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2008 Africa - Telecoms, Mobile and Broadband in Lesotho, South Africa and Swaziland

This report provides a comprehensive overview of the trends and developments in the telecommunications markets of three African countries: The continent’s leading market, South Africa, as well as its two neighbours, Lesotho and Swaziland. Subjects covered include:

  • Key statistics;
  • Market and industry overviews;
  • Regulatory environment and structural reform;
  • Major players (fixed, mobile and broadband);
  • Infrastructure development;
  • Mobile voice and data markets;
  • Average Revenue per User (ARPU) trends;
  • Internet, including broadband development;
  • Convergence (voice/data, fixed/wireless/mobile).
Researcher:- Peter Lange Current publication date:- December 2008 (7th Edition) Next publication date: - December 2009

South Africa is the economic powerhouse and leading telecommunications market of the African continent. At around 100% market penetration, the country’s mobile operators are forced to find innovative ways of distinguishing themselves from the competition in order to gain and retain customers, save costs and develop new revenue streams. Their entry into the Internet sector with 3G/HSPA mobile broadband services, combined with media and entertainment content is one way of achieving this. Another is the rollout of fibre optic national backbone networks in competition with other infrastructure providers. The arrival of new international submarine fibre optic cables to the region in 2009 will bring down the cost of international bandwidth dramatically. The small kingdoms of Lesotho and Swaziland, although landlocked and largely dependent on their powerful neighbour, are expected to benefit from these developments as well.

South Africa boasts the continent’s most advanced telecom market in terms of technology deployed and services provided. Following years of delays with its licensing, the second national operator Neotel has finally launched services in competition to Telkom SA, using wireless technologies such as CDMA and WiMAX to provide alternatives to the incumbent’s copper access network. Billions of dollars are being invested in IP-based next-generation networks capable of delivering converged services more efficiently. In addition, the government has created InfraCo, a national infrastructure company to provide cheap backbone network capacity to service providers, and the mobile operators are rolling out their own national fibre optic backbone networks. Despite this significantly increased competition on the infrastructure level, many municipalities are implementing their own fibre and wireless broadband networks, including all of the major metro areas.

SA’s Internet and broadband market is finally taking off after years of stagnation due to an expensive operating environment created by Telkom’s dominance in the fixed-line and bandwidth market. The arrival of new international submarine fibre optic cables to the country’s shores in 2009 will bring down the cost of international bandwidth dramatically. With mobile market penetration at around 100%, South Africa’s mobile network operators are seeking new revenue streams from entering the broadband sector. Their 3G/HSPA mobile data services now rival available ADSL offerings in terms of both speed and price, and consequently subscriber numbers. With its fixed-line network reaching only 10% of the population, Telkom has reacted by launching its own 3G network and the country’s first commercial WiMAX wireless broadband service, but various competitors are hard on its heels rolling out the same technology.

This, in combination with sweeping liberalisation measures initiated four years earlier, legalising - among other things - the use of VoIP, is beginning to change South Africa’s telecoms landscape fundamentally. Under the new regulatory regime, alternative service providers are pushing into the market with converged services. VoIP revenue was expected to triple in 2008. ISPs are turning into phone companies, and vice versa. Both are moving into delivering media, entertainment and lifestyle content over their networks, while in turn the traditional electronic media carriers are discovering the potential of their infrastructure for telecommunications service delivery. For the country overview, see chapter 2, page 12.

Telecommunications in Lesotho has undergone transformation from a state-owned monopoly to a privatised national operator, with competition in the mobile sub-sector between two networks, Vodacom and Econet. At around 25%, mobile market penetration is still below the African average. The use of wireless technology and fixed-mobile convergence has led to an accelerated increase of teledensity. Various forms of broadband Internet access are available. Although landlocked, Lesotho is set to benefit from the greater choice of international bandwidth sources that the arrival of several submarine fibre optic cables to the African east coast will bring in 2009. For the country overview, see chapter 1, page 1.

The telecoms sector in Swaziland features an old-style posts and telecom monopoly operator for fixed services and one of the last mobile monopolies on the continent as well. Nevertheless, fixed and mobile penetration is relatively high compared with other countries in the region. The level of Internet usage, only about average in the region, has been held back by a lack of attractive broadband offerings, caused by the limited extent of the fixed-line network and limited options for affordable international bandwidth. The planned unbundling and eventual privatisation of the incumbent and the introduction of more competition would enable the market to live up to its relative GDP strength. For the country overview, see chapter 3, page 108.

Key highlights:

  • Mobile market reaches 100% penetration in South Africa, mobile data revenue growing at around 45% per annum, for more information, see chapter 2.9, page 87;
  • South African SNO Neotel exceeds 2008 revenue target;
  • Third fixed-line licence and fourth mobile licence expected in South Africa in 2009;
  • Telkom SA exits Vodacom, launches own 3G network;
  • More 3G/HSPA mobile broadband users than ADSL subscribers in South Africa;
  • South African mobile operators launch fibre backbone networks;
  • South Africa has three commercial WiMAX networks, WiMAX spectrum auction to be held in 2009;
  • 3G/HSDPA services launched in Lesotho, for more information, see chapter, page 9;
  • Fixed-line, mobile and Internet/broadband market forecasts to 2010 and 2015 for Swaziland, for more information, see chapter 3.10, page 118.
Telkom ADSL wholesale services - 2007 - 2008 Year Wholesale services 2007 (Sep) 2,545 2008 (Mar) 18,740 (Source: BuddeComm based on company data)

Peter Lange December 2008

Data in this report is the latest available at the time of preparation and may not be for the current year.

The following notes provide some background to our scenario forecasting methodology:
  • This report includes what we term scenario forecasts. By describing long-range scenarios we identify a band within which we expect market growth to occur. The associated text describes what we see as the most likely growth trend within this band.
  • The projections shown in the tables in this report are based on our own historical information, as well as on telecommunication sector statistics from official and non-official, national and international sources. We assume a possible deviation of 15-20% around this data.
  • All statistics for GDP, revenue, etc are shown in US$, in order to maintain consistency within and between markets. At the same time we acknowledge that this can introduce some irregularities.
This report provides a comprehensive overview of the trends and developments in the telecommunications markets of three African countries: The continent’s leading market, South Africa, as well as its two neighbours, Lesotho and Swaziland. Subjects covered include:
  • Key statistics;
  • Market and industry overviews;
  • Regulatory environment and structural reform;
  • Major players (fixed, mobile and broadband);
  • Infrastructure development;
  • Mobile voice and data markets;
  • Average Revenue per User (ARPU) trends;
  • Internet, including broadband development;
  • Convergence (voice/data, fixed/wireless/mobile).
For those needing high level strategic information and objective analysis on this region, this report is essential reading and gives further information on:
  • Government policies affecting the telecoms industry;
  • Market liberalisation;
  • Telecoms operators - privatisation, acquisitions, new licences and competition;
  • Internet and broadband development and growth;
  • The fast growing mobile markets of the region;
  • Average Revenue per User (ARPU) statistics;
  • Mobile application and content developments.

1.1 Key statistics
1.2 Country overview
1.3 Telecommunications market
1.3.1 Overview of Lesotho’s telecom market
1.4 Regulatory environment
1.4.1 Telecommunication Policy of National Master Plan
1.4.2 Telecommunications Act of
1.4.3 Regulatory authority Lesotho Telecommunications Authority (LTA)
1.4.4 Telecom sector liberalisation in Lesotho
1.5 Fixed network operator in Lesotho
1.5.1 Telecom Lesotho (TL) Privatisation National telecom infrastructure Fixed-line statistics International infrastructure
1.6 Internet market
1.6.1 Overview Internet statistics
1.6.2 Lesotho’s ISP market
1.7 Broadband market
1.7.1 Asymmetric Digital Subscriber Line (ADSL)
1.7.2 WiMAX
1.7.3 EV-DO
1.8 Mobile communications
1.8.1 Overview of Lesotho’s mobile market Mobile statistics
1.8.2 Mobile technologies Third generation (3G) mobile
1.8.3 Major mobile operators Vodacom Lesotho Econet Ezi-Cel
1.8.4 Mobile data services
2.1 Key statistics
2.2 Telecommunications market
2.2.1 Overview of South Africa’s telecom market Fixed-line market Mobile market Broadband and Internet market Convergence
2.3 Regulatory environment
2.3.1 Historical background Network rollout obligations
2.3.2 Regulatory authority Independent Communications Authority of South Africa (ICASA)
2.3.3 Telecommunications Amendment Bill
2.3.4 Regulation of Interception of Communications Act
2.3.5 Electronic Communications Act and ICASA Amendment Bill Licence conversion framework
2.3.6 New Companies Act
2.3.7 Universal Service and Access Fund (USAF)
2.3.8 Telecom sector liberalisation in South Africa
2.3.9 Privatisation of Telkom SA
2.3.10 Third mobile licence
2.3.11 Analysis of the SNO licensing process
2.3.12 Third fixed-line and fourth mobile licence
2.3.13 PTN licences
2.3.14 The ‘Big Bang’ Value-Added Network Services (VANS) providers
2.3.15 Under-Serviced Area Licences (USALs) First licensing round Second licensing round Uncertain future Amatole Telecom
2.3.16 Interconnection
2.3.17 Number portability (NP)
2.3.18 Local Loop Unbundling (LLU)
2.3.19 International gateways
2.3.20 International submarine cables
2.3.21 Spectrum licensing review Least Cost Routing (LCR)
2.3.22 WiFi
2.3.23 WiMAX
2.3.24 New broadcasting licences
2.3.25 Mobile TV licences
2.4 Fixed network operators in South Africa
2.4.1 Market overview
2.4.2 Telkom SA Ltd Shareholder structure Business segments and services Financial data Telephone tariffs Data services and leased lines Global network services Integrated Services Digital Network (ISDN) PBX VSATs International expansion Structural separation
2.4.3 Neotel Licence conditions Shareholder structure and funding Service launch and market potential
2.4.4 InfraCo
2.4.5 Amobia
2.4.6 National private networks Overview Transtel Eskom Other electricity utilities State IT Agency (SITA)
2.4.7 Sentech
2.4.8 Mobile operators establishing fixed networks
2.5 Telecommunications infrastructure
2.5.1 Telkom’s national telecom network Fixed-line teledensity Wireless Local Loop (WLL)
2.5.2 Neotel’s network infrastructure
2.5.3 Municipal networks Knysna - Africa’s first municipal network City of Tshwane City of Johannesburg Ekurhuleni (East Rand) City of Cape Town eThekwini (Durban)
2.5.4 International infrastructure South African Power Pool Submarine cable networks SAT-3/WASC/SAFE EASSy, NBIN Seacom West African Festoon System (WAFS) InfraCo’s Atlantic cables Satellite networks
2.6 Internet market
2.6.1 Overview Internet statistics
2.6.2 Internet demographics
2.6.3 Community access projects Microsoft Digital Villages and telecentres The Smart Cape Access Project Intel ‘World Ahead’ initiative
2.6.4 South Africa’s ISP market Internet Service Providers Association (ISPA) Selected major ISPs Atlantic Internet Services Business Connexion DataPro (Vox Telecom) Internet Solutions (IS) MTN Network Solutions (MTN NS) MWEB TelkomInternet, SAIX Verizon Business South Africa (formerly UUNet SA)
2.7 Broadband market
2.7.1 Overview Broadband statistics
2.7.2 Asymmetrical Digital Subscriber Line (ADSL) ADSL wholesale
2.7.3 Broadband over powerlines (BPL)
2.7.4 Wireless broadband WiFi WiMAX Wireless Access Providers Association (WAPA) Sentech’s MyWireless iBurst by WBS Broadband via satellite 3G mobile broadband 2007 survey of wireless broadband services
2.8 Convergence
2.8.1 VoIP telephony Market overview VoIP interconnection and peering Major VoIP providers Storm Telecom Internet Solutions Verizon Business SA (formerly UUNet SA) MWEB Vox Telecom iBurst Mobile VoIP Call centres
2.8.2 Next Generation Networks (NGN) Telkom SA Neotel Transtel Eskom State Information Technology Agency (SITA)
2.8.3 IPTV, triple play
2.8.4 New broadcasting licences
2.8.5 Broadcast signal distributors Introduction Orbicom Sentech InfoSat
2.8.6 Digital media Digital TV Digital Terrestrial TV (DTTV) Digital satellite TV Mobile TV High Definition TV (HDTV) Video-on-Demand (VoD) Personal video recorders (PVRs) Interactive TV (iTV) MultiChoice iTV iTV using SMS Business TV Online media Online retail Online advertising Mobizines
2.8.7 E-banking M-banking Electronic funds transfer at point of sale (EFTPOS)
2.8.8 Online gambling
2.9 Mobile communications
2.9.1 Overview of South Africa’s mobile market Mobile statistics Market liberalisation and licence obligations Community service telephones (CSTs) Fixed-mobile convergence (FMC)
2.9.2 Regulatory issues Prices Interconnection Handset subsidies International gateways Fees and obligations for 1800MHz spectrum Registration of personal details Mobile Number Portability (MNP)
2.9.3 Mobile technologies Third Generation (3G) Vodacom MTN Cell C Telkom SA Low-cost handsets
2.9.4 Major mobile operators Vodacom South Africa Vodacom’s move into the wireless broadband market MTN South Africa MTN Zone Cell C Mobile Virtual Network Operators (MVNO)
2.9.5 Mobile data services Mobile data revenue Short Message Service (SMS) Multimedia Messaging Service (MMS) Wireless Application Protocol (WAP) General Packet Radio Service (GPRS) Enhanced Data Rate for GSM Evolution (EDGE) BlackBerry
2.9.6 Mobile content and applications Push-to-Talk (PTT) Mobile Instant Messaging (IM) Mobile TV M-commerce Mobile advertising Mobile music Location-based services (LBS) CellBook Manobi
3.1 Key statistics
3.2 Telecommunications market
3.2.1 Overview of Swaziland’s telecom market
3.3 Regulatory environment
3.3.1 Overview
3.3.2 Telecom sector liberalisation
3.4 Fixed network operator in Swaziland
3.4.1 SPTC
3.5 Telecommunications infrastructure
3.5.1 National telecom network Fixed-line statistics
3.5.2 International infrastructure
3.6 Data communications
3.6.1 Overview
3.7 Internet and broadband market
3.7.1 Overview Internet statistics
3.7.2 Public Internet access locations
3.7.3 Barriers to Internet development
3.7.4 Internet initiatives Computer Education Trust (CET)
3.7.5 E-banking
3.7.6 Broadband Asymmetric Digital Subscriber Line (ADSL)
3.7.7 Swaziland’s ISP market Africa Online Posix Real Image Internet SwaziNet
3.7.8 Swaziland Internet Exchange Point (SzIXP)
3.8 Broadcasting
3.8.1 Free-to-Air (FTA) broadcasting
3.8.2 Pay TV MultiChoice Swaziland
3.9 Mobile communications
3.9.1 Overview of Swaziland’s mobile market Mobile statistics
3.9.2 Major mobile operator MTN Swaziland Ltd ARPU analysis
3.10 Forecasts
3.10.1 Forecast - fixed-line services to
3.10.2 Forecasts - Internet users to
3.10.3 Forecasts - mobile market to
Table number: on page number:
Table 1 - Country statistics Lesotho - 2008
Table 2 - Telephone network statistics - 2007
Table 3 - Internet provider statistics - 2008
Table 4 - Internet user statistics - 2007
Table 5 - Mobile statistics - March 2008
Table 6 - National telecommunications authority
Table 7 - Fixed lines in service and teledensity - 1995 - 2007
Table 8 - Internet users and penetration rate - 1997 - 2007
Table 9 - Telecom Lesotho ADSL pricing - 2008
Table 10 - Mobile subscribers and penetration rate - 1996 - 2008
Table 11 - Mobile operators, subscribers and annual change - March 2008
Table 12 - Vodacom Lesotho monthly ARPU and churn rate - 2002 - 2008
Table 13 - Country statistics South Africa - 2008
Table 14 - Telephone network statistics - March 2008
Table 15 - Internet provider statistics - 2008
Table 16 - Internet and broadband statistics - March 2008
Table 17 - Mobile statistics - March 2008
Table 18 - National telecommunications authority
Table 19 - Telkom SA major shareholders - March 2008
Table 20 - Telkom SA fixed-line data revenue and annual change - 2002 - 2008
Table 21 - Telkom SA ISDN channels - 2000 - 2008
Table 22 - Fixed lines in service and teledensity - 1999 - 2008
Table 23 - Internet users and penetration rate - 1995 - 2008
Table 24 - Telkom SA wholesale Internet bandwidth and annual change - 2002 - 2007
Table 25 - Broadband subscribers - 2004 - 2008
Table 26 - Broadband subscribers by service provider - February 2008
Table 27 - Telkom ADSL subscribers - 2003 - 2008
Table 28 - Telkom ADSL wholesale services - 2007 - 2008
Table 29 - WAPA industry snapshot - October 2006
Table 30 - Sentech MyWireless subscribers - 2005 - 2008
Table 31 - WBS iBurst subscribers - 2005 - 2008
Table 32 - Online and mobile banking customers of four major banks - June 2007
Table 33 - Mobile subscribers and penetration rate - 1994 - 2008
Table 34 - Mobile operators, subscribers and market share - March 2008
Table 35 - Vodacom active 3G/HSDPA broadband users - 2006 - 2008
Table 36 - Vodacom SA key statistics - September 2008
Table 37 - MTN SA key statistics - September 2008
Table 38 - Country statistics Swaziland - 2008
Table 39 - Telephone network statistics - March 2008
Table 40 - Internet provider statistics - 2008
Table 41 - Internet user statistics - 2007
Table 42 - Mobile statistics - September 2008
Table 43 - Fixed lines in service and teledensity - 1995 - 2008
Table 44 - Internet users and penetration rate - 1996 - 2007
Table 45 - Mobile subscribers and penetration rate - 1998 - 2008
Table 46 - Swazi MTN monthly ARPU - 2001 - 2008
Table 47 - Forecast - fixed-line and fixed-wireless subscribers - 2010; 2015
Table 48 - Forecast - Internet users - 2010; 2015
Table 49 - Forecast - mobile subscribers - 2010; 2015
Exhibit number: on page number:
Exhibit 1 - Eskom’s licence dispute
Exhibit 2 - VANS - to self-provide or not to self-provide
Exhibit 3 - First round USAL licence holders
Exhibit 4 - Second round USAL licence holders
Exhibit 5 - Internet for rural communities
Exhibit 6 - Telkom SA T-Zone
Exhibit 7 - Spotlight on Vodacom GSM community payphones
Exhibit 8 - BlackBerry services defined

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