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When we think about technological evolution, Africa isan interesting continent to consider. Traditional steps like theinstallation of landline telephones for the general populationhave largely been bypassed, and consumers have insteadleapfrogged straight to mobile Smart phones. Some 20percent of the population has access to a mobile Internetconnection, which is forecast to rise to 60 percent by 2020.The number of connected Smart phones in Africa is expectedto be more than double North America’s by 2020, exceeding700 million.

Despite the rapidly growing connectivity, around two thirdsof the population have no access to grid electricity. “If youcan’t have electr icity, you can’t drive any industrialdevelopment,” Akinwumi Adesina, President of the AfricanDevelopment Bank, told the Guardian newspaper. “Electricitydrives everything, so until we fix that problem Africa faces

Africa: The connectivity conundrum

huge challenges. It’s the most critical issue holding backAfrica’s development.”

In a country with few consumer landlines, access to theInternet was extremely low until 2009, when fibre connectivitywas vastly improved. Penetration grew to 16 percent in 2013and to more than 20 percent in 2015. However, access tobroadband speeds remains low, and inland connectivity isextremely poor.

Growing demandThe limited connectivity in Africa today indicates that thereis a lot of opportunity for growth. Euroconsult’s 2015 report,‘Prospects for Satellite Communications and Broadcastingin Africa,’ states that in 2009-2014, satellite capacity usagegrew at a CAGR of 11 percent, and is expected to grow atthe same CAGR for the next decade, for a total of almost

With an estimated population of 1.2 billion, Africa is the second most-populated region in theworld. However, the majority of the population has largely been left behind when it comes to newtechnological innovations like Smart phones, Internet access and other advances many of ustake for granted. Recent years have seen satellite operators invest heavily in the region to boostconnectivity rates closer to those seen in the Western world; with continent-wide connectivitycurrently so limited, demand is expected to be high. While this may be true, other factors are alsoat play. The widespread lack of electricity grid access, for one, means that even when Internetaccess is made available, many consumers have no way to power devices. Here, SatelliteEvolution examines the African satellite industry and how it might develop going forwards.

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200Gbps of satellite traffic. Growth is attributed to a numberof factors:

• The transition to digital TV has only recently begun, whilepaid-for TV market penetration is low to date.

• Operations diversity and geographical expansions in oiland gas, banking, mining and government networks.

• New enterprise hot spots are evolving, particularly in Eastand West Africa, in addition to historically strong VSATmarkets like South Africa, Nigeria, Angola, Kenya andTanzania.

• High throughput satellites (HTS) offer better broadbandaccess for consumers and enterprises, and providetrunking opportunities for landlocked countries like SouthSudan and the Democratic Republic of Congo (DCR),where fibre is limited and unreliable.

Market research company Dataxis expects paid-for TVsubscribers in Africa to hit 30 million in 2021, up from 16million in 2015, with digital satellite paid-for TV subscribersto grow from eight million to 20 million in the same period.The roll-out of digital terrestrial TV (DTT) is expected toincrease competition, reducing average revenue per user(ARPU) in most African countries. Total paid-for TV revenueis estimated to grow from US$4 billion in 2015 to US$6 billion

in 2021, with paid-for DTH expected to contribute up to US$5billion of the total.

“Despite advances, statistics show that Africa still has along way to go in terms of household TV penetration. Thislow rate is explained mainly by lack of basic economicinfrastructures like electricity. Moreover, poverty in developingAfrican countries make it impossible for its citizens to affordtelevision sets,” said Priscilla Tirvengadum, Research Analystat Dataxis Africa.

Mixed messagesThere are a lot of mixed messages coming from major satellitecompanies concerning Africa. In its ‘A new DTH frontier’release, SES stated: ‘Central and West Afr ica areexperiencing unprecedented levels of economic anddevelopmental growth, increasingly being viewed as the mostdynamic and exciting regions for media and broadcasters todo business in.’

On the basis of an expected boom period across thecontinent, operators have been investing heavily in Africa inrecent years, with key players like Intelsat, Eutelsat, SES,Telesat and Avanti all eyeing the area. However, at the sametime, the global markets have become extremely challenging,with capacity demand fluctuating and disruptive innovationslike high throughput satellites (HTS) amplifying market

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uncertainty. Speculation of over-investment in developingregions like Africa and Latin America is rife.

Since satellite operators do not report financial resultssegmented by world region, it can be hard to discern thestate of play, and average satellite fill rates can only tell usso much. Global players like Intelsat (76 percent), Eutelsat(70.9 percent), and Telesat (66 percent) all boast strongcapacity utilisation, while Avanti, which is much more closelyfocused on the African market, has improved its fill rate to25-30 percent in the second quarter of 2016, up from 20-25percent in the first quarter.

While many of the major operators have appeared tostruggle in recent years with falling revenues and profits, mosthave pointed out that the negative effects are due to shortterm market challenges, which will be offset in the mediumterm. Looking at Africa, it’s certainly true that a lot of businessand new deals have been affected so far in 2016…

SESSES operates ten satellites with coverage over Africa, andworks heavily with broadcasters to increase satellite TVuptake across the continent. The company has developedits ELEVATE training programme, which enables installersacross Africa to improve their skills and gain accreditation.So far, the ELEVATE team has provided training in the DRC,Cameroon, Ghana, Nigeria, Senegal, Cote d’Ivoire, Uganda,Kenya and Tanzania.

SES has suffered a somewhat challenging year so far,with growing revenues in the video and mobility sectorsweighed down by short-term slowdowns in enterprise andgovernment. However, the company has forged ahead withtwo major acquisitions that will significantly help boost itsfuture results; O3b Networks and RR Media.

So far in 2016, SES has done a significant amount ofbusiness across Africa. The company signed a multi-year

renewal with K-NET to continue to support the roll-out of DTHand DTT services in Ghana. Since 2014, SES’ technical reachin Ghana has grown by 18 percent to two million TVhouseholds, and SES now distributes video content to over90 percent of all TV homes in the country.

SES also secured an agreement to support Facebook’sExpress Wi-Fi programme in Sub-Saharan Africa. SES willprovide a highly tailored service, including satellite capacity,data centre solutions and implementation services via itsEnterprise+ Broadband service, launched in February 2016,which provides a simple, affordable and flexible connectivityplatform for service providers.

In addition, SES deployed its SATMED e-health platformat Centre de Dépistage et de traitement de l’Ulcère de Buruli(CDTUB) in Allada, Benin, as well as at the CURE Hospitalfor Children in Niger. SATMED was conceived by SESTechcom Services, a wholly-owned subsidiary of SES, andis funded by the Luxembourg Government and the Ministryfor Cooperation and Humanitarian Action. The satellite-basedcommunication solution aims to improve public health indeveloping countr ies by enabling multiple medicalapplications and tools to operate collectively on a singleplatform. SATMED has already been installed at a number oflocations across Africa to improve the speed and quality ofhealthcare services, particularly in remote locations wheresatellite is often the only means of providing consistentcommunication between sites.

EutelsatEutelsat is another major operator with a significant presencein Africa. 18 of its 39-strong fleet of satellites operate overthe continent, providing broadcasting, Internet and dataservices, among others.

In the first half of 2016, Eutelsat reported growingrevenues, contributed to by sustained growth in videoapplications revenue following the launch of Eutelsat 8 WestB and Eutelsat 36C, which provided market growth in Sub-Saharan Africa and MENA. Eutelsat was one of the operatorsthat highlighted specific market challenges: “We are facingthe challenge of a lower growth environment in certain of ourcore businesses, particularly data…” commented RodolpheBelmer, CEO of Eutelsat.

Eutelsat established its ‘Broadband for Africa’ initiative in2015, which aims to deploy affordable high-quality broadbandin Africa, initially using leased Ka-band capacity in partnershipwith Facebook from Spacecom’s AMOS-6 satellite, and laterwith its own HTS. However, in September 2016, SpaceX’sFalcon 9 launcher exploded during a test fire with AMOS-6on board, destroying the payload. No updates have beenmade at the time of press regarding the next steps.

Meanwhile, Eutelsat also ordered a 75Gbps HTS fromThales Alenia Space in 2016, and expects to launch it in2019. ‘Broadband for Africa’ will develop consumer andenterprise broadband services with Wi-Fi hotspots, mobilephone backhauling and rural connectivity.

During the first half of 2016, Eutelsat signed a multi-yearcontract with the Tunisian Broadcasting Corporation (ONT)for the broadcast of a subscription-free TV platform acrossNorth and West Africa via Eutelsat 7 West A. Meanwhile,StarTimes arranged a new multi-year deal to accelerate the

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roll-out of digital broadcasting in Sub-Saharan Africa,renewing its capacity lease on two Eutelsat satellites andadding extra capacity for an anticipated expansion by theend of the year. In another deal, Eutelsat arranged a newagreement with Liquid Telecom for multiple transponders onEutelsat 7B for enterprise solutions and DTH broadcastingservices across Africa.

Nicolas Baravalle, Eutelsat’s Regional Vice President forSub-Saharan Africa, voiced his view of the African satellitemarket for Satellite Evolution: “Terrestrial infrastructure hasits limits when it comes to covering a continent which is 30million square km and where 50 percent of the populationlives in rural areas. This creates significant opportunities forsatellites that deliver seamless coverage across largegeographic areas for broadcast and broadband services thatleave no one beyond the benefits of digital. Africa’s ongoingmove to a fully digital broadcasting environment is one of thekey technology transformations underway across thecontinent. With half of our satellite fleet covering this continent,we are fully engaged in supporting digital switchover forviewers across the continent. We are equally committed toworking with the best telco and Internet partners to deliveran enhanced online experience to Internet users. With new-generation satellite broadband services about to launch,

Africa has an opportunity to untap a latent potential andaccelerate social and economic progress.”

IntelsatIntelsat has served the African market since 1965, and todayhas 25 satellites with coverage over the continent, reaching16.3 million homes there. Intelsat 36, which has enteredservice this month, will support growth for Intelsat’s SouthAfrica DTH market.

The company’s financials have certainly improved as theyear has gone on, with a massive 91.7 percent year-on-yearincrease in net income reported for the second quarter of2016. Deals such as its new agreement with AfricaOnline,part of Gondwana International Networks, for which Intelsatwill provide services via Intelsat 28, will certainly have helped.With the new deal, Gondwana will provide ground supportand network management services from AfricaOnline’sfacilities at Hartebeesthoek, South Africa. Intelsat andGondwana will deliver a high-quality, Ku-band broadbandservice on a virtual network operator (VNO) basis to expandInternet access throughout Sub-Saharan Africa.

Intelsat has placed a heavy emphasis on its new EpicNG

high throughout satellites (HTS), the first of which (Intelsat29e) entered service over Latin America in July 2016. The

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second, Intelsat 33e, will come into service at the end of2016 to provide coverage over Africa, Asia, the Middle Eastand Europe. Several reports have claimed that Intelsat 29e’slow-cost capacity has put additional pressures on prices inLatin America; a similar outcome has been forecast for theIntelsat 33e coverage areas when it comes online. Intelsat’sChief Executive, Stephen Spengler, has asserted that, overall,Intelsat 33e will be a market enabler, and a way to unlockdemand across multiple sectors.

“Prices… are subject to market pressures at any giventime - competitive pressures,” said Spengler. “That’s been afactor. But in most of these cases, customers have opted formore overall volume of capacity, leading to an uptick in overallrevenue. That price decline might be a little faster than wehad anticipated in our business plan, but the volume is alittle higher. So we’re within our expectations in terms of thebusiness plan for the Epic satellites.”

TelesatTelesat has long seen the value of investing in Africa; thecompany believes that ‘satellite broadband is helping driveeconomic growth while improving educational services andquality of life across the continent.’ Telesat operates twosatellites that have coverage over Africa: Telesat 11N andTelstar 12 VANTAGE. With them, it serves the oil and gas,mining, maritime, broadband, GSM backhaul andcommunications sectors.

The company reported strong results in the first half of2016, despite operating in a challenging marketplace. Indeed,Telesat’s Chief Executive, Daniel S. Goldberg, confirmed thatprices have recently fallen by 15-20 percent in Africa. “Thereis excess capacity for sure in certain markets, and has beenfor at least a year now,” said Goldberg. “Demand is stillgrowing; folks want more bandwidth. But industry is going tohave to digest the excess supply by lowering capitalinvestment to give time for demand to grow into the existingcapacity. Operators are exercising more capex restraint andthe excess supply will be mopped up. These conditions havebeen true for at least 18 months and it will take two, three, ormaybe five years to recover.”

One of Telesat’s major 2016 deals came when it agreedto provide Globecomm with new Ku-band capacity over Sub-Saharan Africa and Europe via its Telstar 12 VANTAGEsatellite. With it, Globecomm will increase its media, maritime,government and IoT business.

AvantiUnlike the other operators discussed here, Avanti relies onthe African market for a large proportion of its business, withtwo of its three active satellites providing coverage over thatcontinent. Avanti’s HYLAS 3 and HYLAS 4 satellites, bothdue for launch in 2017, will also provide coverage in theMENA, and Europe and Africa regions, respectively.

Despite suffering a challenging year so far, Avanti expects50 percent annual continuing business revenue growth forthe full 2016 financial year. The company has signed severalmajor deals in Africa in 2016, including the supply of Ka-band capacity via HYLAS 2 to VSAT equipment providerIntersat Ltd, in order to deliver broadband services to itsenterprise, government, defence and GSM operatorcustomers across East Africa.

In addition, Avanti extended its contract with Africanbroadband provider iWayAfrica until March 2018. Avantisupplies iWayAfrica with its SELECT solution, which enablesiWayAfrica to provide affordable broadband to bridge thedigital divide. Inmarsat also extended its contract with Avantifor an additional two years, enabling Inmarsat to grow in theconsumer, SME and enterprise markets in 14 countries inSub-Saharan Africa, with a particular focus on Kenya.Inmarsat has added Avanti’s SELECT and CUSTOM productsas part of the deal, for the consumer and SME markets, andenterprise market, respectively.

A promising futureDespite the doom and gloom being cast on the satellite sectorin regions like Africa right now, a review of the news revealsthat there is definitely big business to be done there. Eutelsat,Intelsat, SES, Telesat and Avanti have all made great stridesin Africa in recent months, perhaps indicating a sooner-than-expected market upturn.

The lack of essential infrastructure development andwidespread poverty are the biggest challenges to the Africansatellite market today. Without access to grid electricity, oran appreciable disposable income, consumers will struggleto take advantage of the full host of capabilities that satellitecan offer. However, as government initiatives to improvefacilities take hold, we can expect to see more of the generalpopulation adopting new technologies made av

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