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Can Africa tap into potential US$1,79-trillion market?

Can Africa tap into potential US,79-trillion market?

Operator investment in fixed and wireless networks is driving revenue growth in both developing and developed markets, according to ITU's Trends in Telecommunication Reform 2016 report.

These operators are developing a range of strategies to secure investment in broadband infrastructure, adapt to local conditions and remain competitive.

However, despite the global telecommunication services market predicted to be worth an estimated US$1.79 trillion in 2019, up from an estimated US$1.68 trillion in 2014, the report says current service availability and penetration rates for mobile broadband remain low in developing markets such as in Africa.

The report states, "For example, there is a 19 percent penetration rate in Africa and 23 percent in the Asia and pacific region," the report says. "Penetration rates are even lower for fixed broadband services, with a 0.4 percent rate in Africa, 3 percent in the Arab states and 7.7 percent in the Asia and pacific region."

It added that an increase in investment in 3G and (in time) LTE mobile infrastructure is expected to drive growth and increase service penetration leading to higher revenues.

Capital expenditures on fibre infrastructure are expected to surpass US$144.2 billion between 2014 and 2019. US$55.1 billion of that would be in developing markets.

"Africa stands on the cusp of an age of opportunity. But for the Internet to reach its full potential in the continent, a collaborative, multi-stakeholder approach to policy and regulatory issues is key to providing the solutions that will expand access and create greater demand for the Internet," says Internet Society Regional Bureau Director for Africa, Dawit Bekele via email. "As African regulators and policy-makers look to create an Internet for the future, the ITU's 'Trends in Telecommunication Reform 2016' report raises some pressing issues that must be tackled today, including poor service availability and penetration rates for mobile broadband in developing markets."

Bekele added that the Internet Society's work in Africa has also highlighted these themes, along with key considerations such as policies that promote cross-border connectivity, a reassessment of the tax environment and the need for more innovative models in support of infrastructure deployment.

Infrastructure top priority

In a joint survey between Internet Society's Africa Regional Bureau and the African Union Commission earlier this year, infrastructure development emerged the topmost priority among African policymakers as a key challenge facing Africa's ICT sector.

Other key findings of the ITU report include:

  • 88% of the more than 40 operators that have launched or are planning LTE-A deployments worldwide are in developed markets;
  • the rise in consumer data consumption may spur more Wi-Fi investment; increasing numbers of existing operators, new entrants and financiers are developing alternative funding approaches for broadband network investments;
  • and investment in broadband infrastructure is also coming from more unlikely institutions such as hedge funds or corporates that do not traditionally invest in telecoms infrastructure.

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