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East Africa Telecommunications Report Q1 2012
Business Monitor International, Jan 2012, Pages: 95
East Africa Telecommunications Report provides industry professionals and strategists, corporate analysts, telecommunication associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on East Africa's telecommunications industry.
- Benchmark BMI's Independent 5-Year Telecommunications Industry Forecast for East Africa to test other views - a key input for successful budgeting and strategic business planning in the East Africa telecommunications market.
- Target Business Opportunities & Risks in East Africa's Telecommunications Sector through our reviews of latest industry trends, regulatory changes, and major deals, projects and investments in East Africa.
- Exploit Latest Competitive East Africa Telecommunications Intelligence & company SWOTS on your competitors and peers through company rankings by sales, market share, investments and leading products and services.
BMI’s inaugural report on the telecommunications markets of East Africa contains five-year forecasts for the fixed-line telephony, mobile subscriber and internet sectors of six countries: Burundi, Ethiopia, Malawi, Rwanda, South Sudan and Sudan. Our growth forecasts for these six countries, which extend to the end of 2016, are based on historical market data published by the region’s operators and telecoms regulators, industry and regulatory developments, and macroeconomic factors expected to affect consumer spending during the next five years.
The mobile sector is the most active in East Africa, despite the sub-region having an average mobile penetration rate of just 23.4% at the end of 2010. The telecoms markets of the region play host to numerous international strategic investors, including Luxembourg’s Millicom International Cellular (in Rwanda) South Africa’s MTN (in Rwanda, Sudan and South Sudan), India’s Bharti Airtel (in Malawi and Rwanda) and Kuwait’s Zain (in Sudan and South Sudan). Other notable operators in the region include Sudani, Ethio Telecom, Econet Wireless and Egypt’s Orascom Telecom. At the end of this report, we publish profiles on MTN, Sudani, Ethio Telecom and Zain.
Competition in Rwanda and Malawi is expected to change considerably during our forecast period, following the expected launch of commercial services by new mobile network licensees. In Rwanda, Airtel won a 2G and 3G mobile licence in August 2011, a situation that breaks the duopoly of market leader MTN and second-ranked Tigo. In Malawi, GAIN and Celcom are rolling out mobile networks, while the award of unified telecoms licences to the country’s two fixed-line operators could potentially increase the number of players in the mobile market from two to six firms.
The formal declaration of independence by the Republic of South Sudan (RoSS) on July 9 2011 is already having a considerable effect on the telecoms market. In March 2011, the government announced plans to issue new operating licences to telecoms service providers. Zain, MTN and Sudani, which operated in South Sudan using licences issued by Sudan, have indicated interest in bidding for new licences in RoSS. At the time of writing, negotiations were still going on between the government and telecoms service providers. Meanwhile, in July 2011 the ITU assigned 211 to South Sudan as the international dialling code. The new code becomes effective from December 15 2011, ending five years of renting the Uganda code (256), while maintaining the Sudan code (249).
BMI forecast rapid growth in the mobile sector across the six countries in our East Africa report during the next five years. Sudan is expected to have the highest penetration rate, at about 72.1%, followed by Rwanda and Burundi with penetrations rates of 67.6% and 63.9% respectively. Ethiopia and Malawi are forecast to have penetration rates of 42.6% and 42.5% respectively, while South Sudan is forecast to have a penetration rate of 35.3%. Although there are significant upside risks to our growth forecast, we are maintaining a cautious outlook considering the effect of dire macroeconomic factors in some countries in the sub-region on investment in telecoms networks as well as the take-up of telecoms services.
BMI notes that the fixed-line and internet sectors in the countries in our East Africa report are grossly underdeveloped. BMI attributes this to a number of factors, including underinvestment in fixed-line infrastructure, especially state-owned incumbent operators, increasing fixed to mobile substitution, low urbanisation rates, considerable damages to telecoms infrastructure during civil conflicts in some of the countries and the high cost of international bandwidth for internet services. BMI notes that five out of the six countries in the East Africa report are landlocked, resulting in the reliance on expensive satellite connectivity for internet services.
Over the next five years, we expect the internet sector to outperform the fixed-line sector as mobile network operators roll out mobile data services, and access to submarine cables through terrestrial fibreoptic networks drive down the cost of international bandwidth. We forecast internet penetration to exceed 15% in Malawi, Rwanda, South Sudan and Sudan by 2016. Internet growth in Burundi and Ethiopia, however, will be held back by limited competition and network coverage.
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