Angola's ICT sector and telecommunications industry has made headlines of late, inspired by João Lourenço-led government's talk of licensing a new telco to bolster domestic competition, and the country's prominence as a landing site for fibre optic cable networks and launch-pad for relevant projects. But is it premature to describe the market as a 'rising giant'?
In early June this year Angola's government initiated a tender process to accommodate a third operator "to improve services and reduce the telephone tariffs for users."
In February 2018 ITWeb Africa reported that Angola Cables had completed its South Atlantic Cable System (SACS) deep-water installation.
SACS aims to connect Angola and Brazil across 6500km in the South Atlantic with 40 Tbps (100Gb/s x 100 wavelengths x 4 fibre-pairs) of capacity.
Angola Cables says this will be the first direct link between the Americas and the African continent, offering a faster routing with higher capacity. 100% owned and managed by Angola Cables, the SACS cable links the data centre of Angonap Fortaleza, Brazil to Angonap in Luanda, Angola.
The company's executive leadership reiterated that the cable will be fully operational by Q3 of 2018 and "latency will be reduced five-fold, from the current 350 thousandths of a second to just over 60 thousandths of a second."
Angola is also included in a list of countries that can expect to leverage a global Siemens Digitalisation Network (SDN) built on SD-WAN infrastructure, connecting 1,500 sites in 94 countries.
Certainly the impression given is that the South East African country's market is on the rise and will surprise many as a tech force to be reckoned with.
Really the case?
Not exactly, if one goes by the somewhat subdued response by tech businesses to the topic.
Market heavyweights SAP Africa and Liquid Telecom, for example, would not be drawn into the discussion.
But Leigh Smith, MD of World Telecom Labs, which has helped operators across Africa to build network in rural areas, offered this comment: "We have tried a number of times to enter the telecoms market in Angola but with no success. There seems to be a dearth of suitable local partners and no competitive telecom sector. On top of that there also seems to be very little investment available from the private sector. As a result it is not in our top twenty list of African countries to target."
Smith added that the regulator/ USF is not prominent. "So, unlike other countries, they are not taking a lead and at least sponsoring small trials and POCs to help connect the unconnected. The countries north of Angola all appear to have more active telco markets. My prediction for five years' time would be for small improvements in coverage, but that the gap with the rest of the world will have widened."
Still, there are those that are more hopeful.
Asked whether or not Angola is where it should be in terms of telecommunications and technology, Antonio Nunes, CEO of Angola Cables said, "Not yet... but we are making movements, and we are coming home and explaining stories to people, which is starting to make them think."
Nunes identified the main market drivers as the need to reduce Angola's support on its oil revenues and focus on ICT and telecoms, increased co-operation in terms of public-private partnerships, new investment in subsea systems and satellite to ensure digital growth.
"The Angolan government is aiming to develop and attract additional investment into telecom infrastructure to diversify the country's economy and lessen its dependence on offshore crude oil production. In this respect, the government and the regulator have commenced the process of opening up the telecom sector to new competitors – and is making visible strides in this regard," he said.
Analysts reviewing Africa's ICT and telecoms space are circumspect in their evaluation of the country's market.
Mark Walker, Associate Vice President for Sub-Saharan Africa at the International Data Corporation (IDC) said the recent surge in interest and thinking around a 'new dawn in ICT' in Angola has a lot to do with the landing of the cable to link up with Brazil and infrastructure development.
This connectivity, along with the trade opportunities as a result of cultural similarities between two Portuguese-speaking nations and a government that is "serious about IT" and a tech-centric national development plan, has put a new spin on ICT and telecoms development in the country.
The challenge remains to grow sufficient ICT skills programs and continue to increase public connectivity and access, along with e-government initiatives, Walker said. "From that point of view, there is a fair amount of optimism and so on in the market. Whether it will fly or not is another question, and how much money they will actually pay."
Thecla Mbongue, research analyst at Ovum, said Angola's telecoms market has actually underperformed over the last two years. As of Q1 2018, statistics revealed a low (50%) mobile penetration rate, compared to 81% across Africa.
While its mobile segment is the country's largest and most dynamic (much the same as others on the continent), it is not very competitive said Mbongue. "The mobile market is not very competitive with only two players, including Unitel leading the market with 75% market share. Unitel has been involved in a legal dispute with current shareholder Brazilian group Oi. The Angolan government also controls indirectly Unitel via a 25% stake held by the state-owned oil company Sonangol. The government has a 20% stake in competitor Movicel. However, state-owned fixed network incumbent Angola Telecom plans to launch mobile services by 2019."
According to World Bank, Angola's GDP was US$89.6 million in 2016, and Ovum estimates the country's mobile revenues at US$2.6 million – a contribution of 3% for the mobile markets.
How does this compare to other African markets? Based on Ovum research, the Nigerian Communications Commission (NCC) reported that Nigeria's whole telecom sector contributed 9% to the GDP in 2016. South Africa's ICT sector contributed 2.7% of the GDP in 2014 (ICASA). According to the Government of Cote d'Ivoire, the digital economy represents 7% of the country's GDP. In Cameroon, the telecoms regulator reported that the sector's contribution to the GDP was 3.25% in 2016.
Call for competition
Gartner analyst Will Hahn also mentioned that Angola has been quiet of late. He said the market has substantial petroleum resources and is also characterised by the volatility this creates. Some global telcos are reluctant to take on risk and engage the market. Hahn did acknowledge that the focus on connectivity and telecoms bodes well for development.
At a workshop organised by INACOM in November 2017, Angola's Minister of Telecommunications and Information Technology Dr José Carvalho da Rocha echoed the call for a more competitive telecommunications landscape.
He said the Ministry's main objective up to 2022 is infrastructure sharing to enable other companies in the sector to establish themselves and diversify their services.
Mbongue explains that low penetration rate, particularly in underserved areas, and the need for broadband access (either fixed line or wireless) continues to grab the attention of authorities and direct innovation into that space.
Based on the mid-2017 landscape, the expectation is that Angolan mobile subscriptions and penetration to reach "respectively 19 million and 60%".
"I agree that we can talk about a sleeping giant. Investments have slowed down, but following the recent government changes and the potential launch of a new mobile network, we expect growth to take off next year," Mbongue added.
* This article courtesy of Brainstorm magazine, published in September 2018 edition.