By: GUGULAKHE LOURIE

JOHANNESBURG – New telecoms infrastructure is set to boost capacity and cut tariffs in Africa this year, unlocking the continent’s high-speed Internet potential and creating growth opportunities for operators and equipment firms.

Despite being the fastest-growing telecoms market in the world, Africa’s broadband growth has been hamstrung by costly international bandwidth and patchy national infrastructure, impeding development and deterring investors.

But that may be about to change.

US-based advisory firm AfricaNext Investment Research expects Africa’s broadband market to grow more than fourfold in five years to 12,7 million users from 2,7 million in 2007.

AfricaNext says growth will be facilitated by new submarine cables and national networks due to launch this year and next, and the emergence of wireless technology such as EVDO and WiMax.

The group said 2009 could represent the most significant opportunity for investment returns in the African telecoms sector since the mobile voice boom, which saw subscribers rocket to 270 million in 2007 from two million nine years earlier.

And as the rest of the world reels from the global economic slowdown, Africa offers growth for equipment providers such as Sweden’s Ericsson and China’s Huawei Technologies.

“I don’t think equipment vendors like Ericsson and Huawei are going to shy away from opportunities in Africa,” said Lindsey McDonald, ICT industry analyst at consultancy Frost & Sullivan McDonald.

NEW CABLES

While West Africa already has high-speed Internet connectivity through the SAT-3 cable that loops around the west of the continent, East Africa still relies on dial-up or expensive satellite connections.

But projects worth around US$6 billion, including 10 undersea cables and several national networks, are planned or under construction in Africa, according to South African research firm BMI TechKnowledge.

Mauritius-registered private equity venture SEACOM is planning to commercially launch a fibre-optic undersea cable in June costing more than US$650 million, linking east and southern Africa to Europe and Asia.

The EASSy submarine network, owned by African operators including Telkom Kenya and Telkom South Africa, will also loop around east Africa, bringing fast and cheap bandwidth to at least 23 landlocked African countries.

It should be completed by 2010 and will cost US$265 million. Alcatel-Lucent is working on the project.

Richard Hurst, telecoms analyst at global telecoms advisory firm IDC, said international bandwidth rates were expected to drop to a fifth or less of current rates of US$3 000 per megabit after these two cables are in operation.

“(Undersea cables) are a major positive step in a right direction,” he said.

Investors and telecoms companies with an eye on expansion are preparing to take advantage of the new capacity.

Unlisted South African investment firm Convergence Partners is finalising deals in Tanzania and Mozambique.

CEO Brandon Doyle told Reuters the company was looking at taking minority stakes in Internet service providers (ISP) and would provide funding for network expansion and the launch of wireless broadband infrastructure for corporate clients.

“We are in a process of closing transactions, where we will be investing in established ISP businesses,” he said.

KENYAN OPPORTUNITY

Kenyan mobile firm Safaricom, in which Britain’s Vodafone owns 40 per cent, said in September 2008 it was buying a 51 per cent stake in Kenyan IT firm Onecom to boost its product range and move into the data business.

Frost & Sullivan’s McDonald said more such deals may follow in Kenya.

She said Safaricom may also decide to lay its own fibre-optic cable as an alternative to state-owned Telkom Kenya to reduce its transmission costs within two to three years.

The full benefit of undersea cables will only be felt if national infrastructures in Africa are also improved, and progress is already being made in many countries.

In South Africa, MTN and second fixed-line operator Neotel are rolling out a 5 000 km national network, which will allow them to circumvent former monopoly Telkom’s infrastructure.

Vodacom, which is being taken over by Vodafone, may also join the project.

Vodacom has started its own corporate data business, while MTN has bought Verizon South Africa, and both hope to link up to the new cables, enabling them to cut tariffs.

Uganda, Angola and Zambia have also either recently expanded or plan to beef up their national networks.

There is a confluence of indicators that suggest that for the first time in more than a decade, broadband growth in the African continent may be on the verge of truly taking off,” said AfricaNext.

– Nampa-Reuters

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