guaranteeing quality connectivity across the africa continent

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  • 1.This document is offered compliments of BSP Media Group. www.bspmediagroup.com All rights reserved.

2. GUARANTEEING QUALITY CONNECTIVITY ACROSS THE AFRICA CONTINENT Kanagaratnam Lambotharan Chief Enterprise Business Officer at MTN14 November 2013Copyright 14 November 2013 Mobile Telephone Networks. All rights reserved.1 3. CONTENTHow does Africa fare internationally on network and connectivity?What is holding Africa back?What is required for Africa to become a world-class contenderRecommended solutions that should be exploredCopyright 14 November 2013 Mobile Telephone Networks. All rights reserved.2 4. CONTENTHow does Africa fare internationally on network and connectivity?What is holding Africa back?What is required for Africa to become a world-class contenderRecommended solutions that should be exploredCopyright 14 November 2013 Mobile Telephone Networks. All rights reserved.3 5. HOW DOES AFRICA FARE INTERNATIONALLY ON NETWORK AND CONNECTIVITY % Mobile penetration by region (2005 2013)63.512.4AfricaArab StatesAsia PacificCISEuropeAmericasSource: ITU, % Copyright 14 November 2013 Mobile Telephone Networks. All rights reserved.4 6. HOW DOES AFRICA FARE INTERNATIONALLY ON NETWORK AND CONNECTIVITY % Fixed line penetration by region (2005 2013)Fixed line declining internationally1.51.4AfricaArab States Asia PacificCISEuropeAmericasSource: ITU, % Copyright 14 November 2013 Mobile Telephone Networks. All rights reserved.5 7. HOW DOES AFRICA FARE INTERNATIONALLY ON NETWORK AND CONNECTIVITY % Fixed broadband subscriptions (2005 2013)Africas broadband subscription has stagnated0.3 AfricaArab States Asia PacificCISEuropeAmericasSource: ITU, % Copyright 14 November 2013 Mobile Telephone Networks. All rights reserved.6 8. HOW DOES AFRICA FARE INTERNATIONALLY ON NETWORK AND CONNECTIVITY % Mobile broadband subscriptions (2010 2013)Africa is behind in mobile broadband10.9 1.8AfricaArab States Asia Pacific 20102011CIS 2012EuropeAmericas 2013Source: ITU, % Copyright 14 November 2013 Mobile Telephone Networks. All rights reserved.7 9. AFRICA SUBMARINE TRANSFORMATION20082013 Significant opportunities presented to nations, governments and operators with this change Key benefit should be boost to economic growth via improved access to information, commerce, services and education Beneficial connection of West Africa to the digital age requires that outstanding challenges be addressed Copyright 14 November 2013 Mobile Telephone Networks. All rights reserved.8 10. AVAILABILITY OF DEVICES, NETWORK GROWTH SMARTPHONESAfrica is one such market Varying estimates of smartphone penetration, from 3% to 17%, all agree penetration is increasing Samsung estimates that it now stands at 7%, up from 5% percent last year (HumanIPO)Basic phones (2G)2010Feature phones (2G)Smartphones (2G / 3G)2013Copyright 14 November 2013 Mobile Telephone Networks. All rights reserved.Super smartphones (3G / LTE)20169 11. AN INTERNATIONAL PERSPECTIVE BRICS countries and Nigeria broadband and wireless penetration by access technology(%) 3223Fast, pervasive BB is increasingly seen as a critical piece of economic infrastructure2212118 6.0630.10.110.1To remain globally competitive, Africas challenge is to build a pervasive Broadband Access network, fast984Global competition for inward investment, jobs and e-skills12NigeriaBrazilRussiaIndiaChinaSA1 2308 2148 6751 1113 6785 827WirelineFixed broadband - wirelineWireless broadband & 3GFixed broadband - wirelessAfrica is well positioned in the BB race thanks to substantial mobile network investment ~100 Billion USD new investment needs to flow to maintain this positionSource: Assessment of Economic Impact of Wireless Broadband in Nigeria 2009 Analysis Mason Final Report for GSM (2011) GDP per Capita US$ Copyright 14 November 2013 Mobile Telephone Networks. All rights reserved.10 12. KEY DRIVERS FOR AFRICAS GROWTH IN BROADBANDA larger, younger, more affluent population Africas urbanising population Africa is leapfrogging through technologyAfricas commodity wealth Africas expansion of its financial sectorCopyright 14 November 2013 Mobile Telephone Networks. All rights reserved.11 13. CONTENTHow does Africa fare internationally on network and connectivity?What is holding Africa back?What is required for Africa to become a world-class contenderRecommended solutions that should be exploredCopyright 14 November 2013 Mobile Telephone Networks. All rights reserved.12 14. WHAT IS HOLDING AFRICA BACK REAL CHALLENGES?The size of AfricaCopyright 14 November 2013 Mobile Telephone Networks. All rights reserved.13 15. WHAT IS HOLDING AFRICA BACK REAL CHALLENGES?TIME Labour intensiveTIME / COST TerrainCopyright 14 November 2013 Mobile Telephone Networks. All rights reserved.COST Heavy machinery14 16. WHAT IS HOLDING AFRICA BACK ?FundingRegulatory challengesHistorically limited infrastructure expansionSupport and Incentives for infrastructural rolloutSpectrum allocation bottlenecksCopyright 14 November 2013 Mobile Telephone Networks. All rights reserved.15 17. WHAT IS REQUIRED FOR AFRICA TO BECOME A WORLDCLASS CONTENDER IN TOP BROADBAND & TELECOMS?Mobile and wireless will dominate broadbandTUNISIAALGERIALIBYAEGYPTWESTERN SAHARAMAURITANIA CAPE VERDESENEGAL THE GAMBIA GUINEACHADERITREASUDANBURKINA FASOCOTE D`IVOIRE LIBERIASIERRA LEONENIGERBENIN TOGO GHANAGUINEA-BISSAUMALIDJUBOUTINIGERIA CAMEROONEQUATORIAL GUINEASAO TOME AND PRINCIPEETHIOPIACENTRAL AFRICAN REPUBLICGABON1bn people but sparse populationUGANDA KENYA RWANDADEMOCRATIC REPUBLIC OF THE CONGO (ZAIRE)BURUNDI TANZANIA SEYCHELLESMALAWIANGOLA ZAMBIANAMIBIAZIMBABWEBOTSWANA SWAZILANDMTN Business delivery of servicesSOUTH LESOTHO AFRICACopyright 14 November 2013 Mobile Telephone Networks. All rights reserved.MAURITIUSFibre investment is key but shared infrastructure models due to high costs16 18. WHAT IS HOLDING AFRICA BACK DEVICES ADOPTION?Basic US$50US$80 Socialite US$100US$200 Mainstream US$200US$300 Flagship US$300US$450 Hero US$450US$6004 key challengesDistributionOEMs have limited resources in AfricaImport CostsDuties and customs need refinementEducationConsumer education and adoptionUnderlying CostsOperator driven initiatives are key but what about other private sectors ?Iconic US$600+Copyright 14 November 2013 Mobile Telephone Networks. All rights reserved.17 19. CONTENTHow does Africa fare internationally on network and connectivity?What is holding Africa back?What is required for Africa to become a world-class contenderRecommended solutions that should be exploredCopyright 14 November 2013 Mobile Telephone Networks. All rights reserved.18 20. Contribution to the targetUNDERSTANDING THE ROLE OF PRIVATE SECTOR VS GOVERNMENT (II) Government Policy & regulatory framework(eg. spectrum licensing, access regulation, investment certainty, IT-literacy) Local regulations(planning, environmental laws, ) Smart subsidies Long-term market support(supply/demand-side subsidies)Private sector Risk capital Market knowledge Technology & distribution know-how Innovation & platform competition Scale & efficiency Competitive trial & error Optimum network configuration (sharing) & market structure 100% access targetCopyright 14 November 2013 Mobile Telephone Networks. All rights reserved.19 21. POLICIES THAT HAVE A DIRECT IMPACT ON BROADBAND INVESTMENT AND TAKE-UP Wireless CAPEX in Europe vs USAUSA 174Index 2007 = 100 200720082009201020112012Large scale operatorsSignificant consolidation activity around fibre and spectrum assets97Early and large blocks of LTE spectrum allocated2013LTE connections (% of total) Europe vs USAEurope Highly fragmented marketsSevere and continuous price interventions (LLU, MTRs, roaming)18.9Cautious approach to consolidation1.7 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2011 2011 2011 2011 2012 2012 2012 2012 2013 2013 2013 2014Source: GMSA Copyright 14 November 2013 Mobile Telephone Networks. All rights reserved.20 22. Low income householdsPOLICIES THAT ENABLE PRIVATE SECTOR VS GOVERNMENTTrue access gap Smart subsidy zonePrivate and public partnership are key to drive underserviced areasHigh income householdsMarket efficiency gapCurrent network reach and accessCommercially feasible reachGeographical reachGiven the right policies, many of the objectives can be realised via the marketAfter one time subsidy, will become commercially feasibleRequires ongoing supportUSAASA Fund to be leveraged by operators to bid for access to fulfil the rural development objectives100% geographical coverageSource: Initial concept in telecommunication & information services for the poor: towards a strategy for universal access by J. Navas-Sabater, A. Dymond, N. Juntunen, 2000 modified by Intelecon Copyright 14 November 2013 Mobile Telephone Networks. All rights reserved.21 23. ALL PLATFORMS HAVE A ROLE DELIVERING BROADBAND TO AFRICA BB coverage cost per platform (stylized) Cost per pop (US$)With mobile coverage costs increasing exponentially for the last 10% coverage, Satellite is the likely in-fillMobileFibre In urban areas, population and income density supports multiplatform / multiplayer competition (incl. fibre, copper, Wimax,)SatelliteMobile is expected to be the most economic platform for a large part of Africa100% coverage Dense UrbanUrbanSuburbanRuralVery ruralAlthough mobile technology is likely to be prime delivery mechanism for BB coverage. Ubiquitous coverage will require a patchwork of fit-for-purpose platforms and pragmatic network sharing / integration arrangements (eg. fibre backhaul + mobile access; spectrum pooling / RAN sharing in rural areas). Copyright 14 November 2013 Mobile Telephone Networks. All rights reserved.22 24. FRAGMENTING SPECTRUM TO ALLOW FOR ENTRY COULD INCREASE NETWORK COSTS BY A FACTOR Number of sites needed to deliver specified capacity: 2Mbps, 90% coverageFragmenting spectrum to allow for multiple new entries increases networks costs exponentially, leading to h

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