Cerillion recently took part in the AfricaCom 2010 show, held in Cape Town, South Africa. It’s the seventh time we’ve been to the event and it continues to go from strength to strength, with more than 250 exhibitors and 5,000+ participants this year.
Research unveiled at the show by Informa Telecoms & Media indicates that Africa now has 3 of the world’s Top 20 growth markets by net subscriber additions, and 9 of the Top 20 markets by year-on-year growth rate. And by the end of 2010, there will be 540m subscribers in Africa in total. This phenomenal growth is not only part of the global success of the mobile industry, but more importantly it is helping to stimulate the whole African economy.
Rural connectivity and power
However, one of the key issues for the continent is the next stage of growth and extending the network reach beyond the major cities and towns to the more remote regions. Over the past year, there have been a number of large submarine cable projects bringing new capacity to the continent, but the task now is how to deliver this connectivity into the rural areas where there is no fixed telecom infrastructure and in many cases no electricity?
This lack of electricity provides huge problems for both operators and consumers alike:
- For the operators, power to the local base stations is clearly fundamental and many are powered by diesel generators and increasingly by renewable forms of energy such as solar and wind power. However, as one of the conference speakers commented, solar panels that can power local base stations are equally useful in powering television sets and other home appliances and there is a significant problem with theft of these alternative power sources.
- For the consumers, access to basic power to charge the phone batteries is critical and long battery life is the #1 handset requirement for rural customers.
There’s great excitement about the growth potential for data services in Africa. At the moment, the continent is predominantly a voice and SMS market, but there is great optimism that data services usage is set to take off. During his keynote presentation, Karel Pienaar, CEO of MTN, disclosed that SMS accounts for 4.09% of revenues across the MTN group and non-SMS data is just 1.35%. Clearly there is great scope for data services growth and MTN are predicting that 60% of all phones sold will be smartphones by 2014.
For data services to grow and be profitable, Pienaar highlighted the need to reduce the cost per bit to supply by 80%, and raised the prospect of not only tower sharing deals between operators, but also shared backhaul. Furthermore, he commented on the need for pricing innovation to stimulate usage, including dynamic tariffing where prices vary according to network load.
One such example is the MTN Zone
service currently available for on-net calling, and clearly this is being looked at for future data offerings.
Widespread access to the internet is a key goal in many African countries and with such a limited fixed line infrastructure, wireless technologies such as 3G, LTE and WiMAX are seen as the only options for providing connectivity. This will clearly provide a boost to the data services usage and revenues, however the same problem remains: How will devices be powered in rural areas? Battery life and charging facilities will be an even bigger issue as the average smartphone battery barely lasts 1 day. In Africa, it needs to be 1 week.
Other key themes to emerge at the conference included:
- Bharti Airtel acquisition of Zain properties in Africa. Though not part of the official conference programme, there was much comment about the arrival of a new player whose been very successful in another emerging market – India – with many speculating about what this will mean for Africa. Time will tell.
- Outsourcing and managed services. Another statistic revealed by Informa was the tremendous growth in outsourced/managed services provided across Africa. In 2003, Africa contributed just 4% of the global outsourcing market. By 2009, this had grown to 14% as CSPs realise the cost savings and benefits of expert domain resources.
- Mobile money. No conference in Africa could pass without mention of mobile money services, the most famous of which is of course M-Pesa, Safaricom’s ground-breaking service. However there are now in excess of 20 mobile money implementations in Africa, impressive indeed. And a great example of meeting a real customer need – providing secure money transfer.
Interestingly, since returning from AfricaCom, the GSM Association Development Fund has announced the Community Power from Mobile (CPM) initiative in partnership with Lighting Africa, a joint IFC and World Bank programme, whereby operators and tower providers will provide “off-grid” electricity from their generators for a range of local household and business uses. Commencing with initial pilot projects in early 2011, it will be very interesting to see how this develops.
Overall there’s a real vibrancy about the African market and this comes across very quickly in the exhibition hall and conference sessions, with a constant buzz of activity and excitement. For us it really fits the bill as the event in Africa where we can meet all the key players in one place, and this year was no exception with a busy two days meeting customers, prospects, partners and the media at our stand.
Want to find out more about AfricaCom? Dominic Smith talks to Telesperience
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