Wednesday, February 11, 2009

Africa Set For Mobile Phone and Broadband Growth

Cell phones power financial revolution in Africa

JOHANNESBURG: Africa is the fastest-growing telecommunications market in the world, but growth of broadband on the continent has been hamstrung by a patchy national network and costly connections to international systems. That may be about to change.

This year, the construction of new infrastructure could increase capacity and cut prices in Africa, unlocking the continent's high-speed Internet potential and creating growth opportunities for operators and equipment companies.

AfricaNext Investment Research, based in Cambridge, Massachusetts, said it expected the African broadband market to grow more than fourfold in five years, to 12.7 million users from 2.7 million in 2007.

It said the growth will be made possible by new underwater cables and national networks scheduled to begin operation this year and next, and by the emergence of high-speed wireless technologies like EVDO and WiMax.

"There is a confluence of indicators that suggest that for the first time in more than a decade, broadband growth in the African continent may be on the verge of truly taking off," AfricaNext said.

As the rest of the world reels from the global economic slowdown, Africa would likely offer growth opportunities for equipment providers.

"I don't think equipment vendors like Ericsson and Huawei are going to shy away from opportunities in Africa," said Lindsey McDonald, ICT industry analyst at Frost & Sullivan McDonald.

While West Africa already has high-speed Internet through the SAT-3 cable that loops around the west of the continent, East Africa still relies on dial-up or expensive satellite connections.

But projects worth around $6 billion, including 10 undersea cables and several national networks, are planned or under construction in Africa, according to BMI TechKnowledge Group, a research firm based in South Africa.

One $650 million fiber-optic cable, scheduled to be ready in June, would link east and southern Africa to Europe and Asia.

Another network, owned by Telkom Kenya and Telkom South Africa, among other African operators, plans to also loop around east Africa, bringing fast and inexpensive bandwidth to at least 23 landlocked African countries.

It should be completed by 2010 and will cost $265 million. Alcatel-Lucent is working on the project.

Richard Hurst, a telecommunications analyst at the global telecommunications advisory firm IDC, said international bandwidth rates were expected to drop to a fifth or less of current rates of $3,000 a megabit after these two cables are in operation.

The cables "are a major positive step in a right direction," he said.

Investors and telecommunications companies with an eye on expansion are preparing to take advantage of the new capacity.

Safaricom, in which Vodafone of Britain has a 40 percent stake, said in September 2008 it was buying a 51 percent stake in the Kenyan IT firm Onecom to improve its product range and move into the data business.

McDonald, of Frost & Sullivan, said more such deals may follow in Kenya. She said Safaricom might also decide to lay its own fiber-optic cable to reduce its transmission costs within two to three years.

The full benefit of undersea cables would only be felt if national infrastructures in Africa are also improved, and progress is already being made in many countries.

No comments: