Operators Hope To Tap Into Africa’s Potential

By | March 13, 2002 | Feature

Africa may be a market that is well-suited to satellite services, but it still a tough market to crack. This was the message coming out of a session at PBI Media’s Satellite 2002 conference held March 6-8 in Washington, D.C.

Flavien Bachabi, African group director at Intelsat, said: “All African countries want to become involved in the global information society. Satellite is well-suited to Africa. Technology is not an end by itself. The success depends on providing people with the right set of tools.”

The statistics emphasize how far Africa has to go. Africa has a population of around 770 million people, yet there are only 2.7 million Internet users. There are still under 17 million phone lines in Africa, meaning the importance of providing basic telephony services outweighs the need for Internet access.

On the subject of Internet access, Bachabi said: “There are more Internet users in New York than there are in the whole of Africa. There is great potential in Africa … One in eight of the world’s population lives in Africa. When you deal with Africa, you see plenty of demand. One in one hundred of the world’s Internet users live in Africa.”

The potential is enormous. Bachabi believes that telecom traffic in Africa will grow 60-fold by 2005, offering satellite players enormous opportunities. One of the major challenges to ensure this growth is to bring about a more transparent regulatory environment. Ramesh Ramaswamy, senior director of marketing for the Middle East and Africa at Hughes Network Systems, said, “There are a number of traditional monopolies in Africa. The decision making process can be quite slow. A supplier has limited influence and control over the final structure of the deal between end user and service provider.”

The market also has some interesting dynamics. Mesfin Ayenew, co-COO of satellite radio broadcaster WorldSpace, said, “There is no such thing as a homogenous market in Africa. The market in Africa tends to be a lot younger. In some of markets, over 65 per cent of the population is made up of the youth market. There is a tremendous amount of low-cost demand, in particular in the areas of education, as well as news and entertainment. A large segment of African economies is still cash based.”

Education is a key area for satellites in Africa. Governments in Africa are burdened with high costs in terms of building infrastructure.

In many countries, access to telecom services remains dominated by the state-owned incumbent telecom provider. Ramaswamy said that there are more private telephony companies emerging in the region. The emergence of satellite is vital for governments who want to improve education facilities to its population.

The lack of transparency in regulation could be a factor in holding back investment in the region. Andrea Maleter, technical director at Futron Corp., said: “We need to establish and maintain funding for services, as well as transparent regulatory regimes. This will help attract investors to Africa.”

According to Bachabi, 25 out of 53 countries in the region are implementing regulatory reforms.

These include: Chad, Madagascar, Ghana, Uganda, Sudan, South Africa, Senegal, Morocco, Tanzania, Guinea and the Ivory Coast.

The message was upbeat, although few are in any doubt that Africa has numerous issues, ranging from regulatory reform, attracting investment and improving telephony and Internet penetration.

But, the demand for satellite services should grow. Ramaswamy said the growth his company has had in Africa “has been quite phenomenal.”

Maleter added: “Africa has a long standing role in the satellite industry. It has often been a testing ground. New and innovative ideas have often begun life in Africa.”

–Mark Holmes

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