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Telecoms exposure set to rocket in Africa

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The African telecommunications market is on the threshold of remarkable growth and countries that do not invest adequately in telecommunications will be left on the wrong side of the widening digital divide. There are numerous projects underway and in the pipeline that will see significant development within the telecommunications space. 

New analysis from growth consulting company Frost & Sullivan finds that capital expenditure on fixed telecommunications in Africa was at least $195-million in 2006.
Perhaps, the most important activity in the telecommunications market is the laying of undersea cables. These cables are central to the expansion of telecommunications services throughout Africa, although there are misgivings over their huge costs. The introduction of these cables will help provide connectivity in the underserved East African coast.
“Despite their importance to the development of the telecommunications industry, the undersea cable projects are restrained by political disagreements and policy uncertainties around cable ownership and project control,” says Frost & Sullivan Industry Analyst Lindsey Mc Donald. “Governments, regulatory authorities, network operators and other key stakeholders have to reach a consensus regarding strategies and ensure that the cables are laid as quickly as possible.” These challenges notwithstanding, there are abundant opportunities for investors in the African telecommunications sector.
There are several prospects for partnerships between industrial companies and the telecommunications sector, considering that oil and gas as well as mining projects are heavily dependent on telecommunications. These partnerships can help telecom operators share their expenditure and aid in the establishment of high-quality infrastructure for use by the industrial companies as well as the local communities.
The Nigerian Communications Commission’s (NCC’s) demand that operators radically improve their services is also likely to boost investments in telecommunication infrastructure. Since the domestic telecommunications sector has not been able to match strides with the global sector due to its poor service quality, the NCC has commanded operators to cease advertising their services until they meet regulatory standards.
“This will necessitate increased expenditure on infrastructure and present an opportunity to equipment suppliers,” notes Mc Donald. “Network expansion and upgrade is likely to be the main priority for most operators.”