Telecoms infrastructure in Zambia

Ten things to know
October 12, 2015

What are the key operating licences required by companies operating telecoms infrastructure in Zambia?

A tower company wishing to own, construct and operate its own telecoms infrastructure must hold a network licence.

The authority responsible for granting this licence is the Zambia Information and Communications Technology Authority (ZICTA).

What other licences may be required by companies operating telecoms infrastructure in Zambia?

A tower company may also need to obtain the following:

  • Planning Permissions – under the Town and Country Planning Act, planning permissions for any construction or development are required from the local authority in which the development will take place. A building permit may also be required.
  • Multi Facility Economic Zone (MFEZ) Permit – under the Zambia Development Agency Act, a tower company wishing to develop any premises on, or operate in, a MFEZ (a special industrial zone with established infrastructure, including telecommunications facilities) is required to apply to the Zambia Development Agency Board for a permit in order to do so.
  • Environmental Permits – any company which intends to set up a project that may discharge, cause or permit the discharge of contaminant or pollutant into the environment will need to obtain an omissions licence from the Zambia Environmental Management Agency.
  • Director of Aviation approval – there is no requirement for a company to hold an aviation licence. However, it must obtain authorisation from the Director of Aviation prior to erecting a tower in certain protected areas.

What is the principal legislation governing the telecoms sector?

The principal pieces of legalisation governing the telecoms sector in Zambia are the Information and Communication Technologies Act, No.15 of 2009 (the ICT Act) and the Electronic Communications and Transactions Act, No. 21
of 2009.

Secondary regulations and statutory instruments have also been issued in connection with these acts.

Can foreign entities hold telecoms licences or operate as telecoms companies (either as operators or tower companies)? Are there any foreign ownership restrictions?

Whilst the ICT Act does not prohibit a foreign entity from holding a telecoms licence or operating as a tower company, as a matter of ZITCA policy, all companies wishing to hold a licence must be registered in Zambia.

There are no general restrictions as to the foreign ownership of shares in a Zambian registered company.

At least half the appointed directors of a Zambian registered company (including the managing director, if the company has a managing director), and at least one executive director (if the company has an executive director), must be resident in Zambia.

Does the government require any ownership stake in telecoms companies? Must telecoms companies pay any royalties or similar payments to the state/government?

There is no requirement for a government ownership stake in a tower company operating in Zambia.

Similarly, no royalties or other similar state or government payments are imposed on tower companies.

Can security be granted over (i) telecoms licences and (ii) shares in telecoms companies?

Telecoms licences

Companies can, by way of security, assign, transfer, cede, pledge, dispose of or encumber their rights and interests in and over telecoms licences subject to ZITCA’s prior approval. The approval or rejection of an application is typically obtained from ZITCA within 30 days of application.

Shares

Under the Companies Act, Chapter 388 of the Laws of Zambia (the Companies Act), security may be taken over the shares of any company.

However pursuant to the ICT Act, a telecoms licence holder will be required to obtain ZITCA’s prior written approval for:

  • any transfer of shares that would result in the direct or indirect ownership of more than 25 per cent of the issued voting share capital of the company or
  • any change in the ownership of the company’s issued voting share capital that results in a change in the composition of 25 per cent of the company’s board of directors.

Note that a draft Companies Bill has recently been presented by the Zambian Government. Once enacted, the Companies Bill will repeal the Companies Act. However, it is not expected that the new Bill will substantially affect the law surrounding a company granting security over its shares.

Is there a centralised land system in Zambia. What (if any) interest in land is required for a company to build telecoms infrastructure on that land?

Zambia has a centralised land system administered by the Ministry of Lands, with registries currently located in Lusaka and Ndola.

All land in Zambia is vested in the President. Land may be held by a Zambian or foreign entity (subject to certain conditions) under either leasehold tenure or customary tenure. Presidential consent is required when any such land is transferred or assigned. In practice, the consent will be granted by the Commissioner of Lands and is typically obtained within 14 days of application at a cost of ZMW100 (approximately US$9).

Freehold tenure or private ownership is not applicable under the Zambian land system.

Are any stamp duties or registration fees payable on facility/security documentation in Zambia?

Under the Companies Act, security over any assets of a company (including security over shares, land, towers, contracts and accounts) must be registered at Companies House within twenty one days of their creation. The cost of registration is ZMW2,778 (approximately US$250).

Mortgages over land must also be registered at the Ministry of Lands. The fee for this is one per cent of the loaned amount, capped at ZMW4,000 (approximately US$355).

No stamp duties are payable on documentation in Zambia.

Are there any exchange control restrictions in Zambia?

There are currently no foreign exchange control restrictions in Zambia and no consents are required for transactions in order to pay US dollars (or any other currency) out of Zambia.

Are English court judgments recognised and enforced in Zambia. Is Zambia a party to the New York Convention?

No. There is currently no reciprocal order in place for judgements obtained from the English courts.

Zambia is a party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.