Tel.ComAfrica2002

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

2. 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”

3. 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

4. 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.

5. 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

6. 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).

7. 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

8. 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.

9. 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

10. 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

11. INTERNATIONAL INTERCONNECTIVITY AND SERVICES IN AFRICA Tel.ComAfrica2002 SAT-3/WASC/SAFE CABLE 1 2 3 16 4 7 5 6 8 17 9 10 SAT-3/WASC 11 SAFE 15 14 SAT-2 12 13 • 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

12. 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.

13. 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

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

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

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

17. 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

18. 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