Report tips China Mobile, MTN, America Movil as 'best postioned to grow' - but does not consider Middle Eastern, Indian players

graphic from Telegeography's GlobalComms Insight

New research from TeleGeography’s GlobalComms Insight includes predictions about wireless and broadband subscriber growth globally for the next five years. A key finding seems to be that "growth in the value of the telecoms services market will not keep pace with subscriber growth." This feels right. As the report authors note, subscriber growth these days largely comes from countries with very low GDP per capita - i.e. emerging markets.

This is all fine. I am curious, however, to know how the people behind TeleGeography's GlobalComms Insight selected the eight leading service providers studied in the report and positioned on the graph above. It is not without value to consider the global competitive position and the growth prospects of China Mobile, MTN, America Movil, Vodafone, Telefonica, Verizon, BT and NTT. But wouldn't this report be a lot more interesting if telcos headquartered in the Middle East were put into the mix? I hear so many people articulating the view that these relatively cash-rish players are among the best placed to take advantage of the current challenging economic climate - in terms of finding and securing acquisition targets at knock down prices from sellers wanting to raise cash ASAP.

Where, then, would Etisalat, QTel or Zain sit on the graph?

One aspect of this report which does seem useful is ensuring that China Mobile is discussed. The authors call the giant cellco "one company that has managed to buck the general trend, thanks to the blistering mobile subscriber growth in its home market" and note that even this company, "the world’s largest wireless service provider by subscribers is feeling the pressure, as evidenced by last week’s news that it will expand its global footprint by buying a stake in FarEasTone of Taiwan."

I'd also be interested to see where the report authors would place Bharti Airtel in their calculations. Back in February, I considered the view that the rapidly diversifying market-leading Indian MNO might likewise be compelled by competitive pressures at home to look more seriously at international growth opportunities.

Report tips China Mobile, MTN, America Movil as 'best postioned to grow' - but does not consider Middle Eastern, Indian players

East Africa Com musings: Does it matter which submarine cable lands first?

The socio-economic impact of undersea cables in East Africa: the SEACOM view

Blogger Clement Nthambazale Nyirenda is a lecturer, researcher and consultant in Electronics and Computer Engineering at the Malawi Polytechnic, a constituent college of the University of Malawi. He is currently studying for a PhD in Japan at the Tokyo Institute of Technology. In February Clement wrote about the broadband speeds he enjoys in Tokyo and expressed his hope that a similar service might one day be available in his home country.

Malawi, as Clement noted, while usually considered to be part of Southern Africa, also lies in the easterly part of the continent, which is "the only region in the world that has neither intra-[continental] nor direct access to worldwide international cable networks." The region, Clement observes, "instead relies on expensive satellite communication" with "data costs... among the highest in the world."

Clement discusses the progress of the Eastern Africa Submarine Cable System (EASSy), "the first initiative proposed to connect countries of eastern Africa via a high bandwidth fibre optic cable system to the rest of the world." According to the EASSy website, the level of international telephone traffic per main line in sub-Saharan Africa is the highest in any region in the world, which is proof of there being "considerable demand in East Africa due to insufficient supply for telecommunications within the region." My own single experience of visiting that part of the world - last week's trip to the East Africa Com conference in Nairobi - does lead me to concur, as does the business of simply trying to make calls to other East African countries from the UK. As I noted in my most recent post here, the only frustrating aspect of my short trip to Kenya was finding it fairly difficult to stay on top of my day job via our company VPN. At both my hotel and the conference venue, Internet access was slow and unreliable.

My understanding is that there exists the hope that providing East African countries with improved connectivity could prove to be an effective catalyst for economic development in the region through the expansion of businesses based on the Internet, the provision of call centre services and the outsourcing of other back office functions.

EASSy is set to run from South Africa to Sudan, with landing points in six countries, and will be connected to several landlocked countries. A number of telecoms operators have invested in EASSy via WIOCC (West Indian Ocean Cable Company), which had a visible presence at last week's conference. These include state-owned wireline incumbent operators such as Botswana Telecommunications Corporation, Djibouti Telecom, Telecomunicacoes de Mocambique and soon-to-be-privatised ONATEL of Burundi.

Others in the WIOCC contingent are Orascom Telecom-backed MNO U-Com (of Burundi), Telkom Kenya, Dalkom (Somalia), Zantel, Uganda Telecom, Israel's Gilat Satcom and the Lesotho Telecommunications Authority.

From South Africa, direct investors in EASSy include Neotel, MTN and a consortium of Telkom (SA) and Vodacom. Futher direct investors in the project are Telecom Malagasy, Mauritius Telecom, SUDATEL, Tanzania Telecommunications Company, Comores Telecom and Zamtel (no, that's not a repeat of Zantel). From beyond the region, other backers are BT, Saudi Telecom, Bharti Airtel, Etisalat and France Telecom.

In his February blog post, Clement Nyirenda notes that EASSYy was once expected to be ready for commercial use in Q2 2007 but that construction did not get underway until March 2008. Clement reports (confirmed by a more recent Compterworld Kenya article) that the project is now slated for completion and commercial service in the second half of 2010 - three years behind schedule. "EASSy has not been EASY", comments Clement.

In Clement's opinion, "the major problems hampering the progress of the EASSy project stem from the fact that it is a joint venture of more than 20 largely monopolistic parastatal telecommunication bureaucracies." I shall leave it to individual readers to decide which (if any) of the project's backers fit this rather critical description. "In Africa," says Clement, "the culture of working together in such a large grouping is not common."

Wrangles between partners do seem to have been a feature of the project, at least as far back as June 2006, when a meeting of ICT ministers from Eastern and Southern African countries helped resolve disagreements among project participants, according to Sammy Kirui, the chairman of EASSY's project management team.

Regarding the most recently announced delays, the Computerworld article quotes WIOCC CEO Chris Wood, who said late last month that "the delays have been caused due to optimizing the cost structures and finalizing the agreements between all participating carriers". Wood, states the article, is not worried about the delays because the most important thing is the long-term stability of the financial structure of the cable system. "Time and again", Wood said, "the telecom industry has seen private equity financed companies build cables and then go bankrupt within a few years as their business model, hit by high costs, proved unattainable."

EASSy is just one of three submarine cables set to improve the region's connectivity. Another is TEAMS (East African Marine System). Etisalat appears to be spreading its bets in the race to connect the region, having a 15% stake in TEAMS in addition to its investment in EASSy. The other 85% of the ownership of the TEAMS project is split between a diverse group of interests including the Kenyan Government, Telkom Kenya (another one which is backing two horses) and Kenya's market-leading cellco Safaricom. Also involved from Kenya are the country's largest private data carrier Kenya Data Networks and most recent mobile market entrant Essar Telecom Kenya, whose billboards I saw all over Nairobi last week. The advertising of another TEAMS backer, the cable MSO Zuku, was also very prominent as I caught a glimpse of the city during cab rides between meetings.

Kenyan players dominate the consortium, with ISP AccessKenya and Jammii Telecommunications (which provides access to the Internet Backbone to telcos, ISPs, and large enterprises) also involved.

One more Keynan TEAMS backer is Flashcom, an integrated telecommunications solutions provider offering voice, data and SMS services with a collection of network assets including a CDMA2000 WLL and ISDN services over Fibre. Flashcom's CEO Joe Kimani was on the speaker panel at last week's conference, but unfortunately I didn't get the chance to catch what he had to say. From beyond Kenya, a small stake in TEAMS is held by Africa Fibrenet of Uganda.

The other submarine cable on the East Africa scene is SEACOM, whose investors state that the project will ensure access to low cost bandwidth, thereby encouraging the growth of existing and new industries, as well as education and e-government.

Does the region need three undersea cables? If all of this is thought of as a race to land the cables and start doing business first, will whichever project finishes last find itself out of the game? A Business Times (Tanzania) article of last Friday contends that the answers to these questions are, respectively, 'yes' and 'no'.

In this article, the scene is set with an illustration of the degree to which the current paucity of connectivity impacts upon businesses in the region. The claim is made that a large corporation in Tanzania can pay about USD 3000 a month just to ensure a reliable Internet connection for its network. According to the article, this figure rises to USD 7000 to cover a megabyte of bandwidth per computer in a medium-sized office in Kenya. "A business connection in an urban center in the US," continues the article, "can cost as little as USD 25 a month".

The article compares the economics of the VSAT and undersea cable industries and adds that "fiber optic cables are low latency: they can carry information more than ten times faster than a VSAT to satellite to cable connection."

When making a comparison between the three submarine cables, the article contends that they all have "roughly the same capacity", but notes that "each connects a different combination of countries and ownership."

The article acknowledges that "there has been much hype in the media about which cables will land first" but makes the argument that "the success of one cable does not render the others useless." The view expressed is that redundancy is needed to ensure the security of broadband supply and to stimulate competition, thereby reducing prices for users. "Tanzania will be able to make room for both the EASSy and the SEACOM cables, as well as any connectivity provided by TEAMS", concludes the piece. Plenty of room for all, then, it seems.

East Africa Com musings: Does it matter which submarine cable lands first?

A mixed week for telcos in the UK press

Non-British readers will probably only associate the city of Liverpool with the Beatles and the city's red-shirted, iconic football (translation for US readers: soccer) team. Apologies to the blue half of Liverpool for reminding you that your local rivals are much more famous. You knew that anyway. It wasn't a jibe - I can't very well make sarcastic remarks about the profile of football clubs given that I am a dyed-in-wool QPR supporter.

Liverpool sometime attracts attention for more controversial reasons. British readers may recall the colourful then-Member of Parliament (now London mayor) Boris Johnson raising the ire of Liverpudlians for making some pretty strong allegations about the character of the city's residents. In October 2004, Johnson wrote that people in Liverpool "cannot accept that they might have made any contribution to their misfortunes, but seek rather to blame someone else for it, thereby deepening their sense of shared tribal grievance about the rest of society". He said Liverpudlians "wallow" in their "victim status", adding that this is part of the "deeply unattractive psyche" of many in the city. I am sure this is untrue, and Boris did get quite a telling off from his boss. With these thoughts in mind, however, I did smile on seeing seeing the following:

"Phone giant BT charged a Huyton pensioner £100 for call out to replace two AA batteries", moaned a Liverpool Echo headline on Saturday. The accompanying article alleges that an elderly, cash-strapped and bed-bound BT customer was, without fair warning, charged £100 to have an engineer visit his home and pop a couple of new batteries into his phone. The article quotes a BT spokeswoman as saying that the customer had been advised the fault was in the phone, adding "we are satisfied from our customer service records the customer was properly advised about the possible charges ahead of the engineer's visit." If you can be bothered to watch the video clip below, you will notice the 'victim's' daughter admitting that she'd been advised to check the phone and expect a call out charge:

The Liverpool Echo doesn't let this get in the way of a good opportunity to stir local opinion about our national incumbent operator. This does make me wonder how much this paper might have contributed to the the city attracting the kind of criticism levelled by Boris Johnson.

I appreciate that a modern, competitive telco needs to be customer-centric, but I also feel that operators cannot very well cater to the whims of everyone with an unreasonable demand and a misplaced sense of injustice.

With this in mind, I was pleased to see our industry getting some praise in a UK newspaper this week. The Guardian ran a very upbeat article about how the mobile phone is helping to lift people in developing countries out of extreme poverty. It's a good read and filled with heart-warming anecdotes. This is my favourite:

"For much of his life, Mukeba didn't have an address. His corrugated iron house had no number and his volcanic ash street in the heart of Goma had no name. There was no postal service and the phone system had long since disintegrated. So when his mother died in 1995 on the other side of the Democratic Republic of Congo, her church sent a note marked only "Deograsias Mukeba, Goma". Remarkably it got to him - but three weeks after the funeral.

That was before. Now Mukeba's address goes with him everywhere. It has transformed the 33-year-old's life. It is an old Nokia mobile phone. "It was very hard discovering my mother had died and been buried and I didn't know anything about it for weeks," said Mukeba. "But that's how life was. If you lived in Goma, Kinshasa was another planet.

"I didn't really have any work. When the cell phones came I found the money and bought one because it was cool to have. It cost me $25 (£18). It's a lot.

"My brother lives in Kinshasa where he is a trader. He called me and asked me to start finding some things for him that you couldn't get in Kinshasa but you could find in Rwanda and Uganda, like some electrics and car parts. Now I speak to him every day. I send a lot of stuff. Now we are making money."

One customer in Western Europe whines about the telephone company. Another in the Democratic Republic of Congo cannot speak warmly enough about his mobile service. Our industry can frustrate and delight in equal measure. I guess it depends on your sense of perspective.

A mixed week for telcos in the UK press