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Unlocking Africa’s Digital Potential – ITW 2016Russell Southwood, CEO, Balancing Actwww.balancingact-africa.com@balancingactafr
Africa’s Digital Road Map – Where we’ve come from
The end of selling shortage – satellite to fibre – more competition – - mobile voice to data - cheaper wholesale and retail prices - Split between slow lane and fast lane countries – The transition has its pitfalls but is happening
Africa’s Digital road map – where we’re going
The move from infrastructure to services and applications – the arrival of “critical mass” of users – trends begin to reinforce each other – convergent content – media as online players – Rise of African consumers
Everything turns into data What’s App, Viber (Mali example), Skype – Past peak SMS? Smile – Data as minutes and then just data? More investment, less returns – Layered markets and
infrastructure sharing Need to move from narrow straw (2G) to broad pipe (fibre for 4G) Networks not ready (eg East African streaming platform on 3G) Shift to 4G and eventually 5G Data at commodity prices The end of mobile operators as we know them now Data companies (selling high volume, low price data) and
content and services companies. Hard for mobile operators to be the latter (examples MTN, Tigo and Orange). You can’t be everything
Supply - International infrastructure
International: 9 cables landed. Nigeria: 15 Tbps
Countries: All capitals connected by fibre except in Eritrea and South Sudan
Another Cable: Africa One Cable – 12,000 kms along East Coast + 5,000 kms branching. -> Saudi Arabia, Egypt and Pakistan
Changing business models: Seacom’s Fibre Internet Access – 25 mbps – 1GB
Supply: National and local infrastructure
National: Steady roll-out. Largely competitive in East Africa but continuing market blockage elsewhere.
Carriers carriers: Liquid Telecom largest carriers’ carriers. Only national companies elsewhere
Different Ways: Infrastructure sharing? Dark fibre (DFA)? Alternative fibre (FibreCo, Powerline fibre)?
Nov 2014 – 44% of population within reach of fibre
Local access: Largely gone mobile 3G but now increasingly 4G and WiFi hot spots… FTTH.
Quality and reliability issues on worst routes
Supply – Connecting the uncovered: A schematic view
• Challenges: Price/income, literacy/education, gender gap, power, etc
• New Business Models: Vanu, Argon Telecom, Mawingu, Virural,And Inveneo
• Options: Mobile operators; mobile franchisees, new independents
Supply – Value Chain PressuresInternational National Metronet Local Access
Prices at commodity level – Sub $100 at volume
Prices will move to commodity level in medium-term Sub US$00s at volume
Prices will move to commodity level in medium-termSub US$00s at volume
Prices lower to create greater volumes
• Still big issues for landlocked countries with transit prices
• Big split between liberalised countries and the unliberalised (like Ethiopia, Djibouti, Angola, Cameroon)
Demand - Steady Growth of InternetPenetration
Country 2006 or 2007
2009 or 2011
2013 Projected2016
Ghana 1% 4% 21% 25%
Kenya 1% 11% e17% 20%
Nigeria 1% 5% 20% 25%
Senegal 2% n/a 17% 25%
Tanzania n/a 4% 17% 25%
Source: Balancing Act Market research, 2014Below 5%: DRC, Sierra Leone, Somalia, South SudanExample: Liberia – Internet (2.1%) and smartphones (2.6%)
3G + Cheap Smartphones + Social Media = Internet Growth
Mobile and Fixed InternetCountry Mobile Fixed & Wireless
Ghana 14,254,407 Est 120,000
Kenya 23,794,550 135,107
Nigeria 92,285,052 Est 200-300,000
Uganda 6,057,148 122,550
Sources: National regulators, all 2015 except Ghana 2015Ghana and Nigeria Fixed and Wireless, Balancing Act estimates
Africa’s Internet Effect Touches Everything Film and TV : Over 100 platforms. Eg iROKo TV, Juliet Asante,
Mobilefliks, MTN’s Showmax Music: Over 100 platforms. 10 m users. Set to grow 10X in next 5
years e-Commerce: Nigeria – Jumia and Konga 1 m customers each. Hybrid Publishing: Worldreader. 125, 000 active mobile readers. Deal with
Opera Art: Guns and Rain, Pavilion 33 = online galleries Radio: Iono.fm – Prog downloads = 1 m per month Media: Pulse: 3 million uniques; Top show: 175,000 views. Daily
shows 10-12,000 views. Launch of Guardian TV Games: GamersNights multiplayer cty in Kampala Streaming: SkyroomLive, Wild Earth B2B Processes – Paga – 75% of agents nationally now online
Emerging Data Centre and Meet Point Ecosystem Three key countries with independent DCs: South Africa (Teraco
– Joburg, Cape Town and Durban); Kenya (Iolo, Liquid Telecom) and Nigeria (Main One’s MDX and Rack Centre)
First wave driven by regulation. Central Bank of Nigeria – Banks must have primary and secondary DCs at certain distance. Aim to cost save by sharing. CBN’s own mechanism to achieve.
Meet points – Example of Nigeria: IXPs (IXPN) and commercial meet points (Medallion and DCs shown above).
The furthest frontier: Content delivery all hosted outside country - Reasons
The Next Big Step Up – 4G
The Price Glide with 3G – Accelerating high volume use earlier?
10-20-fold inc in 1st wave, more to come. 100-200% with 4G. Example of Nigeria: Somewhere just north of 500 mbps use..
4G launched in 45 countries with 63 operator launches. 154 projects in pipeline
High end users on Smile in 2015 in Uganda: 8-12 GBs per month.
With right pricing, data use and data volumes will increase
Can we meet the challenges? 4 key questions for the session: How can the retail price of Internet come down as fast as
possible to increase volumes? How can operators help deliver “low-cost, high-volume”
wholesale and retail bandwidth to less liberalised countries? How can operators work with others to improve both uptime
and reliability? How can mobile operators deal with market blockages at
content and services level (revenue share, payment methods)?