NGT Summit Africa 2008
Last month I attended the NGT (Next Generation Telecoms) Summit Africa in Accra, Ghana and delivered a presentation “Telecom company valuations in Africa - where are they heading?” to leading executives, including many CEOs of the very companies I was talking about. Global markets were just beginning their freefall, so my workshop on this topic was filled to the last seat. I analysed some of the (high) prices paid in recent acquisitions, privatisations and new operating licence bids in Africa and examined ways for operators to maximise the return on their investment. In this context I looked at expected mobile market saturation levels, average revenue per user (ARPU) trends, convergence of mobile and fixed/wireless broadband services (3G vs. WiMAX, CDMA), and the roll of the many fibre optic infrastructure deployments currently going on around the continent. My slides are online at http://www.ngtsummitafrica.com/pdf/Buddecomm%20presentation,%20Peter%20Lange.pdf
Despite the current global economic downturn we remain optimistic for African telecoms in the medium to long term. We are standing at the very beginning of a broadband revolution on the continent, in which prices for international bandwidth will drop by up to 90% and national fibre backbone networks in combination with mobile broadband access technologies will deliver the Internet to a much wider part of the population for the first time. Penetration rates in the Internet/broadband market are currently in the low single digits in most countries, like they were in the voice market in the early 1990s before GSM came along as an enabling technology with economies of scale and almost completely replaced fixed-line telephony in Africa. We believe that 3G and HSDPA will do the same for the broadband market and that we have a similarly impressive growth curve ahead of us as we saw in the mobile voice market. Even though problems with literacy will limit it at somewhat lower levels, demand for Internet access is similarly strong in Africa now as it was for basic voice communication then, because it can deliver some of the things that Africa needs the most: Objective information, and education. If the governments and regulators let it, that is…
Mobile phone penetration stands at about 35% in Africa now. The majority of future subscribers live in rural areas, which are more expensive for the network operators to reach and which will deliver a lower ARPU. In this situation, Internet access delivery is a welcome, indeed essential new revenue stream for mobile operators to sustain their growth and profitability. At the Summit, several vendors showcased their solutions for cost-effective service provision in rural areas. BuddeComm predicts that, aided by the introduction of mobile broadband services, the decline of ARPU will bottom out over the next few years and can even be reversed. Examples for both scenarios already exist in Africa.
Like last year in Nairobi, the NGT Summit with its unique concept, ensuring a high degree of interactivity, was again an excellent opportunity to network with top-level executives, many of them CEOs and CxOs of African or multinational telcos, mobile operators and other service providers, as well as system vendors and solution providers. The La Palm Royal Hotel, right on the beach in Ghana’s capital Accra, was again a venue with a special touch to it.
Peter Lange - Senior Analyst Africa, BuddeComm
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