Africa Overview and Company Profiles
February 2005
Paul Budde writes:
With around 13% of the world’s population and less than 3% of the world’s telephone lines, Africa is fast evolving as a continent of unlimited opportunity for telecommunications service providers, equipment vendors and investors.
Africa needs to invest US$11 billion per year over a 10-year period to reach its target of 10% teledensity by the year 2010. The private sector is expected to be the key player in the financing of telecommunications development in the region.
Many African countries are undergoing sectoral reform and foreign investment is flowing in as privatisation and deregulation 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. Nigeria and Kenya, two of the biggest markets on the continent, have privatisation of their national telcos on the agenda for 2005.
While being the worlds most rapidly growing market for mobile telephony and also home to the fastest growing fixed telephony markets in the world, Africa still has the world’s lowest penetration rates and basic telephony provision remains a major need in many parts of the continent, particularly in rural areas.
Mobile phones outnumber fixed lines in most African countries and constitute more than 80% of all African telephone subscribers - a higher ratio than on any other continent. Demand for mobile lines is so high that in some countries the existing networks are struggling to cope. By 2010, Africa is expected to notch up some 200 million mobile subscribers.
The convergence of fixed and mobile networks and services will continue to dominate the market with future licensees gaining combination licences with the ability to operate both wired and wireless systems.
Second National Operator (SNO) licences have been issued to companies in Ghana, Nigeria, Tanzania, Uganda and Zimbabwe. South Africa plans to license a SNO in 2005 and Uganda a Third National Operator (TNO). Several countries have also licensed regional operators, in some cases specifically for under-served areas.
Regulations in most African countries do not allow Internet Service Providers (ISPs) to obtain their own international bandwidth. In early-2005 Kenya joined the list of countries with ISPs that are not dependent on a monopoly operator in this regard and licensed several new international bandwidth providers.
Africa’s combined international Internet bandwidth is projected to rise tenfold to more than 6Gb/s over the five years to 2006. By early-2004 it stood at around 2.5Gb/s.
Overall Internet market penetration is still very low due to limited fixed-line infrastructures. Nevertheless, several African countries have experienced triple-digit growth rates in Internet usage in 2003 and 2004. Various broadband initiatives have been launched and the number of African countries offering commercial ADSL services has tripled to 15 during 2004.
The proliferation of new wireless technologies, including Third generation (3G) and 2.5G mobile technologies is expected to bring the Internet to broad masses in Africa for the first time. The first 3G mobile systems were launched in Africa as early as March 2003, and several mobile operators have already established themselves as ISPs.
The liberalisation of Voice over Internet Protocol (VoIP) telephony in several African countries in 2004 will have a significant impact on their markets moving into 2005 and is expected to have a ripple effect across the continent, triggering a much needed reduction of the traditionally high telecommunication costs in Africa.
Telkom South Africa, the continent’s biggest telco and 50% shareholder in Vodacom, listed on the Johannesburg and New York Stock Exchanges in 2003 and operate one of the most extensive and advanced telecoms networks in Africa.
Thuraya Satellite Telecommunications, one of the leading providers of Global Mobile Personal Communications Satellite (GMPCS) services, expanded its footprint in sub-Saharan Africa significantly in 2004, made possible by the launch of a second satellite the previous year.
Several African and international companies have evolved as regional mobile players, including: Celtel International, Econet Wireless International, Millicom International Cellular, MTN Group, Orange, Orascom Telecom and Vodacom Group.
