommunications services in the region. Regional operators have experience working in African markets and therefore can easily access technical and operational know-how. Economies of scale in the purchasing of network equipment also help to reduce costs. A related trend is the development of cross-border network connections, discussed above, which are facilitating the development of regional backbone networks. The benefits of these regional operators were highlighted in 2005 by the Zambia Competition Commission (ZCC), which approved the sale of local mobile operators to Mobile