Life & Style | People
Africa's untapped telecoms potential
Matt Glynn is specialising in Middle East and African telecoms at the leading law firm, DLA Piper in Dubai. He explained to Gulf News why African telecom companies are set for massive change.
- By Ivan Gale, Staff Reporter
- Published: 20:51 June 27, 2007
- Image Credit:
- Matt Glynn is specialising in Middle East and African telecoms at the leading law firm, DLA Piper in Dubai. He explained to Gulf News why African telecom companies are set for massive change.
Matt Glynn is specialising in Middle East and African telecoms at the leading law firm, DLA Piper in Dubai. He explained to Gulf News why African telecom companies are set for massive change.
Gulf News: What trends do you see in the African telecommunications market?
Glynn: Africa's telecoms markets are now the fastest growing in the world. More than 40 per cent year on year growth is being fuelled by untapped demand for reliable communications compounded by severe infrastructure shortages.
Africa is now the subject of intense international operator and private equity interest given the scarcity of new licence opportunities in the Middle East and Western Europe.
Information, technology and communications (ITC) based initiatives are a national priority for most African states.
A GSM association study suggests that a growth of 10 per cent in mobile penetration can boost a developing country's annual economic growth rate by 1.2 per cent. Africa's average telephone penetration rate is less than 25 per cent!
What has been the role of Middle Eastern firms?
Middle Eastern petrodollars are increasingly targeting African telecoms opportunities. Kuwait-based MTC invested some $3.4 billion to acquire Celtel.
etisalat acquired interests in seven West African mobile operations by acquiring a 70 per cent stake in Atlantique Telekom.
Saudi Arabia-based House for Integrated Technology Systems has earmarked some $1 billion for African telecoms investment. Middle Eastern private equity investors are also directly pursuing telecoms opportunities in Africa.
Middle East and African Investment Company and Mubadala Development Company recently acquired licences in Uganda and Nigeria, respectively, and are looking for more licensing opportunities in Africa.
What is the current state of the infrastructure?
Estimates suggest that Africa needs to invest $11 billion per year in telecoms over a 10-year period. Unsurprisingly, the major telecoms vendors are focusing intently on Africa.
Mobile will continue to address much of Africa's infrastructure shortage. Wireless solutions such as WiMax will also substitute non-existent fixed-line infrastructure and provide much needed internet access.
Mobile operators are likely to increasingly establish themselves as ISPs - for example Telkom SA acquired African Online, Africa's largest ISP, early this year.
Much of Africa remains unconnected to global fibre backbones, particularly Africa's East Coast. This means operators rely heavily on limited and expensive satellite connections and existing fibre networks.
Compounding this problem is that cartels of monopoly telecommunication operators own much of the existing fibre and have little incentive to offer competitive prices.
More from People
More from Life & Style
Life & Style editor's choice
-
How to stay fit at your desk
Long periods spent hunched over a computer can leave you feeling tired, stiff and immobile
-
Sweet hope for juvenile diabetes
Every day 200 children are diagnosed with type I diabetes around the world
-
Abhay's 1980 Chevrolet Camaro Z28
Abhay wanted a classic car to tinker with and they don't come much better than a 1980 Camaro Z28
