Africa 2008: New Satellites, New Hopes

Regulatory Barriers Persist

Although the vast majority of African nations have embraced some form of deregulation with lower licensing fees, there is anecdotal evidence of the fact that steep fees persist in many places. “The good news is that Africa has generally opened up in terms of telecoms and satellite regulation, particularly in the past years,” says Bednarek who points to several specific examples such as South Africa recently granting five new pay-TV licenses, Kenya awarding new mobile and VSAT licenses and opening up its market to VOIP. “Nigeria, for example, has drastically deregulated with new network operator licenses and the privatization of Nigeria’s main telecommunications provider, Nigerian Telecommunications Ltd.

Still, regulatory barriers are not the only roadblocks in the region. “In most African countries, a customs duty charged on telecom equipment is still high, which makes initial installation and bandwidth costs high. The cost of freight to Africa is also high. Foreign exchange regulations in many countries form a barrier to timely payments to satellite operators thereby branding customers in these regions as high risk so they often have to pay a premium as a result,” says Bakhrani.

Another factor playing a role in the African satellite sector is the fact that many African nations have economies that are based on commodities at a time when commodity prices are surging, says Chenard. “In investor circles, Africa is still a hard sell despite the fact that the overall trend is quite positive,” he says. “While political stability is becoming the rule rather than the exception across the region, satellite infrastructure is not an easy sell at this time, and this is true even when there an extremely strong demand for trunking services to support Africa’s rapidly growing cell phone sector,” he says.

While the latest chapter in Africa’s telecommunications still has to play out, satellites, including ones operated by Africans, will continue to play a commanding role. “The Rascom and Nigcomsat satellites are a clear tribute to Africa’s commitment to develop their own satellite capacities. We believe (growing demand today is enough) to sustain both these domestic systems as well as regional/intercontinental systems like ourselves,” says Bednarek. “Provided customers are free to choose the system which best suits their needs in terms of back-up, coverage, interconnectivity and capability, we are satisfied that this growth in demand can be maintained.”

Regulatory Barriers Persist

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