Africa & Middle East Telecom Insider / Vol. 1, No 4, Edition 5 - AME Capex Looking Up in Face of the Global Economic Downturn
Pyramid Research, Inc, May 2009, Pages: 18
Strong subscriber growth and sustained levels of revenue in Africa and the Middle East will encourage mobile operators to carry on with their capex plans for 2009 and 2010, according to this latest report.
AME Capex Looking Up in Face of the Global Economic Downturn analyzes the three major factors that will drive capex investment in AME during 2009 and 2010 and investigates how the global economic downturn will affect each one. This 18-page report examines three operators in key markets (Turkcell in Turkey, Vodafone in Ghana, and Zain in Nigeria) that serve as real-life illustrations of the prevalent trend among AME operators to keep spending on network infrastructure.
Recent reports from global network vendors and operators have confirmed the inevitable: Global capex is on the decline, notes Dearbhla McHenry, analyst at Pyramid Research and author of the report. "However, spending in AME is holding steady so far – AME is one of only two regions that will actually see an increase in total telecom revenue in 2009, mainly due to the late development of the mobile sector and a recent move to address pent-up demand for mobile services in AME," she says.
"Pyramid forecasts a similar resilience in its capex spending, due to the region's ongoing unmet need for basic telecom infrastructure," says McHenry. "Whereas capex in developed countries is driven primarily by service enhancements and operator differentiation strategies, capex in AME is driven primarily by the need for more capacity and coverage in order to keep up with organic growth of the subscriber base in many of the region's largest (and poorest) markets," she explains.
Increasing wireless broadband uptake and new licensing, acquisitions, and privatization will also bring new money to the region and help drive capex spending over the next two years. Furthermore, the list of operators interested in increasing their footprint in AME is still a long one. "Zain, MTN, and Etisalat are all keen to enter African markets while penetration is still low. Global operators, such as France Telecom, Telefónica, and Vodafone, have also realized that future growth will come largely from emerging markets and have turned their sights on Africa," McHenry says.
AME Capex Looking Up in Face of the Global Economic Downturn is part of our Africa/Middle East Telecom Insider report series. Telecom Insiders are packed with trend analysis, industry best practices, market sizing and forecasting, competitor analysis, and case studies, providing you information you can leverage to make better business decisions.
Introduction
Organic growth and 3G rollouts drive AME Capex
A. Organic growth of mobile services in AME requires network expansion
B. Demand for broadband drives 3G and WiMAX rollout
C. New license owners will bring fresh money to sustain Capex
Market detail
CASE STUDY: Turkcell — Turkey
CASE STUDY: Ghana Telecom (Vodafone) — Ghana
CASE STUDY: Zain — Nigeria
Conclusions
Key findings
Recommendations
Related resources
Table of exhibits
Exhibit 1: Total telecom service revenue growth by region, in US$
Exhibit 2: Year-on-year mobile subscriber growth
Exhibit 3: Capex-to-revenue ratio vs. mobile penetration level for selected Zain subsidiaries, 2008
Exhibit 4: Regional comparison of data cards as a percentage of total broadband subscriptions, 2008
Exhibit 5: AME 3G deployment map Exhibit 6: Selected new mobile service launches in AME, 2008-2010
Exhibit 7: Turkcell Capex and revenue, US$m
Exhibit 8: Ghana mobile subscribers, year-on-year growth rate, and operator market share, 2004-2010
Exhibit 9: Mobile Nigeria mobile subscribers, year-on-year growth rate, and operator market share, 2004-2010
Exhibit 10: Zain Nigeria Capex and revenue, US$m
Although the economies of Africa & the Middle East — a region in which we include Africa, the Gulf, Iran, Turkey and the Levant — will not be affected by the global economic crisis as severely as the economies of developed markets, the EIU is still forecasting a 6% decline in regional GDP from 2008 to 2009. A few years from now, the economic picture will become much brighter: We expect the region’s GDP to make a fast recovery from 2010 onward, with growth outpacing every other region except for Central & Eastern Europe. But how will the downturn affect Capex spending in Africa & the Middle East (AME) in the meantime? We believe there are reasonable grounds for optimism. Q1 2009 reports from equipment and network vendors are showing an overall decline in global sales, but spending in AME is holding steady so far. Indeed, AME is one of only two regions that will actually see an increase in total telecom revenue in 2009 (see Exhibit 1), and we forecast a similar resilience in its Capex spending. Because operators in AME need to make a variety of immediate and unavoidable network improvements — to cope with a rapidly expanding mobile subscriber base, to respond to the increasing demand for wireless broadband and to comply with the terms of new licenses, privatizations and acquisition agreements — we expect that the economic turmoil of 2009 and 2010 will not cause a downturn in AME’s Capex investments.
This report analyzes the three major factors that will drive Capex investment in AME during 2009 and 2010 and investigates how the global economic downturn will affect each one. It then looks in more detail at three operators in key markets (Turkcell in Turkey, Vodafone in Ghana and Zain in Nigeria) that serve as real-life illustrations of the prevalent trend among AME operators to keep spending on network infrastructure.
- Alcatel-Lucent
- Alheri Engineering
- Egotel
- Ericsson
- Etisalat
- Expresso
- France Telecom
- Ghana Telecom
- Glo Mobile
- La Cell
- Mobinil
- MTN
- MyCell
- Nokia Siemens Networks
- One Touch
- Safaricom
- Telefónica
- Turkcell
- Turk Telekom
- Vivacel
- Vodacom
- Vodafone
- Wana
- Warid Telecom
- Zain
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