Archive for April, 2014

New broadband infrastructure licences to be awarded in Nigeria

Wednesday, April 30th, 2014

Nigeria is one of the biggest and fastest growing telecom markets in Africa, attracting huge amounts of foreign investment. Far reaching liberalisation has led to hundreds of companies providing virtually all kinds of telecom and value-added services in an independently regulated market. After a decade of failed privatisation attempts, the incumbent national telco Nitel and its mobile arm M-Tel are currently in liquidation.

The West African country has overtaken South Africa to become the continent’s largest mobile market with now more than 125 million subscribers and a market penetration stands of around 75% in early 2014. The rapid growth has led to problems with network congestion and quality of service, prompting the regulatory authority NCC to impose fines and sanctions. Every year, the network operators are investing billions of US$ into additional base stations and fibre optic transmission to support the ever increasing demand for bandwidth.

Much of the remaining addressable market is in the country’s rural areas where network rollouts and operations are expensive. This in combination with declining ARPU levels is forcing the networks to streamline their operations and to develop new revenue streams from services such as third and fourth generation (3G/4G) mobile broadband, mobile payments/banking, and others. Major infrastructure sharing and outsourcing deals have been concluded. Several LTE networks are in operation.

Nigeria is also the most competitive fixed-line market in Africa, featuring a second national operator (SNO, Globacom) and over 80 other companies licensed to provide fixed telephony services. The alternative carriers combined now provide around 85% of all fixed connections, the majority of which has been implemented using wireless technologies. This in combination with a unified licensing regime gives the network operators the opportunity to also enter the lucrative mobile market and has helped them to secure hundreds of millions of US$ in investments from local and foreign investors. However, fixed-wireless connections have declined in the past few years in favour of mobile services. This has prompted mergers and acquisitions (M&A) in the sector, which is likely to continue in the coming years.

The arrival of a second international submarine fibre-optic cable (Glo-1) in 2009 and a more in 2010, 2012 and 2013 has broken the monopoly of Nitel’s notorious SAT-3/WASC cable and is revolutionising the country’s underdeveloped Internet and broadband sector by reducing the cost of international bandwidth by up to 90%. Additional submarine cables are scheduled to go online in 2014. Significant consolidation has occurred among Internet service providers (ISPs) as new powerful players from the fixed-wireless and mobile sector have entered this market with 3G/4G mobile and advanced wireless broadband services such as WiMAX. The Internet Protocol (IP)-based next generation networks currently being rolled out are enabling converged voice, data/Internet and video services, VoIP is already carrying the bulk of Nigeria’s international voice traffic. Applications such as e-commerce, online banking and e-payments, e-health, e-learning and e-government are rapidly evolving.

Although the market is one of the most competitive in Africa, the industry regulator is tightening price caps and mandating further reductions of interconnect rates. Following years of delays, mobile number portability (MNP) was finally introduced in 2013, promising to make the market even more competitive.

For detailed information, table of contents and pricing see:

Nigeria – Telecoms, Mobile, Broadband and Forecasts

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Mobile operators moving into fixed-line services

Wednesday, April 30th, 2014

Further to our earlier blog on this topic, there are some further details on this interesting development.

Faced with stiff competition, and a market continually evolving through consolidation, mobile operators have long considered that they must diversify their offerings to survive. Simply providing mobile voice and data packages is no longer enough: they must differentiate themselves by offering a complete range of services.

There are several examples of MNOs doing exactly this. The best is perhaps provided by Vodafone, which now offers fixed-line services (voice and broadband) in several markets. The key ones here may be:

Ireland – Mobile Market Insights, Statistics and Forecasts, where Vodafone has acquired Interfusion and Complete Telecom (the latter subsequently becoming incorporated within the Enterprise Customer Solutions unit of Vodafone Ireland). Vodafone Ireland is also moving into the FttP market, having established itself as a provider of DSL-based broadband.

United Kingdom – Mobile Market Insights, Statistics and Forecasts, where BT’s subsidiary Niche Spectrum Ventures became a new entrant in the mobile sector following its award of spectrum in 2013. BT is likely to introduce LTE and WiFi home hubs to improve indoor coverage for its bundled services.

Spain – Mobile Market Insights, Statistics and Forecasts, where Vodafone bought the network and assets of Tele2’s local operation.

Germany – Mobile Market Insights, Statistics and Forecasts, where Vodafone some years ago integrated its fixed-line division Arcor, so providing a full service offering to subscribers.

Similar developments are expected in other markets. One to watch may be Argentina (Argentina – Broadband and Broadcasting Market – Insights, Statistics and Forecasts): here the main cable TV provider Grupo Clarín (which left the mobile market in 2002 and but has been keen to return to it) is the only Argentine-owned company that could substantially boost the fixed-line market. It has long been denied a licence to provide telephony services, principally due to a long-running dispute with the current government. However, in late 2013 Clarin submitted an asset divestment plan, which was approved by the competition watchdog AFSCA in February this year. By breaking up its operations into six distinct companies Clarin will avoid a forced dismantling under the terms of the new media ownership law. In doing so it can sell its operating licences or redistribute ownership of stocks. There is a chance that under this new format it may secure a licence to offer fixed-voice services.

Henry Lancaster
Senior Analyst BuddeComm

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Movistar preps for mid-2014 LTE launch in Guatemala

Wednesday, April 30th, 2014

Growth in Guatemala’s telecom sector has been affected by the continuing global economic downturn, which has reduced spending power in both the residential and corporate markets. The fixed-line market shrank for the first time in 2009, a trend which has been maintained since. The broadband market has continued to grow but at a slower rate while the mobile telephony market has shown remarkably strong growth in recent years, largely stimulated by consumers finding an alternative to fixed-line communications. Indeed, poor infrastructure has led to the country having one of the lowest fixed-line teledensities in the region. As a result, broadband availability is limited. This has been exacerbated by very low GDP per capita, which has stymied consumer take-up of services where available, as also the popular use of computers. The outlook for the remainder of 2014 is characteristic of former years, with the fixed-line market likely to stagnate while the fixed broadband and mobile sectors develop steadily.

The anticipated growth in GDP per capita will provide more disposable household revenue and so stimulate demand for telecom and ICT services. This would be more marked should the country free itself from its legacy of violence, poverty, and corruption, factors which continue to inhibit prospective investors.

Among the poorer countries in Latin America, Guatemala’s telecom infrastructure has suffered from years of underinvestment from state and provincial governments. Network upgrades, in both the fixed-line and mobile sector, have largely been undertaken by the private sector. A number of key players, including Telefónica and América Móvil, are regional and global powerhouses which can tap into expertise and financial resources to bolster their Guatemalan businesses. Given the commercial impetus of these operators, insufficient government financial investment has resulted in many regional areas remaining with poor or non-existent services. Nevertheless, the country benefits from one of the most open regulatory frameworks, with all telecom sectors having been open to competition since 1996.

América Móvil controls about 70% of the fixed lines in service through its subsidiary Claro. Mobile telephony has been the most developed telecom market in Guatemala for several quarters and is likely to remain so for the next few years given the poor condition of fixed-line services. The intense competition amongst operators has helped to improve services and lower prices. Mobile penetration is on a par with the regional average, while the strong growth in the mobile subscriber base is a further indication that consumers are leaning to mobile telephony as an alternative to fixed-line services.

For detailed information, table of contents and pricing see:

Guatemala – Telecoms, Mobile and Broadband

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New Zealand mobile broadband base shows solid growth as LTE reach expands

Tuesday, April 29th, 2014

In common with other developed markets, the number of mobile subscribers in New Zealand continues to grow rapidly as consumers adopt smartphones and other enabled devices such as tablets. Definitions of mobile broadband are fluid, and can incorporate standard devices such as smartphones as also dongles and keys used with laptops. In the New Zealand market, there are also mobile broadband subscribers via the Rural Broadband Initiative (being undertaken by Vodafone) and subscribers to regional telcos with a presence is certain towns and which generally cover rural areas using the unlicensed 2.4GHz and 5.8GHz bands.

Vodafone does not provide figures for mobile broadband subscribers. As an indication, though, the group’s average smartphone penetration in Europe was 43% at the end of 2013. Markets with the equivalent development to New Zealand, such as the Netherlands, the UK and Spain, recorded smartphone penetration rates of around 60%. Translated to New Zealand, this would suggest that about 1.39 million of Vodafone’s subscribers used mobile broadband services.

Mobile data revenue has grown in line with subscriber growth, supported by the decline in the cost of mobile data traffic as operators now generally include generous data within bundles. Mobile data revenue may reach some NZ$445 million for 2014, compared to only NZ$225 million in 2010. Traffic has seen similar growth, and should approach nine petabytes in this year, compared to 1.1 petabytes in 2010.

The average cost of mobile data has also fallen considerably, though data remains relatively expensive compared to mobile voice plans. In March 2014 the Commerce Commission reported that although plan prices had fallen by between 25% and 70% since 2011 and were about 40% below average prices among OECD countries (as of mid-2013), some plans, such as a 6GB/month plan, were among the most expensive in the OECD.

Commercial LTE services are now widespread in New Zealand, and as the services are pushed deeper into rural areas mobile data use will escalate. In the near future operators will be making greater use of the recently auctioned 700MHz allocations to complement their 1800MHz concessions. The government has already suggested that the economic benefits of using this spectrum for 4G could reach up to $2.4 billion over 20 years. The auction, held towards the end of 2013, included a number of conditions for licensees.  Crucially, operators are obliged to build a certain number of base stations each year for five years in areas where they have no existing infrastructure. Licensees with their own mobile networks are required within five years to upgrade 75% of their base stations in rural areas operating in the 850MHz and 900MHz bands to LTE using the 700MHz band. This was aimed at ensuring that a large portion of rural areas will also benefit from LTE.

The expanding reach of LTE will also be helped by innovative measures undertaken by the incumbent Telco telecom, which is integrating its 3G, 4G, fibre and WiFi platforms into a single platform. 2degrees recently secured a $165 million banking facility with the Bank of New Zealand, and has contracted Huawei as its vendor partner. Meanwhile, Vodafone, which inaugurated LTE in Auckland in early 2013 and has since extended services to more than a dozen larger towns, has also tested LTE-Advanced with its vendor Nokia Solutions and Networks. LTE-A has the potential to deliver speeds of up to 300Mb/s in optimum conditions through combining blocks of spectrum.

Although Vodafone on average charges a $10 monthly premium for the service, this is expected to be dropped when competition from Telecom and 2degrees becomes more pronounced.

For more analyses on New Zealand’s mobile and broadband markets, see New Zealand – Broadband – Statistics, Overview and Providers and New Zealand – Mobile Communications – Statistics, Analysis and Major Operators.

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Belize – BLT revenue continues to slide for FY 2013

Tuesday, April 29th, 2014

Belize is one the smaller countries in the region, with fewer than 350,000 inhabitants. It is the only English-speaking nation in Central America, having closer affinities with the Caribbean region than with its immediate neighbours.

While Belize’s GDP per capita is high for Central America, its telecoms services remain poor by regional standards. Both fixed-line teledensity and mobile penetration are lower than in neighbouring countries.

The Belizean telecom market was officially liberalised in 2003, yet the incumbent, Belize Telemedia Limited, continues to hold a monopoly in fixed-line services and is the dominant provider of mobile and broadband services. In 2009, the state renationalised Belize Telemedia Limited, after a change of government brought to light a questionable Accommodation Agreement between the previous administration and Belize Telemedia Limited.

Although the rationale for the nationalisation was to improve conditions for consumers, Belize Telemedia Limited’s prices remain high and competition is marginal. The nationalisation further discourages foreign investment in a market plagued by frequent allegations of corruption.

Market highlights:

  • The number of fixed lines continues to fall as customers adopt mobile services for basic telecoms. This has kept fixed-line teledensity low, while mobile penetration continues to rise steadily. The mobile sector account for over bout 90% of all phone subscriptions in the country.
  • SpeedNet is making inroads in the mobile sector, securing a sizeable market share.
  • By the close of the Belize Telemedia Limited public share offer in early 2011 the Belize Social Security Board was the largest purchaser. By 2012 the government’s stake was reduced to 64%.
  • Compared with its other economic indicators, penetration is low in Belize for virtually all telecom services. An independent, pro-competition and transparent telecoms regime supported by an effective regulatory framework is needed to develop the telecom market, making it more attractive for investors despite the market’s small size.
  • In early 2012 DigiCell contracted Ericsson to install an HSPA+ network nationally, enabling effecting mobile broadband nationally.
  • BTL in April 2013 began allowing unrestricted VoIP access for the first time.

For detailed information, table of contents and pricing see:

Belize – Telecoms IP Networks Digital Media and Forecasts

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