One of the interesting dynamics of the African market is that many players, both regional and global, have looked to grow a presence in the market over the last few years. While there is a danger that an oversupply of capacity situation could develop, operators see the glass as half full rather than half empty.
David Murphy, CCO of Yahsat, says that, with prolific growth of affordable smart devices within the African continent, the demand for data is “unprecedented” and that most operators (GSM/SAT/FTTH) see the African continent as a new frontier for growth. “The advent of Ka satellite services in Africa since 2012/13 has stimulated the VSAT industry across the continent; with Ka band recording double digit growth year on year. This growth is expected to continue for the foreseeable future.”
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He doesn’t believe an oversupply situation will develop in the region. He says the danger of oversupply is a long way off in the real developing countries. He believes the price point will be the key to overall growth and having a sustainable business model.
Others are optimistic for the future in Africa. Lim Kian Soon, CEO of SingTel Satellite, believes the demand for capacity in Africa will continue to grow, especially in regions such as the Democratic Republic of Congo, Kenya, Tanzania and in industries such as banking and oil and gas. However, while he believes communications needs will boost demand for bandwidth, the regulatory situation will need to improve for the region to realize its potential.
Andrey Kirillovich, director of integration and projects at Russian Satellite Communications Company (RSCC), adds that, despite the fact more and more terrestrial networks are being built on the continent, there are still many places outside big cities where terrestrial connection is either impossible or does not provide acceptable quality.
“Even submarine fiber requires back-up due to frequent cuts and maintenance issues. Satellite remains an integral part of African telecom and broadcasting infrastructure because of the size of the continent and huge number of rural communities,” Kirillovich adds.
LEO Threat
What has changed in the satellite industry over the years is that other satellite players are trying to get a slice of the pie. While O3b has a long stated aim of serving the African market, the impact of future LEO players on GEO operators is less clear. Murphy says Africa is still very much a GEO market as LEO CPEs require tracking capability and regular maintenance whereas GEO CPEs are a fraction of the price and require little ongoing maintenance.
Country Markets
There are many hot country markets for operators to try and exploit in the region. Kirillovich highlights Nigeria, with a population of 175 million people, plus East Africa (Kenya and Tanzania), the DRC with its large requirements for cellular backhaul, and Angola and Mozambique, rich in oil and gas.
The cellular backhaul opportunity could certainly be one to watch in the region. Kirillovich is excited about the potential. “It is a well-known fact that many people in Africa may have no bank account but have a mobile phone, which they use for payment and money transferring. And the amount of money sent to sub-Saharan Africa via mobile services is expected to hit $33 billion this year. Frost and Sullivan forecasts 80 percent mobile penetration in Africa by 2020.”VS
