Africa Telecoms Online

A+ A A-

When you live in a pulsating business hub like Lagos, Nairobi or Johannesburg, it’s easy to forget that an estimated 57% of Africans still don’t have any teleconnectivity. Yet the vast tracts of land that cellular signals have failed to reach are a concern – not only to the operators chasing fresh revenue or obliged to meet universal service obligations to cover unprofitable rural areas. They also worry governments and organisations concerned with economic and social development. Imagine the good it would do those unreached individuals and their local economies if they had the power of communication in their pockets. With Africa’s teledensity standing at 43%, according to Delta Partners, operators can expect significant subscriber growth over the next few years. But the cost of reaching and serving those new subscribers amid impending price wars will put tremendous pressure on their margins. As ever, it’s very obvious that new tactics and cheaper technologies are needed to reach rural communities.

Share and Pare

We’re finally seeing some progress. KPMG recently released a report recommending infrastructure sharing as a way to establish networks in far-flung areas without too much expense. Although operators fight fiercely for subscribers, they are finally recognising that they can slash their costs by sharing some basic infrastructure. The need to trim both capex and opex is persuading operators to treat tower sharing as a viable option, says Johan Smith, director of KPMG’s African Telecoms Group. The move can cut infrastructure costs by 16% to 20%, and the accumulated savings run into billions of dollars. As well as expanding their coverage, operators must also upgrade older networks to take data services to rural areas. Sharing towers – or outsourcing the whole task to a third party tower specialist – cuts their costs and allows them to reach new users. Savings come not only from avoiding erecting separate towers, but by splitting the site rental and fuel bills too. Operators in Africa have been slow to wake up to the potential, but some multi-billion dollar deals are now being discussed, Smith says. Several tower specialists are eagerly bidding to acquire the base stations owned by African operators. In December 2010, American Tower Corporation (ATC) agreed to acquire a stake in almost 2,000 of MTN Ghana’s transmission towers, and to take responsibility for managing those assets. ATC has also acquired 1,400 towers from Cell C in South Africa. Vodafone Ghana has outsourced 750 towers to Eaton Telecom to cut costs and improve coverage. Eaton will also lease spare capacity to other operators to broaden their coverage too. Nigeria’s Helios Towers Africa has signed similar deals with Millicom Ghana and Tigo DRC. These deals are the start of an unstoppable trend, Smith says. It’s partly driven by regulatory pressure and social responsibility obligations to cover unprofitable areas, which may make tower sharing crucial by allowing operators to jointly enter remote regions without punitive rollout costs. The International Telecommunications Union (ITU) stressed that infrastructure sharing was sensible for Africa way back in 2008. Yet progress so far has been limited, with Bharti Airtel, Millicom, MTN and Vodacom the most active co-operators. Airtel’s cost-cutting strategy relies heavily on outsourcing, so its tower division, Bharti Infratel, is expected to make some aggressive inroads.

Simply Effective

On the technology front, several innovations are boosting rural connectivity. One is power line communications (PLC), which adapts existing power lines to carry broadband data packets. This system can quickly cover any region served by the main electricity grid. Wireless mesh technology is another innovation bringing more outlying areas online. That technology creates ad hoc chains of normal Wi-Fi routers to multiply the reach of the signal. Mesh networks require each router in the chain to see the next, and some communities are ingeniously using mirrors to reflect signals when line of sight is impossible. In Botswana, Orange is installing Ericsson’s Expander cells that have a range four to five times greater than traditional transmitters, allowing Orange to reach rural users previously too remote for cost-efficient coverage. Village Phone initiatives are also becoming commonplace, and are supported by many operators in many countries. The idea is simple, as successful ideas often are. Rural entrepreneurs buy a phone and act as the local operator by letting people make calls for an affordable but slightly marked-up fee. Often the entrepreneurs can buy the phones with a small loan from one of the charities involved, such as the Grameen Foundation in Uganda. The owner quickly pays off the loan and then has a profitable business. It’s been recognised as a sustainable development tool by numerous governments and agencies such as the World Bank and the United Nations. In Ghana, a more ambitious scheme called the eCare initiative will grant loans of up to 90% for rural entrepreneurs to buy small ICT centres. The kit in a modified cargo container has three fixed cellular phones, a solar panel system, a computer, printer and a desk. The proposed site must have Ghana Telecom coverage, but does not require electricity as the centres are solar powered. Partners in the project include the United Nations Foundation, Ghana Telecom and Kumasi Institute of Technology and Environment. Towers have also become cheaper to run, thanks to newer technologies. MTN recently installed a mast to take connectivity to Riemvasmaak, a remote community in South Africa’s Northern Cape. There is no mains electricity, so the tower uses wind and solar power, and stores the energy in maintenance-free batteries.

Pioneering Solutions

MTN has spent R18 billion in the past two years to take 3G broadband to rural South Africa, and has built a 900Mhz network to do so. It also upgraded its existing network with UMTS for wireless broadband in rural areas. The 2.1GHz technology it had used didn’t give it the footprint to reach the furthest rural areas, but 900MHz technology does, and negates the need for building more towers in those regions. Wireless broadband is the most effective way to take data services to rural Africa, says Karel Pienaar, MD of MTN SA, and the development of pioneering solutions and technologies will enhance that progress. “It has been a long-term vision for us to develop a data network that extends into the rural communities.” Delivering broadband data would really help bridge the digital divide, he says. Many communities are not being reached through commercial efforts, but through charitable initiatives. Intel and MTN have jointly agreed to accelerate broadband access by supporting WiMAX rollouts, affordable PC bundles for consumers and entrepreneurs, and by developing cost-effective internet browsing devices. The companies are also collaborating to equip students and teachers with technology skills. Moreover, they are investing in emerging innovative technology companies that are developing products to resolve rural Africa’s business and social problems. Meanwhile Airtel has rebranded the operations in 16 African countries that it acquired from Zain last year and has promised to improve their infrastructure. It will extend into more rural communities, says Manoj Kohli, CEO of its international operations. “We remain committed to offering affordable services, deepening our network coverage to include the rural population and enhancing the digital experience through 3G across the continent,” he says. “We want to be a partner in Africa’s growth and will work closely with governments and regulators to enable the telecom networks to touch all parts of society.”

Partnerships

Rival operators are watching to see how and where Airtel begins to play more strongly. Its strategy of outsourcing some operations to gain economies of scale and expansion has already seen Airtel award a contract to IBM to manage its computing technology and services. Part of the aim is to make services more affordable for rural communities by installing advanced technologies created by IBM Research. Breakthroughs include Spoken Web, a voice-enabled internet technology that lets users access and share information simply by talking over the existing telephone network. This initiative is particularly compelling for illiterate populations or people with no access to computers. Airtel also says partnerships with Ericsson, Huawei and NSN will dramatically improve the quality of its networks and expand its 3G footprint. “The partnerships take us closer to our vision of making telephony available and affordable for everyone across Africa, even in the most remote areas which are at present disconnected from the world,” says Kohli. “We are also laying the foundation for the introduction of 3G HSPA wireless broadband as access to content is the right of every African citizen. Many of our new customers will have an online experience for the first time in their lives.” The company is also launching Airtel Money, which lets unbanked customers use their handsets for person-to-person money transfers, bill payments, point of sale purchases in supermarkets and to pay utility bills. Airtel also contributes to rural development through social responsibility initiatives to provide schools with equipment and broadband access. In July, members of South Africa’s ICT industry and the Department of Communications pledged to work together to accelerate economic growth and job creation by setting some specific targets. They include achieving 100% broadband internet coverage for the entire population by 2020 and creating at least one million new jobs. Vodacom CEO Pieter Uys said getting a decent connection speed to everyone demanded mobile technology, which could cost hundreds of billions of rands. Given the limited radio spectrum available with which to do that, the operators must collaborate, he said. There also needed to be a coherent policy framework on spectrum allocation and broadband rollout, which does not currently exist.

Consumer Welfare

Two months earlier, Vodacom had emphasised the important role mobile technology could play in Africa’s development in its 2011 SIM Report, researched in conjunction with the World Wide Web Foundation. “Access to telecommunications and relevant content will significantly help in crossing the digital divide in South Africa and Africa, furthering education and creating jobs,” said Uys. The report urged regulators to focus on consumer welfare when allocating spectrum to service providers. Treating spectrum as a source of short-term government revenue by auctioning it to the highest bidder could cost the economy billions more in lost economic value compared to allocating it to the most compelling service offerings. “Affordability for low income users will require innovation that does not place most of the burden of access costs on the user,” said Steve Bratt, CEO of the Foundation. “We hope regulators allow innovations in this area to flourish and not inhibit them by preconceived notions of the right model or pricing.” In May, Vodacom introduced Airtime Advance, a service that lets customers use voice and data services even if they run out of airtime. Prepaid customers with a proven track record can request R10 worth of advance airtime, and Vodacom will deduct the amount from the customer’s next recharge. Another innovation Vodacom launched this year is the Web Box, which provides affordable and easy internet access using an ordinary television set. That innovation could change the face of internet connectivity said Romeo Kumalo, executive commercial director at Vodacom South Africa. “Just over 10% of the population has access to the internet; this device will ensure that internet access is available to many more who previously had limited or no access.” The Web Box at R749 was developed specifically for lowincome emerging markets. It is a keyboard with a SIM card and inbuilt modem, and a simple user interface that lets users navigate easily between services including internet browsing, SMS and email, an FM radio, online photo album, games, videos and music players. It uses the Opera Mini browser that compresses data by up to 90% for faster and more affordable browsing. “The value that this product will add to schools, homes and small businesses is potentially dramatic. The wealth of knowledge that is available on the internet can now be accessed by millions of South Africans, which will add greater value to the economy,” said Kumalo.

Redressing Rural Neglect

Yet despite efforts by operators to expand their footprint, and efforts by socially aware companies to play their part, rural Africa remains neglected. In August the Commonwealth Telecommunications Organisation (CTO) staged its annual Connecting Rural Communities Africa Forum in Dar es Salaam, Tanzania. As usual, the conference featured discussions on innovative strategies, business models, financing mechanisms and technologies for improving ICT access and realising the socioeconomic benefits. Speakers reported that governments were stepping up efforts to roll out mobile and internet connectivity to rural areas. Representatives from Zambia, Tanzania and Zimbabwe said they were making a push to establish telecentres with internet access. Zimbabwe’s Post and Telecommunications Regulatory Authority said it had earmarked US$10 million from its Universal Access Fund (UAF) for rural connectivity. Tanzania has also established a UAF to connect rural and underserved areas. “Tanzania is making steps to address a rural connectivity backlog, but Africa still faces challenges in its policy frameworks, power and skills,” said Tanzanian President Jakaya Kikwete. Access to electricity hinders the rollout of cellular services in many countries, but this is changing as most governments have started electrification projects to connect rural areas to the power grid. Zambia’s government is being particularly inventive. It has pledged US$10 million for national cellular connectivity and is distributing internet-ready computers to rural areas. The Zambia Information and Communications Technology Authority (ZICTA) is using cash from its UAF to erect telecoms towers in rural areas to help operators quickly roll out their networks. Cleverly, those towers are a shared facility, and ZICTA will earn revenue from the operators that use them. Zambian operators already have infrastructure sharing agreements to help them cover some rural regions. Even so, they have been unwilling to enter rural areas as there would be no return on investment. So the Zambian government introduced tax breaks in August to companies that import telecoms equipment for rural areas. The tax break has already seen Airtel Zambia extend its network to 88 more communities. Its rival, MTN Zambia, has pledged to spend US$40 million on rural expansion this year. Network expansion in Rwanda and Zimbabwe is being aided by US$40 million in loans from the Export-Import Bank of China. A loan of US $60 million will be used by Zimbabwe’s state-owned NetOne to develop its broadband infrastructure and connect to the EASSY submarine cable to boost its ability to compete with private operators. China is the largest single investor in Africa’s telecom sector, and in return, Chinese companies including Huawei and ZTE have won more contracts than any of their rivals, as the loans stipulate that supply and installation contracts go to Chinese firms. That condition naturally causes controversy, since no other player can hope to win the tenders. The Ugandan government has blocked a loan from China after complaints about unfair business practices. Still, the biased loans are allowing Africa’s telecoms players to expand into rural areas, and most governments accept the Chinese dictum as a fair price to pay.

Role of Governments

Further help is coming from the Commonwealth Telecommunications Organisation (CTO) and USAID’s Global Broadband and Innovations (GBI) programme. They recently ran a training workshop for Africa’s Universal Access policy makers and other rural communications stakeholders. The GBI programme advises governments on best practice regulations and broadband strategies, and encourages the use of appropriate software applications, low-cost technologies and cloud services. “Access to telecommunications has enormous benefits, both socially and economically, to rural communities,” said GBI programme manager Joe Duncan. “This is a great opportunity to bring what we know about universal service to the men and women working so hard to provide rural connectivity in their countries.” Dr. Ekwow Spio-Garbrah, CEO of the CTO, has said one factor accounting for Africa’s lower economic growth is the weak uptake of e-progress. Africa needed new e-leaders capable of transforming their country by taking full advantage of all the e-tools available, he urged. And yet, he pointed out, many nations were bogged down by leaders who did not know how to send an sms or e-mail, had not heard of MySpace, and until some counterparts were overthrown by popular uprisings, had not taken seriously social media like Facebook, Twitter or YouTube. “Now that social media have shown their power and capacity to overthrow governments, let us hope that African leaders are listening, and will take prompter action in their own interest,” Spio-Garbrah said. He then announced that the CTO would raise US$300 million over the next few years to invest in a Commonwealth Telecom Development Fund to make member countries more capable of e-transformation. The CTO has also created a commercial subsidiary, CTO Ventures, to make equity investments in small companies that aim to expand in emerging markets, but lack the capacity to do so.

Africa’s Unresolved Challenge

In 2008 a CTO report confirmed that rural connectivity remained an unresolved challenge in Africa. Problems included the lack of electricity, the low income in rural areas, high opex and capex costs of infrastructure, and low skills levels. The research also reiterated that affordable connectivity is critical to improve the delivery of government and business services to isolated communities and to empower people through education, employable skills and wealth creation. “Nowhere is access to and effective use of ICTs less pervasive and more needed than in the rural and isolated areas of sub-Saharan Africa,” the report said. It recommended liberalising and privatising the telecoms sector, and having independent regulatory authorities capable of establishing and enforcing impartial rules. Several regulatory authorities in Africa were still subject to direct government oversight, which could be detrimental to competition and to achieving rural connectivity. That was a particular risk when the state still had a financial stake in the incumbent operator, the report warned. The economic viability of telecoms in rural regions depends on favourable interconnection terms with the fixed-line operators, the report found. So it suggested that regulators might need to enforce skewed interconnection fees to reflect the higher operation and maintenance costs of rural networks. Operators should also be encouraged to share infrastructure to reduce capital expenditure, and be given preferential access to universal service funds and tax breaks. The CTO report also encouraged the authorities to allocate licence-free spectrum to operators willing to set up wireless local area networks. It then warned that universal service obligations imposed with each licence must be accurate and flexible to be achievable. Universal service funds may be more effective if operators can bid for the cash to subsidise their work in rural regions, the study suggested. The Ghana Investment Fund for Telecommunications (GIFTEL) awards grants on a competitive basis to operators providing public telephony kiosks or telecentres in neglected areas. Another problem still not addressed since the CTO report highlighted it in 2008 is that operators struggle to expand into rural areas if there are insufficient skilled people to install and maintain their equipment. “There is a sizeable gap between the existing ICT skills and those necessary to accelerate rural connectivity,” the report said, recommending that governments urgently address the skills gap.

CTO report revisited

Three years later, little has changed. Many African universities still lack adequate ICT laboratories and affordable high-speed internet access. Many pupils leave school without having used a computer. Rural schools are even more ill equipped, making ICT lessons impossible. The strategies to overcome all these challenges remain the same, yet African citizens are still waiting. Solutions include implementing simultaneous rural electrification and connectivity programmes, infrastructure sharing and skills building. There is no single best path for all countries to follow, and each national rural connectivity plan must be tailored to that country’s circumstances. That said, the CTO recommended tactics that have proven successful in comparative countries. It is worth repeating them now: Its recommendations to governments are:

• To establish an independent regulator able to establish and enforce impartial rules, and with jurisdiction over both telecoms and broadcasting as these technologies converge.

• Implement technology-neutral licensing to promote competition and the provision of services by the most costeffective means.

• Encourage local participation when installing ICT infrastructure to enhance local skills.

• Equip universities and tertiary educational institutions with modern ICT hardware and high-speed internet to create skilled ICT graduates.

It urged regulatory authorities to:

• Put regulations in place to ensure affordable services in rural areas.

• Encourage favourable interconnection terms that reflect the higher costs of rural networks.

• Provide incentives for infrastructure sharing to reduce duplication and increase cost-efficiency.

• Allocate unlicensed spectrum to encourage the use of innovative technologies.

• Ensure that licence obligations are feasible, flexible and technology-neutral.

It urged the body responsible for universal service funds to:

• Disburse funds by competitive tenders, and ensure funds go where they are needed most.

• Prioritise funds for bidders offering rural solutions such as public kiosks and telecentres.

Operators should:

• Strive to meet the rural connectivity targets in their licence conditions.

• Provide reliable, high-quality services with the most costeffective technology available.

• Cooperate to share their infrastructure.

• Establish employee training programmes to build skills.

• Prioritise services to rural government headquarters, educational institutions, hospitals, post offices and other public access points, including kiosks, telecentres and payphones.

• Negotiate interconnection terms that reflect the higher costs of rural networks

Technology manufacturers should strive to:

• Step up research and development in technologies for rural connectivity, including solutions suitable for rough terrains.

• Focus on renewable energy, such as solar, wind or hydroelectric power

Published in October 2011
Friday, 04 February 2011 00:00

2010 a year in review by lesley stones

The past 12 months can be written off as a dull kind of year for the telecoms industry, with economic turbulence making many players happy to survive rather than thrive. The chief development for Africa was undoubtedly the belated entry of the Indians, as Bharti Airtel took over the bulk of Zain’s African activities. Other than that there were a few price skirmishes, the axing of the telecoms minister in South Africa and the surprisingly low-key landing of the Eassy cable. Here’s a brief reminder of a few or the more interesting moments in a year that most of us have probably forgotten already. Let’s hope the industry regains its usual energy and joie de vivre in 2011.

January

The year began badly for Vodacom’s subsidiary in the Democratic Republic of Congo (DRC). A bitter clash with its 49% shareholder Congolese Wireless Network (CWN) saw CWN file papers in a Kinshasa court accusing Vodacom of “plundering” the company. CWN claims Vodacom illegally took up to US$180 million out of the DRC and repatriated the profits instead of reinvesting in the operations. Vodacom denied the allegations and initiated arbitration through the International Chamber of Commerce, which could take years to be resolved. Both parties agreed to keep discussions open to keep Vodacom DRC running, although Vodacom may decide to pull out of the country if arbitration looks likely to take too long, or if the relationship deteriorates further. South Africa’s third cellular operator Cell C had a better start to the year and awarded a US$378m contract to China’s ZTE Corporation to supply equipment and managed services to roll out a national 3G network. While ZTE was welcoming more open communications with the west, the Chinese government was less keen to embrace decadent western ways. Cyber attacks on Google and other companies led to escalated tensions between the US and China, although the government claimed it wasn’t to blame. US secretary of state Hillary Clinton called on the communist country to end online censorship, but Chinese officials said they would not tone down the way they censor the internet. The internet also went down for parts of Africa, although by error rather than design. A planned interruption on the Sat-3 cable connecting South Africa to Europe caused chaos with users unable to access international websites. Traffic was routed over a different cable to Asia, emphasising the need for multiple cables.

February

Nigeria’s government made yet another attempt to sell off its ailing incumbent operator Nitel. MTN Nigeria and Globacom were among six shortlisted bidders for a 75% stake, or to bid for stakes in some of its subsidiaries, including mobile arm M-Tel and its international gateway. The government went on to approve a US$2.5bn bid for Nitel, which was five times the US$500m that industry experts considered its maximum value. The deal went to the New Generation Telecommunications, a consortium of local and foreign investors including a Dubai investment house, Minerva Group. But by November, sources were saying some of the backers were getting cold feet and wanted an extension on the payment deadline. GiCell, a Nigerian company in the consortium, blamed the government for taking almost eight months to give final approval, making the foreign investors jittery about what exactly they were getting into. Further afield, the first images were transmitted back to Earth from South Africa’s Sumbandila satellite, a project that cost more than ZAR20 million to build and ZAR12 million to launch. The satellite is designed to strengthen the country’s technological capabilities, space resources and satellite engineering skills. Sumbandila can also collect imaging data during a national emergency such as floods. While the government can organise a presence in space, it’s struggling with the more mundane concept of TV. Plans to migrate from analogue to digital transmissions were delayed until April 2013 at the earliest, at least 18 months later than originally envisaged. The regulatory authority partly blamed anticipated delays in the availability of the set-top boxes needed to receive the new digital signals. It forgot to say that the delays were being caused by the government prevaricating over which technology standard to adopt.

March

After two aborted efforts to merge with MTN, the Indian operator Bharti Airtel finally began its African adventure by acquiring Zain’s African activities. The US$10.7 billion deals saw Bharti take over operations in 15 countries, and excluded Zain’s operations in Morocco and Sudan. Bharti is handing over a tidy sum of US$9 billion in cash and discounting US$1.7 billion of debt. Hopefully it still likes what it got, because the remaining US$700 million is due this March. Zain had been trying to sell its African networks for more than a year, despite initially denying that any such plans were afoot. Bharti now has 163 million subscribers, with Zain Africa’s 41.9 million looking rather paltry compared to Bharti’s home-grown user base of 121 million. So at least the feisty Indians should teach Zain a thing or two about economies of scale and serving low-income consumers. Bharti is expected to be a more formidable operator than Zain was, and is now a rival to MTN instead of the potential partner it tried to be. Yet MTN CEO Phuthuma Nhleko described suggestions that Bharti posed a serious threat and could trigger potential price wars as “exaggeration and oversimplification.” His comments were based on the opinion that a business model that works in India may not transport easily to a totally different environment. How well Bharti will manage to replicate its operations is still playing out, with a business model designed to serve millions of people in densely crowded areas now having to adapt to sparsely populated regions lacking basic facilities. Zain has rebranded as Airtel and has already slashed prices in Kenya to steal market share from Safaricom, Kenya’s dominant player.

April

After two aborted efforts to merge with MTN, the Indian operator Bharti Airtel finally began its African adventure by acquiring Zain’s African activities. The US$10.7 billion deals saw Bharti take over operations in 15 countries, and excluded Zain’s operations in Morocco and Sudan. Bharti is handing over a tidy sum of US$9 billion in cash and discounting US$1.7 billion of debt. Hopefully it still likes what it got, because the remaining US$700 million is due this March. Plans for Egypt’s Orascom Telecom to sell all or some of its African assets suffered a setback when the Algerian government said it would block the sale of Orascom’s subsidiary in that country. Orascom is the majority owner of Algeria’s Djezzy network, which is a key part of its operations and contributes 47% of its revenue. Algeria’s government would rather buy Djezzy using its pre-emptive rights as a minority shareholder than see it sold to a foreign entity. Analysts warned that the inability to sell Djezzy could scupper the sale of Orascom’s assets to potential buyers including MTN. That proved true, with MTN walking away from the deal. By November Russia’s Vimpelcom had agreed to buy a controlling stake in Orascom for US$6.6 billion. But as the year drew to a close those plans began to look increasingly shaky as Algeria remained a hurdle and regulatory issues also emerged in other countries. Orascom operates GSM networks in Algeria, Tunisia, North Korea, Canada, Pakistan, Bangladesh, the Central African Republic, Zimbabwe, Burundi and Namibia. As usual, Africa’s elite got looked after a whole lot better than its poor, when wellheeled consumers welcomed Apple’s new iPad device. The first models arrived via the grey market without the official support of Apple. The tablet computer is a multifunctional device with a 9.7-inch high-resolution screen, making it perfect for watching podcasts, videos, browsing the web, checking e-mail, reading magazines, watching movies and listening to music. It also runs close to 200,000 applications.

May

Network operator MTN said it had invested nearly ZAR450 million specifically for the 2010 Soccer World Cup in South Africa. It rolled out infrastructure to all the stadiums so fans could make calls and connect to the internet without sucking up all the bandwidth from businesses and consumers in the neighbourhood. At Soccer City in Soweto alone it erected 22 base stations. May also saw two of those occasions where something we already know is finally admitted in public. Firstly, the outgoing chairman of the Independent Communications Authority of South Africa (Icasa) admitted that the regulatory authority had failed the sector. “I concede we have failed you,” Paris Mashile told his stakeholders. In reply to complaints about how long Icasa took to deal with industry issues, Mashile said its performance had been “inexcusable and unacceptable” and had affected the telecoms companies in very serious ways. Mashile complained that the industry poached Icasa’s best staff and that it was beholden to the government for its budget. “We are not serving the sector well and it requires a turnaround strategy,” he said. The mea culpa was welcome, but there was little clue as to when or how a turnaround strategy may begin. The second “yes, we already knew that” came when a study by Ookla confirmed that Africa is poorly served for broadband. Ookla’s Net Index, based on millions of tests, ranks South Africa 93rd in the world for broadband download speeds. Uganda fares just a fraction better in 92nd place. The index found the average global consumer download speed is 7.7MB per second. The average in South Africa is 2.2Mbps. The worst countries in which to attempt a data download include Mali and Sudan.

June 

June was a month in which plans went awry for several companies. MTN formally ended negotiations to buy the African assets of Orascom Telecom. The deal probably fell through because the Algerian government blocked the sale of the Djezzy network, which was perhaps the asset MTN most wanted to get its hands on. MTN instantly bounced back by declaring that growth in Nigeria is far from over, and announcing that it had raised another ZAR16 billion to expand its network there. The new infrastructure investment follows heavy investments in 2008 and 2009, which now lets MTN cover 83% of Nigeria’s land and 84% of its people. While MTN was raising money, Neotel was losing it in vast amounts. The operator licensed to rival Telkom in South Africa suffered a net loss of nearly ZAR1.6 billion in the 2010 financial year. It was the first time its majority stakeholder, India’s Tata Communications, had revealed the extent of the losses being clocked up by its subsidiary. Neotel was initially seen as a much-needed, much-delayed alternative to Telkom, so businesses and consumers had high hopes of enjoying decent competition at last. But Neotel has failed to set the market alight. Plans at Telkom also went wonky when the company announced that CEO Reuben September was resigning – in other words, his contract wasn’t renewed. Politics turned out to be the chief reason, with September and his chairman:

– government appointed Jeff Molobela

– repeatedly clashing.

He was replaced by Jeffrey Hedberg as acting CEO, with no news yet of who will become the permanent head.

July

The East African Submarine System (Eassy) undersea cable started commercial operations on July 30, remarkably ahead of schedule and about 10% below its US$300- million budget. Not bad for a project that’s literally been in the pipeline for seven years. The 10,000km fibre optic cable on Africa’s east coast links South Africa, Mozambique, Madagascar, Tanzania, Kenya, Somalia, Djibouti and Sudan with other submarine cables from Europe, Asia, the Middle East and the US. One change of plan was unexpectedly caused by pirates, as the consortium has chosen not to build a landing point in Mogadishu in Somalia yet because of pirate activities. About 25 telecoms operators are buying its bandwidth so far, and its investors include international bandwidth prices, as Eassy, Seacom and Sat-3 cables all charge roughly the same. Hay said Eassy simply wasn’t big enough to make a large impact, but it was a valuable redundancy option for telecoms operators and internet service providers, which still have vivid memories of the lengthy breakdown of Seacom. South Africa’s MTN, Vodacom, Telkom and Neotel, as well as Dalkom Somalia, Comoros Telecom and Mauritius Telecom. Chairman Trevor Martins said the cable had been launched with an initial 60Gb per second of capacity, which would be increased as demand grew. He expects to see a broadband capacity explosion in Africa between 2012 and 2014. Although Martins said the cable would provoke another sharp reduction in wholesale international bandwidth prices and cheaper broadband for consumers, that hasn’t been particularly noticeable. South African internet service providers say the cable has had little impact on the price of bandwidth so far. Neotel’s Angus Hay agreed that Eassy’s arrival hadn’t had a big impact on international bandwidth prices, as Eassy, Seacom and Sat-3 cables all charge roughly the same. Hay said Eassy simply wasn’t big enough to make a large impact, but it was a valuable redundancy option for telecoms operators and internet service providers, which still have vivid memories of the lengthy breakdown of Seacom.

August

South Africa’s largest cellular network Vodacom teamed up with Nedbank to launch the M-Pesa money transfer service. M-Pesa is already enormously popular in Kenya, where it’s operated by Safaricom and used by 10 million people. It’s also available from Vodacom in Tanzania. The technology was developed by the Vodafone Group to let cellphone users transfer money quickly, easily and securely from person to person. Vodacom CEO Pieter Uys said: “The beauty of this service is the ease and speed with which people can send money to each other anywhere in the country. As anyone can receive M-Pesa without having to be an M-Pesa customer or even a Vodacom subscriber, it has the power to reach all cellphone users.” Only Vodacom customers can send M-Pesa, but anyone on any cellphone network can receive it. Nedbank chief executive Mike Brown said cellphone penetration was extremely high in South Africa, but banking was far less widespread, with more than 13 million economically active South Africans not having a bank account. M-Pesa would make basic financial services accessible to all and help bring marginalised individuals into the economic mainstream, he said. Customers can register for the service and deposit money into their M-Pesa account at outlets including shops, spazas and all Nedbank branches. Once they have money in their account, they can send it to any other cellphone user in South Africa, and the receiver can collect the cash at any M-Pesa outlet or a Nedbank ATM. Customers access their accounts using a four-digit PIN code and as long as that PIN remains secret their transactions are secure.

September

Price war skirmishes have become a regular feature in East Africa, and bubbled up again as Kenya made some drastic cuts in mobile call fees. Analysts said that posed a huge competitiveness challenge to its regional counterparts following the launch of the East African Common Market. High cross-network call rates force many subscribers to buy multiple Sim cards to call cheaply on one network then swap cards to call another network. Kenyans had been making crossnetwork calls at the equivalent of Ushs 300 a minute, with Uganda charging Ushs 340. But the price difference changed dramatically after the Communications "South Africa’s largest cellular network Vodacom teamed up with Nedbank to launch the M-Pesa money transfer service." Commission of Kenya halved the interconnection rate. Kenyans now call for an equivalent of Ushs 75 a minute across all networks. In Rwanda, the rate is about Ushs 270 a minute, while Tanzanians pay about Ushs 7.5 per second, and MTN Uganda charges Ushs 9 per second. When the Uganda Communications Commission tried to force down interconnection rates from USh180 to Ushs 131 last year it was immediately sued by MTN, which claimed that was well below the actual cost of the service and the fee should not drop below Ushs 151. Then Warid Telecom instigated a price war by slashing cross-network calls to Ushs 5 per second, making it the cheapest in the market. Warid said the new rate was half its previous fee, and was designed to make cellphone services affordable to more people. Next Bharti Airtel led a price war in Kenya by cutting call rates by up to 45%. Bharti said usage soared by 50% after the cuts, and within eight weeks its revenue was back to normal as higher usage offset the lower call fees.

October

Few tears were shed when a shake-up in South Africa’s cabinet saw Communications Minister Siphiwe Nyanda unceremoniously axed. Nyanda was replaced by the former deputy communications minister Roy Padayachie, seeing the return of a man who once showed far greater promise than the late minister he served under, Ivy Matsepe-Casaburri. Nyanda had allowed the department to totter from crisis to crisis. First he bought two extravagant BMWs then racked up massive hotel bills at the taxpayer’s expense. He never shook off allegations that he benefited from dodgy tenders. Then a spectacular clash saw him fire director-general Mamodupi Mohlala, who wanted to change the tendering processes. As internal wrangling absorbed much of the minister’s time, the state-owned signal distributor Sentech and the SABC were allowed to keep spiralling downwards through mismanagement, corruption, boardroom spats and failure to deliver on business plans. Analysts agree that Padayachie is a great choice, but given the department’s appalling track record for more than a decade, anyone with a touch of common sense and motivation ought to be an improvement. October also saw South Africa’s fixed line monopoly Telkom launch its new mobile services. The mobile offerings, dubbed 8ta, include a full range of prepaid and contract packages for consumers and corporate customers. Its “ultra-competitive contract offers” starting at R90 a month were designed to encourage more usage of mobile voice and data services, said 8ta’s Managing Executive Amith Maharaj. “We will provide more minutes for your money than any other network.” Telkom has erected 800 base stations of its own and has a roaming agreement with MTN to cover areas it has not yet reached. The initiative has already cost ZAR205m in operating expenditure and a further 3,200 of its own base stations are planned.

November

The long-awaited switch from analogue to digital broadcasting in SADC countries by 2015 looked set to be delayed by another five years as countries argued over which technology to adopt. The prediction of long delays came from Mgqibelo Gasela, head of regulatory affairs for MultiChoice Africa. He advised SADC leaders not to bow to pressure from Japan and Brazil to adopt a technology that is cheaper but less robust than the one they initially supported. Engineers in the Southern African Digital Broadcasting Association strongly recommend the adoption of DVB-T over the Brazilian and Japanese ISDB system, but politicians were being swayed by political pressure from those countries. “SADC should choose a standard that is the best standard worldwide and the latest,” Gasela said. And that meant DVB-T. He urged ministers to vote in the best interests of the region and not for political expediency. In January 2011, everyone breathed a sign of relief when South Africa’s Communications Ministry announced that SA would adopt DVB-T2, the latest version of the European standard. The Southern African Digital Broadcasting Association called the decision “visionary. Meanwhile, research by Informa Telecom declared that Africa now has 506 million active cellphone subscribers. Africa accounts for 10% of the world’s mobile subscriptions as user numbers in the continent rose 18% from last year due to demand for new services such as mobile internet access. In Ghana, a change of ownership took place as Kasapa Network was sold to Dubaibased Expresso Telecom. Kasapa serves 400,000 customers as the fourth operator behind MTN, Tigo and Vodafone. Expresso operates the Intercellular network in Nigeria and holds new licences in Mauritania and Senegal. CEO Isham Ayub said his company would upgrade the network across Ghana to enhance coverage, attract more users and offer a more customer-oriented service.

December

As the year limped to a close, MTN finally declared that outgoing CEO Phuthuma Nhleko would be replaced by Sifiso Dabengwa on Apri 1. Nhleko will stay on as non-executive deputy chairman. Dabengwa is currently the chief operating officer (COO) and was seen as the obvious choice, since he worked closely with Nhleko in driving MTN’s growth strategy. The COO position will be scrapped and a new position, CEO of MTN International, will be created to focus intensely on opportunities abroad. No candidate has been name for that yet. Christmas was grim for employees at South Africa’s fixed and mobile operator Neotel with retrenchments looming. Neotel has more than 1,000 staff, which cynics would say almost outnumbers its customers. The company’s debt providers have apparently brought in independent management consultants to assess the situation. Neotel will consult staff in January and February, with retrenchments expected in April. Neotel says it is evaluating its business strategy, operational performance, efficiency and competitiveness with a view to achieving long-term sustainability. Staying in South Africa, the government pledged to build 18 information and communications technology centres in 2011 to take technology to the rural poor. The ZAR180 million scheme will provide broadband internet access and computing resources in underserviced areas to help raise the country’s appalling low broadband penetration rate of 4% to double digits. Bringing us full circle, we end back in the Democratic Republic of Congo (DRC), where Vodacom and its minority shareholder Congolese Wireless Network (CWN) have agreed to appoint investment bank NM Rothschild & Sons to explore options to settle their acrimonious dispute and keep their network viable.

And a quick look at what's brewing for 2011:

Bharti should make a big impact in the countries where it aquired the networks of Zain. Expect more price wars, more innovative offerings and a general slashing of any flabby bits in the operating expenses. In South Africa the mobile interconnection fees finally fell, but the Independent Communications Authority of SA (Icasa) didn’t really get its way against wily operators Vodacom and MTN. It will try again in 2011 with plans to cut call termination rates in March. Consumers are advised not to hold their breath.

 

Published in February 2011

Group appoints top executives with global networks technology and internal assurance expertise

Appointments will add impetus to Bharti Airtel's leadership team to offer unrivalled services on the continent

Nairobi, Kenya, 2nd November 2010 - In its continued quest to offer world class telecommunications services in Africa, Bharti Airtel has today announced the appointment of two executives to steer its network and internal assurance functions across 16 countries in Africa.

Ms. Tay Kim Lee joins the group as the Director of Internal Assurance whilst Mr. Eben Albertyn will take up the Chief Technical Officer role.

The two new appointees bring a wealth of experience gained in top management levels from various organizations across the globe. Their appointments are in tandem with Airtel's goal to connect communities across Africa by providing affordable and innovative mobile solutions to all.

Published in Airtel

Partnership to support airtel Allstars search for young African football talent

• First partnership signed between Bharti airtel and Manchester United in the African continent

• airtel customers will have the opportunity to win tickets to watch the Red Devils play in Manchester

• airtel customers will have regular opportunities to take part in competitions and prize draws to win all expenses paid trips to attend Manchester United matches

9th December, 2010: Bharti airtel, a leading global telecommunications company, today announced an exclusive partnership with Manchester United Football Club and signed a four year partnership agreement. This is a first of its kind partnership signed between Bharti airtel and Manchester United in the African continent.

Published in Airtel

Popular Videos

Copyright 3I Publishing. All rights reserved.

Register

User Registration
or Cancel