East Africa Telecommunications Industry Update Quarter 2 2012

  • March 2014
  • -
  • Business Monitor International
  • -
  • 131 pages

Includes 3 FREE quarterly updates

BMI’s update to the report on the telecommunications industry s of East Africa contains five-year projections for the fixed-line telephony, mobile subscriber and internet segments of six countries: Burundi, Ethiopia, Malawi, Rwanda, South Sudan and Sudan. Our growth projections for these six countries, which extend to the end of 2016, are based on historical industry data published by the region’s operators and telecoms regulators, market and regulatory developments, and macroeconomic factors expected to affect consumer spending during the next five years.
The mobile segment is the most active in East Africa, despite the sub-region having an average mobile penetration rate of 32.1% at the end of December 2011, up from 23.4% a year earlier. The telecoms industry s of the region play host to numerous international strategic investors, including Luxembourg’s Millicom International Cellular (in Rwanda) South Africa’s MTN (in Rwanda, Sudan and South Sudan), India’s Bharti Airtel (in Malawi and Rwanda) and Kuwait’s Zain (in Sudan and South Sudan). Other notable operators in the region include Sudani, Ethio Telecom, Econet Wireless and Egypt’s Orascom Telecom. At the end of this report, we publish profiles on MTN, Sudani, Ethio Telecom and Zain.
We revised Sudan’s population data and mobile subscriber figures for 2011 and the rest of our projection period, following the secession of South Sudan in July 2011. As a result, there is considerable increase in Sudan’s penetration rates, especially for the mobile segment where we estimate a penetration rate of 65.6% at the end of 2011, up from 46.7% a year earlier. We expect robust growth over our projection period to 2016, with mobile penetration rising to almost 88%. That said, we caution that the newly introduced tax on telecoms services poses a significant downside risk to our growth projection . Although the operators have said they plan to absorb the tax by improving cost efficiencies, we do not rule out the likelihood of tariff hikes and, possibly, a reduction in capital investments on network expansion projects to rural and low income areas.
We retain our positive outlook for competition in Rwanda and Malawi in view of the expected launch of network services by new industry entrants. In Rwanda, Airtel says it is on course to launch commercial services in 2012. In Malawi, fourth licensee Celcom also says it expects to meet its October 2012 deadline to launch commercial services. The launch of commercial services by both operators will break existing duopolies in their respective industries, a development BMI expects to drive subscriber growth through lower tariffs and network investments.
BMI notes that the fixed-line and internet segments in the countries in our East Africa report are grossly underdeveloped. BMI attributes this to a number of factors, including underinvestment in fixed-line infrastructure, especially state-owned incumbent operators, increasing fixed to mobile substitution, low urbanisation rates, considerable damages to telecoms infrastructure during civil conflicts in some of the countries and the high cost of international bandwidth for internet services. BMI notes that five out of the six countries in the East Africa report are landlocked, resulting in the reliance on expensive satellite connectivity for internet services.
Over the next five years, we expect the internet segment to outperform the fixed-line segment as mobile network operators roll out mobile data services, and access to submarine cables through terrestrial fibreoptic networks drive down the cost of international bandwidth. We projection internet penetration to exceed 15% in Malawi, Rwanda, South Sudan and Sudan by 2016. Internet growth in Burundi and Ethiopia, however, will be held back by limited competition and network coverage.

Table Of Contents

Executive Summary . 5
Industry SWOT Analysis . 7
East Africa Mobile SWOT 7
East Africa Fixed-Line And Broadband SWOT 8
East Africa Macroeconomic Overview . 9
Data : East Africa Macroeconomic Overview . 9
Risk/Reward Ratings 11
Sub-Saharan Africa . 11
Sub-Saharan Africa Risk/Reward Ratings, Q212 . 15

Market Projection Scenario . 20
Data : Regional Mobile . 20
Data : Regional Fixed . 24
Data : Regional Internet 27
Market Data Analysis . 30
Mobile . 30
Burundi 30
Ethiopia . 33
Malawi . 35
Rwanda 38
South Sudan . 42
Sudan . 45
Mobile Content . 50
Regional Outlook 50
Data : Major Players Leverage Footprint In VAS Development 52

Industry Analysis Data s . 54
Data : Burundi Mobile Industry Overview 54
Data : Ethiopia Mobile Industry Overview 54
Data : Malawi Mobile Industry Overview . 54
Data : Rwanda Mobile Industry Overview 55
Data : South Sudan Mobile Industry Overview . 55
Data : Sudan Mobile Industry Overview . 55
Fixed-line and Internet 56
Burundi 56
Ethiopia . 57
Malawi . 59
Rwanda 60
South Sudan . 63
Sudan . 64
Data : East Africa Regulatory Environment 67
Burundi 67
Ethiopia . 68
Malawi . 68
Rwanda 69
South Sudan . 70
Sudan . 70
Company Monitor . 72
Africa Is A Key Industry For Aviat . 72
Data : Aviat Networks Quarterly Financial Results (US$mn) . 73
Company Profiles . 76
Zain Sudan . 76
Sudatel . 80
MTN . 83

Additionnal data . 86
Regional Telecommunications Penetration Overview . 86
Fixed Line 86
Data : Fixed Line Penetration . 86
Mobile 87
Data : Regional Mobile Penetration 87
Internet 88
Data : Regional Internet Penetration 88
Glossary Of Terms . 90
Data : Glossary Of Terms 90
BMI Methodology . 91
How We Generate Our Market Projections . 91
Data : Key Indicators For Telecommunications Market Projections 91
Telecoms Business Environment Ratings 93
Risk/Reward Ratings Methodology 93
Data : Ratings Indicators 94
Data : Weighting Of Indicators . 95
Sources 95

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