The future of broadband: What bandwidth evolution can Africa expect in the future?

The future of broadband:

What bandwidth evolution can Africa expect in the future

April 2012

Broadband Confex

Chantel Lindeman

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Agenda

Megatrends impacting Africa

Urbanisation

Regional integration

Future Infrastructure

Connecting the unconnected

Current broadband situation

Future impact of bandwidth

Competitive playing field

Future connectivity platforms

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Africa – The Dark Continent

C. Mayhew & R. Simmon (NASA / GSFC). NOAA / NGDC, DMSP Digital Archive

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Urbanisation

Regional

Integration

Connecting the

Unconnected

Future Infrastructure

The megatrends impacting the ICT sector in Africa over the next 5 to 8 years

Source: Frost & Sullivan analysis.

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AsiaEurope

Latin America

and Caribbean

North America

Africa

Oceana

Urban

Population

(million)

2020

2010

468

560

560

533288

340 1,757

2,383

30

25

412

660

As a region, Africa will possess the second largest number of urban occupants

by 2020

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30% not living in

informal

settlements

70%

in informal

settlements

Percent of Urban Residents by Type of Settlement, Africa,

2050

Splintered Urbanisation

African urban communities will comprise 70 per cent

informal settlement dwellers living alongside an

emerging middle class roughly equal to that of India

Seventy % of urbanised Africa will live in informal settlements

Source: UN-Habitat, Frost & Sullivan analysis.

Lagos

75% of the population

live in informal

settlements

Luanda

Cacuaco >

600,000 people Johannesburg/

Pretoria

Soweto

Kinshasa

Nairobi

Kibera > 1

million people

Ethiopia

99.4% of the

population live

in informal

settlements

Chad

99.4% of the

population live in

informal settlements

Maputo

Cape Town

Khayelitsha

Major Informal Settlements, Africa, 2050

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African cities will require resource efficient technologies to meet social

challenges and business opportunities

Cairo

Cairo is expected to grow from 11

million in 2010 to over 13.5 million by

2025; it is the only mega city, by

definition, in Africa.

North South Corridor

Transport routes across the region will

be expanded and integrated to create

corridors for trade and inter-

continental co-operation by linking

mega cities.

Lagos and Eko Atlantic City Region

Lagos’s Eko Atlantic City will merge

with the city of Lagos to form a future

business gateway to Africa—a

mega region of over 16 million.

Source: Frost & Sullivan analysis

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Lagos

Luanda

Johannesburg/

Pretoria

Cairo

Dar es Salaam

Alexandria

Nairobi

Accra

Abidjan

Kinshasa

Addis Ababa

Main Developed Corridors

Corridors will unlock economic potential of landlocked countries and will

improve inter-dependence among cities, leading to regional economic growth

Cape Town

DurbanSource: UN-Habitat, 2010, Frost & Sullivan analysis.

The Greater Ibadan Lagos Accra

(GILA) Corridor

• Combined population >18 million

• Contributes combined GDP of

$127,592,000.

The North Delta Region

• Combined population of 77

million

• Three emerging corridors:

Cairo-Suez

Cairo-Alexandria

Cairo-Ismailia.

900 km Kampala-Nairobi-

Mombasa urban corridor

1,000 km Abidjan-Ouagadougou

Corridor

North-South Corridor

• Facilitate inter-regional trade

from Cape to Cairo.

• Free trade area comprising 533

million people.

• Combined GDP of $833 billion or

58% of Africa’s GDP.

Trans-Cunene Corridor

• Will link the Democratic Republic of

Congo (DRC) with South Africa

through Angola and Namibia.

Ouagadougou

Ibadan

Future Corridor Development

Mega Corridors, Africa, 2050

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An integrated continent – development in intra-trade and key infrastructure

development

`Planned Electricity Interconnections

Trilateral Free Trade Agreement (T-FTA)

Road Infrastructure development

$50 billionPower Interconnection

Investment:

Total Intra-trade: $216 billion

Regional Transport

Investment (road, rail): $30 billion

ICT Infrastructure

Development: $60 billion

Power, Transport and Trade Integration (Africa), 2010 – 2020

Source: Frost & Sullivan Analysis

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Agenda

Megatrends impacting Africa

Urbanisation

Regional integration

Future Infrastructure

Connecting the unconnected

Current broadband situation

Future impact of bandwidth

Competitive playing field

Future connectivity platforms

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Asia

Europe

Latin America

North America

Africa

Markets with 80% broadband penetration are more than twice as innovative as

countries with 40% Penetration

Oceania90%

41%

123%

140%

91%

120%

56%

110%

82%

112%

27%

4%

90%

56%

85%

7%

65%

11%

57%

83%

Mobile Penetration 2009

Source: 2009 telecommunications statistics from ITU,

2020 projections from Frost & Sullivan

90%

110%

100%

68%

9%

50%

100%

82%

100%

70%

8%

60%

21%

75%

95%

70%

Mobile, Broadband, and Internet Penetration per Region, Global, 2009 and 2020

Mobile Penetration 2020

Broadband Penetration 2009

Broadband Penetration 2020

Internet Penetration 2020

Internet Penetration 2009

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Annual growth rates of 9% to 2020 will allow Africa to reach a mobile

penetration rate close to market saturation

80–100%

60–80%

40–60%

20–40%

<20%

Mobile Telephony Penetration Rate, Africa, 2010 Mobile Telephony Penetration Rate, Africa, 2020

Mobile Phone Subscriptions

• In 2010, African mobile

penetration is just less than

50 per cent.

• That said, several countries

have reached saturation.

• By 2020 we expect a 90 per

cent mobile penetration

rate.

500 million

$80 billion investment

in networks

1,170 million

Low cost mobile

phones

Value-added Services

Source: Frost & Sullivan, 2011

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Announcement of additional submarine cables to BRICs in saturated

undersea cable market is concerning – terrestrial fibre is key

• Terrestrial fibre will unlock the vast

amounts of bandwidth available from

undersea cables

• Fibre vendors, telcos and municipalities

have began investing heavily in

infrastructure

• Mobile broadband and data centres are

driving the revenue and subscriber

growth rates

• Landlocked countries have access to

EASSy and WACS through incumbents

• ISPs still have access issues to

backhaul services.

Source: Steve Song Map and Ubuntu Alliance, 2012

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1 to 3 cables

4 or more cables

Landlocked country with

access to submarine

cable

Terrestrial fibre links

By 2020, $4 billion is expected to be invested in submarine fibre cables and $56

billion on terrestrial networks

Sub marine cables – Multiple cables

Thirteen undersea

cables will result in a

90 per cent decrease

in the wholesale cost

of international

bandwidth

Mobile operators

will be the ISPs

The number of major

ISPs will increase from

20 to 25

Revenue from data

services to reach

$137,000 million in

2010

Source: Frost & Sullivan, 2011

Submarine Fibre Optic Landing Points, Africa, 2020

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DSL adoption is expected to decline whilst mobile broadband leapfrogs in

uptake

Ad

op

tio

n R

ate

Low

High Introduction Growth Maturity Decline

Mobile Broadband

DSL Access

Satellite

Dial-up Access

WiMax

Source: Frost & Sullivan analysis.

LTEWi-Fi

Technology Stage

Total Broadband Market: Technology Adoption Trends (Africa), 2010

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In response to the declining voice revenues, existing operators are focusing

on providing broadband services to both businesses and consumers

Total Broadband Market: Competitive Structure

Number of Companies in the Market More than 255

Competitive FactorsCost, performance, schedule, support, technology, reliability,

contractor relationships, customer relationships

Key End-user Groups Consumers, SMEs and Enterprises

Major Market Participants* Vodacom, MTN, Telkom, Orange and Econet

Market Share of Top 10 Competitors 80%

Other Notable Market Participants Internet Solutions, Africonnect, PowerTel, Africom

Distribution Structure Direct sales

Notable Acquisitions and Mergers

Vodacom Gateway Mauritus acquired Africonnect; Lap Green

acquired 75% of ZAMTEL, Liquid Telecom acquired 49% of

Ecoweb.

Source: Frost & Sullivan analysis.*Major market participants by broadband technology

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Government will drive future investments in order to facilitate growth in the

business sector

Infrastructure expansion and

sharing

Influence of

undersea cables

Spectrum allocation

Effective customer

segmentation crucial

Managed services pushes

broadband market

Further consolidation

expected

Broadband Market

Total Broadband Market: Strategic

Conclusions• Collaborated infrastructure expansion and sharing

has increased broadband penetration

• The influence of undersea cables cannot be denied

‒ Broadband prices have started to decrease in the region

‒ ISPs and mobile operators have already started to take

advantage of this

• Regulator facilitation of spectrum allocation will

enhance deployment of technologies like WiMax and

LTE

• Effective customer segmentation is crucial for ISPs to

properly differentiate themselves

• An increased demand for managed services pushes

the broadband market

‒ Data centres, storage and converged communication

• Frost & Sullivan expects further consolidation,

especially between tier II and III operators

Source: Frost & Sullivan analysis.

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Ten per cent of urban office staff will work from home and

use broadband networks

Seventy per cent of electrified

households to use remote metering

of electricity and automatic load

staggering–$20 billion will be

invested

Forty per cent of hospitals will be networked with pharmacies and doctors–$40 billion will be spent on hospital ICT equipment

Five per cent of cities will deploy intelligent transport systems for traffic management–$10 billion will be invested in these systems

One hundred per cent of terrestrial TV broadcasting

will be digital–$4 billion worth of set-top-boxes to be sold

ICT innovation will be a major employer of skilled

manpower

Connectivity will generate $200 Billion in opportunities for

networked sectors by 2020

Seventy per cent of all banking transactions will use mobile technology–$300 billion to be transacted

`

Source: Frost & Sullivan, 2011

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http://www.frost.com

Your Contact For Additional Information

Chantel Lindeman

Business Unit Leader – ICT Africa

Tel: +27 21 680 3205

Mobile: +27 82 555 3851

E mail: [email protected]

For additional information