Fixed line telecom firms set to reap from roll-out of fibre cables

Fixed line telecommunication companies in sub-Saharan Africa are set to reap from the roll-out of fibre optic cables, say analysts Frost & Sullivan.

Sub-Saharan Africa has the lowest fixed-line penetration rate in the world, a situation attributed to low investments in copper-wire network infrastructure.

However, the three fibre-optic cable operators — Seacom, TEAMs and Eassy and others across the continent — are expected to give fixed-line telecommunications a new lease of life and cater to the rising demand for data and broadband Internet services.

Frost & Sullivan, a growth partnership company, says that the fixed-line telecommunications market in sub-Saharan Africa earned revenues of $6.78 billion in 2008 and estimates this to reach $12.25 billion in 2015.

“The key growth drivers for wire-line telecommunications are the increasing demand for data and Internet services, cost-effective deployment of fixed-wireless technologies, and the introduction of fibre-optic cables,” says Frost & Sullivan ICT analyst Jiaqi Sun.

“Corporate customers are the major revenue contributor for fixed-line services, particularly data and Internet services and fixed-wireless technologies.”

Fixed-wireless technologies such as WiMAX and CDMA have overtaken capital-intensive landline infrastructure to achieve less time-to-market.

Additionally, fibre-optic cables will reduce cost and increase the bandwidth capacity of Internet services in the next three to five years.

“Corporate customers continue to prefer superior fixed-line to mobile services,” Mr Sun notes.

“Traditional fixed-line operators are in the process of deregulating and migrating to fixed-wireless technologies.”

Mr Sun expects that the combination of fixed-line strength with innovative mobile offerings will help to retain existing customers as well as attract new ones.

In addition, data and Internet services will be future revenue generators for fixed-line telecommunications.

However, the shortage of reliable power supply is hampering network performance.

Furthermore, high incremental costs of fixed-line infrastructure are inhibiting network rollout, while market monopoly is restraining competition.

“The lack of physical infrastructure such as power generation plants in sub-Saharan Africa limits the expansion of wire-line networks,” explains Mr Sun. “Conventional fixed-line telecommunication also relies on expensive copper wire-lines. Fixed-line operators find it difficult to improve the quality of services as there is a lack of private investment to fund infrastructure roll-out.”