African Telecoms Market Overview
October 2007
Peter Lange, Budde Communications Senior Analyst for Africa writes:
Africa is the world’s second largest continent after Asia and presents an enormous market that has seen excellent growth rates in recent years especially in the mobile sector. Huge pent-up demand means that Africans on average wait around five years for a fixed telephone, in some countries more than 10 years. Around 2.5 million Africans are currently on waiting lists for a fixed telephone line, and the African Telecommunications Union (ATU) estimates that there is demand to support an additional 60 million lines in Africa. This demand is likely to be even greater in view of the increasing interest in Internet access and broadband capabilities.
Many African governments have realised the importance of telecommunications and the fact that private investment is the way forward. Mobile, wireless and satellite technologies are now making the task of connecting Africa far easier than it has been with the traditional cable-based services, and growth rates have been phenomenal.
Many countries are undergoing sectoral reform and foreign investment is now being actively encouraged across the continent as privatisation and liberalisation are progressively being introduced. More than one-third of all state telcos have already privatised and several more are set to undergo privatisation in the near future. Some of the leading markets on the continent, including Algeria and Kenya, have privatisation of their national telcos on the agenda for 2007.
Voice over Internet Protocol (VoIP) is starting to have an impact in Africa following deregulation in key markets and steady improvements in Internet bandwidth. Among the first countries that have liberalised VoIP and opened up opportunities for many smaller service providers are South Africa, Kenya, Algeria and Egypt, with many others now following in their footsteps. In more protectionist markets, significant amounts of international voice traffic are carried by unlicensed grey market players. International IP telephony wholesalers have seen a huge surge in voice traffic to and from Africa in the past five years. Through their interconnection capabilities, they enable African operators to quickly gain access to an international network, new revenue and very competitive outbound rates. The arrival of VoIP has also brought down conventional international call charges.
Eastern Africa, the only densely populated part of the world without access to international fibre bandwidth, is set to finally get connected as several submarine cable projects along the continent''s East coast are being developed.
National transmission backbone networks are also being migrated from microwave radio relay to fibre at an increasing rate. Where legally possible, mobile network operators have rolled out their own independent national transmission networks in order to connect their base stations to the core network.
