The 'Airtel effect' will extend to other sub-Saharan service providers
Airtel’s aggressive drive to limit overhead and improve return on investment is proving contagious among operators in sub-Saharan Africa. Operators in the region are driving a hard bargain with equipment vendors, consolidating their networks, looking to outsourcing and reviewing their investment plans. We expect operators to prioritize consolidating their core subscriber base in rich and dense urban areas. Investment in hard-to-reach rural areas will require support from universal service funds or even third-party tower companies. Vendors with strong existing relationships with pan-regional operators, such as Ericsson AB (Nasdaq: ERIC) and Alcatel-Lucent (NYSE: ALU), will benefit the most.
Completion of several submarine projects in the region will triple capacity and allow for substantial price drops, all of which will contribute to rising Internet and broadband adoption
Large submarine cable projects around Africa and terrestrial cable projects across the Middle East are reaching completion. West African countries will see their international capacity more than triple from 4TB/s to 14TB/s in 2012. If we are to replicate the impact of cable landings on East African countries, then we expect to see substantial price reductions for both voice and Internet services, driving adoption of broadband services. African countries will also push hard to capture a share of the outsourcing pie that benefited mostly North African countries. Cameroon, Cote d’Ivoire and Senegal will see major investment in outsourcing and call-center activities catering to Francophone countries, while Kenya and Tanzania will try to cater to English-speaking countries.
Middle Eastern operators will continue their push for last-mile fiber access
Middle Eastern operators, especially in the UAE and Turkey, are very serious about their last-mile FTTx investments, mainly focused on high-density urban centers. We expect rollout to drive adoption of higher-speed broadband connections, VoIP and IPTV in the Middle East.
Smartphones will become mainstream
This will be driven by the introduction of inexpensive Android-based devices, the introduction of more flexible data usage plans, the rising availability of local content and the further push from low-cost smartphone-like devices from Chinese and Indian manufacturers. We believe it will be increasingly difficult for Nokia to maintain its historic hold on the region’s devices market as a result of these trends.
- Despite a Challenging Climate, Fixed Operators Can Profit from Business Broadband and FTTx
- Beyond Price Wars: A Road Map for Better Mobile Services in East Africa
- Three Steps to Accelerate Mobile Innovation in Africa and the Middle East
- Pyramid's Top 2012 Trends (free registration required)