Issue no 539: Are mobile phone penetration rates in Sub-Saharan Africa really as low as they seem?

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  • Many crystal-ball gazers in 2011 point to what they see as the low penetration rates of African mobile telephony as an indication that there is plenty of room for future growth in the sector. On the face of it, the statistics for individual countries give some support to these optimistic prognostications. Taking the overall population as the potential target market, the penetration rate of mobile telephony in Uganda is now only 35%, while in Liberia, it was around 31% in 2009. In Cameroon, where MTN and Orange have a duopoly, the penetration rate was around 38% in June 2010. In Kenya, it just passed the magic 50% level at around this time, while in Rwanda, it was about 25% in early 2010. It is nonetheless worth asking whether it is realistic to infer vigorous future growth on the back of calculations that see the whole population as a vast untapped market. Isabelle Gross cautions that for the foreseeable future, other factors, such as demographics and related economic aspects will keep penetration rates in sub-Saharan Africa lower than those in developed countries. This in turn implies both opportunities and challenges for African telcos.

    In Liberia, which has a population of about 3.5 million and a mobile phone penetration rate of around 31%, the Johnson Sirleaf-led Government organised a census in 2008: the first after two decades of civil war. This exercise revealed a striking "youth bulge" in the population structure: 42% of the total population, or around 1,458,072 people, were less than 15 years old; 54% were aged between 15 et 64; while less than 4% (118,111 people) were in the 64+ age group. In Kenya, where a 2009 census put the overall population at 38,610,097, the age structure is almost identical. Almost 43% of the total population, or around 16.5 million inhabitants, were less than 15 years old; a little more than 55%, or around 20.6 million fell into the 15-64 bracket, while less than 4% (1.3 million) were older than 65.

    The situation in Senegal is not very different. The last census, carried out in 2002, showed that 55% of the population were less than 19 years old, while 43% were aged between 20 and 69. These few examples demonstrate the preponderance of youth in the demographic make-up of African countries: a position which is in marked contrast to that in developed nations, where populations are clearly ageing. In France, where I was born, the population stood at 62.8 million in 2010. Detailed statistics provided by INSEE reveal that only 19% of this total, or 11.5 million, were less than 15 years of age. In the country where I live – the UK – the position is similar: in 2009, the total population was 61.8 million, of which only 18.6% were less than 15 years old. As a percentage of the overall population, in Sub-Saharan Africa there are more than twice as many under-15s as there are in developed countries.

    This contrast means that it is not realistic to expect the progress of mobile telephony in Africa to follow an identical path to that in the developed world. In particular, the fact that many African families do not have the money to send their children to school, let alone buy them phones, puts a major question mark over the conventional model for mobile telephony penetration. In interview in December 2010 with local newspaper New Vision, Themba Khumalo, the CEO of MTN Uganda said “these statistics (mobile penetration rate) should be read with the knowledge that about 50% of the population are below 15 years and have no spending power. In terms of addressable market, we have gone way above 70% of penetration, we have done well as a country". If one looks again at the statistics described above in the light of the addressable market - in other words, the 15-64 age bracket - it becomes obvious that "true" penetration levels are not as low as many market commentators would have us believe.

    In Kenya, there were a little more than 20 million mobile phone subscribers in June 2010. Comparing this to the total number of 15-64 year olds (20,685,000 according to the 2009 census), one arrives at a true penetration rate of around 100%. In Liberia, there were around one million mobile phone subscribers in 2009, making a mobile penetration rate as a percentage of the overall population of 31%. However, if one re-calculates this rate as a percentage of the addressable market, the figure climbs to 60%. According to the telecoms regulator in Ghana, the NCA, the number of mobile subscribers reached nearly 17 million in October 2010, out of a total population of 24 million. Although there are no detailed demographic data available from 2010, the last census from 2000 found that the 15-64 age bracket made up about 54% of the total population. While the population may have aged somewhat, it seems likely that there were around 13-14 million 15-64 year-olds in 2010. On this basis, it would appear that the mobile penetration rate in Ghana in 2010 has reached the heady heights of 130%.

    One can therefore conclude that penetration levels are higher than would appear at first glance, and that this will present both opportunities and challenges for African telcos. In terms of opportunities, African operators are more or less certain to be able to count on a regular and substantial stream of new young customers, who will be eager to buy a phone and some call credits as soon as they have made a little money. In the meantime, however, the fact that the under-15s make up such a large percentage of the overall population limits the size of the addressable market. And as we have seen, a hard look at the statistics shows that the addressable market in some countries such as Ghana may already be approaching saturation. It will be interesting to see what commercial and marketing strategies the telcos can adopt to attract children to the world of mobile telephony when their parents have barely enough money to pay for basic schooling.

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telecoms

  • Executive Vice Chairman of the Nigerian Communications Commission, NCC, Dr. Eugene Juwah, last week said that the commission had not given licence to any operator in Nigeria to do LTE.

    However, Juwah explained that though operators can do LTE on the platform of the 2.3Ghz licence which they already have, it was not as if there was no licence meant specifically for LTE services.

    According to Juwah, NCC deliberately did not want to issue licenses on this platform because it needed to see that 3G services were properly deployed by the operators and the potentials fully harnessed by users before joining the next service level.

    Juwah's explanation was a fall out of questions by ICT journalists in Lagos, on how operators can be assisted to deploy cutting edge services like 4G LTE in the rural areas to help transform their economies. He boasted that he wanted his regime at NCC to be remembered for allowing services achieve full potentials before lumping another one on the users, thereby creating opportunity for half-baked services.

    Juwah, who exuded much confidence as he interacted with ICT reporters for the first time since he assumed office as NCC EVC six months ago, said that as a thorough professional, he believed in allowing users to understand every technology and personally analyse what benefits such technologies can give them before bombarding them with another.

    He said the time to issue licences for LTE was only when the NCC was convinced that users had grown accustomed to the 3G services and needed services that offered more. This is even as he noted that his explanation was not to condemn those who have taken pains to go extra miles in providing the services.

    Juwah noted: "Please understand me, I am not saying that 4G-LTE cannot be deployed by operators now on the platform they already have licence for, but that would only mean doing it on the frequency that it is not internationally specified for. Besides, doing LTE on the 2.3Ghz would cost the operators more. We have not issued license for LTE. You can agree with me that even 3G has not been fully harnessed here."

  • Cell C has been the biggest net beneficiary of mobile number portability. Nearly a quarter of a million consumers have ported their numbers to Cell C’s network since number portability was introduced in November 2006, latest statistics show. Mobile number portability was introduced to allow consumers to switch between cellular networks without losing their telephone numbers.

    The figures, which are not published officially but have been leaked to TechCentral by a source in the telecommunications industry, show that Cell C has won nearly 240 000 subscribers to its network through consumers porting their numbers. At the other end of the spectrum, just over 1 000 people have ported to Telkom’s new mobile network, 8ta. However, 8ta has only been in the market since August 2010. The figures exclude customers who ported, and then ported back to their original operator.

    Since portability was introduced, just over 200,000 people have ported to Vodacom. MTN is in third place with about 130,000 subscribers switching to its network.

    Cell C’s investment in a new national network may have been a factor in the operator convincing customers to port to its network. Also, smaller operators like Cell C tend to benefit more from portability than their bigger rivals.

  • Gamtel last week inaugurated its new 3G services, making it the second telecommunication provider to introduce such services in the country. The inauguration ceremony was held at the Gamtel head office in Banjul.

    The new services -'Nafaa', Express, and Bantaba enable customers to access the Internet in the fastest form anywhere. It is ideal for home and small-scale business that requires broadband speed daily.

    Speaking at the ceremony, Jamal Micknas, the managing director of Gamtel, described the day as historic. He said Gamtel over the years has been working tirelessly to regain its lost glory noting that the coming of the 3G services will enable it provide more Internet services in the country.

    Minister Kah said that the management of Gamtel deemed it necessary to upgrade their network services to their customers. He explained that the upgrading includes a high-speed Internet access; and that the 3G services have different tariffs to meet the diverse customers.

    In a statement read on behalf of the vice president and minister of Women's Affairs, Alhaji Cham, the Minister of Information and Communication Infrastructure noted that Gamtel, as the leading and first Internet service provider in The Gambia, has paved the way through a level playing field for other service providers to join the Internet market, which has benefited not only Gamtel but the entire nation. "Following the establishment of Gamtel as a government-owned limited liability company, with an authorised share capital of D6 million, there has been a remarkable and significant development in the industry especially with fixed telephone services entirely monopolised by Gamtel," he said.

    He also noted that the monopoly at the time coupled with efficient and effective management of services, culminated in the proliferation of projects on fixed lines expansion and improvement. He emphasised that Gamtel being a fixed line provider, finds it very difficult to compete on voice and data effectively, because of these highly competitive services offered by the mobile service. He continued: "Further to these coping strategies, Gamtel in year 2005 established the first ever CDMA network in The Gambia with wireless voice telephony and data services in the form of wireless broadband internet connection.

    The CDMA network locally known as 'Jamano' services is a complementary network for Gamtel fixed lines which came purposely to rescue the aging fixed line network of the time. This was needed to minimise the downward trend in revenue, due to the fixed nature of the copper network."

    The Communication Minister further went on to state that Gamtel CDMA network like most other GSM operators had 2.5G network and as the need for customers' taste changes, Gamtel did not hesitate to improve on its network to match such customers' needs and expectations, thus an upgrade of the current network of 2.5G to a 3G network with more advanced version of the CDMA system named Release A put in place.

  • Installation of an undersea cable between Brazil and Angola could cost up to US$200 million, the Angolan deputy minister for Telecommunications and Information Technology said in Brasilia Wednesday.

    Aristides Safeca took part in a meeting in the Brazilian capital with Brazilian minister for Communications, Paulo Bernardo, representatives of Angolan consortium Angola Cable and Brazilian telecommunications group Oi. According to Safeca, the project is open to the participation of other business groups, and that the project's feasibility studies would be concluded by the end of the end of the first half of this year.

    Last week, Angolan Minister for Telecommunication and Information Technology, José Carvalho da Rocha, said in Luanda that installation of the new cable, linking South Africa to the United Kingdom, with an anchor point in Angola, could solve some of the country’s telecommunications problems, mainly international data and voice connections.

    The cable will be extended to Angola in February, but services due to be provided based on the terminal stations by project manager Angola Cable will only be available in the first quarter of 2012.

    The project for the new undersea cable is a public-private partnership between the Angolan state, represented by Angola Telecom, and operators Movicel, Unitel, Mundo Sartel and Mstelcom.

internet

  • Reporters Without Borders condemned the arrests and physical attacks that journalists suffered while covering demonstrations last week and today in various Egyptian cities. The authorities have been doing everything possible to keep the media at a distance in order prevent the circulation of images of protesters demanding President Hosni Mubarak's departure. No TV station was able to film yesterday's big protest in Cairo's Tahrir Square.

    The authorities began jamming mobile phone communications early yesterday afternoon in places where protesters had gathered in Cairo. Representatives of the Vodafone and Mobile Nile phone companies last week denied any involvement in the disruption of service, blaming the Egyptian authorities.

    The social-networking website Twitter and the livestreaming service Bambuser.com were both blocked. The hashtag #jan25, referring to protest, was widely used on Twitter.

    Access to Facebook was intermittently blocked, with the degree of blocking varying from one ISP to another. Egyptian dissidents and civil society groups have been using Facebook for years to disseminate information and organize protests, including the 6 April 2009 strike.

    Slow Internet connections were reported, especially during attempts to access the online newspapers Al-Badil, Al-Dustour and Al-Masry Al-Youm. Access to Al-Badil and Al-Dustour was subsequently blocked altogether while Al-Masry Al-Youm experienced major problems that prevented it from operating.

    Egypt is on the Reporters Without Borders list of Enemies of the Internet, above all for harassing and arresting bloggers, but it has not as yet set up Internet filtering systems as Tunisia and Iran have done. Many Egyptians posted messages on social networks in the past 24 hours voicing exasperation with the unusual level of censorship and began using proxies and other censorship circumvention tools to access blocked sites see here:

  • The fibre backbone of the City of Johannesburg’s R1bn broadband infastructure project, being built in conjunction with Ericsson SA, should be completed within the next three months.

    BWired, a telecommunications operator set up by the city and Ericsson, is running the project. It’s being managed in collaboration with several small Internet service providers.

    The company began digging trenches and laying its fibre backbone network in April last year. However, the digging was put on hold during the soccer World Cup in June and July and the roll-out only got underway in earnest from August. Since then, BWired has built 300km of fibre in various areas around Johannesburg. Executive director Musa Nkosi says the backbone should be completed in the next three months.

    So far, R240m has been ploughed into the network. Ericsson is funding the bulk of the project, with the City of Johannesburg paying for the physical fibre. Once the backbone has been completed, BWired will begin laying another 700km of fibre, which will ring underserviced areas such as Soweto and Orange Farm.

    Nkosi says the project is well on track to providing Internet access to those areas. “Last mile-access, or final user access, is scheduled for late 2012,” he says. “However, we will have test sites and accounts set up during the last quarter of this year [and] test network topology and the management of the fibre network,” he says.

    The connectivity will be used to connect small businesses and consumers in areas that have not had access to high-speed Internet access before. The company will also host several kiosks for users without access to computers and on-site support.

    Programmes will also be set up at a number of technology hubs in areas such as Soweto and Alexandra, to help school children, adults and business owners develop computer, entrepreneurial and job-seeking skills.

    Johannesburg residents in Sandton and parts of Randburg will already have noticed BWired signboards and workers trenching to lay cable. According to Nkosi, the fibre that is being laid in these areas is being used for its backbone network.

    Part of the plan is to connect the City of Johannesburg’s main offices to branch sites through the metropolitan area.

    Under an agreement, BWired will run the broadband network for the City of Johannesburg for a period of five years after the network is built and will then hand over the telecoms operator to the city.

    Consumers hoping for an alternative access technology to Telkom’s last-mile copper network shouldn’t get too excited, however. The network is aimed mainly at providing access in underserviced areas and not as a direct rival to products from commercial network operators.

    There are no plans to offer fibre-to-the-home; rather last-mile access, where it is exists, will be wireless. To bring affordable access to residents of underserviced areas, BWired has entered agreements with several Internet service providers and hopes to add cheap international capacity, probably through Seacom.

    The City of Johannesburg is also hoping to use Internet access to provide e-government and e-health services to Johannesburg residents.

  • Kenya has the highest number of people accessing Internet facilities and services within the East African Community. According to a study conducted by TNS Research International in Nairobi, Mombasa and Kisumu from September to November 2010, out of a population of 40 million, about four million (10 per cent) have access to the Internet.

    The study, titled "Digital Life" and conducted to establish people's online behaviour and activities, found that in Uganda, out of a population of 33 million, about 3.3 million (10 percent) have a access to the Internet while Tanzania comes last -- out of a population of 42 million, only 672,000 people (1.6 per cent) have had an online experience.

    The study found that based on an adult sample in each of the covered EAC towns, an average of 45 per cent of the urban population have used the Internet, with Kampala having the highest number at 53 per cent; Arusha and Nairobi at 49 per cent; Mombasa at 42 per cent while Dar es Salaam has the least number of people using the Internet at 31 per cent.

    The TNS study revealed that in Kenya, mobile devices and Internet cafes are the primary points of access. The results of the study show that 60 per cent of Kenyans online use mobile phones as compared with those who use PCs at home (29 per cent); PCs at work (33 per cent); and cyber cafes (41 per cent), thereby indicating high potential for growth in the mobile Internet business in Kenya.

    The study found that though e-mail accessing remains the top online activity in Kenya and sub-Saharan Africa, usage of Internet for social media and education as well as knowledge access is growing steadily.

    "The demography covered frequent users falling within the 16-60 age bracket, which represents the active online population. The study showed huge growth in Internet use, indicating that once Kenyans get online, they are highly engaged," noted Melissa Baker, TNS Research International's East Africa chief executive.

    However, the study notes that barriers to Internet access -- like lack of Internet-enabled handsets and PCs as well as lack of awareness of the benefits of the Internet -- need to be addressed to raise the level of frequency of accessing Internet services as penetration is still low at between 10 and 15 per cent.

computing

  • The Constitutional Parliamentary Select Committee (COPAC) is allegedly embroiled in a new crisis, with a source saying that the main computer server has been hacked into and important details changed and 'distorted'. The information on the server contains the views of Zimbabweans across the country about what they'd like to see in a new constitution.

    This month in Harare COPAC teams began uploading the information gathered during the countrywide outreach meetings, so that it can be ready for analysis. COPAC said the process would take two weeks, but this latest set back might delay it.

    On Tuesday SW Radio Africa correspondent Simon Muchemwa said COPAC discovered that the data had been 'distorted' on Sunday morning but was trying not to divulge this latest problem for fear it would disrupt everything.

    "The server administrator indicated that there was a problem with the server: information which had been uploaded onto the server was mixed up. For instance, you would get information coming from Murhewa appearing at a centre in Bulawayo."

    Muchemwa said that within COPAC it's believed that ZANU PF is behind the hacking of the data to make sure it reflects the party's views, or completely distorts the information so that it is not credible. "Centres which had information which was not actually linking with the interests of ZANU PF, the information was changed and in some instances it was deleted," Muchemwa said.

    It's been reported that information from 3,600 out of about 4,600 centres has been uploaded, and that last week a ZANU PF COPAC official was overheard saying this information so far is not favourable towards their party.

    "This came as a surprise to so many people who heard that information because they had lied to President Mugabe," Muchemwa said. "He believed that the information which had been gathered throughout the whole country was favourable to ZANU PF, especially on the issue of land and resources."

    "But now they are discovering that the survey they (ZANU PF) carried out was misleading for President Mugabe, and they believe within COPAC itself that some elements in ZANU PF could have tampered with the server so that at least the whole process will be rendered null and void," Muchemwa added.

    On Tuesday COPAC co-chairman Douglas Mwonzora confirmed that some data has gone missing. "Some of the information in the server is missing. The technicians have attributed this to the system failure. What we were doing is to make sure that the teams authenticate the information that they recovered," Mwonzora said.

    It has also been reported that 70 COPAC technicians were fired because of this security breach, but Mwonzora has denied this.

    COPAC has already faced many problems and has been heavily criticised. Its outreach programmes were marred by numerous incidents of violent attacks on civilians and MDC supporters, by ZANU PF militants and war vets. COPAC has also been accused of poor management of funds, with its rapporteurs going unpaid and some being evicted from hotels because bills had not been paid.

  • Camara Rwanda, a social enterprise based in Kigali, has been awarded with 'Most Innovative Development Project Award' by the Global Development Network (GDN).
    The firm received the award during the 12th annual GDN Conference held in Bogota, Colombia last week.

    "With over 250 projects that submitted their proposals, Camara's operation model appealed to the jurors drawn from reputable institutions such as the World Bank, JICA, AUSI-AID and Kenya's Central Bank, as a result of its simple yet self-sustainable approach," said Edward Rwagasore, a senior official at Camara Rwanda.

    Rwagasore added that, Camara's operations focus on establishing e-learning centres in schools across the country. "We are currently working with 33 academic institutions spread across the country, with numbers set to grow. We have set up computer labs in all those schools which are equipped with Camara PCs that are fine-tuned and installed with pre-configured Linux software based on the educational package, Edubuntu," said Rwagasore.

    Camarabuntu, as it is known, is loaded with numerous applications that prove handy in enhancing computer literacy. They include programmes that develop mouse and keyboard skills, interactive software and an offline version of Wikipedia among many other programmes.

    "Schools partnering with Camara Rwanda receive a wide range of support services that include teacher training on ICT usage as a pedagogical tool, technical support on PCs and parts as well as supply of relevant software and material," said Rwagasore.

    He also noted that ownership and responsibility is bestowed on the schools through payment of a levy on the machines. Explaining one of the reasons why his organization emerged best, Rwagasore said that volunteers, drawn from the local youth, are responsible for a lot of what Camara does.

  • A computer laboratory, constructed by MTN, to provide computer skills for the inmates of the Ankaful Prisons Complex, is being wasted, as the inmates are not currently using the computer centre for training, The Chronicle has learnt. The inmates claimed that the computer laboratory had been shut down following its inauguration last year, to the disappointment of the inmates.

    When The Chronicle contacted the Central Regional Prisons Commander, Ahwa Yankey, on Tuesday, he explained that the officer in-charge of the laboratory had been transferred, leading to the temporary stoppage of training. According Yankey, his outfit had found a replacement for the officer who was transferred, to train the inmates.

    Yankey disclosed that the new trainer for the laboratory was competent in the hardware, and would ensure that the inmates also acquired the skills they needed. He told this reporter that not all the inmates were educated, therefore, they select those who are educated, and train them in computer skills.

Mergers, Acquisitions and Financial Results

  • The World Bank board of directors has approved three major projects for three West African countries, totaling US$71.5 million dollars. The projects are aimed at boosting Information Communications Technology (ICT) infrastructure and access to services in Liberia, Sierra Leone, and the Democratic Republic of São Tomé and Príncipe.

    The Republic of Liberia and Sierra Leone will receive line of credits from the World Bank to the tune of US$25.6 million and US$31.0 million, respectively, to boost their ICT communications sectors. The Democratic Republic of Sao Tome will receive a grant of US$ 14.9 million from the Bank for its component of the Central African Backbone Program.

    The money, according to the World Bank, is part of a US$300 million West Africa Regional Communications Infrastructure Program (WARCIP).

    “The projects have two main components. The first component will seek to create an enabling environment through provision of technical assistance and capacity building for legal and regulatory reform; and will develop public private partnership arrangements for the infrastructure to be developed,” noted a World Bank statement issued over the weekend.

    The Bank pointed out that the second component, which focuses on connectivity, will provide financing for the countries' contribution (consortium fee) for participating in the Africa Coast to Europe (ACE) submarine cable on an open access basis, using public private partnerships, leveraging private sector investment, and associated investments.

    The Projects will provide support to modernize legal, regulatory and institutional framework and improve overall competitive environment in the telecommunications sector and improve the viability of public incumbent operators where necessary, to make them more competitive.

    In Sierra Leone, for example, the commercialization of SierraTel, the state-owned telecom operator, and the liberalization of access to the country's international gateway will be supported, while in São Tomé and Príncipe the project will help to introduce competition through the launch of a second global telecommunications operator license to provide fixed and mobile services.

    World Bank Africa Region director for regional integration, Yusupha B. Crookes, added: "the growth of ICTs in Africa has been phenomenal over the past decade. Mobile penetration in particular is astronomical now, with many countries recording as high as 80%. The mobile network now constitutes the largest ever service delivery platform available to reach citizens, and is boosting Africans' ability to connect to the information super highway, thereby, creating opportunities for ordinary people to connect for social, economic and political reasons.”

    Crookes noted: “better days are ahead, as prices drop, broadband improves, internet access scales up, overall quality of communication is enhanced and broader and more innovative applications become available to solve problems facing ordinary people and governments in Africa."

    Last year, the Liberian government through the Ministries of Planning and Economic Affairs, Postal Affairs and the LIBTELCO as well as the Liberia Telecommunications Authority (LTA) signed the country onto the broadband connectivity which is expected to be provided by the France Telecom’s ACE cable.

    Liberia needs about US$26 million dollars in order to join this connectivity. It was in this regard that the World Bank and other stakeholders promised to pay the US$26 million.

    The total cost of the project for several countries in Sub-Saharan Africa is estimated at US$700 million dollars. Construction of infrastructure for this project is expected to be completed in Liberia in 2012, the government said.

    Meanwhile the World Bank says it will provide support to 15 additional countries within Economic Community of West African States (ECOWAS) region to increase the geographical reach of broadband networks and reduce costs of communications services.

    This new Program complements, the Regional Infrastructure Connectivity Program and the Central African Backbone, targets respectively Eastern & Southern African countries (25 eligible countries for a total amount of US$424 million) and Central African Countries (11 eligible countries for a total amount of $215 million).

    The World Bank observed that Liberia, Sierra Leone and Sao Tome and Principe, are countries that currently have some of the highest connectivity costs in the world and are among a handful of countries in West and Central Africa which are not connected to the global network of broadband optical fiber infrastructure.

    The projects will help to bring a major infrastructural revolution as the countries will for the first time be connected to the best of global internet broadband services network as well as develop their national backbone infrastructure for distributing broadband internet to their urban and rural masses.

    Small countries like Sierra Leone, Liberia, São Tomé and Príncipe are typically ignored by private submarine cable consortia who consider their markets as too small and not attractive enough.

    Currently the three countries depend on costly satellite connectivity to the tune of US$4,000-5,000/Mbps per month while those connected to submarine cables can access international capacity at much lower prices as low as US$ 600 in East Africa and US$100 in Morocco. This, coupled with a lack of national backbone infrastructure, has created a difficult environment for expanding availability of Internet services and advanced applications.

  • Safaricom has raised Sh4.5 billion it had targeted through a bond issued last month, boosting the telecommunication company's war chest for making new capital investments to safeguard its market share in a fiercely competitive industry.

    Transaction advisors said the firm had just about hit its target, indicating a high appetite for investment opportunities given the high competition for funds from offers floated in December.

    Treasury, Safaricom, CFC Stanbic Bank, and power firm KPLC all sought to raise an estimated Sh31 billion through bond and rights issue offers last month.

    "We received just about the amount we were seeking," said Nkoregamba Mwebesa, the managing director of CFC Stanbic Financial Services who were lead arrangers of the issue.

    Subscription results of the Sh2.5 billion medium term note issued by CFC Stanbic Bank are yet to be announced. This was the second tranche of a three-note bond that originally opened in 2009 targeting to raise Sh12 billion. The first issue dated November 2009 was oversubscribed.

    The offer sought to raise Sh5 billion, but received applications worth Sh7.5 billion, which the company took up fully by exercising the "green shoe option."

    "The second issue did not attract as many applications mainly due to its timing but it was successful still," said Kabaki Wamwea, an executive director at Dyer and Blair Investment Bank.

    The second half of last year saw heightened fund raising in the capital markets including a KCB Bank rights issue and a Housing Finance corporate bond. The first tranche paid an interest rate of 12.25 per cent, while the second note will be paying less than seven per cent.

    A vicious price war started by Safaricom's main rival Airtel on calling tariffs have put pressure on the firm's dominance as the largest mobile phone service provider. The fluid telephony market has seen the share of Safaricom trade at below the initial offer price of Sh5 for most of the time since the global financial crisis. The government's two-and fifteen-year bonds also issued last month were oversubscribed, netting Sh24.3 billion, but Treasury took up Sh15.2 billion.

  • Neotel’s ability to continue as a going concern has been questioned by its independent auditors, Deloitte & Touche. But CEO Ajay Pandey, speaking to TechCentral in an exclusive interview, says there’s no reason for alarm and insists that the company is broadly meeting the targets set out in its business plan.

    Deloitte & Touche’s warning is contained in Neotel’s 2010 annual report, a copy of which is in TechCentral’s possession. The annual report, submitted to the US Securities and Exchange Commission (SEC) by its parent, India’s Tata Communications, paints a less than flattering picture of Neotel’s financial position as it prepares a round of retrenchments driven by an internal restructuring. Tata Communications has to submit the annual report under SEC rules.

    Deloitte & Touche warns in its auditors’ report that Neotel’s “recurring losses and shareholders’ deficit raise substantial doubt about its ability to continue as a going concern”.

    The annual report shows Neotel’s debt is mounting, too. Net debt stood at R5.3bn at the 2010 financial year-end in March, up from R3.1bn a year earlier. Shareholders’ deficit, also known as negative shareholders’ equity, climbed from R782m in 2009 to R1.7bn in 2010.

    But Pandey insists there is no reason for investors or customers to worry and points out that the company is delivering strong top-line growth. He says December was Neotel’s best sales month on record with revenues of about R250m. The growth in revenue will eventually flow through to the bottom line, Pandey says.

    The company will turn Ebitda positive by the second quarter of calendar 2012, he predicts. Ebitda is earnings before interest, tax, depreciation and amortisation and is a key measure in evaluating the performance of companies still in their growth and investment phase.

    The annual report shows that at the end of March 2010 Neotel had drawn R3.2bn of R4.4bn in debt facilities available to it from various financial institutions, including Nedbank and Investec. About R1.2bn of those facilities remained. The facilities expire on 30 September 2012. Pandey says Neotel’s bankers remain “fully supportive” of the company and are backing its restructuring programme.

    Neotel had also drawn R2.3bn of R2.9bn in sanctioned funding from shareholders, leaving R633m available from this source of funding at the end of March. Pandey says Neotel was not expected to be profitable yet in terms of its business plan. He says the company is on the right track, despite the restructuring exercise and looming redundancies.

    He emphasises that Deloitte & Touche has not issued a qualified audit, but has simply expressed an “observation” about its ability to continue as a going concern. He says this is common practice in the auditing profession. Neotel continues to enjoy the support of its parent company, Tata Communications, Pandey says, a fact that is borne out by the Indian company’s recent decision to increase its stake to above 50%.

    However, the operator, licensed as the first competitor in fixed lines to Telkom, is clearly facing challenges. On two separate occasions last year it failed to meet targets for Ebitda agreed to with its external funders.

    Pandey says disruptions caused by the soccer World Cup — like other telecoms companies, it was prohibited from working on its network for about three months around the football extravaganza, negatively affecting its ability to deliver on contracts to customers — played a part in its missing the targets. The economic recession also played a role.

    Neotel is not the only telecoms company that has felt the economic pinch, Pandey says, pointing to recent job cuts at MTN, Nashua Mobile and Altech Autopage Cellular. He says the company has not missed any interest payments on its debt. In 2010, Neotel paid R523.9m in interest on loans.

    Of more concern, perhaps, is that Neotel’s cash position fell precipitously in the 2010 financial year. Cash and cash equivalents fell from R433.6m in 2009 to just R64.7m in 2010. But Pandey insists Neotel is not facing a debt trap. In the annual report, Neotel’s directors say they are “satisfied the company has access to adequate resources to continue in operational existence for the foreseeable future”.

    They base this on the fact that the company still had undrawn, committed funding facilities of R1.8bn at its 2010 financial year-end. They also cite the strength of Neotel shareholders Tata Communications and Tata Africa Holdings, which together hold 56% of the company’s equity. The directors say they are confident they can manage the cash outflows stemming from Neotel’s heavy investment in telecoms infrastructure.

    Neotel chief technology officer Angus Hay tells TechCentral that the 2010 financial year was one of heavy investment in infrastructure. This included big spending on undersea cables and data centres. Hay says capital expenditure has now peaked and has begun falling. This will flow through to the bottom line.

    The annual report shows Neotel incurred a loss before tax in 2010 of R1.58bn, growing from losses of R1.03bn in 2009 and R432,3m in 2008. Revenues, however, have surged in the same period, climbing from R1.1bn in 2009 to R1,8bn in 2010. Pandey says Neotel will be a US$1bn-revenue company within three years.

    Neotel generated most of its revenue from enterprise and wholesale services in 2010. This business area contributed R1,.3bn to the company’s R1,8bn in sales. Network services added R280m to the top line, with consumer services contributing R169m.

    Though it’s a small player in the consumer market, Pandey dismisses suggestions that its retail consumer strategy has failed. He says it’s unfair to compare its subscriber numbers — estimated at about 50 000 — to the mobile operators, which have racked up millions of customers. He says Neotel is going after niche consumer markets that are not adequately served by other operators.

    Turning to the planned retrenchments, Pandey says Neotel needs to restructure to address “imbalances in some functions and departments”. He says Neotel is focusing more strongly on providing managed services to clients, and it needs to build capacity in that area. Some staff will be redeployed as part of this process; others will be retrenched. Hay says the retrenchments are as a result of the need to refocus and restructure and are not being driven by the need simply to cut costs.

  • JSE-listed IT services company EOH has acquired Belay, a 200-person IT solutions provider based in Midrand that specialises in Microsoft technology.

    The value of the deal has not been disclosed and the transaction is still subject to approval by the Competition Commission.

    Belay is involved in custom software development, data management, business intelligence, server management, enterprise content magement and other specialist IT areas. The acquisition will give Belay access to a broader customer and skills base and strengthen the company’s empowerment credentials, says Belay CEO George Grimes.

    EOH CEO Asher Bohbot says Belay is will add “significant weight” to the company’s Microsoft and enterprise content management offerings. EOH, a darling among local technology investors, has about 2 300 staff and revenues of over R2bn/year. It listed on the JSE in 1998.

Telecoms, Rates, Offers and Coverage

  • EriTel, Eritrea’s state-owned incumbent telecoms operator, has completed the first phase of its network expansion and upgrade project, local newspaper Shabait reports. To ease mobile network congestion, the company has constructed additional stations in Asmara, Keren, Mendefera and Massawa, among other areas, while new telephone stations have been installed in Merhano, Tsaeda Kristian, Arbaete Asmera, Bisha, Foro and Massawa to accommodate more customers. Additionally, EriTel is rolling out a third-generation mobile network in order to upgrade data and internet services, and is also considering expanding its 2G network nationwide.

    Prepaid TopUp firm, Seamless has announce the successful launch of MTN Rwanda's Prepaid TopUP Solution on Seamless’ carrier class platform, ERS 360◦.

    South Africa’s mobile operator, Cell C, announced the launch of its online dashboard called MyTools which promises to provide functionality similar to that of Google Voice to Cell C subscribers. The major difference from Google Voice is that it's integrated into an operator, said Lars Reichelt, CEO of Cell C.

Digital Content

  • According to the latest survey on online shopping habits from MasterCard Worldwide, 51% of South Africans who have access to the Internet are shopping online and 75% of those have done so in the past three months.

    While the number of South Africans accessing the Internet to shop online is up 9% from the previous survey, the number of those who made purchases in the last three months has decreased by a marginal 2% from 77% a year ago.

    The survey was conducted from 3 September 2010 to 1 October 2010 and reached 8,500 consumers from 15 markets across APMEA. The survey and its accompanying reports do not represent MasterCard financial performance.

    In early 2010, South African research company World Wide Worx reported that the number of South Africans with access to the Internet grew by 15% between 2009 and the beginning of 2010 from 4.6m users to 5.3m users with similar growth predicted for the remainder of 2010.

    According to the latest survey by MasterCard, a majority (89%) of South African online shoppers are satisfied with their overall online shopping experience and 73% of active online shoppers intend to make an online purchase in the next six months. Both these figures have shown improvements over the previous year, where satisfaction was 83%, with the likelihood of continued online shopping at 72%.

    South Africans who shop online also feel that making purchases on the Internet is more convenient, user-friendly and easier than walking into a store or ordering from a catalogue or via a call centre.

    "Those who shop online are largely satisfied with their experiences with just over half of South Africa's Internet-connected population logging on to shop online. This presents a great opportunity for MasterCard to leverage on this Internet revolution to bring more people into the online shopping fray," says Dougie Henderson, VP Product Delivery, MasterCard Worldwide in the Middle East & Africa.

    The survey revealed that more people are making use of broadband access technologies. ADSL usage has increased from 55% to 60% while 3G/HSDPA usage increased from 49% to 63%.

    Conversely, the number of users who said that they utilise dial-up dropped substantially from 16% in 2009 to just 6% in 2010.

    Interestingly, respondents who said they use their mobile phones to access the Internet has shown significant growth, climbing from 13% in 2009 to 39% in 2010 - which is the highest score for mobile phone Internet usage across the APMEA region. Singapore follows at 33%, India (25%), Malaysia (20%), Thailand (20%), and UAE (20%)

    This corresponds with extensive changes and upgrades that have been apparent in the South African mobile broadband market throughout much of 2009 and 2010, including increased price competition between the cellular operators, vastly upgraded networks and the growth in smart phones as a handset category.

    This is according to a research study released by World Wide Worx, which revealed that three quarters of South African companies have deployed smart phones within their organisations, compared to almost none two years ago.

    That said, MasterCard survey found that just 11% of online shoppers actually made purchases using their mobile phones and only 13% intend on doing so in the next six months.

    When asked for what purposes respondents accessed the Internet, sending or receiving e-mail (95%) topped the list, followed by browsing for materials for study purposes (74%), checking their bank balance (73%), browsing for leisure (73%) and reading the news (70%). Online shopping was cited by 51% of users.

    According to the latest MasterCard survey, South African online shoppers prefer to plan and research their online purchases in advance, and fewer people are making impulse purchases online. The number of online impulse shoppers dropped substantially from 22% to just 8%.

    The majority of those shopping online (84%) conduct research about their purchases on the Internet before buying, 69% use the merchant or company's website for their research and 57% speak to family or friends beforehand.

    CDs and DVDs are still what South Africa's online shoppers seek out most on the Web with 50% citing so. Closely following CDs and DVDs is the purchase of books and art by 45% of respondents. Airline tickets saw a 1% decline to 43% of online purchases, while movie/concert tickets shot past home appliances and electronics to tie third place with 43%. Home appliances and electronics dropped a substantial 14% to just 29% of online purchases from last year's level of 43%.

    When it comes to payment for online purchases, credit cards are the most widely-preferred payment method online with just under half of the respondents (48%) using this payment method.  Paying using a debit card (29%) is the second most preferred payment method.

    According to 55% of the respondents not shopping online, the number one reason was that they prefer to shop in-store in order to look at the physical product.

    Encouragingly, fears about online safety and security have decreased substantially, dropping to second position from 63% in 2009 to 51% in 2010, while 44% of respondents reported not having a credit card as their reason for not shopping online.

    Interestingly, there was a significant jump from 24% to 41% in the number of respondents who cited "additional administration and delivery charges" as their reasons for not shopping online, while there was also an increase in people who said that they did not find anything online that interested them.

    South Africans who do shop online are quick to offer advice on how online stores can improve their current offerings, and potentially attract new customers.

    At the top of their list of recommendations were:

    1. Continue to enhance payment security and improve users' confidence in online transactions,

    2. Don't charge additional service charges on purchases and

    3. Make websites easier to use.

    "Online shopping has come a long way in South Africa. Access to the Internet is becoming easier and more cost effective, the overall online shopping experience is viewed positively and people are gaining trust in online security.

    "However, online retailers also need to be cognisant of the concerns of and feedback from their customers and continue to improve their offerings to further enhance the overall online shopping experience in order to attract new customers and retain existing ones," Henderson concludes.

  • Ugandans can now check their voting status via their mobile phones, at a cheap cost, across all networks, thanks to the new Electoral Commission service.

    The simple sms sent to 8683 will avail the recipient all details about their voting status as indicted in the voters' register like polling station, district, sub-county and county.

    The Electoral Commission (EC) chairman, Dr Badru Kiggundu launched the service, which cuts across all mobile phone networks, in Kampala yesterday.

    Financed by the US government, the service costs Shs120 on MTN and UTL while Orange and Warid charge Shs220. Airtel charges Shs160 for each sms sent.

    However, the first one million people to send the sms receive the service free of charge, but the subsequent subscribers will be charged.

    All one has to do is text his or her voter identity number to 8683. For the newly-registered voters who have not been given voter numbers, they are required to send the 17 digit number on their registration receipt to 8683.

    One can also get the same service by sending his surname followed by their dates of birth.

    The service, which started yesterday afternoon, will go on until the voting day on February 18. The deputy EC chairman, Mr Joseph Biribonwa, said all political parties shall be availed copies of voters' register at least two weeks to the voting day.

More

  • 5th Africa Economic Forum 2011
    7-9 March 2011

    BMW Pavilion, V&A Waterfront, Cape Town, South Africa  

    Our 5th Africa Economic Forum 2011 (AEF-2011) in Cape Town at the BMW-Imax Theatre, with Africa Exhibition is a landmark Conference on Africa and significant business networking occasion for the top corporate players active in, across and involved with the development of the African continent - Cape-to-Cairo, with Governments and officials in key industries and state institutions.
    Contact: babette@glopac.com For more information please visit  here:

    Cloud Computing World Forum Middle East & Africa
    March 9, 2011

    Grand Millennium Hotel, Dubai

    Taking place on the 9th March 2011, the Cloud Computing World Forum Middle East and Africa is a Free-to-attend event and will feature all of the key players within the Cloud Computing and SaaS market providing an introduction, discussion and look into the future for the ICT industry.
    For more information please visit here:  or contact the Keynote team on +44 (0) 845 519 1230 or email info@keynoteworld.com.

    Broadband World Forum MEA
    14-15 March 2011

    Dubai UAE
     
    Network, learn and do business with 750+ decision-makers from across the regional Broadband ecosystem. The conference programme features 60+ visionary speakers presenting across keynote plenary sessions, 4 in-depth technology tracks and a Rural Coverage and Connectivity focus day.  Co-located to the conference is a 35+ stand technology exhibition showcasing some of the region’s latest cutting-edge broadband technologies, applications, solutions and services to hit the market.
    Limited FREE passes for operators and early booking discounts apply to all others.  Register with VIP code: BBM11BAA
    For more information please visit here:

    ICT For Development in Africa – Sustaining The Momentum, Extending The Reach
    23-26 March 2011

    Ota, Nigeria

    The conference will initiate research and practice agenda where ICTs will aid the academia, organizations - public and private and non-governmental to improve socio-economic conditions and directly benefit the disadvantaged in some manner.
    For more information please visit here:

    Managed Services Growth Markets 2011
    4 - 5 April

    Moevenpick Jumeirah Beach, Dubai, UAE
     
    Now in its 4th year and attended by over 200 attendees in 2010, Informa Telecoms and Media’s Managed Services for Growth Markets event will take place on 4th - 5th April at the Moevenpick Jumeirah Beach, Dubai, UAE.
    With a proven track-record and repeat sponsorship from leading suppliers Alcatel-Lucent, Ericsson, NokiaSiemens Networks and Motorola, this event is truly established as the ultimate meeting-place for the Managed Services industry in the growth markets. A 50% discount for operators ensures a high percentage operator attendance.  
For more information please visit here:

    eLearning Africa 2011 - Spotlight on Youth, Skills and Employability
    25-27 May 2011

    Dar es Salaam, Tanzania

    The 6th event in the series of pan-African conferences and exhibitions will focus on Africa's youth. Africa has the highest percentage of young people anywhere in the world. How can it unlock the vast reservoir of talent? How can technology support education and training?
    For more information please visit here:

  • ITU: HIPSSA CALL FOR APPLICATIONS

    Opened positions and requests for proposal:

     - G-3.1 (d) [WA]: Spectrum management expert specialized in cross-border coordination [EN] (Deadline February 11, 2011)
    click on the link below to download the application or copy the URL in your browser
    http://www.itu.int/ITU-D/projects/ITU_EC_ACP/hipssa/tor/G-3/HIPSSA_G-3.1[WA].pdf

    - G-3.1 (d) [EA]: Spectrum management expert specialized in cross-border coordination [EN] (Deadline February 11, 2011)
    click on the link below to download the application or copy the URL in your browser
    http://www.itu.int/ITU-D/projects/ITU_EC_ACP/hipssa/tor/G-3/HIPSSA_G-3.3[EA].pdf

    - G-3.3 (d) [CA]: Spectrum management expert specialized in cross-border coordination [EN] (Deadline February 11, 2011)
    click on the link below to download the application or copy the URL in your browser
    http://www.itu.int/ITU-D/projects/ITU_EC_ACP/hipssa/tor/G-3/HIPSSA_G-3.2[CA].pdf

    - G-3.4 (d) [SA]: Spectrum management expert specialized in cross-border coordination [EN] (Deadline February 11, 2011)
    click on the link below to download the application or copy the URL in your browser
    http://www.itu.int/ITU-D/projects/ITU_EC_ACP/hipssa/tor/G-3/HIPSSA_G-3.4[SA].pdf

    - G-3.5 (d) [INT]: International spectrum management expert specialized in cross-border coordination [EN] (Deadline February 11, 2011)
    click on the link below to download the application or copy the URL in your browser
    http://www.itu.int/ITU-D/projects/ITU_EC_ACP/hipssa/tor/G-3/HIPSSA_G-3.5[INT].pdf

    - G-3.6 (d) [PM]: Senior international spectrum management expert [EN] (Deadline February 11, 2011)
    click on the link below to download the application or copy the URL in your browser
    http://www.itu.int/ITU-D/projects/ITU_EC_ACP/hipssa/tor/G-3/HIPSSA_G-3%206[PM].pdf

    [HIPSSA/G-6] Call for Application related to ICT statistics

    The expert will be responsible for designing regional statistical reports about ICT/telecommunication indicators with a specific focus in regional organizations in Sub-Saharan Africa. These statistical reports shall include factsheets for each member country of the identified regional organisations and an aggregated and comparative view for each of the regions.

    To download the job description, please click on the link below or copy the URL in your browser: http://htmlnews.balancingact-africa.com/JD HIPSSA_G-3 6 1 a ST 110128 final _2_ _3_.pdf

    For further information visit the ITU's website.

     

    Google hires across Africa
    Google South Africa is no exception and the company is most likely looking to significantly strengthen its local presence in the country.

    Until fairly recently, Google SA had less than 10 employees, but the local arm has started to grow its workforce and is advertising no less than 15 positions for its Johannesburg office.

    Julie Taylor, Google’s Communications Manager for Sub Saharan Africa, says that Google’s South African office is still small but growing fast. “We expect it to grow by as much as double in size during the coming year, across different functions,” said Taylor.

    The positions advertised for the Google SA office in Bryanston, Johannesburg are as follows:

       1. Account Coordinator (Temporary) - Johannesburg
       2. Account Manager - Johannesburg
       3. Account Strategist - Johannesburg
       4. Agency Relationship Manager - Johannesburg
       5. Business Development Manager, Southern Africa - Johannesburg
       6. Country Marketing Manager South Africa - Johannesburg
       7. Developer Relations Program Manager - Johannesburg
       8. Human Resources Coordinator (Temporary) - Johannesburg
       9. Industry Analyst - Johannesburg
      10. Industry Manager - Johannesburg
      11. Legal Counsel, Sub-Saharan Africa - Nairobi, Lagos or Johannesburg
      12. Policy Manager - Johannesburg
      13. Recruiting Coordinator (Temporary) - Johannesburg
      14. Sales Engineer - Nairobi, Accra, Lagos or Johannesburg
      15. Training Development Specialist for Africa Programs – Johannesburg

    Google is also growing its African presence with positions advertised at Google offices in Kenya, Senegal, Ghana and Nigeria. For more information on these positions, visit the Google Africa jobs page here:

  • Mobinil and iBwave - Egypt
    Egypt's Mobinil has selected an in-building wireless planning suite from iBwave. The company says that 70% of its calls originating from within buildings, hence the need to improve indoor coverage. "As the demands on our network continue to grow, we firmly believe that expanding our in-building coverage is a key strategy for us to be able to continue delivering that positive experience to our mobile subscribers and strengthen our leading position in Egypt," said Hassan Kabbani, CEO at Mobinil.

  • Côte d’Ivoire:  Michel Hebert has been appointed as the new CEO of mobile operator Comium (Koz) while Dr Nizar Dalloul has been appointed as the chair of the Board.