Afghanistan’s Lack of Dollars Threatens Internet Infrastructure
(Bloomberg) -- Wireless carriers in Afghanistan that invested billions into the telecom sector during the U.S. occupation are now struggling to get access to dollars and pay suppliers, according to people familiar with the matter.
Most large payments to firms maintaining communication networks, including satellites in remote areas, are made in U.S. dollars. These have gone unpaid since the U.S. cut off funding and froze reserves after the Taliban takeover in August, said the people, who asked not to be identified as the matter is sensitive.
The situation has been deteriorating in recent weeks, with no clear sign of a deal to secure additional funding, they said.
The fear is that satellite companies like SpeedCast International Ltd. and Eutelsat Communications, along with fiber providers from bordering countries such as Iran, could cut services reducing the level of connection people in Afghanistan have to the outside world, said the people. A number of other services, including providers of remote software support, spare parts and electricity to keep mobile towers running, also require payment in U.S. dollars, they said.
“A possible shutdown of SpeedCast services will affect more than 200 Afghan villages in end-to-end small cell communication,” said Manuel Ntumba, regional partnership manager at the United Nations Space Generation Advisory Council. Broadband, cellular, e-health, e-learning and tele-medicine in hard-to-reach areas would also be affected, he said.
Almost 74% of Afghanistan’s population lives in rural areas, according to DataReportal.
SpeedCast did not immediately respond to an emailed request for comment. Eutelsat said it was unable to comment on commercial arrangements.
Estimates are hazy on how much foreign telecoms firms have invested in Afghanistan during the U.S. occupation, potentially reaching to about $3 billion, according to two senior executives.
Senior management at the major telecom firms have left Afghanistan for Dubai, Europe and South Africa, with local engineers staying behind to try and keep the networks running, said the people. However, the biggest threat to internet and mobile connectivity -- besides security -- is the potential collapse of the banking sector, they said.
The U.S. has frozen about $9.5 billion in assets belonging to the nation’s central bank, and the International Monetary Fund has cut off the group from using reserve assets.
That’s created a liquidity crisis, and the central bank ordered lenders to limit withdrawals to $200 a week even for corporate clients, making it almost impossible to run a business in the telecom industry.
During the Taliban regime that ended following the U.S. invasion in 2001, Afghanistan had fewer than 15,000 local landlines and almost no internet, according to information from the Afghan Ministry of Communications and Information Technology.
This changed significantly during the occupation, with international operators such as Johannesburg-based MTN Group Ltd., Etisalat of the United Arab Emirates and Roshan entering the market. The latter is a joint venture between Monaco Telecom SAM and a Swiss development agency.
“If the economic situation deteriorates significantly over the short term and operators struggle to remain profitable, they would be inclined to leave,” said Dobek Pater, managing director of Africa Analysis. Customers and infrastructure sold or left behind would be absorbed by local operators or the state-owned Afghan Telecom, he said.
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