2007 Africa - Telecoms, Mobile and Broadband in Lesotho, South Africa and Swaziland

Publication Overview

This report provides a comprehensive overview of the trends and developments in the telecommunications markets of three African countries: The continent’s leading market, South Africa, as well as its two neighbours, Lesotho and Swaziland. Subjects covered include:

• Key statistics;
• Market and industry overviews;
• Regulatory environment and structural reform;
• Major players (fixed and mobile);
• Infrastructure development;
• Mobile voice and data markets;
• Internet, including broadband development;
• Convergence of mobile and fixed, voice, data and multimedia services.

(Approx. number of pages: 127)
Current publication date: September 2007 (6th Edition)
Next publication date: September 2008

Executive Summary

South Africa is the economic powerhouse and leading telecommunications market of the continent, but a lack of competition in several key areas has slowed developments down in recent years and allowed the country to be overtaken by some other African countries in terms of certain key indicators. At more than 70% penetration, South Africa will see a flattening subscriber growth curve in its mobile market over the next few years, leaving service providers to compete aggressively on price, value-add and quality of services. The boom will be taken over by the provision of broadband Internet access, combined with voice and entertainment services in a converging and more competitive environment of fixed, wireless and mobile platforms. The small kingdoms of Lesotho and Swaziland are expected to follow in the footsteps of their powerful neighbour, privatise their incumbent telecom monopolies and further liberalise their markets.

South Africa

South Africa’s telecom sector boasts the continent’s most advanced networks in terms of technology deployed and services provided. The country is taking a regional lead role in the convergence of telecommunication and information technologies. The long awaited new Electronic Communications Act (formerly Convergence Bill) was finally enacted in mid-2006. Sweeping liberalisation measures taken two years earlier, legalising - among other things - the use of VoIP, have begun to change the country’s telecoms landscape fundamentally. ISPs are turning into phone companies, and vice versa. Both are moving into delivering audio and video content over their networks, while in turn the traditional electronic media carriers are discovering the potential of their infrastructure for telecommunications service delivery.

The newly licensed SNO, Neotel finally launched services in competition to Telkom SA in early 2007, using nationwide infrastructure of Eskom and Transtel, the country’s electricity and railway utilities. Broadcasting signal carrier Sentech is another major owner of telecommunications infrastructure, and some of the largest municipalities in the country are also rolling out their own networks. Wireless technologies are being pursued to provide alternatives to Telkom’s copper access network. The end of Telkom’s monopoly on the international SAT-3 submarine cable in 2007 is expected to help reduce the costs of telecommunication in South Africa which are currently among the highest in the world.

Despite being open to competition by more than 200 ISPs, South Africa’s Internet sector has been stagnant in recent years due to the expensive operating environment created by Telkom SA’s dominance in the fixed-line and bandwidth market. Under the incumbent’s monopoly rule, fixed-line teledensity has continuously fallen since 2000. Modest growth has now returned to the Internet market, stimulated by the launch of ADSL and wireless broadband services in 2004, followed by continuous price cuts in the following years. Further stimulus is expected in 2007 from the launch of the SNO and an expansion of 3G/HSDPA services by the country’s mobile network operators.

The continent’s leading mobile market, South Africa has seen rapid uptake of GSM since competition was introduced to the sector more than 10 years ago. With market penetration exceeding 70% and mobile number portability introduced in 2006, the subscriber growth curve has started to flatten, increasingly forcing the three network operators to find innovative ways of distinguishing themselves from the competition in order to gain and retain customers. The introduction of mobile Internet and multimedia services via 3G mobile technology is one way of doing this and has lead to a marked increase in data traffic. Another is the adoption of the MVNO model, highlighted by the entry of Virgin Mobile into the market. For the country overview, see chapter 2, page 11.

Lesotho

Telecommunications in Lesotho has undergone gradual transformation from a state-owned monopoly to a privately majority-owned national operator, with competition in the mobile sub-sector since 2002. Mobile market penetration was approaching 20% in mid-2007 compared with a fixed-line teledensity and Internet penetration of less than 3%. The use of wireless technology has led to an accelerated increase of teledensity, which in turn will foster further growth in Internet penetration. Following the end of Telecom Lesotho’s exclusivity period, more competition may be introduced in several market segments. For the country overview, see chapter 1, page 1.

Swaziland

The telecoms sector in Swaziland features an old-style posts and telecom monopoly operator for fixed services and one of the last mobile monopolies on the continent as well. Nevertheless, fixed and mobile penetration is relatively high compared with other countries in the region. The level of Internet usage, only about average in the region, has been held back by a lack of attractive broadband offerings, caused by the limited extent of the fixed-line network and limited options for affordable international bandwidth. The planned unbundling and eventual privatisation of the incumbent and the introduction of more competition would enable the market to live up to its relative GDP strength. For the country overview, see chapter 3, page 95.

Key highlights:

• Fixed-line, mobile and Internet/broadband market forecasts to 2010 and 2015 for South Africa and Swaziland;
• Second national operator (SNO) in South Africa has launched services;
• Telkom SA continues to post record results;
• South African mobile market is approaching saturation;
• Mobile data revenue close to 10% of total in South Africa;
• ADSL is rapidly replacing dial-up as the main Internet access method in South Africa;
• Telkom SA prepares major WiMAX launch in early 2008;
• Telecom Lesotho is pushing fixed-mobile convergence;
• Swaziland’s incumbent SPTC due for privatisation following major restructuring program.

Telkom South Africa ADSL, dial-up and satellite Internet subscribers - 2003-2007

For those needing high level strategic information and objective analysis on this region, this report is essential reading and gives further information on:

• Government policies affecting the telecoms industry;
• Market liberalisation;
• Telecoms operators – privatisation, acquisitions, new licences and competition;
• Internet and broadband development and growth;
• The fast growing mobile markets of the region and their expected saturation levels;
• Mobile application and content developments.

Data in this report is the latest available at the time of preparation and may not be for the current year.

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