Sub-Saharan Cellular Networks to get US$50 investment boost

Telecoms

A combined $50bn will be invested in cellular networks in sub-Saharan Africa over the next five years, doubling an already rapid rate of investment.

The figure has been calculated by collating the investment commitments of operators including MTN, the largest player in Africa, as well as Vodacom, Orange and Celtel and numerous smaller players.

The figure has be announced by the GSM Association (GSMA) at the United Nation's Connect Africa conference in Rwanda. "That's an average of $10bn a year going into new infrastructure which will literally double the rate at which investments have been made in the previous five years," said Tom Phillips, GSMA chief officer for government and regulatory affairs.

For most rural and remote parts of Africa, cellular networks provide the only way for people to make calls or send data because of the dearth of fixed-line phones. Almost 70% of the population in sub-Saharan Africa is now covered by a cellular network, although a far smaller percentage can actually afford to use the service. In some countries fewer than 5% of the population has a cellphone.

Of the 500-million people living in catchment areas, only a third, or 150-million, can afford to be a customer.

The GSMA used the conference to put pressure on attending heads of state and ministers to play their part in the cellular evolution. The investments were not conditional on policy and regulatory changes by governments, but were highly dependent on that, Phillips said. The association would call for reductions in tax and import duties and for regulations that encouraged foreign investments. Some governments still taxed handsets as a luxury item, which put the cost of a cellphone out of reach for many people.

The GSMA would also urge governments to open up the bottlenecks where telecoms operators or facilities were still state-owned. Some governments were talking about re-nationalising telecoms assets because they saw them as a lucrative source of income, but that was a retrogressive step, he said.

He was not aware of a plan by SA's communications department to prevent undersea telecoms cables from landing in SA and bringing bandwidth to the county unless they were majority African-owned.

That sounded like "the worst kind of protectionism" and sent the wrong message to investors, he said.

He cited the recent action of Benin's government as another bad example, where MTN's network was switched off because it refused to pay a backdated 600% hike in its licence fee.

Business Day