This report provides a comprehensive overview of trends and developments in the telecommunications markets of eight African countries: Cameroon, the Democratic Republic of Congo, Ethiopia, Gabon, Kenya, Rwanda, Tanzania, and Uganda.
Subjects covered include:
Low fixed-line teledensity and Internet penetration and strong growth of mobile telephony have been the chief characteristics of the telecom markets in the Central and Eastern regions of Africa. Several new international submarine cable projects are now set to bring large amounts of fibre-based bandwidth to countries along the continent’s East coast and in the interior for the first time. Key countries in the region have privatised their incumbent telcos, liberalised international access and VoIP Internet telephony, and are implementing new competition frameworks. This is creating new opportunities in an environment of converging technologies and services and promises the long-awaited cost reduction and improved availability of telecommunications.
Like in most African countries, Cameroon’s mobile market has been booming since competition was introduced, while the fixed-line sector has been stagnant. Convergence between fixed and mobile, voice and data services is now set to change the market dramatically: The fixed-line incumbent, Camtel, is re-entering the mobile sector through a third national licence, while the existing mobile operators are establishing themselves as leading ISPs by introducing mobile data services and acquiring existing ISPs. The mobile operators are also among the bidders in the privatisation of a majority stake in Camtel with a view to providing converged services. The existing ISPs are combining their forces by merging and preparing to offer VoIP services through newly established wireless broadband networks. For the country overview, see chapter 1, page 1.
Democratic Republic of Congo
The Democratic Republic of Congo is a mineral-rich country that is recovering from civil strife and many years of pillage by its former leaders which has accounted for the low level of development of its telecommunications and other infrastructure. While the traditional fixed-line network has deteriorated to almost non-existence, mobile telephony has experienced excellent growth. Wireless technologies serve as a replacement of the obsolete fixed network infrastructure and public payphones. National teledensity remains extremely low, creating enormous potential for the provision of basic services. There is also strong demand for Internet service which has been hampered by the underdeveloped telecoms infrastructure. For the country overview, see chapter 2, page 17.
Ethiopia still practices a monopoly in almost all areas of its telecoms sector. Market penetration is still very low, but major efforts to roll out a national fibre backbone and wireless access networks have resulted in an acceleration of growth in all market segments. Further massive investments into fixed, mobile and Internet services, totalling US$4 billion, are planned for the five years to 2012. The government is intent on eventually privatising the national operator, ETC, and introducing competition in mobile and Internet services. For the country overview, see chapter 3, page 28.
Following the introduction of competition between three service providers in Gabon, this relatively small and wealthy African nation has achieved one of the highest mobile market penetration rates on the continent, but its fixed-line and Internet sectors remain underdeveloped due to a lack of competition and the resulting high prices. The recently completed privatisation of Gabon Télécom may bring new impetus to the market in 2007 if coupled with further market liberalisation. For the country overview, see chapter 4, page 46.
Kenya’s mobile market looks likely to move beyond a duopoly in 2007 with the third operator, already licensed since 2003, set to finally overcome its legal challenges and shareholder disputes. At the same time, fixed-line incumbent Telkom Kenya will be privatised and licensed to compete in the mobile sector directly, and the to-be-licensed second national operator will have a mobile concession as well. Telkom would have to dispose of its majority stake in leading mobile operator Safaricom, opening up an opportunity for strategic investors. Enormous further growth potential exists, with mobile market penetration at only just over 20%.
Convergence is ever-present in Kenya’s dynamic and fast growing market, with legalised VoIP enabling cheaper calls through newly licensed international gateways, the introduction of 3G mobile services catapulting the mobile operators into the virtually untapped Internet sector, and mobile banking services empowering the largely un-banked population. New international submarine fibre projects will bring bandwidth prices down further and open the Internet up to the mass market. Wireless broadband technologies and ADSL, soon to be followed by ADSL2, have been introduced and at least four WiMAX network rollouts are going on or being planned with the aim of providing converged voice, data and video/broadband TV (triple play) services. Mergers and acquisitions are in full swing. For the country overview, see chapter 5, page 57.
In Rwanda, the aftermath of the 1994 genocide and a monopolistic market structure until 2006 have weighed on the telecommunications sector, but the country is now on its way to outpace most other markets in Africa, which as a whole is already the fastest growing region in the world. The 99% privatised incumbent telco is more innovative than most of its African counterparts in the provision of market-driven, affordable services, and it was recently licensed to compete in the mobile sector as well. The country has one of the most developed fibre infrastructures in the region and is preparing to connect to the new high-bandwidth submarine cables that are being planned along the east cost of Africa. For the country overview, see chapter 6, page 105.
Tanzania has a fully competitive mobile sector comprising four networks and two fixed-line operators. Nonetheless, market penetration is still very low. A new converged licensing regime introduced in 2006 has brought a large number of new players into the market, including the country’s third national fixed-line and fifth mobile network operator. The liberalisation of VoIP as well as the introduction of Third-Generation mobile services and wireless broadband networks is also expected to provide a boost to the Internet sector which has been hampered by the low level of development of the traditional fixed-line network. For the country overview, see chapter 7, page 120.
As early as 1999, Uganda became the first country in Africa where the number of mobile subscribers passed the number of fixed-line users, and the ratio is now more than 18:1. With three mobile networks, the market is consistently growing at around 50% p.a., while market penetration is still low at less than 9%. A new competition framework has been announced which will include the licensing of a third national operator and the liberalisation of VoIP, creating additional opportunities for ISPs who are already operating wireless broadband networks. The recent introduction of GPRS will enable the mobile operators to play a larger role in Internet service provision as well, and a fourth licence for 3G mobile technology is being considered. For the country overview, see chapter 8, page 142.