INTERNATIONAL INTERCONNECTIVITY AND SERVICES IN AFRICA Tel.ComAfrica2002 INTERNATIONAL INTERCONNECTIVITY AND SERVICES IN AFRICA BY ROGER CHIUME GROUP EXECUTIVE INTERNATIONAL BUSINESS 25 OCTOBER 2002

and services to its communities. INTERNATIONAL INTERCONNECTIVITY AND SERVICES IN AFRICA Tel.ComAfrica2002 Introduction In the telecommunications industry various phrases allude to the perception that Africa is inept in its attempts to provide good telecommunications infrastructure and services to its communities. “Africa does not Talk to itself” “The missing Link”

Promotion of social cohesion and economic integration of the continent INTERNATIONAL INTERCONNECTIVITY AND SERVICES IN AFRICA Tel.ComAfrica2002 Why Africa Connectivity ? Enables efficient intra Africa business to business communications and trade Promotion of social cohesion and economic integration of the continent Retention in Africa of revenues generated in Africa - Africa pays 400 million of US dollars yearly to developed countries’ operators for the use of their transit facilities for intra-Africa communications Limited communication between countries and limited access to information by the masses results into totalitarianism and dictatorships

The project was financially supported by UNDP, ECA and the OAU. INTERNATIONAL INTERCONNECTIVITY AND SERVICES IN AFRICA Tel.ComAfrica2002 African Initiatives The PanAfrican Telecommunications Network (PANAFTEL)- Dakar 1962 The objective was to set up an Africa-wide telecommunications network that directly linked neighbouring countries, particularly the Sub Sahara countries The project was financially supported by UNDP, ECA and the OAU. The ITU through consultants undertook pre-investment research and link surveys. Recommendations were - line of sight terrestrial radio relay systems - satellite earth stations for international links Capable to carry voice, data and TV programmes West African submarine cable linking Nigeria, Cote d’Ivoire, Senegal and Morocco to Europe PANAFTEL would be the key to unlock the economic and social development of the African continent.

African Initiatives….continued INTERNATIONAL INTERCONNECTIVITY AND SERVICES IN AFRICA Tel.ComAfrica2002 African Initiatives….continued Failure of PANAFTEL Political diversity and adversity among and between African countries Cultural differences and colonial mentality – link each African capital to mother country Piecemeal ownership of PANAFTEL by states, often with conflicting interest Concentration on international links instead of national network development Ethnic preferences and victimisation of the few competent and qualified personnel that did not belong to the group Financial constraints to upgrade and expand - revenues generated went to government treasury - inability to pay in time “sister” countries for termination of international traffic Culture of network maintenance and adequate spares holding was lacking

African Initiatives….continued INTERNATIONAL INTERCONNECTIVITY AND SERVICES IN AFRICA Tel.ComAfrica2002 African Initiatives….continued RASCOM – Regional African Satellite Communications Organisation Was created in May 1992 by African Ministers of telecommunications in Abidjan The mission is to provide an efficient and economic means of telecommunications among all areas in Africa The main objectives are: - to establish direct links between all African countries - to improve and / or develop inter- urban communications within each country - to provide telecommunications infrastructure to rural areas at low cost 450, 000 telephone stations throughout Africa low cost terminals at US$ 1000 per complete station cost per call will be about US$0.10 per minute It was envisaged that ownership of RASCOM would be 100 % by African telecommunications operators. However, due to financial constraints and lukewarm support of the project by some African countries, majority ownership of RASCOM is now in the hands of private foreign investor company(ies).

African Initiatives….continued INTERNATIONAL INTERCONNECTIVITY AND SERVICES IN AFRICA Tel.ComAfrica2002 African Initiatives….continued 3. AFRICA ONE PROJECT An AT&T conceived project to “ring” Africa with an undersea cable in order to improve interconnectivity. Hinterlands would be accessed via terrestrial links (logically to be financed by AT&T) Huge investment by each African country Majority ownership of equity would be in the hands of a single foreign entity De facto Africa-wide telecommunications operator by a foreign company without “proper” regulatory sanction

African Initiatives….continued INTERNATIONAL INTERCONNECTIVITY AND SERVICES IN AFRICA Tel.ComAfrica2002 African Initiatives….continued 4. COMTEL The Common Market for Eastern and Southern Africa (COMESA) formed a telecommunications network company called COMTEL, which was incorporated in May 2000. The company formation was agreed upon by Ministers of telecommunications of COMESA in June 1998. The shareholding structure would be 30% SEP, 45% private sector investors and 25% National telecommunications operators, NTOs. The backbone network has been configured to include a mix of optic fibre cable, microwave and satellite connectivity and to transmit voice, data and TV programmes.

Telkom SA about 30, was much less than 20 in 1994 INTERNATIONAL INTERCONNECTIVITY AND SERVICES IN AFRICA Tel.ComAfrica2002 The State of Affairs Despite the efforts and years of attempts to improve intra Africa Connectivity, by 2001 Africa was still behind Western countries’ direct links with Africa. Carrier Direct links to Africa 2001 BT >40 FT >40 Telecom Italia >40 Telkom SA about 30, was much less than 20 in 1994 Note: Telkom had the most connectivity to African countries

Change Drivers in the African Telecommunications Industry INTERNATIONAL INTERCONNECTIVITY AND SERVICES IN AFRICA Tel.ComAfrica2002 Change Drivers in the African Telecommunications Industry The liberalisation of the markets – allowing individual players in multiple countries Privatisation of PTOs / NTOs –injection of finance, skills and technology transfer Entrepreneurial spirit among new generation Africans

Africa’s Success Story INTERNATIONAL INTERCONNECTIVITY AND SERVICES IN AFRICA Tel.ComAfrica2002 Africa’s Success Story WASC/SAT 3/SAFE Submarine Cable Project conceived by Telkom SA Majority ownership by African countries -15 countries –US$ 294 million Foreign investment exists - 11 European companies – US$ 145 million - 10 Asian companies – US$ 111 million - 4 American companies – US$ 89 million Links 9 African countries directly to each other and to Europe and Asia 80 Gb/s capacity System design life – 25 years IT IS OPERATIONAL 1 4 5 6 7 8 9 10 11 12 13 14 15 16 17 SAT-3/WASC SAFE SAT-2 2 3 SAT-3/WASC/SAFE CABLE

Africa’s Success Story….continued 2. VSAT INTERNATIONAL INTERCONNECTIVITY AND SERVICES IN AFRICA Tel.ComAfrica2002 Africa’s Success Story….continued 2. VSAT Africa wide VSAT Solutions are provided by South African telcos to Multinationals such as Banks, Retail Chains, Mining firms and so forth. Possible because of improved Regulatory framework in Africa.

Africa’s Success Story….continued INTERNATIONAL INTERCONNECTIVITY AND SERVICES IN AFRICA Tel.ComAfrica2002 Africa’s Success Story….continued 3. Cross Border Expansion Vodacom in Lesotho, Tanzania, DRC, Mozambique and possibly Zambia MTN in Swaziland, Uganda, Rwanda, Cameroon, Nigeria ECONET in Leotho, Nigeria, Malawi and possibly Kenya ESCOM and Transtel in various other countries Sentech / SABC – Africa-wide coverage Orbicom / DSTV – Africa-wide coverage These cross border expansions bode well for improved international interconnection between countries and as a result of entepreneurialship and favourable Regulatory environment

Africa's Cellular Telephony Growth Africa's Fixed Telephony Growth INTERNATIONAL INTERCONNECTIVITY AND SERVICES IN AFRICA Tel.ComAfrica2002 Africa’s Success Story….continued Africa's Cellular Telephony Growth Year 1998 1999 2000 2001 Cameroon 3,200 4,000 250,000 311,000 Nigeria 15,000 22,000 40,000 677,000 Senegal 9,000 37,000 250,257 340,181 South Africa 2,540,000 3,400,000 9,000,000 11,000,000 Tanzania 36,000 48,000 90,000 427,000 Uganda 12,000 50,000 120,000 322,000 Zimbabwe 145,000 280,965 325,800 2,655,200 3,706,000 9,941,222 13,402,981 Africa's Fixed Telephony Growth Year 1998 1999 2000 2001 Cameroon 120,000 87,950 142,000 154,000 Nigeria 412,000 417,682 492,000 Senegal 127,000 139,549 205,888 237,160 South Africa 4,645,000 5,075,000 5,100,000 5,900,000 Tanzania 115,759 150,000 200,300 243,549 Uganda 55,000 55,390 85,000 95,000 Zimbabwe 249,000 241,000 250,000 5,723,759 6,174,571 6,466,188 7,371,709

Africa's Internet Service Growth INTERNATIONAL INTERCONNECTIVITY AND SERVICES IN AFRICA Tel.ComAfrica2002 Africa’s Success Story….continued Africa's Internet Service Growth Year 1998 1999 2000 2001 Cameroon 2,000 4,000 4,500 Nigeria 5,000 40,000 50,000 Senegal 2,450 7,000 15,000 South Africa 370,000 1,430,000 2,850,000 Tanzania 3,000 8,000 25,000 300,000 Uganda 10,000 60,000 Zimbabwe 8,300 20,000

Africa’s Success Story….continued INTERNATIONAL INTERCONNECTIVITY AND SERVICES IN AFRICA Tel.ComAfrica2002 Africa’s Success Story….continued

continued privatisation of NTOs/ PTTs INTERNATIONAL INTERCONNECTIVITY AND SERVICES IN AFRICA Tel.ComAfrica2002 Opportunities and Pitfalls Opportunities continued privatisation of NTOs/ PTTs emerging 2nd tier operators for JV / takeovers cellular licences being issued all over Africa positive FDI inflows in Angola and DRC broadcasting signal distribution business entertainment telemedicine distant education large file transfers and video streaming – unidirectional Pitfalls political uncertainty corporate governance ethics excess debt due to rapid expansion currency fluctuations

Critical Success Factors for Telecommunications Industry in Africa INTERNATIONAL INTERCONNECTIVITY AND SERVICES IN AFRICA Tel.ComAfrica2002 Critical Success Factors for Telecommunications Industry in Africa Political stability Liberalisation of markets and privatisation of NTOs Harmonisation and coordination of Legal and Regulatory frameworks Strategies to create “Resource Expertise” instead of consumer/service competence; interconnected by broadband communications links. IS AFRICA ON THE RIGHT TRACK? LEAVE IT TO THE PRIVATE SECTOR