Moving into hi-tech: 3G spurs new growth.
In this Special Report, we look at the continuing growth of Africa's mobile market sub-region by sub-region and how advanced technologies are now making their presence felt in the continent. We also take a close look at Mauritius as it bids to become a regional hub for ICT.
BuddeCom's 2007 Africa--Telecoms, Mobile and Broadband Overview report says that due to Africa's poor fixed-line infrastructure, mobile networks are beginning to play an increasing role in internet service provision, following the launch of 3G services in a number of markets--"a welcome new revenue stream in an almost entirely prepaid environment with low average revenue per user (ARPU) levels".
But some experts caution that the right balance has not yet been struck. "In South Africa, the focus of deregulation has been on putting the correct processes and infrastructure in place to support a competitive sector. The result, though, has been a hampering of progress," says Elia Tsouros, sales executive: Africa at Verizon Business South Africa. "On the other hand, the situation in the rest of the continent is that deregulation has taken place but it has gone to the other extreme."
"In the rest of Africa," he says, "we are seeing a lot of licences being granted but no structures in place to manage these and the result is a lot of interference." He advocates a more balanced approach between the two extremes to create the vibrant telecoms environment that can and should exist on the continent.
Nevertheless, there are countries and players in each region that stand out in terms of their approach.
Morocco has demonstrated the possibilities of broadband for the continent. Currently ranked number one in terms of the competitiveness and capacity associated with the price of their ADSL offerings, the country's operators can offer packages of up to 4mb at this time at competitive rates. "Penetration has been good," Tsouros says.
Algeria has also experienced significant growth. According to Business Monitor "figures from market leader Djezzy reveal a subscriber base of almost 11.3m, up by 41% year-on-year. Similar growth was exhibited at Mobilis, while third-ranked Nedjma has more than doubled its subscriber base to more than three million in the past year."
Algeria's fixed-line penetration remains low. Orascom is the mobile market leader followed by Wataniya Telecom Algerie then ATM Mobilis, according to Johan Smith, director at KPMG South Africa. Algerie Telecoms plans to introduce Fibre-to-the-Home (FTTH) connectivity during 2008. (See separate story).
Other Northern African countries are also experiencing growth, with Egypt's telecom sector providing approximately 1,500 new fixed lines in the country every day, which has helped to reduce the waiting list by around 90% in recent years, according to Buddecom. Egypt also launched its 3G mobile service, one of the first in the region, in May last year.
Dominated traditionally by South Africa, southern Africa has seen other countries emerging as telecoms contenders in the region. Botswana, for example, has a robust telecommunications environment. "Mobile penetration has passed the 50% mark which is more than twice the African average, while the government-owned national operator BTC has seen a continued decline in the number of fixed-line connections despite the introduction of ADSL broadband services," according to Buddecom's 2007 Africa--Telecoms, Mobile and Broadband in Southern Region and Indian Ocean Islands report.
Fixed-line incumbent Angola Telecom is being privatised in the oil-producing nation and soon the country will welcome the licensing of a third mobile operator. Competition finally came to Namibia's mobile telecommunications sector in 2007, creating a duopoly.
Although the market in Mauritius is small, it is becoming one of the most dynamic in Africa after a surprisingly late start. It has ambitions of becoming the ICT hub for the sub-region and perhaps a link between Asia, Africa and Latin America. (See separate stories).
Madagascar, on the other hand, still battles with a low penetration rate for both fixed-line and mobile connectivity, despite the deregulation of the industry and the introduction of competition in the mobile market.
Despite political tensions and continued uncertainty, Zimbabwe's telecommunications sector is slowly addressing the demand for broadband service and has introduced 3G mobile services.
Changes in policy and regulation in South Africa have started to create a more competitive, diverse telecommunications sector that can cater to the demands of a sophisticated business and consumer market.
Mobile penetration remains at around 70%, but more alternatives in a variety of areas such as Value Added Network Services (VANS), which have recently been granted permission to convert to electronic communications network services (ECNS) licences, are creating an exciting, emerging sector.
"This will create more independence and increase competition, offer more alternatives and eventually a reduction in pricing," says Tsouros.
Arguably one of the most significant players in this region must be Nigeria. The mobile sector is dominated by MTN followed by Glo and Celtel. At the country's current growth rate, Nigeria is expected to surpass South Africa to become the continent's largest mobile market.
Johan Smith of KPMG South Africa lists continued convergence--such as integration of technological platforms enabling delivery of diverse service types and the implementation of the Universal Access Licensing regime by the Nigerian Communications Commission, which has spawned a wave of consolidations--as two of the core reasons for the country's emergence as a leader in the sector. "The UMTS licences recently issued to operators will enable them to enter the broadband access market in Nigeria," he says.
Fiercer competition with new entrants, which has been the case in most African countries undergoing deregulation, has also created an attractive proposition. "Infrastructure sharing/ co-location is a global best practice and heavily explored in European countries, Singapore and Australia for the roll out of 3G technologies and is currently being considered by Nigerian operators," says Smith.
The world's first borderless network was introduced to the Nigerian market in 2007 by Celtel. The service enables customers to use their mobile phones across country borders without a need for a roaming agreement or additional financial costs.
Burkina Faso has also begun to invest in its telecoms environment with incumbent Onatel receiving a cash injection through Maroc Telecom's acquisition of a 51% stake in the incumbent. This investment seems set to speed up development in the sector. Onatel currently has 400,000 mobile customers and a 35% market share in Burkina Faso. Telcel International and MSI-CI compete with the fixed-line operator in the mobile market.
Cost is the decisive factor in Cote d'lvoire's success in the ADSL market, with the West African nation offering speeds of up to 8Mb/s at very affordable rates.
Kenya and Tanzania top the list in East Africa, with innovative roll-outs and telecommunications initiatives. Kenya, for example, has already rolled out a number of WiMax options. WiMax is also available in Rwanda, Uganda and Tanzania.
In Kenya, Celtel and Safaricom are the clear leaders with Safaricom, in which the state-owned Telkom Kenya has substantial shares, with the larger subscriber base. However, with its One Network solution, Celtel has been gaining market share throughout the sub-region. Safaricom's widely anticipated IPO in April fell below expectations largely because of a general lack of confidence in the country's economy following the political standoff between the incumbent President Mwai Kibaki and the opposition challenger Raila Oginga.
A robust telecommunications sector makes Tanzania an attractive investment option on the continent. The country has a fully competitive mobile sector comprising four networks and two fixed-line operators, according to Buddecom. Data users are the focus of both ISPs and mobile operators as competition for this market hots up with the introduction of 3G services and the legalisation of VoIP.
Uganda has a competitive mobile environment with two new mobile licensees, Warid Telecom and HiTs Telecom, joining the three established operators MTN, Celtel and Uganda Telecom.
Informa Telecoms & Media forecasts 54m subscriptions by 2012 in Eastern Africa, a 73% growth since end of 2007. "Voice remains the major telecommunications service used in Eastern Africa but the data segment is also in expansion, fuelled by converged licensing frameworks and the deployment of technologies other than GSM," the business intelligence and strategic solutions provider says.
Overall there are 37 fixed and mobile operators in the Eastern region and over 20 ISPs.
As in other regions, mobile has been the growth area over the past year. Convergence has also increased opportunities and offerings within the region. In Cameroon, for example, fixed-line incumbent, Camtel, has gone mobile through a third national licence, which will see them entering the mobile environment.
Mobile operators such as MTN Cameroon and Orange CM, are establishing themselves as leading ISPs by introducing mobile data services and acquiring existing ISPs.
Boasting little in the form of fixed-line operations, DR Congo lags behind others on the continent, despite growth in mobile telephony which has replaced the fixed-line almost completely. Vodacom Congo (Congo-GSM), Celtel DRC, CCT, Millicom (Tigo) and Supercell are the mobile operators. Internet usage remains low, but with excellent potential for growth if the obstacles can be overcome.
The big picture
Interest in African telecoms remains robust. UAE telecoms incumbent Etisalat has $3.5bn to invest in Africa when opportunities arise and France Telecom has also shown interest in expanding its reach, having acquired mobile licences in Guinea Bissau and Guinea in March last year. The South African, Nigerian and Algerian markets together comprise almost half of the African telecommunications market, according to KPMG.
Satellite remains a vital technology for Africa and seems set to continue its stable growth. "Satellite is in a certain sense still one of the only ways for landlocked countries in Africa to connect with the rest of the world," says Tsouros.
"Regulation, penetration and competition lead to increased M&A activity and telecoms dominate the deal value in emerging markets," says Smith. "We expect to see further consolidation for operators to increase their footprints and offer new converged services. With the liberalisation of the telecoms industry, abnormal growth rates resulted. Growth will slow down in the next few years, but the market will continue to offer unique opportunities."
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|Title Annotation:||ITC in Africa|
|Comment:||Moving into hi-tech: 3G spurs new growth.(ITC in Africa)|
|Date:||May 1, 2008|
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