This document discusses connectivity and broadband access in Africa. It finds that Africa lags internationally in mobile penetration, fixed broadband subscriptions, and mobile broadband adoption. Several factors hold Africa back, including the continent's large size, difficult terrain, and lack of funding and supportive regulations. To become a world-class competitor, Africa needs improved mobile and wireless networks, more fiber investment, and policies that encourage private sector investment over government support. Recommended solutions include allocating large blocks of spectrum, promoting infrastructure sharing, reducing taxes and duties on ICT equipment, and using universal access funds to expand networks to underserved areas.

1. This document is offered compliments of
BSP Media Group. www.bspmediagroup.com
All rights reserved.

2. GUARANTEEING QUALITY
CONNECTIVITY ACROSS
THE AFRICA CONTINENT
Kanagaratnam Lambotharan
Chief Enterprise Business Officer at MTN
14 November 2013
Copyright 14 November 2013 © Mobile Telephone Networks. All rights reserved.
1

3. CONTENT
How does Africa fare internationally
on network and connectivity?
What is holding Africa back?
What is required for Africa to become
a world-class contender
Recommended solutions
that should be explored
Copyright 14 November 2013 © Mobile Telephone Networks. All rights reserved.
2

4. CONTENT
How does Africa fare internationally
on network and connectivity?
What is holding Africa back?
What is required for Africa to become
a world-class contender
Recommended solutions
that should be explored
Copyright 14 November 2013 © Mobile Telephone Networks. All rights reserved.
3

5. HOW DOES AFRICA FARE INTERNATIONALLY ON
NETWORK AND CONNECTIVITY
% Mobile penetration by region
(2005 – 2013)
63.5
12.4
Africa
Arab States
Asia Pacific
CIS
Europe
Americas
Source: ITU, %
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4

6. HOW DOES AFRICA FARE INTERNATIONALLY ON
NETWORK AND CONNECTIVITY
% Fixed line penetration by region
(2005 – 2013)
Fixed line declining
internationally
1.5
1.4
Africa
Arab States Asia Pacific
CIS
Europe
Americas
Source: ITU, %
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5

7. HOW DOES AFRICA FARE INTERNATIONALLY ON
NETWORK AND CONNECTIVITY
% Fixed broadband subscriptions
(2005 – 2013)
Africa’s broadband
subscription has
stagnated
0.3
Africa
Arab States Asia Pacific
CIS
Europe
Americas
Source: ITU, %
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6

8. HOW DOES AFRICA FARE INTERNATIONALLY ON
NETWORK AND CONNECTIVITY
% Mobile broadband subscriptions
(2010 – 2013)
Africa is behind in
mobile broadband
10.9
1.8
Africa
Arab States Asia Pacific
2010
2011
CIS
2012
Europe
Americas
2013
Source: ITU, %
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7

9. AFRICA SUBMARINE TRANSFORMATION
2008
2013
 Significant opportunities presented to nations, governments and operators with
this change
 Key benefit should be boost to economic growth via improved access to information,
commerce, services and education
 Beneficial connection of West Africa to the digital age requires that outstanding
challenges be addressed
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8

10. AVAILABILITY OF DEVICES,
NETWORK GROWTH – SMARTPHONES
Africa is one such
market
Varying estimates of
smartphone
penetration, from
3% to 17%, all
agree penetration
is increasing
Samsung estimates
that it now stands at
7%, up from 5%
percent last year
(HumanIPO)
Basic phones (2G)
2010
Feature phones (2G)
Smartphones
(2G / 3G)
2013
Copyright 14 November 2013 © Mobile Telephone Networks. All rights reserved.
Super smartphones
(3G / LTE)
2016
9

11. AN INTERNATIONAL PERSPECTIVE
BRICS countries and Nigeria broadband and
wireless penetration by access
technology(%)
32
23
Fast, pervasive BB is increasingly seen
as a critical piece of economic
infrastructure
22
12
11
8
6.0
6
3
0.1
0.1
1
0.1
To remain globally competitive, Africa’s
challenge is to build a pervasive
Broadband Access network, fast
9
8
4
Global competition for inward
investment, jobs and e-skills
1
2
Nigeria
Brazil
Russia
India
China
SA
1 230
8 214
8 675
1 111
3 678
5 827
Wireline
Fixed broadband - wireline
Wireless broadband & 3G
Fixed broadband - wireless
Africa is well positioned in the BB race
thanks to substantial mobile
network investment
~100 Billion USD new investment
needs to flow to maintain this
position
Source: Assessment of Economic Impact of Wireless Broadband in Nigeria 2009 – Analysis Mason Final Report for GSM (2011)
GDP per Capita US$
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10

12. KEY DRIVERS FOR AFRICA’S GROWTH IN BROADBAND
A larger, younger, more
affluent population
Africa’s urbanising
population
Africa is leapfrogging
through technology
Africa’s commodity
wealth
Africa’s expansion of its
financial sector
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11

13. CONTENT
How does Africa fare internationally
on network and connectivity?
What is holding Africa back?
What is required for Africa to become
a world-class contender
Recommended solutions
that should be explored
Copyright 14 November 2013 © Mobile Telephone Networks. All rights reserved.
12

14. WHAT IS HOLDING AFRICA BACK – REAL CHALLENGES?
The size of Africa
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13

15. WHAT IS HOLDING AFRICA BACK – REAL CHALLENGES?
TIME
– Labour intensive
TIME / COST
– Terrain
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COST
– Heavy machinery
14

16. WHAT IS HOLDING AFRICA BACK ?
Funding
Regulatory challenges
Historically limited
infrastructure expansion
Support and Incentives for
infrastructural rollout
Spectrum allocation bottlenecks
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15

17. WHAT IS REQUIRED FOR AFRICA TO BECOME A WORLDCLASS CONTENDER IN TOP BROADBAND & TELECOMS?
Mobile and
wireless
will dominate
broadband
TUNISIA
ALGERIA
LIBYA
EGYPT
WESTERN
SAHARA
MAURITANIA
CAPE VERDE
SENEGAL
THE GAMBIA
GUINEA
CHAD
ERITREA
SUDAN
BURKINA
FASO
COTE
D`IVOIRE
LIBERIA
SIERRA LEONE
NIGER
BENIN
TOGO
GHANA
GUINEA-BISSAU
MALI
DJUBOUTI
NIGERIA
CAMEROON
EQUATORIAL
GUINEA
SAO TOME
AND PRINCIPE
ETHIOPIA
CENTRAL AFRICAN
REPUBLIC
GABON
1bn people but
sparse population
UGANDA
KENYA
RWANDA
DEMOCRATIC
REPUBLIC
OF THE CONGO
(ZAIRE)
BURUNDI
TANZANIA
SEYCHELLES
MALAWI
ANGOLA
ZAMBIA
NAMIBIA
ZIMBABWE
BOTSWANA
SWAZILAND
MTN Business delivery of services
SOUTH LESOTHO
AFRICA
Copyright 14 November 2013 © Mobile Telephone Networks. All rights reserved.
MAURITIUS
Fibre investment is
key but shared
infrastructure
models due to
high costs
16

18. WHAT IS HOLDING AFRICA BACK – DEVICES ADOPTION?
Basic
US$50US$80
Socialite
US$100US$200
Mainstream
US$200US$300
Flagship
US$300US$450
Hero
US$450US$600
4 key challenges
Distribution
OEMs have limited resources in Africa
Import Costs
Duties and customs need refinement
Education
Consumer education and adoption
Underlying Costs
Operator driven initiatives are key but
what about other private sectors ?
Iconic
US$600+
Copyright 14 November 2013 © Mobile Telephone Networks. All rights reserved.
17

19. CONTENT
How does Africa fare internationally
on network and connectivity?
What is holding Africa back?
What is required for Africa to become
a world-class contender
Recommended solutions
that should be explored
Copyright 14 November 2013 © Mobile Telephone Networks. All rights reserved.
18

20. Contribution to the target
UNDERSTANDING THE ROLE OF PRIVATE SECTOR
VS GOVERNMENT (II)
Government
• Policy & regulatory framework
(eg. spectrum licensing, access regulation,
investment certainty, IT-literacy)
• Local regulations
(planning, environmental laws, …)
• Smart subsidies
• Long-term market support
(supply/demand-side subsidies)
Private sector
• Risk capital
• Market knowledge
• Technology & distribution know-how
• Innovation & platform competition
• Scale & efficiency
• Competitive “trial & error”
• Optimum network configuration
(sharing) & market structure
100% access target
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19

21. POLICIES THAT HAVE A DIRECT IMPACT ON
BROADBAND INVESTMENT AND TAKE-UP
Wireless CAPEX in Europe vs USA
USA
174
Index 2007 = 100
2007
2008
2009
2010
2011
2012
Large scale operators
•
Significant consolidation activity
around fibre and spectrum assets
•
97
•
Early and large blocks of LTE
spectrum allocated
2013
LTE connections (% of total) Europe vs USA
Europe
•
Highly fragmented markets
•
Severe and continuous price
interventions (LLU, MTRs, roaming)
•
18.9
Cautious approach to consolidation
1.7
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
2011 2011 2011 2011 2012 2012 2012 2012 2013 2013 2013 2014
Source: GMSA
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20

22. Low income households
POLICIES THAT ENABLE PRIVATE SECTOR VS
GOVERNMENT
True
access
gap
Smart
subsidy
zone
Private and public
partnership are key
to drive underserviced areas
High income households
Market
efficiency gap
Current
network reach
and access
Commercially
feasible reach
Geographical reach
Given the right
policies, many of
the objectives can
be realised via the
market
After one time
subsidy, will
become
commercially
feasible
Requires
ongoing
support
USAASA Fund to be
leveraged by
operators to bid for
access to fulfil the
rural development
objectives
100% geographical coverage
Source: Initial concept in telecommunication & information services for the poor: towards a strategy for universal access
by J. Navas-Sabater, A. Dymond, N. Juntunen, 2000 – modified by Intelecon
Copyright 14 November 2013 © Mobile Telephone Networks. All rights reserved.
21

23. ALL PLATFORMS HAVE A ROLE DELIVERING
BROADBAND TO AFRICA
BB coverage cost per platform (stylized)
Cost per pop
(US$)
With mobile
coverage costs
increasing
exponentially for
the last 10%
coverage, Satellite
is the likely in-fill
Mobile
Fibre
In urban areas,
population and
income density
supports multiplatform / multiplayer competition
(incl. fibre, copper,
Wimax,…)
Satellite
Mobile is expected to be the most
economic platform for a large part of
Africa
100% coverage
Dense
Urban
Urban
Suburban
Rural
Very rural
Although mobile technology is likely to be prime delivery mechanism for BB coverage.
Ubiquitous coverage will require a patchwork of fit-for-purpose platforms and pragmatic network sharing /
integration arrangements (eg. fibre backhaul + mobile access; spectrum pooling / RAN sharing in rural areas…).
Copyright 14 November 2013 © Mobile Telephone Networks. All rights reserved.
22

24. FRAGMENTING SPECTRUM TO ALLOW FOR ENTRY
COULD INCREASE NETWORK COSTS BY A FACTOR
Number of sites needed to deliver specified
capacity: 2Mbps, 90% coverage
Fragmenting spectrum to allow for multiple new
entries increases networks costs exponentially,
leading to higher end-user prices
20,000
Radio sites required to deliver
2Mbps to 4 simultaneous users
18,000
• Can’t be done with 2x5MHz
• c. 20 000 sites with 2x10 MHz
• c. 12 000 sites with 2x15 MHz
• c. 10 000 sites with 2x20 MHz
It costs twice as much to deliver the
required capacity with 2x10MHz than
2x20MHz
Number of sites
16,000
14,000
12,000
10,000
8,000
6,000
Typical awards (Europe) are
4,000
2,000
0
2
4
6
8
10
12
Required capacity
(relative number of simultaneous users)
5Mhz
10Mhz
15Mhz
• 2x 15-20MHz in 2.6GHz; and
• 2x 10-15MHz in sub-1GHz band
NB: Lack of pervasive backhaul
infrastructure in Africa may require even
larger blocks to support adequate QoS
20Mhz
Source: Ofcom, Second consultation on assessment of future mobile competition and proposals for the award of 800 MHz and 2.6 GHz spectrum and
related issues, Jan 2012. Annex 6: Revised Competition Assessment. The LTE network modelled here operates in the1800MHz band
Copyright 14 November 2013 © Mobile Telephone Networks. All rights reserved.
23

25. COST TO CONNECT 10M SA HOUSEHOLDS WITH FIBRE
– R150BN TO R200BN
Target 10m of
14.5m households
78% formal dwellings
65% urbanisation
<10% multi-tenant
dwellings
COSTS FOR FIBRE CONNECTION
Approximately R15 000 to
R20 000 per household
R150bn to R200bn
MTN SA invests R1.5bn to R2bn a year
on Transmission/Transport network
Will take 100 operator years
(25 years with 4 operators)
Without considering overbuild
88% mobile phones
Copyright 14 November 2013 © Mobile Telephone Networks. All rights reserved.
24

26. INFRASTRUCTURE INVESTMENT –
HOW TO CONNECT 10 MILLION HOUSEHOLDS ?
4 years for National Fibre networks
of over 3 000km – Way leaves, Permitting
process, Inconsistency in Local
Approvals
Unbundling, OTT
players, continuous
subsidies for smaller
players = Reduction
in investment
Price pressure, regulatory
intervention = Reduction in
investment
Copyright 14 November 2013 © Mobile Telephone Networks. All rights reserved.
MTN – R1.5 BN TO R
2BN investment pa on
transmission = 100
operator years to
reach goal
Lack of coordination
increases time to reach goal
25

27. CONTENT
How does Africa fare internationally
on network and connectivity?
What is holding Africa back?
What is required for Africa to become
a world-class contender
Recommended solutions
that should be explored
Copyright 14 November 2013 © Mobile Telephone Networks. All rights reserved.
26

28. THE AFRICAN BROADBAND AGENDA – KEY QUESTIONS
Spectrum
Consolidation & network
sharing
Rights of way
Regulated open access vs
need for profit
Attracting BB investment
Smart USO mechanisms
Other incentives
128 kbps, 10 Mbps,
100 Mbps or more
Densely populated areas
Remote areas
10Mbps everywhere =
>US$100bn
100Mbs everywhere =
US$$$ bn
Private sector vs
Public sector
Leveraging government, utilities, education
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27

29. CONCLUSION: POSSIBLE SOLUTIONS
• Mobile is key to delivering a gigantic share of broadband (but fibre is needed
in backhaul and backbone)
• Don’t fragment spectrum allocations: this increases costs
• Leverage incumbents investment capacity / existing infrastructure
• Encourage competition through service-neutral licensing
• Delicate mix between infrastructure and service-based competition, incumbents and network
sharing in rural areas likely to be key to deliver Broadband in Africa
• Remove special taxes & duties on ICT equipment and services, to bring down prices, grow
services and general tax base
• Free up ,release and coordinate critical spectrum for wireless broadband use, through
competitive evaluation and allocation of spectrum
• Reduce costs & prevent unnecessary duplication through incentivising infrastructure-sharing
• Use existing unused USAF levies to build out network into underserved areas, through
reverse-bidding to service areas & in support of demand stimulation strategies including
e-skills development
• Focus SOEs on delivering support infrastructure in rural areas (fibre backhaul)
• Subsidies for rural access and capacity expansion
• Incentives for innovation
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28

30. DIGITAL PARTICIPATION CURVE
Internet user base vs Digital participation curve
Average Internet
user needs to be
online for 5 years or
more before
engaging actively
with high-level
applications – online
retail and interactive
Requires experience,
comfort, confidence
and trust
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
Source: World Wide Worx
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
Internet users in SA
5 year participation curve
Internet Access in SA 2012, World Wide Worx
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29

31. “MTN’S NEW SMART DEVICE –
CONNECTING THE UNCONNECTED”
Affordable
6TH SENSE UI
Most affordable
Smartphone in SA,
R499
Simple, easy &
comfortable to use
Unique contextual Ad
Banner
Performance
Great Apps
Training
Service Data
Qualcomm Snapdragon
Extensive training
and tutorial videos
to get started
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Exclusive pre-loads
Free social, email and
internet for 3 months
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32. THANK YOU
Questions?
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