Past, present and future

Africa Com 2008 was the event’s 11th annual outing in Cape Town, South Africa, celebrating industry developments across the continent. Having participated at 10 previous events as speaker, moderator or delegate, Michèle Scanlon, principal consultant of Green Giraffe Communications opened the conference with a brief synopsis of how quickly some developments have come to market, while in others cases, how slow things are to materialise

In 2000, prepaid roaming was a focal point of the  agenda of the annual African telecoms conference, then known as GSM Africa. Six years on in September 2006, Celtel (now Zain) launched its One Network in East Africa providing transparency of roaming charges as well as cross-border top-ups for prepaid customers. In August 2008, Zain extended its One Network to link all its properties in Africa and the Middle East, and competing products have emerged from other East African networks as well as a panregional service from MTN.

In 2001, mobile banking was first discussed by MTN South Africa, and in March 2007, Safaricom launched its M-PESA service in Kenya, which has become the de facto benchmark globally for domestic mobile money transfer services. The service has catapulted mobile financial services onto centre stage, becoming a key point of discussion at the 2007 Africa Com event. This year, Zain announced its Zap! brand for its new mobile money service currently being piloted in East Africa.

In 2002, African operators discussed how to maintain profitability with declining ARPU levels and how to drive loyalty in markets susceptible to high churn. Six years later in 2008, these same operators are tending to their cost models as they look to work with competing operators on shared network infrastructure. Operators are also finding ways to lower network OPEX through initiatives such as the reduction of diesel consumption through the adoption of green energy and sustainable power solutions.

Extending coverage to rural areas was a competitive differentiator in 2007, but now the focus is increasingly on service differentiation, and the establishment of aspirational brands. On August 1, 2008 Zain’s pan-regional rebrand across all its African properties was certainly one of the most ambitious rebrand strategies ever witnessed on the continent, and this year’s Africa Com delegates were left in no doubt over the passion that Chris Gabriel, CEO of Zain Africa, has for the brand. With such leadership, one can expect further exciting brand reaffirmation in the coming year.

“Bridging the digital divide” was an industry focus point in 2004 with governments recognising that growing penetration of mobile phones could lead to a positive economic impact in developing markets. Today as mobile penetration in Africa tops 30 per cent and continues to expand, the term has morphed to “digital inclusion” with the industry focusing on increasing Internet penetration and specifically broadband services, primarily through wireless-enabled technologies such as WiMAX.

Investor strategies are also mirrored in the evolution of the Africa Com event with Orascom being the only featured network operator back in 2000, while MTN, Orange and Zain have become regular features in recent years. A new player announced its regional strategy at this year’s event. Michael Foley, CEO Africa, Essar Communications Holdings, introduced the company’s Yu brand, which is set to be launched in Nairobi, Kenya before end of November 2008. Essar plans to expand to a further 5-6 markets in Africa in 2009. Foley highlighted his interest in “distressed properties that were short of cash”. Similarly, Zain’s Gabriel announced that following the recent refinancing of Zain, the operator was “shopping” in Africa, declaring that South Africa was always of interest to Zain to enter should the opportunity arise.

A year ago, the event moved its technology focus from GSM to all telephony services reflecting the vertical expansion of mobile operators in becoming ISP and wholesale players, as well as the emergence of CDMA players in the traditional mobile environment. New greenfield players, especially WiMAX entrants, were singled out at the 2008 event as being potential victims of the current economic climate in that they could be subject to limitations on capital funds for new ventures. However, Noel Kirkaldy, Motorola’s director of broadband services in the region, dispelled such comments insisting that a greenfield WiMAX operation could acquire a licence, network infrastructure and be operational all at a fraction of what a traditional mobile operator would pay for just its licence.

The continuing liberalisation and privatisation of fixed-line operators across the continent has opened up new avenues for such players, which have traditionally been seen as bureaucratic and slow-tomarket. It will be interesting to track the progress of Telkom South Africa at next year’s Africa Com event given it will represent the telco’s first year of separation from Vodacom. Representatives for both Vodacom and Telkom were conspicuously absent from this year’s speaker list.

In 2005, the industry was fixated with lowering access device price points, and the GSMA’s Ultra Low Cost Handset (ULCH) initiative, which was dominated by Motorola in Africa. In 2008, almost every presenter continued to highlight access device pricing as a continued barrier to entry. Tim Lowry, VP Southern and East Africa, MTN Group and MD, MTN South Africa indicated that MTN was sourcing US$10- US$12 handsets from China, while Dubai-based mobile phone manufacturer, Mi, generated lots of interest at this year’s event with its low cost handsets that are especially tailored for the African market with retail price points at US$17-US$35.

In summary, the key themes to emerge from the 2008 Africa Com include:

Further developments are sought to lower barriers to entry, especially handset prices.

Alternatives to diesel-fuelled BTS are being sought to lower network OPEX as well as promote green energy initiatives.

The global recession has yet to impact the African telecoms market, with regional investors highlighting continued expansion plans with acquisition of cash-strapped networks. Operators continue to invest heavily in fibre deployments with discussions of shared infrastructure at infancy stages in many markets.

Michèle Scanlon is principal consultant at Green Giraffe, an independent South Africabased telecoms consultancy focusing on commercial & technical strategies for emerging market operators with 11 years experience of the African market. Michèle can be contacted at michele.scanlon@greengiraffe.cc.