In the midst of an acute economic crisis, Angola has decided to open up its telecoms market in a bid to attract foreign capital. Our State of Digital report takes a look at telecoms and digital services opportunity in the Angolan market, sizing up the upsides and risks in the country's digital infrastructure, consumer and enterprise segments.
We provide an in-depth assessment of the proposed fourth mobile licence and the privatization of Angola Telecom. Even by African standards, Angola remains as tough a market as they come. We assess whether, ultimately, Africa’s last Eldorado isn’t merely another investor mirage.
State of Digital: Angola provides an in-depth assessment of the opportunities arising from Angola’s decision to award a fourth mobile licence and privatize state-owned Angola Telecom. We analyze the current state of key segments of the Angolan ICT market - mobile, B2B and wholesale.
We assess addressable demand and competitive dynamics and lay out our projections for each segment. We make the case (or lack thereof) and outline the critical risks we see for these opportunities, from OpEx and CapEx requirements to regulatory frailty, and the crucial challenge posed by Angola’s web of interlocked stakeholder relationships.
The insights derived from the research on the Angolan market are distilled in this report, covering critical key questions and points, including:
- Angola’s economic crisis and the advent of a new president are providing the momentum for action that the country’s policymakers and stakeholders have long resisted.
- The potential is solid. This the third largest economy, and the fourth largest telecoms market in sub-Saharan Africa in revenue terms. The B2B segment is one of the largest in sub-Saharan Africa, largely due to the presence of a relatively dynamic financial sector, and an active ecosystem of foreign companies in the mining and oil and gas sectors.
- While not immune from the challenges that have afflicted the broader ICT sector, the B2B segment has performed better than the broader market;
- There is upside: mobile penetration is low, half of Angola’s mobile addressable market is underserved. The very nature of the Angolan mobile market creates substantial room for differentiation for a new entrant.
- For the fourth licence, the subscriber case is strong, as is the revenue case. We find the OpEx and CapEx cases to be extremely challenging.
- Angola Telecom (AT) is a troubled business. But we see solid underlying value in its unique pool of assets; in this case, the parts look better than the whole.
- A critical characteristic of the Angolan ICT market is its remarkable interlocking of interests. These will be difficult to break.
- This matters, because success in the Angolan market, in our view, would require a challenging of the existing market structure, along with tangible regulatory action to foster true competition.
- The opening of Angola’s telecoms market is welcome - but still doesn’t go far enough for the opportunity to be truly compelling.
1 EXECUTIVE SUMMARY: AFRICA’S LAST DIGITAL ELDORADO
2 MACRO-ECONOMIC CONTEXT: DISTRESS SPURS ACTION
- Overview: the third largest economy in sub-Saharan Africa
- The Angolan economy is in a state of crisis
- Why now: A new president, and a momentum for action
3 TELECOMS MARKET OVERVIEW
- A highly concentrated ~$1.8bn ICT services market
- Three years of significant lost value for the Angolan ICT market
- Summary outlook - moderate growth lies ahead
- Angola enterprise ICT adoption - The players
4 THE ANGOLAN MOBILE OPPORTUNITY
- Angola mobile: big market, punching below its weight
- Mobile addressable market - only ~60% served to date
- It’s not just the economy: business model and SIM registration dampen market growth
- …but mobile broadband is a bright spot
- The revenue side: the fourth largest market in sub-Saharan Africa
- Breaking down the Angolan pricing model: high and higher
- Angola’s challenging price context - higher than most, yet still falling in real terms
- Angola’s tough revenue cycle: this is not just about inflation and FX
- Looking for upside: incumbent operators have few options to boost the revenue base
- Our projections: competition underpins strongly positive outlook
5 ANGOLA’S ENTERPRISE ICT OPPORTUNITY
- Breaking down Angola’s B2B ICT demand
- The fixed broadband market: Luanda, Benguela or (mostly) bust
- The third largest ICT B2B market in sub-Saharan Africa
- B2B is doing better than the broader ICT market
- Angola ICT B2B - Our projections
6 ANGOLA WHOLESALE: THE MAKING OF A HUB
- Angola wholesale: more dynamic internationally than domestically
- Angola wholesale: building a traffic hub
7 MAKING THE CASE: ANGOLA’S GREENFIELD LICENCE
- The greenfield licence: opportunity summary
- The greenfield operator’s revenue case: strong
- The greenfield operator’s revenue case: market share, ARPU and MBB
- The greenfield operator’s cost case - challenging
- The greenfield operator’s CapEx case - demanding
8 THE ANGOLA TELECOM CASE
- The Angola Telecom opportunity: primarily a wholesale play
- Looking for upside: Angola Telecom’s parts look better than the whole
9 SUMMARY RISK ANALYSIS: NO STRONG CASE WITHOUT TRUE TRANSFORMATION
- Weight of government, maze of interlocked interests hamper ICT market growth
- The interdependent relationships of Angolan ICT players
- Risk analysis: macroeconomics, government intervention and tangled relationships
- Risk analysis: a weak regulator and a dominant player make for a tough combination
- Risk analysis: high OpEx and CapEx mean limited visibility on payback