RURAL CONNECTIVITY IN AFRICA. Nicolas BARAVALLE Director Line of Business Data

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1 RURAL CONNECTIVITY IN AFRICA Nicolas BARAVALLE Director Line of Business Data

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3 STATEMENTS Fuelled by the growing public appetite for new services and smart devices, the mobile data boom has placed huge demands on wireless networks, prompting a seismic change in performance and capacity. In the readilyaccessible urban centers and populated regions of the world, mobile operators have been willing to invest in new technologies, building out their networks to fulfill the growing demand. As these markets reach saturation, the next challenge will be to expand data capabilities into regions that are more economically challenging and so have been underserved, whether in the less accessible corners of the developed world or in the unconnected rural areas of the emerging economies. Informa Telecoms & Media 5

4 THE SITUATION IN 2014 The mobile business in most African markets has slowed down due to saturation. Most of the new subs are coming from churn, resulting in flat growth. With the fast roll out of smart phone in the continent, the data consumption increases but the price competition pressurizes revenues and ARPU. The continent has benefited form the massive roll our of fiber to its coast and the creation of network capillarity within the countries. Submarine cable operators and terrestrial fiber operators are even beginning to interconnect their network offering service redundancy. Urban and suburban areas are now well covered with an improving reliability and service quality. 6

5 WHAT WE THINK While most African cities enjoy 3 and 4 G, mobile coverage becomes scattered and less reliable in rural areas. Deploying rural networks in Africa or any other part of the world aren t favored: Lower population density Prohibitive cost of infrastructure and interconnectivity of these networks, Prohibitive cost of installation, energy, security and maintenance, Low ARPU ($2 to $6 dollars in some instances) Low penetration of smartphone Bad business model with a far too long return on investment Thinks aren't that bad, and the reality shows a much better prospect filled with opportunities: Rural connectivity: The new Eldorado for MNO s 7

6 RURAL CONNECTIVITY CAN GENERATE REVENUES Rural connectivity is an opportunity for MNO s, Governments and the rural population. Rural connectivity enables basic day to day requirements: Bridge / closure of digital divide Easier / faster Communication and trade Mobile money and means of electronic payments Rural connectivity in a more structured and developed form also bring: Health, education and prevention E-Health School, Knowledge and education E-School Government services, Post Services, Entertainment with Kiosks and content distribution Rural connectivity is an opportunity to develop revenues and services, structure society and develop micro services. 8

7 RURAL CONNECTIVITY CAN BE COST EFFECTIVE -USE SATELLITE The more fiber and telecom infrastructure in a market, the more telecommunications are consumed by the end user, the more satellite becomes relevant. Relevant in DTH, Broadband, and voice-data backhaul. When fiber requires as many individual links and connections as there are PoPs, Cable head end, towers or BTS s, satellite requires ONE single link whether you interconnect 2 or 2 million points. One satellite link, one cost! One satellite link can be shared amongst all the points (DVB TDMA services) One satellite link can be increased / decreased anytime and on demand One satellite link can reach any point of the network at any given time. Satellite offers Flexibility, Scalability, cost effectiveness and unlimited reach. Satellite services best suit the needs of rural networks. 9

8 MANAGED RURAL COVERAGE Next wave of rural build-out Rural Urban Suburban 10

9 TECHNICAL SOLUTION OVERVIEW FOR 2G, 3G OR LTE WITH SATELLITE Operator Core Network MNO responsibility Services Terminals 11

10 POTENTIAL REVENUE / SITE / YEAR WHEN MINIMUM UNDERTAKING OF 50 SITES CURRENCY: USD IN SMALL/MEDIUM/LARGE VILLAGES Average population in villages 5,000 Mobile penetration rate 50% Number of subscribers 2,500 ARPU level 3 Revenue per site and year 90,000 Annual revenue with 50 sites: USD 4,500,000 12

11 RURAL COVERAGE SPLIT OF RESPONSIBILITIES MNO Tower Operator or Equipment Manufacturer or MNO Local Community Subscriber management and SIM card distribution Define site locations Spectrum Site lease and cost Network installation Access and Transmission Network Transmission Cost Operation & Maintenance Attract subscribers and distribute SIM cards (together with operator) Local lease, Security and maintenance of remote last mile station and solar panels 13

12 THE VALUE PROPOSITION FOR RURAL CONNECTIVITY Rural connectivity offers MNO s a new pockets of growth, First movers will take a considerable advantage (incl. government contracts & services) Rural connectivity roll our can be cost effective: Use satellite services to interconnect the last mile remotes Use Time Division Multiple Access to optimize bandwidth use and efficiency Share the infrastructures between multiple MNO s Whoever own the last mile infrastructure owns a unique and valuable piece of network. Last mile remotes depend on Solar energy (environment friendly + low maintenance) Rural connectivity will enhance trade and communication generate GDP growth. 14

13 THE BUSINESS MODEL MNO s are changing the model by transferring all Capex into Opex. In other words MNO s want to transfer the cost of acquisition of the last mile remotes into a monthly operational cost, along with maintenance and satellite capacity. MNO are separating the traffic management from the network MNO s are specializing & focusing on the core business Owning & Rolling out last mile remote infrastructures is Capexhungry but creates a wonderful business opportunity for the likes of : Tower Operators Equipment vendors (ZTE, Huawei ) Financial investors or institutions. 15

14 THANK YOU! Nicolas BARAVALLE Director Line of Business Data