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East African and Indian Ocean markets will get a “growth bump” from the arrival of the international fibre cables

The arrival of four international fibre cables in East Africa and the Indian Ocean islands will give larger markets in these regions a significant “growth bump” in what might otherwise be uncertain times. The price reductions on the new fibre capacity makes it just so much cheaper that it should bring a price reduction dividend for both wholesale customers and retail end-users. If it doesn’t, serious questions will need to be asked about why this hasn’t occurred. This week Balancing Act published African Telecoms and Internet Markets - Part 3: East Africa which provides detailed information on the region's fifteen countries and territories and provides a good opportunity to review emerging opportunities.

Despite scepticism from the remaining nay-sayers, another piece of the jigsaw fell into place this week. KDN completed the link between its Ugandan company Infocom and its network in Kenya, giving it a 1,500 kilometre route direct from Mombasa to Kampala. The link to its Altech Rwanda company follows. These companies are the Seacom POP’s in their respective countries.

Although Infocom’s CEO Hans Haerdtle is cautious about the impact of cheaper prices, the pattern is clear. Current C-band prices at volume in Uganda vary from US$5,000-5,400. Haerdtle believes that he will be able to deliver US$700 per mbps and less at volume:”The price reduction will definitely have an impact but there is no redundancy so the need for satellite won’t reduce. We’re trying to educate clients to a back up ratio of 1:10.”

His point is that customers will need to retain satellite capacity for redundancy because the alternative fibre from Telkom Kenya does not reach the border yet. But by mid 2010 KDN will add another strand, thus reducing the mid-term requirement for satellite redundancy.

But whilst the pipes are falling into place (France Telecom’s LION is built but not yet licensed), the local content, services and applications that will drive use are clearly not yet in place.

The only country with a substantial entry under Local Content and Web Services in African Telecoms and Internet Markets - Part 3: East Africa is Kenya. But even in Kenya, most of these services are starting out rather than building on an existing track record. If the question is what comes first, the chicken or the egg, then the answer must surely be that the “hard build” infrastructure is now in place and the challenge - both for those selling to retail and corporate customers - is to give them plenty of value added services they need.

Balancing Act’s African Telecoms and Internet Market’s Part 3: East Africa is the most detailed current description of the fifteen markets which include: Burundi, Comoros, Djibouti, Eritrea, Ethiopia, Kenya, Madagascar, Mauritius, Mayotte, Reunion, Seychelles, Somalia, Tanzania and Uganda. For nine out of the 15 countries, the author either lives in the country or has visited it. The report is 217 pages long and has 61 tables, 26 charts, 9 maps and full page maps illustrating GSM coverage and networks in each country. It also includes a spreadsheet that summarises data from 2005 and 2008.

The report opens with an overview of data and significant trends across all eight countries. This includes comparisons of growth in different countries for both mobile and Internet subscribers and chart of operators in different countries.

As with all reports in the African Telecoms and Internet Markets series, it opens with two introductory pieces: these look at recent trends in the market across Africa. The first of these contributions looks at comparisons of ICT take-up in Madagascar, Mauritius and Reunion. As each island represents a different level of wealth, it offers useful insights into the levels of both device and service take-up associated with each GDP level.

The second contribution looks at the unsold, Government-owned incumbents and asks: what opportunities exist at the bottom of the barrel? It provides an overview of the state of play with the remaining Africa telco privatisations and seeks to identify what opportunities exist for investors.

http://www.balancingact-africa.com/atim3.html

African Telecoms and Internet Markets - Part 3: East Africa is part of a series of five parts that will cover the whole of the continent. If you’ve not already bought Part 1: West Africa which covers 16 countries and Part 2: Central Africa which covers 8 countries, click on the link below and scroll down to find details:

http://www.balancingact-africa.com/publications.html

African Telecoms and Internet Markets - Part 4: Southern Africa will be published in October 2008.

The prices for African Telecoms and Internet Markets - Part 3: East Africa is as follows:

Full price - Africa: GBP250/USD500

Full price - Rest of the World: GBP320/USD640

Reduced price - Universities and NGOs GBP125/USD250

Click below to order:

http://www.balancingact-africa.com/publications.html

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