Africa fuelled by the New Big Five

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fuelled by the new big five Africa will undoubtedly be the land of opportunity over the next decade and is likely to be last bastion of true subscriber telecom growth to be harvested. Nevertheless, the region is at a crossroad, with some of its telecom markets on the path to maturity, whilst at the same time, the digitalization of its society is empowering numerous opportunities for the region’s growing number of start-ups and entrepreneurs. It is also increasingly defined by an Internet-literate youth, and a growing appetite to assimilate technology led innovations.

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So, for those who play their cards right, Africa may become the gem in their crown jewels. But what will be the secret recipe? Where will the opportunities and challenges lie? This article discusses ‘The New Africa Big Five’, or the 5 top opportunities and trends that are expected to represent the main drivers of telecom growth within the region. If telecom service providers can tackle them successfully and efficiently, they should win big. AFRICA - A LAND OF CHALLENGES AND OPPORTUNITIES Big opportunity #1: Usage growth The region has been, and will continue to be, one of the world’s main growth engines, not only in terms of people and economy, but also in terms of telecom. For example, the region’s population is increasing at an average rate of 2.3%, compared with 0.9% for the world, and its average GDP is expected to expand between 4.0% to 4.3% in 2020 – again above world average. When it comes to telecom subscribers, Middle East and Africa will be the region where mobile subscribers are expected to climb at the fastest pace over the next 5 years. Average mobile subscriber growth is expected to reach 3.1% between 2018 and 2022, bringing the number of mobile SIMs to 1.5 billion by the end of the forecasted period. With this comes the explosion of data usage, fueled by the increasing penetration of smartphones and high-speed mobile internet. As a direct result, the consumption of content is skyrocketing, generating a significant opportunity for those who can tackle it efficiently. This means the creation and high



quality delivery of local content (in each country), video and other OTT value added material. For example, in Africa mobile data traffic is expected to increase by over 50% year-on-year over the next 5 years, representing a growth as high as 10-fold. A similar trend is expected with data roaming, as yearly data roaming traffic is forecasted to also multiply 10-fold in the region between 2018 and 2022. Big opportunity #2: Connectivity With an unquenched thirst for data and content comes the need for high quality connectivity, everywhere and at all time. As a large portion of the content consumed by the African continent still resides outside of its boundaries, the need for international connectivity never ceases to rise. As a result, the region has come leaps and bounds when it comes to international connectivity, with 37 out of its 38 countries with seashore having at least one submarine cable landing. The race for connectivity is set to continue, with 8 new cable systems in planning or in construction, which should encourage a healthy and competitive pricing dynamic, which in turn should empower the digital transformation of the continent. But the need for connectivity obviously also extends internally, with rising requirements for pan-African networks and local access to enable enterprises to thrive. One of the biggest barriers to enterprise growth in the region I believe. Additionally, as the African economy continues to expand, cloud computing has taken off dramatically across the region’s major markets. Pan-African cloud requirements are

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driven by the proliferation of local content, by current and new enterprises expansion and by the uptake of virtualization. The region is home to a emerging ecosystem of local and global cloud providers hoping to support businesses on their cloud journey. For example, companies such as Google, Microsoft, Amazon and Netflix are increasingly focusing on addressing the needs of the region, with cloud connectivity as their main vehicle. Big opportunity #3: Enterprises The enterprise market has always been a challenging segment to serve in Africa. Local access and cross-border connectivity is a challenge that is yet to be fully addressed. But more importantly, I strongly believe that the enterprise segment, and more precisely Small and Medium Enterprises (SMEs), have been grossly underserved by the telecom service providers in Africa more particularly, as they were not a priority. Henceforth the commercial models and technology have ignored their requirements. The interesting fact is that in most countries, SMEs represent an average of 90% - 95% of the total number of enterprises. A missed opportunity I believe. Rapidly expanding verticals in the region include Agriculture, Oil & Gas, Infrastructure and Financial services (Banking). The challenge here, for service providers and carriers looking to tap into these buoyant verticals, will be how to effectively reach them, how to understand their specific needs, to then deploy solutions tailored to their reality - this with high quality and secured connectivity and content.

Big opportunity #4: Entrepreneurship and start-up Africa’s vibrant startup scene is gaining momentum, with a growing number of entrepreneurs creating solutions spanning the full technological spectrum to meet Africa’s unique challenges. Startups in the region focus on building home-grown solutions to address challenges particular to Africa, both high and low-tech. There is definitely no shortage of ambition in the region, as its boasts the highest percentage (60%) of 18-34 year olds who believe they could create a business out of local opportunities. Also, a recent report published by ‘Disrupt Africa’ stated that African tech startups raised funding in excess of US$195 million in 2017, up 51% on 2016, with the number of startups securing funding also increasing to 159. However, these entrepreneurs are faced with a set of challenges that have, to date, prevented them from growing at a pace comparable to their counterparts in other regions. For example, the difficulty of accessing financing, prevalent logistic frictions, weak infrastructure, unfriendly regulation and political uncertainty are barriers to African startups’ success. In my opinion, proper connectivity and real-time communications tools are vital ingredients for any startups and small and medium enterprises’ success. From a telecom perspective, the challenge here is to address this new growing target market and give them the tailored communication tools they require to thrive in today’s digital society. Solutions and connectivity commercial models should therefore focus on minimizing up-front costs, with a pay-as-you-grow pricing structure



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that mirrors small businesses’ journey. The opportunity here is to give them access to Unified Communication services they could never afford before and which are key to their success in and increasingly digital world. Big opportunity #5: Digitization

of Africans still do not have. This is where in our opinion, the opportunity, as well as the challenge, lies. AFRICA A LAND OF PARTNERSHIP

The digital economy, and Africa’s digital transformation, is seen more and more as a cornerstone for its emergence, and as the main motor for growth and competitivity.

Addressing these New African Big Fives will require operators and carriers to be bold, develop solutions that are efficient, low cost, flexible, easily adaptable/tailored, as well as high quality and secure – not a small feat.

Digital solutions have transformed many parts of the African society for the better, with mobile banking coming to mind, and similar transformations are occurring in healthcare, agriculture and education.

This is a challenge in any environment, but even more in a continent as large as Africa, where the nature of markets varies greatly from country to country, and within countries, and where connectivity remains a challenge.

The next era of this journey will come with African businesses being shaped by the disruptive forces that are impacting collective global markets. Such innovative forces include AI, Machine Learning, IoT, blockchain and big data analytics.

The only way forward, in my view, is to address this flourishing continent through a set of strategic partnerships, which will enable telecom service providers to tackle the Big Five opportunities swiftly and with minimal risk.

However, for these technologies to have a significant positive impact on the continent’s businesses and economy, they must be supported by extensive cloud capabilities, a well-trained workforce and a high-end infrastructure. For example, as mentioned earlier, Africa has already come a long way in developing mobile money payment systems that give the unbanked millions a chance to move into the formal economy. Many say that Bitcoin could take this a step further, though it requires an internet connection, something that three-quarter



Service providers should aim to partner with companies who have extensive experience in dealing with the day to day trials and tribulations of such an exhilarating continent and who know customers inside and out. The MTN Group is one of these potential partners. MTN connects 220 million subscribers in 22 countries in the MEA region. The group’s IP/MPLS network boasts 46 PoPs over MTN operations and across the globe, and ensures the final leg of communication, delivering fast and reliable connectivity to end customers, in over 29 countries. This empowers cost efficient connectivity, as well as high quality and secure access to the

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different customer layers - from consumer, to enterprise and content providers. To build business sustainably and empower its customers’ digital journey, MTN launched its BRIGTH operational strategy, which is underpinned by six key pillars. These are: Best customer experience, Returns and efficiency focus, Ignite commercial performance, Growth through data and digital, Hearts and minds and finally Technology excellence. As part of this strategy, MTN recently created it 23rd operating company (OpCo) called MTN GlobalConnect. This new entity brings together MTN’s fixed connectivity, interconnect and roaming activities, for each of its OpCos, under

one umbrella. This means a simplification of interaction with MTN and a one stop shop for all service providers’ African requirements. ‘MTN GlobalConnect is an integral part of MTN and its customers’ success, as it capitalizes on the groups’ scale, regional and international capabilities. The MTN BRIGHT strategic initiatives empower a sustainable, innovative and efficient approach to tapping into Africa’s ‘New Big Fives’ said Frederic Schepens, CEO of MTN GlobalConnect. It is now incumbent on telecom service providers to tackle this great market with the respect, intelligence and dynamism it deserves and harvest what I strongly believe will be the most exciting opportunities in our industry for the coming decade!

ABOUT THE AUTHOR Isabelle Paradis President HOT TELECOM

Isabelle is President and Founder of HOT TELECOM, one of the most innovative and creative telecom research and consulting companies in the industry. More recently, Isabelle has been working with many of the world’s telecom service providers to help them define their transformation strategy. She has published several articles and reports on the subject and has spoken at numerous conferences around the world to share her views on the future of the international telecoms business.



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ABOUT MTN GlobalConnect MTN GlobalConnect is MTN group’s new wholesale arm, which consolidates its wholesale infrastructure and operations across its entire footprint. MTN GlobalConnect centralised wholesale function enables MTN to be the one stop shop for on-net and off-net connectivity in Africa. Although its operations only officially started in 2018, MTN GlobalConnect has the clear goal to be the reference infrastructure provider and traffic hub in Africa and the Middle East once it leverages: • MTN experience - most experienced telecoms provider in Africa • Infrastructure - largest fibre (over 100,000 km of national and metro fibre backbone) and PoP footprint in Africa • MTN brand - most valuable brand in Africa

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