Top 10 nightmare wholesale bandwidth markets in Sub-Saharan Africa – High prices, protective monopolies and the loss of business potential

10 June 2022

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As the continent’s bandwidth requirements continue to ramp up, enormous progress has been made in terms of national, regional and international fibre networks. Prices continue to come down as volumes increase substantially. This progress masks the loss of business potential on the continent caused by key countries that are defending continuing wholesale monopolies for their incumbents, causing high prices. Russell Southwood looks at the top ten countries where a lack of wholesale competition is undercutting new demand.

At the top of the list of nightmare wholesale bandwidth markets is Cameroon. A 2019 World Bank report observed that “Cameroon’s international connectivity remains non-competitive despite the existence of multiple submarine cables, leading to unused capacity and limited international bandwidth per capita. Today, Camtel owns direct connections to all of the international submarine cables: SAT-3/WASC, WACS, ACE, and SAIL. Additionally, Camtel owns indirect connections through the Nigeria-Cameroon Submarine Cable System (NCSCS) and is in the process of constructing a link through Equatorial Guinea. About 15 percent of the SAT3 and only 30 percent of WACS cable capacity has been used since its launch 17 years ago.”

Not a great deal has changed since that report was published. Camtel retains a monopoly of wholesale fibre networks in the country, which it has also failed to exploit. The monopoly means that wholesale prices are high and quality of networks is low. High wholesale prices feed into high retail prices and Cameroon lags behind in terms of mobile data subscribers and the development of its digital economy.

Camtel faces an uncertain future. It was supposed to launch a mobile network that might give the over-staffed company some defensive cover if competition were ever to be introduced. That launch is now the subject of political wrangling. Cameroon’s position as a region hub means that its high prices have a knock-on effect for the landlocked Chad and Central African Republic.

Although the Tanzania regulator has allowed the country’s MNOs to build some national fibre, its main instinct is to defend the semi-monopoly of the national fibre network company, NICTBB. As one industry observer told me: “Domestic fiber is too expensive. Everyone wants to transit (the country) to get to other countries and this is blocked by Government.”

The Government has always taken the view that it can force those wanting to transit to pay high prices but not surprisingly many take the view that there are more competitive routes out of East Africa. Again high wholesale prices feed into higher retail prices and it’s noticeable that penetration levels in Tanzania are much lower than in its neighbor Kenya. Things are always more complex than a single factor but it does not take a genius to work out that high wholesale bandwidth prices are a contributory factor.

Next up is Cote d’Ivoire where both international and domestic bandwidth prices are significantly higher than in more competitive markets like Ghana and Nigeria. Although there are three landing stations in the country – Main One, MTN and Orange – the latter two seem to have a lot of influence over the price levels of international bandwidth and are directly responsible for high domestic wholesale prices. Cote d’Ivoire is also a gateway hub (along with Senegal) for inland Francophone markets like Burkina Faso.

For next wholesale nightmare we move to two countries, the DRC and Angola. The revived state incumbent SCPT was given control of the landing station and as a result is charging above average wholesale rates for international bandwidth. In Angola, Angola Cables is more competitive but is still at the higher end of the range for international bandwidth.

Both countries are potentially key hubs for Central Africa and some progress is being made for cross-continental connections through them. But, to spell it out again, the higher the percentage cost of international bandwidth inevitably retail prices will be higher. Perhaps the presence of Africell will provide the right kind of competition domestically in Angola to open things up. Sadly, DRC’s neighbor Congo Brazaville is not much better as again the incumbent Congo Telecom is the landing party for WACS and is keeping international wholesale prices high.

Ethiopia is opening up but the Ethiopian Government’s idea of competition is very particular and contains a number of risks. Safaricom is coming into the country to compete with incumbent Ethio Telecom and has been allowed to sign a deal with the country’s power utility. However, the Government will only allow virtual ISPs to be formed supplied by Ethio Telecom. Although not the fault of Safaricom, a duopoly is never a good recipe for falling prices. And the civil war is still ongoing…

As part of the Horn of Africa region’s lack of competition, Djibouti Telecom’s monopoly means that what should be a gateway for wholesale international bandwidth to the region remains undeveloped.

Sudan again is a huge country that has enormous potential but the wholesale network supply is a duopoly between the incumbent Sudatel and Canar. Sudan has the potential to be the gateway to many countries - Chad, Central African Republic, Uganda (through the troubled South Sudan), Ethiopia and Eritrea. Instead of focusing on this potential close to home, Sudatel runs a marginally successful mobile operation with no great distinction, financial or otherwise.

The biggest loss of continental business potential is in Egypt where the continuing network monopoly of Egypt Telecom and its attitude to pricing – both internationally and domestically – will mean that people like the international cloud hyperscalers will find it very difficult to operate in the country. One observer told me: “Out of all the African countries, Egypt is 100% the most expensive.” Given its proximity to Europe and multiple cables, it’s hard to see why this should be the case. Egypt is such a large market that the sheer scale of existing retail subscribers makes it difficult to see that there might be lost potential. However, if you can imagine 30-50% cheaper wholesale prices leading to fall in retail prices, there would be both more people using services and more use.

In Brief

DRC: Airtel Africa has announced that they have purchased of 58 MHz additional spectrum for a gross consideration of US$42m.

Nigeria: Carbon, a credit led Pan-African digital bank today released Carbon Zero: (Zero-app.GetCarbon.co) , a buy now, pay later web app which helps customers spread the cost of purchases into interest-free instalments, in-store or online. Since its inception in late 2021, Carbon Zero has generated ₦2.3 billion in requests from 41,000 customers who have applied for a spending limit.

Cameroon: MTN Cameroon has announced the signing of a Collaboration Framework Agreement with the Rural Electrification Agency (AER) to supply its rural mobile sites with solar energy. The agreement specifies the terms and conditions under which AER will provide MTN with energy produced by its solar power plants to power the operator’s network infrastructure in rural areas, particularly relay stations. The implementation of the agreement is already ongoing at pilot sites in the West and Littoral regions, with the deployment set to be extended to all ten regions of the country in the coming months.

Zimbabwe: The Postal and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ) has implemented a new traffic monitoring and revenue assurance system to stem financial leakages from telecoms services. Previously, operators made voluntary declarations of traffic levels, which the regulator said was no longer adequate as it could lead to inaccurate taxation. POTRAZ added that the system will also be used to curb fraudulent activities in the telecoms sector, such as illegal call routing.

Nigeria: Tizeti Network Limited (www.Tizeti.com), West Africa’s pioneer solar-based internet service provider has today, announced the appointment of Emmanuel Ikazoboh as its Board Chairman. He is the immediate past Group Chairman of Ecobank Transnational Incorporated (ETI), Chairman of ARM Pensions Managers Limited (Pensions Fund Administrators), and is the International Vice Chairman at International Institute for Sustainable Development, Canada. He is an independent/Non-Executive Director for Nampak Packaging Limited South Africa and Dangote Cement Plc.

Constant Ventures, a part of the Constant Group, is raising a $100 million venture capital fund to invest across a range of technology startups with a focus on financial inclusion, education and healthcare. Investee companies will initially be located across Nigeria and Ghana, with the fund set to target the wider West Africa region.

In a rare acquisition of a US tech company by an African tech company, MFS Africa, Africa’s largest digital payments network, today announces that it has reached an agreement to buy Global Technology Partners (GTP). Based in Tulsa, Oklahoma, GTP is the number one processor for prepaid cards in Africa with over 80 banks – including UBA, Ecobank, BIA, Stanbic, Coris, NSIA and Zenith Bank – using its platform. GTP’s client base covers 34 countries and is fully connected to the Visa, Mastercard, GIM, GIMAC and Verve networks for which it provides the processing.

Senegal: Free Senegal has announced the deployment of a 5G pilot network in Dakar. Speaking at an event held last Thursday to demonstrate the potential of fifth generation services to drive digital transformation, Free Senegal CEO Mamadou Mbengue revealed five sites have been activated in the capital and another 20 will be rolled out in other regions of the country in the coming weeks, enabling customers to test the technology and learn more about its practical applications.

Ghana: Africa Data Centres, part of the Cassava Technologies Group, a pan-African technology group, has announced that it is building a 30MW data centre facility in Accra, Ghana. The new facility will lay the groundwork for the company’s hyper-scale partners to expand digital services and solutions to more countries in West Africa and will make Africa Data Centres the largest provider in West Africa, with facilities in Nigeria, Togo and now Ghana.