Zambian president Edgar Lungu has issued a directive to cut funding to the country's telecom sector regulator Zambia Information and Communications Technology Authority (ZICTA), as well as telecom operator the Zambia Telecommunications Company (Zamtel).

The directive is likely to impact next year's budget.

Lungu told the minister of Communications and Transport Brian Mushimba that the two entities have to become innovative and make a profit.

"ZICTA and Zamtel, which are still suckling from the government, must be transformed into profitable institutions which will be able to declare dividends to the government. The dependence on government for funding should come to an end," Lungu said.

It is unclear how much funding ZICTA and Zamtel require from government, but the process is based on activity reports submitted to the Ministry of Communications and Transport for review.

Lungu added that he does not understand why Zamtel, which has the largest network in the country, is failing to make a profit and fund its operation, adding that the telco rents out some of its facilities around the country to private operators and ISPs.

Two weeks ago, Zamtel acting CEO Sydney Mupeta said the company has managed to exceed its 1.5 million customer target and was now chasing the 2 million customer mark because of the financial support the company is receiving from the government.

The government transferred management of the company to the Industrial Development Corporation (IDC) last year in a bid to quickly source investment to recapitalise the company, the country's smallest operator.

While Zamtel receives funding from IDC in addition to its revenue, ZICTA;s main sources of revenue are from regulatory and license fees.

There is concern that a lack of sufficient funds could impact the regulator's ability to formulate policies and strategies aimed at increasing investment in the sector, policies and strategies aimed at increasing access and usage of ICT and protection of consumers from exploitation by service providers.

ZICTA  and Zamtel yet to comment on the directive.