Versatile Amphibian

On Monday I was privileged enough to present a keynote at the SATNAC conference in South Africa, the slides for which can be found here . The presentation is a little less conceptual than my usual... in that there are significantly fewer pictures of cats off the internet. The thrust of my argument was as follows: Part 1 - setup We are in the early throes of a shift to a new economic system This means redefinition of the roles of individuals in society, businesses and governments in their lives Conceptually, some commentators believe that this new system will enable African countries to leapfrog over their developed world counterparts because they don't have the infrastructure, business model and cultural encumbrances of the Industrial Economy To examine whether that is true, we need to look at the ingredients for success at a macro (national or perhaps mega-corp level), which I'd describe as: Pervasive access to computing (because this is the general purpose technolo...

I had the chance to return to a topic that was very close to my heart for many years: that of the development of foundations for a digital economy in Africa. I'll drop a transcript of my keynote at SATNAC here in the next day or so, but for now, here's two high level figures on the investment over the last 5 years.  I'm planning to restart blogs on this topic (and in general) once I've completed my latest book, on the traits of a digital business, later in the year. In the interim, here's two figures: total investment in telecoms infrastructure, including international, core, MAN and access for all African countries, split by region. My summary of the figures is that although investment has been huge in African countries, on a per capita basis very few countries are even on par with the global average investment. Given where they're coming from, this means that African countries are effectively falling behind in terms of the foundational infrastructure th...

October was a $900m month for African telecoms investment, with mobile and backhaul infrastructure benefiting most from a sudden upsurge in activity. The biggest news on the continent was probably Vodacom, MTN and 8ta taking LTE live in South Africa. Third player, Cell C have also promised LTE before the end of 2012. As I mentioned in a previous post, LTE is slowly entering African markets although take-up will remain very constrained by the cost of end use devices for the foreseeable future. I also worry about the risk of returning to a communications infrastructure that it not compatible between countries. Chinese standards for LTE – proposed in a number of countries – won’t interoperate with the versions found in Japan, Korea and the West. Since it is business users that are most likely to use LTE in the early days, I worry that this will act as a small brake on intra-continental trade. There were two big stories in Kenya, where Safaricom is spending $161.7m to install 1,800km...

I've just finished an analysis of the cost of broadband versus individual wealth in 29 African countries. It makes disturbing reading. Simply put, the poorer you are, the more expensive it is to get a data connection. The implication of this is pretty stark. We may be about to see a rapidly growing digital divide in Africa between those countries that have good cheap connectivity and those without. If we believe (and I do) that digital technology will be an accelerator that will lift education and services in the continent much closer to developed market norms much faster than would have historically been possible then the total lack of affordable connectivity in countries like Sierra Leone, Malawi, Burkina Faso and Togo will doom their residents to falling further and further away from their neighbours and from desperately needed improvements in quality of life. The World Bank has helped many of these countries get international connectivity. Now it's time t...

August was a relatively slow month in African telecoms investment, with $428Mn of new money committed to upgrades. 3 of the big 4 markets took new investments, with only South Africa announcement-free. Non-M&A investments for the year now stand at a touch under $8.5Bn, on track for my forecast for the year of $13.5Mn. For reference, investments announced in August 2011 totalled nearly $1.9Bn, driven by massive commitments in Nigeria and South Africa. 2010 netted a more subdued $80Mn and August 2009 yielded $300Mn. In truth, there's little of major import to report as this month's two most interesting announcements have yet to mature into concrete commitments. In Morocco, the goverment unveiled its 10 year plan to modernise the country's obselete broadband market. This exciting plan includes a national fibre backbone in combination with DSL and LTE last miles to bring developed market connectivity to 32 million people. In South Africa, MTN is looking at selling...

Despite the fact that half of the investor community are on vacation, July was a good month for African telecoms, with $2.5Bn of new infrastructure investments announced. Two things stand out. Firstly, the reawakening of the north African telecoms sector in the wake of the Arab Spring. As stability returns to the major markets, investment is coming with it. In July, Vodafone committed $50Mn to core network upgrades in Egypt. In Algeria, Mobilis will invest $1.7Bn over five years to upgrade and extend their mobile network. North Africa led investment in the continent up to the point that the revolutions started in early 2011. If they are to maintain competitiveness and exploit their geographic location then more investment will be required to enable ICT development and economic growth. I expect further big announcements before the year is out. The second characteristic of July was the large volume of spats and court cases that broke in the month. In Swaziland, MTN demanded $...

I've completed my analysis of the trends in African telecoms for the first half of the year and thereby amended my forecast for the remainder of 2012. Overall, investment was up 54% over the same period last year, however it remains 33% down on H1 2010. As the table shows, much of this decline is due to the destabilising effects of the Arab Spring, which has almost completely halted investment in North Africa. In 2010 and 2009 countries in this region accounted for a third of all investment in the continent. In 2011 they represented 3% of the total and are on track to be the same this year. Overall only Central African countries are likely to show an uptick in investment from 2010, driven by the nascent emergence of the continent's third most populous country - the DRC - and coincident investment by telecoms groups who are keen to find a non-Nigerian market to focus on. The market I'm most worried about is Kenya, so long a leader in digital Africa, but now, t...

Nearly $2.4Bn of new investment in African telecoms infrastructure was announced in June 2012, making this the most lucrative month for the continent. Logically, this investment was concentrated on the most populous parts of the continent, with Nigeria (population c. 155Mn) and Democratic Republic of Congo (66Mn) taking $1.3Bn and $0.6Bn respectively for cellular network upgrades. Most investments are currently focused on installation of 3G Node-B infrastructure and smaller - yet still meaningful - investments were announced in Liberia, Mozambique, Botswana, Swaziland, Tanzania and Namibia. But possibly the most significant investment relative to the state of the market was in the world's newest country. ISP iBurst has commited around $1Mn to install fibre and switching in the capital, Juba. All of South Sudan's backbone and much of its access infrastructure was destroyed during the civil war, so this money, however small, is a significant step on the road to recovery. ...

LTE launches are coming thick and fast at the moment and with availability of decent handsets growing, consumers are begining to see the benefits of the technology... or rather, they don't mind having it, which represents a win in itself if we recall the trauma of 3G. Although I don't much trust analyst estimates on these things, ABI research reckon there'll be 80 million LTE subscribers by 2013 . Contrary to logic which would suggest new network technology is beyond the means of poorer countries, Africa isn't being left out of LTE. As the picture shows, four cellular networks have launched this year, in Angola, Namibia, Tanzania and Mauritius. There are also advanced trials taking place in a number of countries - the lighter red on the picture. I'd expect half a dozen major African countries to have a live LTE network by the end of the year. I'm reasonably bullish with respect to service availability because for many operators with reasonablely modern HSPA...

$1.1Bn of new investments in African telecoms infrastructure were announced in May 2012. When summed with the $3.1Bn France Telecom (finally) paid for full control of Egyptian mobile operator Mobinil this makes May the most successful month of 2012 for telecoms investment in the continent. Significant activity includes the launch of Movitel, Mozambique's third mobile operator, to increase competition in this increasingly vibrant east coast market. Movitel has deployed 1,800 BTS to date and intends to double that number by the end of next year. The former gives them capacity for about 7Mn subscribers - more than enough to cope with likely demand in a country of 20Mn people. Elsewhere, Airtel have commited $100Mn to rolling out 3G in Rwanda over the next three years. Although on the surface this looks like a small amount of money, it should be remembered that Rwanda has a population of roughly 11.5Mn and Airtel's investment should be sufficient to upgrade 1,000 urban cell...

$322 million of new investment in African telecoms infrastructure was announced in April 2012 and an additional $2 billion was spent by France Telecom to increase their stake in Egyptian mobile operator Mobinil to 95%.   But the month’s news was dominated by continued intervention by African governments into their telecoms markets. In Algeria, the wrangle between the Government and Vimpelcom over ownership of local mobile operator Djezzy ground on. Unable to easily get its way through compulsory purchase, the former has imposed $1.3 billion of fines on the Telco to attempt to force Vimpelcom’s hand over an asset that it now values at $6.5 billion. The south and east of the continent fared no better. Here’s a few more stories: In Tanzania it transpired that the Government owns 40% of Airtel’s subsidiary in the country and has no intention of selling; Malawian telecoms regulator MACRA was fined $67 million for breach of contract over cancelled spectrum licenses; Telkom So...

In geekier moments, it entertains me that mobile telecoms towers – one of the dullest parts of the TMT world - are also one of the hottest areas in telecoms rights now. Nowhere is this more true than in Africa, which regular readers will know is the market I find most interesting. This post focuses on the opportunity in towers in Africa. Cellular towers are the building blocks of mobile telephone networks. Typically they consist of a pylon on a leased site (“passive” network components), to which is attached the base station and antenna (“active” network components). In a country like the UK the average network has about 14,000 of these location, many of which are shared. In India, Airtel alone has over 70,000 towers, whereas in Africa networks even in the largest countries like Nigeria make do with a few thousand apiece. The latter fact hints at why towers are hot property and why the three largest infrastructure companies are involved in a land grab for these assets. Tower sharin...

I’m of the belief that participants in the TMT industry need to read widely in order to understand the present and future dynamics of the market. To that end, this post is a collection of the articles that have caught my eye. This week: Spotify, Indian semis and the Academic Spring build momentum, HTC, Yahoo lose it; how the iPad dominates online shopping and why blue is the future of Internet infrastructure Emerging markets India’s semiconductor consumption is expected to grow 20% this year, to over $9Bn. The appetite of newly-middle class consumers for tech’ is huge – most good tech’ products provide unmatched aspirational bang for the buck compared to more traditional products like cars. http://www.theregister.co.uk/2012/04/10/semiconductor_india_growth/ TV set top boxes are just one such product. Technicolor have shipped 5Mn of them to Tata Sky customers. A huge number and demonstrative of the enduring value of TV in a market that has become consumerist in the era of smart devices....

$388Mn of new African telecoms infrastructure investments were announced in March 2012. It’s too early to tell whether this is a sign of any kind, but the first quarter of this year has been the weakest for African telecoms investment for 3 years. On the flip side, it could just be that investment opportunities are now more difficult to come by – both MTN and Maroc Telecom made announcements this month that they were seeking to invest billions more in “bolt on” operations in African countries in which they don’t currently operate, however with nearly $8Bn of M&A done in the last 3 years targets are getting bigger and more expensive (and that doesn’t include the $10.75Bn Airtel spent on Zain, because it was officially done in Kuwait). The standout deal was actually the smallest. Movicel in Angola spent $10Mn to buy a stock of 100,000 3G enabled tablets from Datawind. By my estimation, there are fewer than half a million PCs in Angola, so this one order almost certainly means that Da...

A new piece of analysis I’ve just completed on total telecoms investments in Africa from 2009 to 2011. What it shows is the extreme concentration of investment in the top 3 markets – 55% of the investment that went into Africa in 2009 to 2011 went into Nigeria, South Africa or Egypt. On a per person basis, it’s no surprise that residents of richer economies do better than average. That said, I remain bearish about Kenya’s long term prospects as a digital leader in Africa. Interference from government and regulator, coupled with slowing national investment in public sector IT has led to the country becoming a less attractive destination for FDI. Since it lacks its own telecoms powerhouse (Safaricom being largely foreign owned), Kenya risks falling behind regional competitors. Zimbabwe may well be one of those competitors. Chinese investment in a number of local players has boosted infrastructure capabilities and provides a basis for long term growth of the sector. Provided governmental ...

Lots of conversation but little action would be how I'd characterise the African telecoms investment landscape in February. $200Mn of fresh investments were announced, but although some big deals were mooted - particularly a sell off of tower assets by Etisalat - none materialised, leaving only Vodacom's mobile upgrades in Tanzania and Movicel's selection of Huawei and ZTE to build a small LTE network in Angola to prop up the numbers. Perhaps this shouldn't come as a surprise. Only $215Mn of investments were announced in the same month of 2011; suggesting that the $516Mn announced in February 2010 was a bit of an aberration.

$1,418Mn of investment in African telecoms infrastructure was announced in January, down very marginally on the same month last year, but up 15% on 2010. As ever, cellular network upgrades dominated proceedings, with large capex commitments being made in Nigeria, Tanzania and Liberia. Staying with mobile for a moment, the launch of 3G networks continue to make headlines, with HSPA being switched on by operators in Zambia and Kenya. There also seems to be light at the end of the tunnel for Vodacom in DRC, where resolution to their dispute with their local partner appears close, potentially unlocking nearly $500Mn of much needed investment into Africa's 3rd most populous country. Also worth mentioning is the continued success of alternative wireless broadband access network solutions, such as wifi (Burkino Faso), WiMAX (Namibia), satellite broadband (South Africa) and TD-LTE (Nigeria). These are generally quite small investments, but are meaningful in that they extend data provision ...

New investments in African telecoms infrastructure fell 42% in 2011, from $17.6Bn in 2010 to $10.2Bn in 2011. While at face value this seems like a profoundly negative thing for the continent, the story is actually still mostly positive for its population. In total, the average African citizen benefited from just under $29 of new infrastructure since January 2010, often coming from a very low base. Many countries, such as Zimbabwe, Mozambique and Malawi experienced quantum leaps in backhaul and access network connectivity, taking them from laggards to leaders and closing the gap to traditionally leading countries like Kenya and Ghana. There are also a number of mitigating factors that should be taken into account when looking at the raw numbers. First amongst these are the effects of the Arab Spring uprisings, which began in the early part of 2011 and rumbled on throughout the year. Egypt and Morocco suffered worst in telecoms infrastructure terms - shown below - receiving only nominal...

Although Nigeria and South Africa received by far the largest share of the $10.2Bn of investments in African telecoms infrastructure announced in 2011, the biggest winners were citizens of Zimbabwe. In absolute terms, Nigeria ($3.3Bn) and South Africa ($1.8Bn), represent 50% of the total investment, but at $54 per person, Zimbabweans benefited from more than twice as much investment per person as Nigerians ($21) or South Africans ($37.50) and received more than double the continental average ($24). Much of the new $700Mn going into Zimbabwean telecoms was spent on mobile data services, either direct to modem or to 3G handsets, taking advantage of new sub-sea bandwidth - such as that provided by SEACOM - to provide Internet connectivity to consumers. Zimbabwe, it must also be remembered, has been a significant beneficiary of Chinese investment dollars for all manner of infrastructure projects. Worst off of the large nations were citizens of the Democratic Republic of Congo ($2.75), whic...

$723Mn of investments in African telecoms infrastructure were announced in December 2011, taking total publicly released investments for the year to $10.2Bn. Towers remain a hot market, with American Tower and Vodacom investing a total of $264Mn for a Ugandan towers joint venture. My estimate is that American Tower paid about $175,000 per tower, which looks like a good deal for Vodacom - $100,000 is the mean value for towers in comparable African markets this year and the only emerging market deal to top this was American Tower's almost simultaneous acquisition of 2,500 Pegaso PCS' towers at $200,000 per unit in the much larger and more mature Mexican market. If this Uganda deal was the largest of the month, probably the most important news was Cameroon's activation of 10GBit/s of metro fibre in the second city of Douala. This upgrade from the previous 20MBit/s loop should have massive benefits for the public and service sectors in the city. I think that this kind of small ...