Fiber, satellite, drones: which technology will successfully connect African homes?

In November 2022, Paratus Zambia, a pan-African broadband connectivity company, announced that it had signed an agreement with Meta to build 900 kilometers of fiber optic cable across 10 Zambian cities by the end of 2023. The demand for connectivity has been accelerating in Africa for several years now. Yet, the COVID-19 crisis between 2020 and 2021 has slowed the progress of fixed internet implementation and broadband penetration remains very low on the regional level, with less than 5% of households connected to fixed internet in 2022, and only 1% to fiber. Still, initiatives are multiplying to connect populations to high-speed internet. It is estimated that by 2027, the number of FTTx subscriptions will almost double while xDSL subscriptions will stagnate or even decrease in some countries.

In Sub-Saharan Africa, a two-speed connectivity development is occurring. On the one hand, in the most developed countries, fiber already reached the majority of connected households in 2022. This is the case for example in Kenya with 53% of fixed wireline and wireless internet subscribers receiving fiber against less than 0.5% counted on the xDSL access. In South Africa fiber subscriptions account for 33% of fixed internet against less than 4% for xDSL. On the other hand, in most countries, xDSL remains the main connection mode to bring the internet to African homes. In 2022, in Burundi, xDSL accounts for 94% of fixed internet subscriptions while fiber accounts for only 1%. In Congo, it’s 35% of xDSL against 18% of fiber subscriptions. It is estimated that there will be a turnover between xDSL and fiber subscribers by 2027 in the majority of countries where xDSL prevails today. In Democratic Republic of Congo, while fiber subscriptions should be multiplied by 2 by 2027, xDSL subscriptions are expected to stagnate.

In general network operators follow a similar pattern across Africa: the first fiber deployments are taking place in the largest cities of the countries, usually in capital cities and then in the other major towns. This strategy is explained by a stronger potential market in these areas but also by ease of installation and cost reduction. For instance, after establishing its CanalBox fiber service in Ouagadougou in Burkina Faso in June 2021, Vivendi Africa Group (GVA) has extended its network to the country’s second city Bobo-Dioulasso in May 2022. The same model took place in Gabon where GVA launched its fiber offer in Libreville in October 2017 and then in Port-Gentil in June 2022. The potential market is more important in major cities, where many profitable and connected businesses have established their offices, where the population density can create fundamental economies of scale for fiber operators, and where ISPs will find most households with high purchase power, required to subscribe to the costly fiber service. The next step will be to extend these services to the rural areas, where most of the African population lives (58%) but which remains very poorly connected to broadband.

The low connectivity rate coupled with the high demand represents an important opportunity for all players, provided that the current cost constraints are successfully overcome. At the dawn of a promising market, the challenge is to balance fiber deployment with profitability. In the most advanced country in fiber deployment, such as South Africa, mergers allow network operators to increase their area of influence. Vumatel, the South African market leader with 1.5 million homes covered by fiber in the second quarter of 2022, and Dark fiber Africa (DFA) are both controlled by the Community Investment Ventures Holdings (CIVH). On November 9, 2022, the Independent Communications Authority of South Africa (ICASA) approved the takeover of 30% of those companies by Vodacom which itself covered around 157 000 homes in the second quarter of 2022. DFA and Vumatel will continue to operate as two different entities in the market but the aim is to consolidate the existing fiber coverage and to outperform the fiber operator OpenServe, which follows closely behind Vumatel with 800 000 homes passed in the second quarter of 2022. To go further, in February 2022, Vumatel bought a 45% stake in the operator HeroTel whose network covered about 150,000 households at the same time. Finally, Remgro limited, which controls CIVH at 57% also controls Seacom, which in March 2019 acquired 100% of the operator FibreCo. These commercial transactions are the witness of a more than dynamic market since it is estimated that between 2021 and 2027, the number of fiber subscriptions will almost double in South Africa.

Despite all the promises of the South African market, this situation is still far from reaching the entire territory. To face the lack of infrastructure and high installation costs some companies are making the craziest bets, as shown most recently by StarLink for instance, the company of the South African Elon Musk, which started its commercial activities in Nigeria and aims to cover the most isolated areas with some 2 000 satellites in orbit around the Earth. While the kit costs $599 in the United States, it will only cost $99 in Nigeria. Although the amount remains very high for the region, it reflects a desire to make it affordable. The company does not intend to stop there as it obtained in 2021 a license in South Africa, in February 2022 a license in Mozambique and in October 2022 a license in Malawi. However, the price remains extremely high compared to the inhabitants’ income. Starlink is not the first company to try new methods to connect more Africans to the internet. Loon, a subsidiary of Alphabet, the parent company of Google, has abandoned in 2021 its project of stratospheric balloons floating over Kenya to bring 4G to the population. This idea is now taken up by World Mobile, which has obtained a license in Zanzibar and Tanzania and expects to obtain one in Kenya. Meta’s Aquila project to provide internet via high-altitude drones was also shut down in 2018, as were the company’s Wi-Fi hotspots, which are all expected to be deactivated by the end of 2022.

Thereby, whether via fiber, satellite, or drones, the challenges of broadband connectivity in Africa are at the heart of heavy investments for operators who want to conquer this promising market. Broadband deployment should not be considered as an isolated issue in each country but rather as a whole in the entire region. Not only do fiber networks often cross borders, either because operators are present in several countries or because of collaborations, but it also brings African economies closer together and accelerates the development of the whole region. Although fiber seems to be the most likely evolution because of its attractive amortization, all innovations are beneficial to connect all the populations of the region, even the most isolated, to a quality, reliable and affordable network. The economic perspectives that can be activated by an improved connectivity to global networks will undoubtedly continue to foster initiatives from operators, well aware of the region’s hidden potential.

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