3G, WiMAX, ADSL and the Future of African Broadband: Projections, Economics and Best Practices

Publication Date	October 2008
Publisher	AfricaNext Investment
Product Type	Report
Pages	83
ISBN Number	not applicable
Product Code	AFN00001

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Summary

African broadband business models have long been so dispiritingly brutal that it is hardly surprising that few private service providers have ever created any meaningful value out of them . The similarities with the African mobile voice market of the mid to late nineties are uncanny. Expensive services and devices and cream-skimming business models. The frustrating, persistent and maddeningly self-defeating regulatory roadblocks.

This, in our view, is about to change. We have reviewed Internet and broadband dynamics in 33 African markets and our conclusion is inescapable. We believe broadband services and applications are 12 to 24 months removed from a tipping point, a commercial inflexion point that would lead to a drastic increase in adoption and revenue generation. In essence, we argue that broadband, in its various forms-and other than perhaps, pay-TV- is the most significant opportunity for investment returns in the African TMT sector since the mobile voice boom.

Content

List of Exhibits
Companies Mentioned in This Report
List of Abbreviations
Executive Summary
The Baseline
The Opportunity
The Business Model Issues
The Economics
Report Structure
Section I The Rise of African Broadband
- 1.1 Broadband: The Most Significant Opportunity since The Mobile Voice Boom
- 1.2 Some Definitions and Preliminary Points
- 1.3 African Markets Are Not Created Equal: from Value to Volume Opportunities
- 1.4 Broadband Technology: The Resiliency of ADSL and The Rise of Mobile Broadband
- 1.4.1 External Drivers: Broadband Operating Environment
- 1.4.2 Technology Dynamics: Who Deploys What Where
- 1.4.3 Forecast Assumptions: Searching for Tipping Points
- 1.5 Market Projections: Broadband Forecasts
- 1.5.1 Overall Broadband Forecasts
- 1.5.2 The 3G Catalyst: More than Half of All African Broadband by 2012
- 1.5.3 ADSL: Alive and Well, Though Not Kicking
- 1.5.4 Wimax: A Fast-Growing Alternative, but Limited Scale
- 1.5.5 Consolidation Dynamics: Whither The Isp?
- 1.6 Market Projections: 3G and Wimax Capital Expenditure
Section Ii The Business Case for 3G in Africa
- 2.1 Is There Demand for 3G Services in Africa?
- 2.2 The Internet Revenue Opportunity
- 2.3 Breaking down African 3G Economics
- 2.3.1 The Arpu Case: Solid
- 2.3.2 The Capex Case: Improving
- 2.3.3 The Opex Case: Not Pretty
- 2.3.4 Network Opex: The Main Drag on The Model
- 2.3.5 Subscriber Acquisition: to Subsidize Broadband or Not to Subsidize, That Is The Question
- 2.3.6 The Future of African Broadband: through The PC or through The Handset?
- 2.4 Pricing & Positioning Models: Prepaid, Bundles, and Cost per Mb
- 2.4.1 Subscriber Valuation: Mobile Voice vs Mobile Data
- 2.4.2 The Perverse Economics of Mobile Data: over The Long Term, IT May Not Be So Good
Section Iii Business Case Simulations
- 3.1 3G Business Case Simulations: Summary Assumptions
- 3.2 Tier 1 Market Simulation: A No-Brainer
- 3.3 3G Volume Markets: A Tougher Case to Make
- 3.4 Value Markets: Value in Small Figures
- 3.5 Small Markets: Tough to See A Case
- 3.6 Wimax in A Volume Market: Mixed Case
Section Iv Country Focus & Investor Watchlist
- 4.1 Country Broadband Focus: Nigeria & Starcomms
- 4.2 Country Broadband Focus: South Africa - Broadband Slowly Losing Its Shackles
- 4.3 Country Broadband Focus: Kenya - When Wimax Takes on Hspa
- 4.4 Africanext Investor Watchlist: Other Key Markets to Watch - Table
- 4.5 Africanext Investor Watchlist: Key Broadband Infrastructure Players - Table
Appendix