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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
added: 2007-05-29

All sectors of Africa’s telecom markets continue to be among the fastest growing in the world, thanks largely to the rapid take-up of mobile phones and roll-out of networks. With fixed-line and Internet penetration at little more than 3% and mobile penetration at around 15%, enormous opportunities continue to exist 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 massive amounts of foreign investment are flowing in 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. Nigeria and Kenya, two of the biggest markets on the continent, have had difficulties with the privatisation of their national telcos in 2005 which could lead to particularly attractive opportunities for investors in 2006.

Regional and international players continued to jostle for positions in Africa’s lucrative mobile market throughout 2005 and 2006 is likely to see more consolidation. Particularly remarkable is the influx of Middle Eastern capital. There are now more than 120 mobile networks in operation in Africa compared with 33 in 1995.

The number of mobile phones quickly outnumbered fixed lines in most African countries, and mobile users now constitute around 85% of all African telephone subscribers – a higher ratio than on any other continent. Other wireless solutions are also used to serve as substitutes for inadequate fixed-line infrastructure and Internet access. New mobile and fixed operating licenses will become available in several key markets in 2006. The convergence of fixed and mobile networks and services will continue to dominate the market with new licensees gaining combination licences with the ability to operate both wired and wireless systems. Africa’s mobile networks are playing an increasing role in the delivery of data and saw their data revenues increasing by between 20% and 100% in 2005, even though much of the data traffic consists of Short Message Service (SMS) at this stage.

The first 3G mobile systems have been launched in Africa with several more scheduled for 2006. They are expected to play an increasing role in the provision of Internet services, and several mobile operators have already established themselves as ISPs.

The number of African countries offering commercial ADSL services reached 21 at the end of 2005. The liberalisation of VoIP telephony across the continent continues and will have a significant impact on the market moving into 2006, triggering a much needed reduction of the traditionally high telecommunication costs in Africa.

Several countries in Africa have embarked on major initiatives to roll out Internet Protocol (IP)-based Next Generation Networks (NGN) which will enable them to cost-effectively deliver converged voice, data and video services under so-called triple-play models, including VoIP, Internet access and Broadband TV. WiMAX technology will enable Africa to leapfrog to wireless NGNs. Six African countries are already deploying WiMAX systems, with Mauritius becoming the world's first country with a nationwide network.

In 2006 the ring around Africa with fibre optic submarine cables will be closed, allowing traffic to be routed between African countries, to Europe and the Pacific. Partners in the cable projects have come under scrutiny for monopolistic pricing, which may lead to lower access prices in the future. Africa's combined international Internet bandwidth is projected to rise tenfold to more than 6Gb/s over the five years to 2006. By early 2005 it stood at close to 5Gb/s. Convergence of Telecoms and Media is starting to happen in Africa with at least four countries currently trialing or planning to introduce Triple-Play services.


Source: Business Wire

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