2007 Africa - Telecoms, Mobile and Broadband Overview

Publication Overview

This report provides a comprehensive overview of trends and developments in the telecommunications markets in Africa. Subjects covered include:

• Key Statistics
• Market and Industry Overviews
• Regulatory environment and structural reform
• Major Players (fixed and mobile)
• Infrastructure development;
• Fixed and mobile voice and data markets
• Internet, including broadband development
• Internet telephony (VoIP)
• Convergence of telecommunications, digital media and broadcasting
• Analyses of key developments shaping the future of telecommunications in Africa

Executive Summary

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 some of the world’s lowest penetration rates. Foreign investors are scrambling for positions in this very lucrative market as privatisation and liberalisation are progressively being introduced. Explosive growth in the mobile sector has meant that by early 2007 mobile users constituted almost 90% of all African telephone subscribers. Other wireless solutions are also used to serve as substitutes for inadequate fixed-line infrastructure. A surge in demand for Internet access and broadband capabilities is expected to drive these developments further in the coming years. Several international fibre projects currently under development will deliver the necessary bandwidth to Africa and bring down costs. Overall, Africa’s telecoms future looks very promising and offers great opportunities to service providers, equipment vendors and investors.

The continent’s mobile market is consistently growing at around 50-60% every year. Enormous further potential remains, with market penetration standing at little more than 20%. Due to Africa’s poor fixed-line infrastructure, the mobile networks are beginning to play an increasing role in Internet service provision as well, following the launch of 3G services in a number of markets – a welcome new revenue stream in an almost entirely prepaid environment with low ARPU levels. Newly introduced converged licensing regimes have increased the competitive pressure in a number of key markets but also allow the mobile operators to branch out into new service segments.

Africa’s data traffic is on the rise, fuelled by rapid growth of ADSL and wireless broadband services. Massive efforts are under way to adapt the continent’s underdeveloped infrastructure to the growing need, both on the national and international level. Broadband has begun to rapidly replace dial-up as the preferred access method, and this process is already virtually completed in the continent’s more developed markets. Overall Internet market penetration is still low at just over 4%, leaving ample room for further growth in the coming years.

The extent of Next Generation Networks and services on the continent is still limited. There are, however, encouraging developments. Several countries have launched broadband initiatives and are rolling out dedicated IP-based networks and new fibre optic links. Given the still large amounts of unsatisfied demand for basic voice services in Africa, VoIP is a primary application at this stage, and this technology is now gaining ground on the continent following steady improvements in Internet bandwidth, deregulation in several countries and the growing number of VoIP service providers entering the market. The first triple play services have been launched across the continent, offering converged voice, data and broadband TV/video. WiMAX technology, currently being rolled out in at least 20 African countries, will enable the continent to leapfrog straight to wireless NGNs at affordable cost.

The number of African countries where VoIP can be regarded as open to private operators has more than doubled to around 20 in 2007. Nevertheless, at least 10% of international calls in almost every country on the continent are still carried by unlicensed grey market players, because many operators are not yet passing on the full cost savings from VoIP to their customers. Profit margins are still very healthy in this emerging market.

Broadcasting is an integral part of Africa’s development and a means of communication over the vast areas of the continent. Improvements in broadband infrastructure and the emergence of 3G mobile systems are now opening the way to convergence of conventional and digital media as well as telecommunications. With far greater ownership of TV sets compared to PCs in Africa, the broadcasters’ viewers represent a huge potential customer base for Internet services as well. Interactive TV, especially the variety using mobile phone text messages (SMS), has found its way to Africa and is growing fast. At least nine African countries are currently trialing or planning to introduce Broadband TV and VoD services, typically converged with voice and data services under so-called triple play models.

Key Highlights

• Major privatisation events in 2006/07;
• Several new submarine fibre projects currently under development will improve the supply of international bandwidth at drastically reduced prices;
• Status reports from 17 African countries where the migration to IP-based NGNs have begun;
• Record prices are being paid for investments in African mobile operations;
• Converged licensing regimes increase competition in all market sectors;
• Status reports from all 29 African countries with significant VoIP developments;
• Broadband is rapidly replacing dial-up Internet access;
• 3G mobile is gaining a foothold in Africa;
• Wireless and mobile broadband is overtaking ADSL;
• Status reports from 20 countries on the continent with WiMAX trials, rollouts or commercial services;
• The first four service providers on the continent have launched commercial Triple-Play services, with at least five others at advanced stages of deployment.

Top 10 African markets by annual mobile subscriber growth – 2006

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