Africa Telecoms

AFRICA TELECOMS

ISSUE 4

CONTENTS March 2010

04 Guest Editorial

28 Calendar

06 News

38 Statistics

Upcoming events, shows and conferences which you can’t afford to miss.

Josh Silverman, Chief Executive Officer, Skype.

The latest local and global telecoms news.

16 Gadgets

Africa Telecoms presents statistics and data relating to ARPUs and VAS.

Want the next big thing in portable devices? Our gadget review is here to help you choose.

p.20

Manoranjan Mohapatra Thought Leadership p.30 Driving Rural Connections

Leveraging public-private-people’s partnerships to improve rural connectivity and adopting the 4P approach to develop, promote and accelerate ICT connectivity in the developing world.

“Africa is not an export market. It is considered more of a home market for us,” says Mohapatra, Comviva CEO, in an exclusive interview with Africa Telecoms.

p.42

Special Report: Smartphones Africa will be a latecomer to the smartphone party as Ken Wieland reports from Barcelona.

48 Mobile's Rule, OK? Manufacturers’ tendencies towards producing shinier, thinner and lighter cellular handsets don't mean a thing.

54 Minimising Churn Operators in Africa will have to fight hard to improve customer loyalty.

56 Operators Must Act Now

Mobile content revenue is at risk if operators fail to move swiftly.

58 Q&A

With Deon Liebenberg, Regional Director, Research In Motion (RIM), Sub-Sahara Africa.

62 Can India Tame Africa?

It looks like third time lucky for telecoms tycoon Sunil Bharti Mittal.

66 MXit

Successful mobile social communities offer excellent value proposition for global mobile operators.

70 Tenders

A listing of current tenders from around Africa.

72 Last Word

Be careful how you treat the next call centre operator you talk to, it might get rough.

AFRICA TELECOMS Executive Editor Mohammed Khan mkhan@3ipublishing.co.za

Designer: Alexander Flemming xflemming@3ipublishing.co.za

Africa Telecoms and Africa Telecoms Online are published monthly by 3i Publishing.

Web Development: Wilbur Taute

Managing Editor Bradley Shaw bshaw@3ipublishing.co.za

Sub-Editor: Niki Sampson

Unit 10, Planet Art 2, 32 Jamieson Street, Cape Town 8001

Sales Director Sarah Theron stheron@3ipublishing.co.za Printing Tandym Press

Research Assistant: Ann Blackburn Publishing Consultants SchreiberFord Publications Contributors: Ken Wieland, Lesley Stones, Leslie Pean, Brett Haggard, Johann Barnard, Eden Zoller.

T: +27 21 426 5590 E: info@3ipublishing.co.za www.3ipublishing.co.za www.africatelecomsonline.com BPA Worldwide Business Publication Audit Membership Applied for – October 2009.

Guest Editorial

Josh Silverman

Chief Executive Officer, Skype More than 450 million people around the world are now using their cell phones to access the Internet. By 2013, this will rise to 1 billion, according to International Data Corporation (IDC). A significant part of this huge demand is generated by mobile applications – apps, as they are called now.

The rate of growth of the mobile Internet is faster than the adoption of TV, radio and the desktop Internet. ABI Research recently predicted that 4G mobile consumer service revenue in 2014 will top US$70 billion. That's a huge opportunity for the companies that get this right at the right time. Gartner analysts recently commented that “telecom carriers (particularly those in mature markets) intent on pursuing non-traditional service opportunities need to act now, if they have not done so already.”

Consumers are eager to take advantage of the new possibilities.

What they expect is a superior user experience and access to innovative services, applications and content. They want to access these services on any device at any time from any place.

The only way to exploit this opportunity is to provide easy to use, compelling applications and services that “just work” every time, regardless of the mobile device or operating system. It is imperative that mobile operators, device manufacturers and application developers start looking for more effective ways to work together.

But too many operators – especially some of the world's leading ones – are dragging their feet and not embracing these realities.

They think they can decide which services and applications their customers will be allowed to use over their network infrastructure.

Ultimately, they will find out that this is no sustainable business model in an app-centric world.

Apps don’t take away revenues or anything from operators, they add something. Skype, for example, is often accused of taking something away from operators. There is no better counterevidence than the partnerships we have formed with Hutchison Whampoa's 3 in the UK (3UK). 3UK is allowing mobile Skype calls over the Internet at no extra cost, providing a comprehensive user experience by integrating the Skype application into a wide range of mobile handsets.

3UK's customers who use Skype generate 20 percent higher margins. A survey undertaken by 3UK in August 2009 revealed that, on average, users of Skype used 17 percent more traditional voice minutes than non-users. As well as being a valuable customer acquisition tool, Skype users on 3UK have a lower churn rate and higher ARPU. This clearly demonstrates that innovative applications like

4 AFRICA TELECOMS March 2010

Skype can deliver improved financial results. Smart, forwardthinking operators around the world are coming to the same conclusion. An example is an operators like Verizon Wireless who recently announced a partnership with Skype at the Mobile World Congress in Barcelona, Spain. This announcement, according to Dario Talmesio, Senior Analyst at Informa, “demonstrates that mobile operators are beginning to change their attitude towards VoIP providers. They have gone from blocking to managing what they consider to be an issue. Those operators wanting to be serious players in the mobile Internet need to embrace openness and they need to allow Internet services on their devices - this includes VoIP." He concludes: “Blocking VoIP simply doesn’t work for customers". AT

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With AMOS-2 and AMOS-3 serving Europe and the Middle East, and AMOS-4 and AMOS-66 scheduled for launch in 2012, Spacecom offers its vast experience to DTH operators, TV broadcasters, ISPs, VSAT broadband providers and telephony carriers throughout Africa.

AMOS-5i and AMOS-5 C-band and Ku-band capacity over Africa is currently available, contact us to find out more.

April 13-14

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News

New mobile security platform Giesecke & Devrient has developed the first prototype of a complete security platform for a mobile handset, with Qualcomm’s support. It demonstrated its proof-of-concept solution running on Qualcomm’s Snapdragon chipsets at Mobile World Congress in Barcelona.

The demo showed how the MobiCore secure application environment and the Snapdragon’s security architecture delivers a complete ARM TrustZone technology-based security platform to address the requirements of services ranging from mobile payment with secure PIN entry and content management to key management and general user authentication. The MobiCore environment provides a fully certifiable security solution that enables applications using dedicated security solutions today to be integrated into mobile devices based on Qualcomm’s Snapdragon platform.

“MobiCore is of great interest to banks and payment service providers in increasingly leveraging the capabilities of smartphones within the security frameworks of existing payment systems. G&D sees Qualcomm as a key partner to bring this technology to market,” said Dr. Kai Grassie, head of the New Business division at G&D. “As mobile devices continue to evolve and become more advanced, demand for services such as mobile payment at the point of sale will increase significantly – underscoring the need for exceptional security to protect consumers,” said Jason Bremner, vice president of product management, Qualcomm CDMA Technologies. “We are pleased to be working with G&D to demonstrate their open security solution on our Snapdragon platform, and we also look forward to bringing comprehensive security capabilities to market.”

Kenya wins Government Leadership Award The GSMA presented His Excellency Mr Samuel Poghisio, Minister for Information and Communications for Kenya, with the mobile industry’s prestigious annual Government Leadership Award. The Award recognises the leadership role played by Kenya in extending the benefits of mobile technology to more consumers by cutting tax on mobile phones and ICT equipment and promoting the early rollout of mobile broadband.

During 2009, Kenya eliminated import duty and sales taxes on mobile phones and other ICT equipment, making access for consumers more affordable. The Communications Commission of Kenya (CCK) has also demonstrated an established and ongoing programme of modernisation of the telecoms sector.

The CCK facilitated the landing of two fibre-optic cables, TEAMS and SEACOM, heralding a new era of abundant broadband

>> Nokia Corporation is currently the world`s largest manufacturer of cell phones. >>

6 AFRICA TELECOMS March 2010

capacity for Kenya and the East African region. The CCK also enabled the development of a vibrant mobile broadband market by licensing new spectrum and by launching a number of ICT/mobile projects aimed at promoting education and health in rural communities. This programme of initiatives will boost the Kenyan economy and improve the wellbeing and future prosperity of its citizens.

“This award acknowledges the pioneering leadership of the Kenyan government and its determination to improve the lives of Kenyans by making access to mobile broadband and ICT more available and more affordable,” said Rob Conway, CEO and Member of the Board of the GSMA. “Mobile broadband is a great enabler, and it is imperative that government and industry work together to realise its potential to positively transform society.”

Mobile money transfer grows in Sierra Leone

News

Splash Mobile Money and MoreMagic Solutions, leading mobile payment system providers, have expanded Sierra Leone’s first mobile money transfer system to all network operators in the country, allowing customers to freely trade across mobile operators. In addition, Splash customers in Sierra Leone can now receive payments from employers, and pay for goods and services by sending splash-cash to merchants, in addition to sending money using the mobile phone.

Splash Mobile Money and MoreMagic Solutions launched a pilot operation in Sierra Leone in September last year and have already signed up more than 12,000 clients. Splash is available in agency locations in all major cities around the country and virtually every Chiefdom of Sierra Leone.

“The key distinction of our service is that clients can freely trade across mobile operators and thus, in markets where multiple operators co-exist, the service creates more opportunity for commercial growth and individual economic empowerment,” said Ben Farren, Director, Splash. “We are pleased that the easeof-use and reliability of the MoreMagic Solutions platform has allowed Splash to expand with new operators and functionality, resulting in dramatically increasing take rates among Sierra Leoneans.”

“Splash’s success demonstrates that mobile phone customers in Sierra Leone have welcomed the chance to keep cash secure and convenient, even as they travel far from home to support their families,” said Pankaj Gulati, chairman and CEO, MoreMagic Solutions. “MoreMagic Solutions is pleased to support Splash as the service expands, not only with new operators, but also with increased mCommerce functionality for the customer.”

Solar powered feature phone launched Intivation and Inventec Appliances Corporation (AIC) announced the launch of the GS109, a solar powered dual SIM feature phone. The phone is a mid-level phone with a raft of new features in the solar mobile space, including dual SIM, SD memory card slot, Bluetooth 2.1, video and photo camera, radio and MP3 player.

“This is a great opportunity for Intivation to continue developing groundbreaking technology with a partner that is a great fit for our business,” said Paul Naastepad, Intivation CEO. “IAC has strong heritage in design and manufacturing and together we can support the needs of many more markets in the solar mobile space.”

Verne Zhang, President & CEO, AIC said: “We have been excited by the potential of solar for some years now and Intivation are an ideal partner to work with. Together we can make full feature phones at entry level prices a reality for people for whom reliable electricity is a problem. This is an area of the market which shows great promise and we look forward to a strong relationship with Intivation.”

The GS109 was scheduled to come to market in March this year.

>> The first cell phone in a non-vehicle setting, and which could be handheld, was invented by Martin Cooper, Communications General Manager, Motorola >>

March 2010 AFRICA TELECOMS 7

News TeleAtlas maps ready for World Cup Soccer 2010

Comviva launches usage and retention solutions Comviva, the leading provider of integrated mobile VAS solutions in emerging markets, announced at the GSMA Mobile World Congress 2010 its Usage and Retention solutions that extend the lifetime value of mobile customers. By drawing on a comprehensive suite of analytics and customer segmentation tools, operators are able to design innovative, real-time promotional offers that stimulate usage and drive revenues, the company said.

The suite comprises three solutions that each focus on addressing critical issues faced by operators: Revenue Plus that presents operators with a 360° view of the customer; Reconnect that aims to arrest churn; and Dynamic Discounting that defines an optimal discount that shifts service usage patterns from peak to non-peak hours.

“In the current mobile landscape, which is characterised by high competition and high churn, the ability to segment and enhance the value of customers over their lifetime represents a significant opportunity for growth,” said Manoranjan Mohapatra, Comviva CEO. “Comviva’s Usage and Retention platform enables operators to improve the overall profitability of hard-won customers by implementing highly targeted and highly effective value enhancement techniques throughout the customer’s lifecycle. As markets mature, we see Usage and Retention forming an essential component of operators’ competitive strategies.”

With World Cup Soccer on the horizon, Tele Atlas is now offering its customers a World Cup Soccer-ready digital map of South Africa. The special version of the company’s MultiNet map database includes all roads in South Africa, Lesotho and Swaziland, as well as accurate details covering the nine host cities in South Africa.

“The special map release allows our navigation and local search partners to deliver solutions for an enjoyable, hassle-free World Cup experience,” said Danny Grobben, General Manager, Tele Atlas South Africa. “With Tele Atlas content as the foundation, mobile and in-car navigation products will help people avoid temporary road closures, find the best walking route to stadiums and see just where they are using Tele Atlas 3D landmarks or detailed Tele Atlas 2D city maps.”

>> 51% of US Households say they are likely to shop for their next car online according to the Gartner Group >>

8 AFRICA TELECOMS March 2010

To help developers create applications in time for the event, Tele Atlas plans to offer special World Cup Application Programming Interfaces. Using these standard web interfaces, developers can access the freshest maps and dynamic content to create and deliver navigation and local search applications for the World Cup. Tele Atlas claims to be the only map company offering complete coverage of the street network in South Africa, Lesotho and Swaziland, including more than 700,000km of roads and 240,000 points of interest. The special World Cup version adds 12,000km of new roads with speed restriction, signpost and lane information. It also offers World Cup Soccer specific information. Also included in this product release are Tele Atlas Advanced City Models of Johannesburg, Cape Town, Pretoria and other metropolitan areas, offering three-dimensional representations of cities that dramatically raise the clarity and reality of screen images within in-car and portable navigation systems and mobile devices.

BBC mobile delivers one million English lessons Mobile users in Bangladesh have accessed more than one million English lessons using a new service, BBC Janala, which is promising to transform the way people learn language through m-technology in the developing world. Launched in November 2009 by the BBC World Service Trust, the service has proved hugely popular with the country’s growing 50 million mobile users, many of whom want to learn English to improve their access to the global economy.

The first of its kind in the world, BBC Janala has turned the mobile phone into a low-cost education device by offering hundreds of three-minute audio lessons and SMS quizzes through people’s handsets.

To date 1,030,583 lessons have been accessed, with users engaging with Janala’s interactive services – including audio quizzes, English story recording and direct feedback – an additional 130,000 times.

Part of its success is the price, with the BBC teaming up with all of Bangladesh’s mobile operators to offer a national service at half the cost of a typical call or SMS – just 1 Taka (1 pence) a minute.

BBC Janala is aimed at younger people living on less than £2 a day, who have missed out on decent English teaching at school.

News

Netsize Direct Billing designed to catch mobile commerce wave Netsize, the communications and commerce enabler, has launched Netsize Direct Billing, a unique managed direct billing solution for mobile network operators. Direct Billing is a billing method that charges mobile payment amounts directly to the end user’s mobile phone subscription. It does not require intermediate WAP pages or premium SMS. The Netsize solution provides mobile operators with direct billing that integrates seamlessly with their billing platform. It is provided as a fully managed service that minimises the mobile operator’s time and resources that would be required to deploy a direct billing offer.

In addition, Netsize provides a direct billing API that enables third parties to launch mobile commerce services.

“As a relatively new billing method, Direct Billing delivers operators tremendous benefits for launching mobile commerce services, including ticketing and money transfer,” says Stanislas Chesnais, Chief Executive Officer, Netsize. “We estimate that operators would need a year to launch an in-house developed direct billing offer. Netsize Direct Billing shortens their time-to-market significantly to a few weeks, enabling the operator to catch the mobile commerce wave now.”

>> In North America, 70 out of 100 surf the Internet, in the Middle East, 10 out of 100 surf the Internet and in Europe, 38 out of 100 surf the Internet. >>

March 2010 AFRICA TELECOMS 9

News New-generation mobile financial apps mooted Toro Development and Giesecke & Devrient are working together to develop a cutting-edge offering for mobile financial applications based on G&D’s Mobile Security Card and TORO’s Akami mobile platform. Both companies are contributing their respective expertise in hardware, firmware, middleware, mobile software, and system architecture to create a platform offering system integrators, financial service providers, and retailers fast time to market for a proven secure mobile solution.

This new offering addresses the booming market of secure applications on mobile phones.

It brings to the market a series of standalone solutions for

secure applications that will not necessarily evolve toward near-field communication (NFC), such as mobile banking, mobile remittance and mobile ATM. “G&D SFS offers secure micro-SD cards as one among a number of secure elements on the mobile phone,” says Laurent Renard, CEO of TORO. “This is a strong sign to the financial industry that their applications can securely run on mobile. Independently from the longer-term agreements that banks and mobile network operators may be putting in place in preparation of NFC, banks can already educate their customers to use their mobile as a secure terminal for their daily banking

Motorola launches second generation LTE eNodeB The Networks business of Motorola has introduced its newest and highest capacity LTE solution, the WBR 700 Series LTE eNodeB. The company claims that the platform offers unprecedented capacity and density in a 1U rack in one of the smallest and most energy efficient eNodeBs in the industry.

The LTE-Advanced-capable design, which will be able to accommodate 3GPP Release 9 and 10 based upon the current specification, and extra capacity of Motorola’s WBR 700 Series eNodeB, also offers network investment protection and a simple software upgrade path to 4G. “Wireless operators want a true mobile broadband network that can support more data connections and longer data sessions while delivering better quality of service and lower total cost of ownership. The WBR 700 Series is built for that exact purpose – to deliver a superior mobile broadband experience,” said Bruce Brda, Senior Vice President, Motorola Networks. “Operators are also looking for an experienced partner to deploy their 4G solutions. Motorola, with our years of OFDM experience and success in WiMAX, meets that criteria.”

Motorola says operators will be able to deploy multiple LTE carriers at different frequencies, providing greater flexibility.

>> Amount of internet surfers in Asia (389,392,28 million) is 11 times the population of Australia (34,468,443 million) >>

10 AFRICA TELECOMS March 2010

News

Bluestreak delivers open Flash platform for Java and Android devices Bluestreak Technology, a provider of open Flash platforms for wired and wireless devices, has extended its MachBlue platform to Java and Android powered mobile devices. As a result, companies can now use MachBlue to deploy custom Adobe Flash-based user interfaces, applications, and web services across the majority of mobile devices in the market, including phones running the Android, Blackberry, Brew, Java, Linux, Symbian, and Windows Mobile operating systems.

“One of the largest consumer complaints about the iPhone is its lack of Flash support,” said Julien Blin, JBB Research Principal Analyst and CEO. “Over 90% of consumers with Internet-enabled computers access Flash. These consumers have come to expect the same graphically rich Flash-based experiences they enjoy on their computers to also be available on their mobile phones, regardless of device type. Bluestreak

Technology’s support for new Java and Android devices benefits mobile operators, content companies, and developers who want to write visually appealing Flash powered applications once and then deploy them across the majority of mobile devices currently in market.”

Bluestreak Technology CEO and President Dominique Jodoin said the recent success of phones like the Droid and Nexus One had made Android one of the most popular new development platforms for mobile applications. “By expanding our addressable market base through support for new Android and Java devices, we offer our customers a way to use the power of Flash technology to differentiate their applications from the thousands that are currently available in market,” he said.

>> Hong Kong's broadband network shattered the millionth mark for fixed telecom network services subscriptions in January 2010 >>

March 2010 AFRICA TELECOMS 11

News Mobile media innovation hub for the MENA region The Mobile Entertainment Forum (MEF) and the Qtel Group have announced plans to establish a local MEF office in Doha sponsored by The Qtel Group. With its 2020 Vision to be among the world’s top 20 telecommunications companies, the Qtel Group aims to work closely with MEF in this joint project to build a sustainable ecosystem and accelerate growth of the mobile media industry in the region.

The Qatar MEF office will be responsible for facilitating regional membership, organising local events and supporting knowledge transfer via MEF initiatives to help create a self-sustainable hub for the growing MENA mobile media industry.

“We are committed to take leadership positions and we want to leverage MEF’s strong network and fuel our drive for innovation to create real momentum in the region,” said Dr Nasser Marafih, Chief Executive Officer of the Qtel Group. “By tapping into the expertise of MEF’s international membership and through regular local networking activities, our aim is to accelerate innovation and grow the local mobile entertainment industry in general.”

MEF Chairman Andrew Bud said the Middle East is one of the most exciting markets for the growth of the mobile media industry. “The new MEF office sponsored by The Qtel Group will be a tremendous resource for all our members, both local and worldwide, and this new hub for mobile media innovation will accelerate growth and help new ideas flourish in the region.”

FancyFon extends device management for Android FancyFon, a pioneer in unlocking the capabilities of next generation mobile communications, has strengthened its position as the provider of choice for centralised multi-platform mobile device lifecycle management, by announcing the addition of Android to the technologies that it currently supports from a single point of control.

FancyFon Mobility Center enables customers to manage a fleet of mobile phones, over multiple platforms – including Symbian S60, iPhone, BlackBerry, Windows Mobile, UIQ, Java-based feature phones, and now Android – in real time, over the air.

Android customers will be able to benefit from the full

functionality portfolio from FancyFon, including the five key areas of mobile device lifecycle management: device asset management, configuration management, application management, security management and remote support.

With a common GUI and a centralised point of control, FancyFon provides a simple and cost effective management solution for Android.

“As mobile technology evolves, Android is gaining market share and is being viewed as an increasingly important player. FancyFon has reacted to this by extending its support of Android functionality, to satisfy the growing market demand,” said Dietmar Fuchs, COO at FancyFon.

>> The first internet search engine was the Archie search engine from McGill University in 1990 >>

12 AFRICA TELECOMS March 2010

News

‘1GOAL: Education for All’ mobile campaign launched Her Majesty Queen Rania Al Abdullah of Jordan joined the GSMA to announce the 1GOAL: Education for All mobile campaign, claimed to be the world’s largest cause-related campaign ever undertaken. The initiative aims to ensure that every child in the world has the opportunity to go to school by 2015.

Today, 72 million children in the world are denied that chance, and do not have access to basic primary education.

Operators from across the mobile world have joined forces with global football stars, the football world and FIFA, along with educational champions, charities and campaigners to support 1GOAL – a legacy of the FIFA Football World Cup 2010 – to give all children in the world the chance in life an education brings. Operators serving more than one billion mobile users will deliver an international mobile communications

campaign of unprecedented reach that combines the platform of the world’s biggest sporting occasion with the world’s largest medium, to harness public support for 1GOAL. Founding operator supporters of the campaign include: AT&T Wireless, Axiata Group Berhad, Bharti-Airtel, Hutchison 3 Group, KT, MTN, NTT DOCOMO, Orascom, SingTel Group, Smart Communications, Softbank Mobile, SK Telecom, VimpelCom and Zain Group. Batelco Group of the Middle East, CSL of Hong Kong, Mobitel of Sri Lanka and Umniah of Jordan have joined the 1GOAL mobile campaign in recent days.

The campaign launches on 20 April 2010 and runs up until the World Cup final in South Africa on 11 July 2010.

“We are grateful for the GSMA’s leadership and partnership in creating

this campaign,” said Queen Rania, CoFounder and Co-Chair of the 1GOAL initiative. “I want to thank each and every one of you here today who has joined the 1GOAL team and who’ll reach out to subscribers with a message, an app, or a widget. 1GOAL is about people-power … the largest ever, neverbefore-done, cause-related campaign of its kind. And I hope that those of you in the mobile ecosystem who haven’t done so, will join up and sign up before our kick-off in April.”

The mobile campaign – coordinated by the GSMA – will comprise a host of mobile communications tools, including mobile advertising, applications and messaging. The GSMA & 1GOAL will provide the marketing tools and innovative football-related content to operators and others in the mobile ecosystem that support the campaign.

>> By 2011, 22% of the Earth's population will surf the Internet regularly. >>

March 2010 AFRICA TELECOMS 13

News

High performance solar charger

Informa mobile backhaul report for Mobile World Congress As sophisticated mobile devices, broadband networks and ‘all you can eat’ data packages proliferate, the resulting mobile data explosion has led to a corresponding requirement for high capacity backhaul networks.

But according to new independent research from industry analyst Informa Telecoms & Media, as the situation becomes more acute, European mobile operators need to re-examine the backhaul strategy they adopt to protect both capital and operational expenditure.

Informa Telecoms & Media’s research indicates that a mixed technology approach will be the most likely strategy since mobile operators do not have the luxury or the capital to upgrade their backhaul networks in

one go. Instead they will use a mix of technologies with microwave likely to be widely deployed alongside legacy technologies. PTMP, a relative newcomer to Western Europe, offers significant opex/capex benefits performance gains and is the most attractive of the microwave technologies on offer.

According to the calculations in this white paper, PTMP can offer savings of up to US$5 billion over a five-year period for a Tier-1 mobile operator with networks in five European developed markets.

Informa estimates that PTMP can be deployed at 5% the cost of fibre and is 40% more cost effective to deploy compared with traditional point to point microwave.

>> In 2008 more Internet access devices had become mobile phones, rather than personal computers>>

14 AFRICA TELECOMS March 2010

XPAL and Intivation have introduced the SP500 Solar Egg, which they claimed is the world’s first high-performance solar changer. The device is based on XPAL’s battery expertise and Intivation's SunBoost solar conversion technology.

Built by XPAL, with high power consumption users in mind, the Solar Egg can reach over 90% battery charge in just four hours of exposure during average charging conditions. The charger is the first of its kind to recognise the power and convenience demands of consumers and the challenges presented by less sunny places. Built to power a wide range of devices, from phones to MP3 players and digital cameras, the Solar Egg will reduce the need for multiple chargers and conveniently offer greater battery life.

“Solar power is a huge unrealised energy source, particularly in the Western world, which tends to have fewer hours of sunlight than developing markets,” says Christian Scheder, President, XPAL. “As personal devices demand more energy and solar charging technology improves, we are making solar power available to more consumers and changing the way people power their portable devices.”

The SP500 Solar Egg will be available in select regions from March, with further rollout expected globally later this year.

News

Tough year for services, but 2010 looks better After a marked decline in 2008 – to 3.8%, or two points less than in 2007 – growth in the telecom services market dropped significantly once again in 2009.

After generating revenue of US$1,417 billion in 2008, sales are expected to reach US$1,441 billion for 2009 – an increase of only 1.7%, the lowest growth rate since 2002.

“This decline is due to structural phenomena, ie the maturity of the markets that have driven growth in the past, namely mobile telephony in industrialised countries, combined with competitive and regulatory pressures, whose impact has been further aggravated by the economic downturn,” said Carole Manero, project leader of the World Telecom Services Market report at IDATE Consulting and Research.

Although based solidly on business models tied to subscriptions and

technologies that users in industrialised nations consider essential, the telecom services market is not likely to emerge unscathed from the recession. It does nevertheless have some very strong assets that will help put it back on track, including the fact that consumption volumes continue to rise apace with the growing base.

In fixed markets, the growing Internet services market is no longer fully offsetting the decline in fixed line calling, added to which the growth rate for mobile services revenue continues to shrink – decreasing by two-thirds between 2007 and 2009. With total sales estimated at US$755 billion in 2008 and US$785 billion in 2009, mobile services nevertheless remain the chief driving force behind growth as a whole. They have accounted for more than half of all telecom services’ revenue worldwide

for four years running (representing an estimated 55% in 2009), and generate more than twice as much income as landline calling.

The mobile market’s growth is being sustained by a massive rise in customer numbers, which increased by 14% worldwide in 2009: up to 4.5 billion (or by more than 46 million customers a month), whereas the market’s value has been declining year after year.

Fixed telephony continues its decline that began in 2002, and at an ever increasing pace. In 2009, the number of fixed lines shrank again, and average revenue per line has decreased by around 2% annually for the past two years.

Fixed telephony has decreased in value by 11% in three years and, at the end of 2009, it accounted for only 26% of the telecom services market worldwide, compared to around 33% in 2006.

Generating an estimated US$275 billion in 2009, data and especially Internet services continue to increase their weight in the equation, which has risen slowly, but steadily: by 0.5 to 0.7 points annually since 2006. Their share of the total market reached 19% last year, up from 17% in 2006 and less than 15% in 2001, although their contribution to growth is no longer compensating for the decline in fixed telephony revenue.

Excluding Internet, the data services market remained unchanged in Europe and North America in 2008 compared to 2007, and is expected to have suffered a decline in 2009.

The growth of Internet and data services has been spurred by the remarkable rise of the Internet, and especially of broadband access. In terms of volume, the number of broadband subscribers grew by close to 63.3 million.

>> The dot-com bubble burst on March 10, 2000, when the technology-heavy NASDAQ Composite index peaked at 5048.62 >>

March 2010 AFRICA TELECOMS 15

Gadgets

Africa Telecoms looks at some of the latest gadgets and devices designed to integrate your work and home life, bringing convergence to a device near you.

H Uncool HH Poor HHH Average HHHH Excellent

HHHHH Died and gone to heaven

Sony Ericsson Idou Smartphone

Powermat NEED TO KNOW Wirelessly charges many electronic devices / Charge up to 3 devices

NEED TO KNOW

at the same time / Adapters required for some products

12MP camera with autofocus, xenon flash, video LED flash / New touchscreen interface with Symbian OS v9.4 / 128 MB storage; 256

Cost: Approximately R800

MB RAM with microSD expansion up to 32GB

Rating: HHH

Cost: Approximately R4,250

Owning cool tech has one major downside: Cables. If not for

Rating: HHHH

chargers, then for the devices themselves. Powermat, a US-based company, has developed a mat that allows the user to wirelessly

Set to be a media machine, this mobile phone was introduced

charge a wide variety of devices, eliminating the need for pesky

recently at the GSMA Mobile World Congress. ‘Idou’ is just a

cable management. It’s not a perfect solution, however, nor as simple

codename for the prototype that could be seen and handled at the

as it sounds. Devices need to be “Powermat-enabled” in order to

event and is one of a number of projects that will be launched this

use the device for charging, which means that there may be a need

year under the umbrella of Entertainment Unlimited. Those who

to purchase adapters for some gadgets; iPhones are not supported

got to experience the prototype at the MWC said that the media

out the box, and require their own adapter in order to work with the

experience looks quite promising. It was noted that the touch-screen

Powermat. Fortunately, most popular phone makes are supported

interface is incredibly intuitive, responsive and user-friendly and

without requiring an extra purchase. The charging that takes place is

that the device contains shortcuts to the camera and phonebook

not entirely wireless, either. The Powermat itself needs to be plugged

as well as dedicated touch music player controls. The 12MP camera

into the wall, and all devices rest on its surface while charging, so it’s

– the device’s flagship's feature – is accompanied by the necessary

not like a phone can be left on the counter and it would recharge

autofocus, a Xenon flash, LED flash for video recording, geo-tagging,

over the airwaves. While this concept works, it’s not perfect. It’s still

face detection, and Smile Shutter technology, which only captures an

cool to be able to charge a phone by just placing it on the mat, but

image when an individual is smiling.

not all devices will be supported out the box.

16 AFRICA TELECOMS March 2010

HTC Desire Smartphone

INQ Chat 3G Smartphone

NEED TO KNOW

NEED TO KNOW

Touchscreen smartphone with an 8MP Camera / GPS-aware

3.2MP camera with autofocus / Facebook, Windows Live, Skype,

functionality / Uses Google’s Android operating system

Twitter applications and integration / GSM and HSDPA connectivity

COST: Approximately R5,200

COST: Approximately R1,200

Rating: HHHH

Rating: HHH

The new HTC Desire touchscreen smartphone is a feature-packed

Despite being designed by a relatively new company, the INQ Chat

gadget that will keep the user in touch when on the go. Its

3G has an exciting hardware array and a decent price tag, making it

touchscreen is responsive, its menu structure easy to get to grips

a really intriguing prospect and an alternative to the more expensive

with, and it is packed with so many useful features that it will be

smartphones currently flooding the market. Targeted specifically

difficult to make extensive use of all of them. The most important

at a young market of trendy movers and shakers, it is intended

features are the phone’s integration with popular social media

to fuel their ever-growing social networking addiction. Like most

websites and services. Facebook, Twitter, MySpace and others are set

smartphones, it features a full QWERTY keypad, but differs from

up to be accessed from the Desire, making it a phone for connected

competitors in that it has native Twitter support for the homepage,

people. It’s easy to type on it too, making status updates a simple

as well as INQ Facebook/Skype/MSN Chat integration, so no need to

task. Google’s Android operating system is as nippy and responsive

download any social media applications. For all those other apps that

as ever, and its integration with popular Google services like Google

might be required, there is an app store to cater to every possible

Maps, Gmail, and an internal GPS antenna mean the Desire is, well,

need. Complete integration with your social networking is possible

desirable for anyone who makes good use of them. Throw in the fact

– this device imports contacts from Facebook, MSN Chat and Skype,

that it has a 5MP camera and that it looks even better than HTC’s

and then adds their details to the phone’s address book. In terms of

sleek Magic phone, and it’s an absolute winner. Definitely one to

data connection, it's very fast and the device can handle some pretty

consider for all HTC and Android fans out there.

large websites where a number of other more powerful handsets have faltered. It also functions much like the browser on a computer.

March 2010 AFRICA TELECOMS 17

GADGETS

Motorola BACKFLIP

Sony Ericsson Vivaz Pro

NEED TO KNOW

NEED TO KNOW

5MP camera with LED flash, autofocus, geotagging and video /

QWERTY keyboard / 5.1MP camera with 4x digital zoom, autofocus

Google Android operating system / Powerful social networking

and geotagging / Symbian S60 5th edition OS

capabilities Cost: Approximately R4,500 Cost: Approximately: TBC

Rating: HHHH

Rating: HHHH The Sony Ericsson Vivaz Pro is the modified version of original This aptly named smartphone is an engineering marvel that comes

Vivaz and it comes with a slide-out QWERTY keypad. Although the

with a full QWERTY keyboard, a stunning screen, yet is only 15.3

camera in the Pro has been downsized from 8MP to 5.1MP, it still

millimeters thick. How was this achieved? Well, like the name

retains its 720MP HD video shooting capacity. It has the usual range

suggests it was as simple as putting the keyboard on the back of the

of connectivity options: 3G, EDGE, GPRS, GSM, HSDPA (3G) as well

reverse flip. It opens like a book with the keyboard on the back being

as Wi-Fi. It has a 360x640 pixel 3.2” touch screen with a 16:9 HVGA

exposed at all times, instead of having it on the front, like we’ve

display. In terms of digital lifestyle, this device has inbuilt unified

seen with other smartphones. The camera is a 5-megapixel model

email, Twitter, Facebook, blogging and chat – allowing the user to do

with an LED flash, autofocus, geotagging and the capacity to record

everything, without needing a PC. In terms of messaging there’s the

video at 25 frames per second in MP4 format. The Google Android

usual email, IM, MMS and SMS. Along with this comes handwriting

operating system works like a dream on the Backflip and is given a

recognition and Microsoft Exchange ActiveSync. An alarm clock,

makeover with the “MotoBlur” user interface. It can handle any social

calculator, calendar and document readers should keep the user on

networking task thrown it at. It gives a host of apps to track friends

schedule. On the entertainment side, this device features 3D games,

and stay up to speed with what’s happening in the surrounding

FM radio and Java, Facebook and Twitter applications and video

virtual social world.

streaming which allows the user to upload videos directly to YouTube and browse the web with the WebKits browser and manage RSS feeds directly from the handset.

18 AFRICA TELECOMS March 2010

GADGETS

Sennheiser MM 450 Travel Bluetooth Headphones

Golla Bags NEED TO KNOW Perfect travel companion for gadgets / Colourful, vibrant and

NEED TO KNOW

practical / Multi-functional and versatile

Mobile headset that looks like headphones / Contains an invisible microphone for wireless comms / Noise-cancelling tech means music

Cost: From R400 upwards

enjoyment in peace

Rating: HHH

Cost: Approximately R4,400

For the user that’s tired of plain-black, dull-as-dishwater carry

Rating: HHHHH

companions for their gadgets, Golla has the solution. Gorgeous, vibrant and stunning bags for every individual, every personality

Anyone would be forgiven for assuming that this regular-looking

and every gadget. Intended to perfectly complement the digital

set of wireless headphones is just another set for listening to music

mobile lifestyle, Golla is specialises in fashionable bags for portable

from a PC or portable music player. It’s not; it’s the latest mobile

electronics. These bags blend the creative forces of fashion, lifestyle

headset from Sennheiser that can be paired with any Bluetooth

and technology and have spread to over 100 countries. Golla

device, but which works particularly well with mobile phones. With

bags have been well received by the mobile generation for their

Bluetooth 2.1 support and a built-in but invisible microphone, the

wide array of colours, bold, funky prints and sturdy quality and

MM 450 headphones can be used with any mobile phone and the

workmanship. Golla’s complete collection includes an extensive

genius of this particular set is that the user can also listen to the

range of bags for mobile phones, MP3 players, digital and SLR

music stored on their mobile phone, and in great quality. The MM

cameras, gaming consoles and laptops from 7” to 17”.

450 headphones reduce ambient noises by up to 90% through Sennheiser’s Noisegard technology, beautifully insulating the ears from external sounds. Sennheiser’s expert audio engineering produces warm, bass-rich audio for a seriously good listening experience.

March 2010 AFRICA TELECOMS 19

THOUGHT LEADERSHIP

An Indian VAS has adopted Africa as its second home. “Africa is not an export market. It is considered more of a home market for us,” says Comviva CEO Manoranjan Mohapatra, speaking exclusively to Africa Telecoms shortly after the GSMA Mobile World Congress 2010 in Barcelona, Spain. by JOHANN BARNARD

Manoranjan Mohapatra What ’s in a name?

Comviva may appear to be unknown to the uninitiated, but less so once it is pointed out that the company underwent a name change in April 2009 from Bharti Telesoft. The Bharti name is inextricably linked to the Indian telecommunications industry as a leading telecommunications operator and service provider. While Comviva still offers VAS services to Bharti Airtel on a managed services basis, the name change was effected to avoid confusion with the parent company, especially as Comviva spreads its wings into other areas of the globe.

“W

e were active in Africa before people even considered it a viable market, with our first sale being a billing system to Rel-Tel in Nigeria in 2003," says Manoranjan Mohapatra, "And we have seen strong growth since.” The India-headquartered integrated VAS provider has gained a growing reputation globally for its innovative solutions and services that have transformed the mobile landscape and helped network operators lower their management costs, improve customer retention and raise ARPU. The company’s ability to develop and deliver solutions aimed at emerging economies with traditionally lower ARPUs is one of its strengths and has contributed to its presence in more than 80 countries.

It provides services to more than 100 mobile network operators, touching the lives of some 500 million subscribers, positioning it as one of the top three global providers of integrated VAS solutions.

20 AFRICA TELECOMS March 2010

LEAD STORY

November 2009 AFRICA AFRICATELECOMS TELECOMS 21 2 March 2010

While grand plans are rolled out at international forums, such as the recent mobile world congress in barcelona, ordinary people in the african market are seeking out the best value added services in a tight monetary market.

Know the game

Considering its birth in a country where monthly ARPU has fallen to less than US$4, its ability to match customer needs with subscriber demand for lower-cost but equally comprehensive services is being brought to bear. “The backbone of the organisation is based on innovation and taking risks in the markets we are in,” says Mohapatra.

“We see if we can evolve services for the markets we are serving rather than force-feeding western products.

“We aim to add value to the end user and take into consideration factors such as the demographic and socioeconomic situation. In the end, it’s about contributing to their quality of life, and business success too.”

He says that the African and Indian markets are fairly similar, although the former currently lags behind the latter by a factor of three to five years in terms of the adoption of mobile services.

“In emerging markets there are common challenges we face, such as low literacy in some areas, and our products have to be more intuitive to end users to address this.”

Two-way traffic

It is not only a one-way street, though, as Mohapatra points out – its revolutionary Virtual SIM product that exponentially increases an operator's ability to connect subscribers who cannot afford a handset, was initiated following demand for such a service in Cameroon.

Working with MTN, which launched the service last year in the west African country, this service has since been rolled out to other emerging markets and has received numerous awards and wide recognition for extending and growing market penetration.

Part of Comviva’s success is based on this principle of understanding market conditions and needs by assimilating the culture. It does this primarily through its philosophy of ‘local touch’ by which it endeavours to hire locally.

“What it does is that it gets people on board who understand the local culture and business environment,” he says. “We train them and have many programmes that stimulate continual interaction to groom them in our culture, products and technology. We believe that helps and as we get more into managed services, we will be depending a lot more on local staff.”

Comviva’s physical presence on the African continent is still quite limited, numbering around 20 people in southern, east and west Africa and another 10 or so in the Middle East.

22 AFRICA TELECOMS March 2010

Mohapatra says market conditions and needs are very different in each of these regions – which is understandable considering the differing levels of subscriber numbers, access, usage and maturity of the networks.

The key, though, is to position products correctly that not only match the ARPU for that region, but that help the operators enhance revenue and subscriber growth.

One of the key considerations in low ARPU markets is to keep the cost of operations, support and maintenance down so that it is still commercially viable for even the smaller networks to roll out services.

In west Africa, where the ARPU is around US$40 per month, a subscriber could easily dedicate 1% of that spend on VAS services, says Mohapatra, but in south Asia where the monthly

Right product, right market

spend is a tenth of that, the solution has to be able to deliver the same services, but at a substantially lower cost to the network operator.

Comviva is able to achieve this, he says, to some extent by not continuously reinventing the wheel and taking existing platforms and services and adapting them to market needs.

“Mobile commerce is an example of this, where we took the intellectual property in an early-stage mobile recharge product, and built mobile commerce over that,” he explains.

“This product has been very well recognised and we believe that people will be willing to deploy mobile banking due to the success of the platform.”

Where the money is

In fact, Comviva’s award-winning mobile banking offering, mobiquity™, has been a singular success given the rollout by Barclays Global Retail & Commercial Banking of its ‘Hello Money’ service, which is based on the Comviva solution.“We expect to have deployed our mobile banking platform to at least 14 countries across Africa by the end of this year,” says Mohapatra. “The opportunity for mobile commerce is fairly large and we believe that all stakeholders – banks, network operators and regulators – should join hands to expand the adoption of mobile banking.”

Comviva used the GSMA Mobile World Congress in Barcelona to introduce the commercial availability of its Usage and Retention solution that extends the lifetime value of mobile customers.

This is core to its focus in emerging markets, and provides network operators with a suite of analytics and customer segmentation tools they can use to design innovative, real-time promotional offers that stimulate usage and drive revenues.

The suite comprises: Revenue Plus that uses advanced micro-segmentation techniques to present a 360° view of the customer that enables effective up-sell and cross-sell campaigns to help retain ARPU; Reconnect aims to arrest churn by analysing churn data at a highly granular level to identify ‘at-risk’ customers and target them with relevant promotions; and Dynamic Discounting that helps define an optimal discount to shift service usage patterns from peak to non-peak hours.

“In the current mobile landscape, which is characterised by high competition and high churn, the ability to segment and enhance the value of customers over their lifetime represents a significant opportunity for growth. Comviva’s Usage and Retention platform enables operators to improve the overall profitability of hard-won customers by implementing highly targeted and highly effective value-enhancement techniques throughout the customer’s lifecycle. As markets mature, we see Usage and Retention forming an essential component of operators’ competitive strategies,” Mohapatra said at the launch of the services.

March 2010 AFRICA TELECOMS 23

Keep innovating

He adds that while regulatory hurdles have had to be overcome, regulators are becoming more supportive of the demand for such services by the unbanked.

“Like anything else, this has evolved over time and I believe we are living in an era when most regulators are becoming more elastic to the changing needs of the market and the consumer. I think it will continue to be a challenge, but when you are a pioneer you often have to clear up roles so that the rest of the market can participate.”

Participation in Western Union's Mobile Vendor Program is further recognition of Comviva’s position in this segment of the market, which was given another boost following an announcement

by Western Union Money Transfer.

“This alliance exemplifies our commitment to continuous innovation in the mobile money space,” Mohapatra said at the announcement in February. “Selection by Western Union … is further recognition of Comviva’s leadership in extending mobile money services to underserved segments globally. International remittance via the mobile is the next logical step, and this partnership expands mobiquity’s capabilities in this regard considerably.”

24 AFRICA TELECOMS March 2010

Research and development is given high priority at Comviva considering the comparatively short lifecycle of VAS services. Mohapatra says as much 40% of revenue is dedicated to this function.

“We realised that, unlike network infrastructure and product licences, the VAS lifecycle is extremely short. We therefore rely on our ability to innovate and bring products to the market and fill some gaps,” he says.

And the company has certainly stamped its authority on the market in this respect, gathering a plethora of awards for its innovations. [See Awards and Accolades sidebar opposite for five years of highlights.]

One of the latest innovations Mohapatra is counting on to become hugely popular is the company’s ‘one-click’ Online Gaming Solution that was launched at the GSMA Mobile World Congress 2010.

“We believe that gaming is going to become a dominant contributor to mobile usage and penetration,” he says. “The problem has been that most solutions assume that you have the bandwidth and a smart device to play the games. But, we realised that in the market we serve, you can’t take for granted that it will be a smart device or that the bandwidth is there.

“So we developed a patented technology that is able to deliver more rich games, irrespective of the handset. It is played on the network and the way it is managed, only a small amount of data is sent to the handset, so it is not dependent on the availability of a high quality broadband network.”

The benefit to operators is that they will now be able to target a sector of the market that has not participated in the tremendous growth seen and expected of the mobile gaming market.

According to a 2009 research report, Global Mobile Broadband – Statistics and Trends, released by Research and Markets, worldwide mobile games’ revenues are expected to grow from US$4.9 billion in 2009 to US$7 billion by 2013. So, demand is definitely there and while these statistics bear out the picture in developed markets, Comviva should have little trouble finding willing participants in emerging markets.

No phone? No problem

Another innovation for which the company has been widely lauded is its Virtual SIM service that brings mobile telephony to those who are unable to afford a handset, and is a perfect example of how its services are focused on growing operators’

Awards and accolades

2010

Winner of the Golden Peacock Award for Mobile Internet Gateway. Comviva’s Mobile Internet Gateway (MIG) enables operators to deliver an accelerated, optimised mobile internet experience by incorporating a set of content acceleration, advancement and adaption techniques.

The Golden Peacock Award. inaugurated by India’s Institute of Directors, is one of the highest accolades of excellence in the areas of innovation, quality, training, governance and CSR and is judged by a jury of leading figures from the world of business, politics and social responsibility.

2009 revenue opportunities.

“We have seen this service contribute to growing operators’ penetration by up to 5%,” says Mohapatra. “This will also help them take mobile penetration to even low-density areas.”

The solution enables users to make and receive calls, send and receive SMSs and make remittances virtually, using another subscriber’s phone. It requires no special handsets, SIM cards or additional software.

The flexibility of the service and Comviva’s ability to identify and fill a gap are demonstrated by the extension of this service to users who want to differentiate between business and personal numbers, for example, without needing to own multiple handsets and SIMs. Similarly, parents are able to control their offspring’s use of their mobile phone by limiting the amount of time and money spent on mobile calls, including restricting use to certain times of the day.

Given the latent potential that Africa represents to service providers and network operators, it is this kind of out-of-the-box thinking that is going to separate the innovative leaders from the me-toos.

And with Comviva having demonstrated its ability to take up this mantle on a Continent fraught with challenges, it will be a company to watch closely – and emulate if possible. AT

Winner of the AfricaCom Awards.

Comviva’s Virtual SIM was named “Best New Service” and “Telecom Innovation of the Year”. The AfricaCom Awards recognise outstanding achievements in the African telecommunications market.

Winner of the Golden Peacock Award. Virtual SIM won the Golden Peacock Innovation Award 2009.

Winner of the Golden Peacock Award for Hub Technology and Solutions. Comviva won the Golden Peacock Innovation Award for its pioneering work in the field of Hub Technology and Solutions. The Hub Solution unites prepaid roaming, messaging and community-building services into a centralised service, which speeds time to market whilst reducing capital investment and operating costs for operators and carriers.

GSMA Global Mobile Awards.

Comviva’s mobiquity™ mobile banking solution was shortlisted for the Best Mobile Money solution at the Mobile World Congress Awards in Barcelona.

2008

Deloitte Technology 2008. Comviva named an Asia Fast 500 Company for the fourth successive year.

Golden Peacock Award for Innovation 2008 . Comviva received the Golden Peacock Award for Innovation for Money Hub, a global services hub providing seamless network interoperability for mobile airtime and money transfer.

GSMA Mobile Asia Congress Awards. Comviva’s mobiquity™ short-listed for mobile banking solution at the Mobile Asia Congress in Macau.

AfricaCom Awards. Shortlisted for Charging Proxy enterprise solution.

2007

Deloitte Technology 2007. Named as one of Asia’s fastest growing Top 500 companies by Deloitte Technology.

Golden Peacock Award for Innovation 2007. Comviva received the Golden Peacock Award for Innovation for its pioneering work in the field of mobile finance with its mobiquity platform.

2006

Deloitte Technology 2006.

Comviva named as India’s 18th fastest growing technology company and one of Asia’s fastest growing Top 500 companies by Deloitte Technology.

2005

Red Herring Award. Named by Red Herring as an Asian Top 100 Technology Company.

Deloitte Technology 2005. Named as India’s 2nd fastest growing technology company and one of Asia’s fastest growing Top 500 companies by Deloitte Technology.

March 2010 AFRICA TELECOMS 25

driving rural connections

by Dr. Ekwow Spio-Garbrah, Chief Executive Officer, Commonwealth Telecommunications organisation

Leveraging public-private-people’s partnerships to improve rural connectivity and adopting the 4P approach to develop, promote and accelerate ICT connectivity in the developing world.

30 AFRICA TELECOMS March 2010

O

ver the past 50 years there has been a significant paradigm shift in how projects and businesses have been done, especially in developing countries. With the advent of independence during the 1950s and ‘60s, newly independent countries, flush with the euphoria of selfgovernment, looked to the state as the main or only source of investment and management for enterprises and industry. This practice also found support from both the western world, and the international development community, which found it convenient to load the state with sovereign debts, as well as from the eastern bloc which espoused state-led socialist central economic planning and statism. By the mid 1980s, it was clear to all that most state enterprises were failing, and reform was needed. Fortuitously, this realisation coincided with perestroika in the Soviet Union, the eventual break-up of the Soviet bloc, the fall of the Berlin Wall and general disenchantment with centrally planned economies.

For many developing countries, especially those in Africa, the rapid fall of communism and socialist central planning was accompanied by IMF and World Bank-inspired structural adjustment programmes, which called for the outright privatisation of state

March 2010 AFRICA TELECOMS 31

enterprises and the notion of making the private sector “the engine of growth in the economy”. However, this excessive swing to purely private sector-led growth in the 1990s and into the 21st century had its limitations, as became evident in the failure of western countries in recent years to allow their automobile, financial services, insurance and other strategic industries to fail by simply obeying the laws and forces of the free market. So, as the limitations of purely private sector-driven growth became self-evident, there was a tendency to encourage a bilateral co-existence of the public and private sector through what was promoted as public-private partnerships. However, it has become evident that this bilateral model, too, has its limitations.

The global financial crisis has therefore brought the merits of public private partnerships (PPPs) to the fore, and provided a vista for the additional dimension of the fourth ‘P’. The market failure that characterised the banking systems called for many governments to bail out their country’s banks and make them part, or wholly, state owned. Whether one subscribes to the view that the world would have come to a proverbial end if the banking system had not been maintained is a matter of choice and depends possibly on which news channel one watches.

However, few doubt that the world would have gone through many more trials and tribulations if governments had not decided to inject unprecedented amounts of money into the global economy and effectively create PPPs with banks. Nevertheless, even in the creation of these new financial institutions using taxpayers’ money, there was inadequate recognition that there was another silent “P” in these partnerships – the “people” whose taxes were being used for these bailouts. It seemed as if these were merely governmental initiatives, even if approved by parliaments. So in reality they were public-private-people’s partnerships (PPPPs).

Of course, PPPs and their importance for the future prosperity of the world is not a new concern for those who have a greater focus on the global ICT sector than on the banking sector. Despite the massive growth of mobile telephony in the less developed countries of Africa, Asia and Latin America, the establishment of robust and effective PPPs has become essential for those intent on closing international and national digital divides, and building a truly inclusive global knowledge economy. The stark contrast in rural and urban ICT penetration levels in less developed countries that have witnessed startling growth in mobile access highlights the market failures that need

32 AFRICA TELECOMS March 2010

PPPP intervention, if we are to leverage the power of ICTs to achieved globally agreed socio-economic development goals.

While rapid rural-urban migration continues to change the face of many countries, the fact remains that the majority of the world’s poorest people reside in rural areas and they invariably have the poorest access to ICTs such as the mobile phone and internet. In light of this, many governments have established Universal Services Funds (USFs) that levy ICT operators between 1 and 5 percent of revenue in order to create pots of money that can be used to subsidise and catalyse investment in ICT infrastructure and services for unserved and underserved areas. These funds are used to make areas that may have been deemed unprofitable by bigger operators a viable business proposition for smaller players with a focus on rural markets.

While the record of many USFs in Latin America is recognised as being good, the jury is still out on the African Universal Services funds, partly because the few USFs that have been established are so young and the sustainability of their interventions to date has not yet been proven.

Most developing countries recognise that establishing public-private partnerships is not an end in itself. The poor record of many e-governance projects in developing countries, which are often developed through PPPs established between the mostly ambitious governments and the overconfident, eager IT-implementation companies, is evidence of this. For some time, we have known that the majority of e-governance projects fail partly due to the gaps between their design and the reality, and a failure to ensure that what is created is capable of meeting the specific purpose of the end user. Clearly, the success rate of e-governance projects and the PPPs that underpin them would have been higher if the end users were consulted more effectively.

The evidence from the thousands of failed e-governance projects in developing countries serves as warning to those involved in implementation of ICT projects using the PPP model. Indeed, the likelihood of more successful ICT projects that meet the needs of users and are sustainable are increased when the end users have greater involvement in the design process, or are co-investors or co-managers, ensuring the reduction or elimination of the design and reality gap and a greater sense of buy-in and local ownership. The most successful community-based rural ICT projects outlined in the CTO’s final report for the Commonwealth African Rural Connectivity

Initiative (COMARCI) were all developed in partnership with the community. In fact, in many cases, they were actually developed, owned and operated by the community they serve.

While the ownership and operation of rural ICT facilities by the community will depend on the final business model, and the capacity within a given community and the ability to develop that capacity as time goes on, the need to consult the community during the early stages of project design and development is essential. So much so that the CTO has made the use of the term PPP obsolete in its operations and instead insists on the use of the term public-private-people’s partnerships (4Ps). The hope is that rather than being an afterthought, the community – the people’s “P” in the 4P – will be considered as partners in the development of ICT projects, and work hand in hand with government and private sector from the inception of the project to its realisation.

It must be noted that not all rural people are illiterate or nonprofessionals, that a lot of high-value economic activities – eg mining, forestry, agro-processing, oil and gas exploration – take place in some rural communities. And indeed, most professionals who are city dwellers easily trace their ancestry to one village

or another and are happy to assist in ensuring the commercial sustainability and success of “village” projects if they can be engaged early on in the process.

The forthcoming CTO COMARCI Phase Two workshops that will take place in rural areas of Nigeria, Sierra Leone and The Gambia in the first quarter of 2010 will catalyse the development of the PPPPs in each country and ensure that nonserved and underserved communities obtain access, or improved access, to sustainable ICT facilities. The CTO will work hand in hand with the regulator or USFs in all three countries in order to deliver workshops that will bring all the stakeholders in the 4Ps together to establish relationships that will eventually lead to the implementation of ICT facilities.

Trends in public-private partnerships in developing countries

Almost all developing countries today, since 1990, have imbibed the concept of PPP in some way or the other. While some countries have taken it on aggressively, others are still in the process of gaining valuable learnings from best practices in different regions.

March 2010 AFRICA TELECOMS 33

According to the World Bank, investments by private companies in public infrastructure in developing countries only took off in the early 1990s, then valued at USD 18 billion. But this drive was dampened by financial difficulties by private companies and growing risks in the unstable developing countries.

In telecommunications, which involved the technological innovations and the entry of mobile phones, there was stiff competition by developing countries to invite investment in order to expand this sector.

According to the World Bank, PPPs are prominent in the telecom and energy sectors, with almost 50% of total investment going into the telecom sector. It was found that between 199099 and 2000-06 PPP investment increased by almost 118%.

PPPs in sub-Saharan African region

The sub-Saharan African region is facing a severe backlog in its socio-economic development. According to the Organisation of Economic Development (OECD) Development Centre, over 600 million people in the region do not have access to electricity and almost 300 million still need access to clean drinking water.

According to the International Telecommunication Union, only one in 100 individuals have a mobile phone or fixed line. PPPs in the region promises to change all that and is envisaged to provide significant improvement in service and benefits within the region.

Benefits of a PPP partnership

• It provides an opportunity to develop skills and capacity in developing countries.

• It provides many jobs to the unemployed, due to the large project.

• It provides the community with an opportunity to act as transaction advisors for both parties, the public and private

34 AFRICA TELECOMS March 2010

sectors.

• There is tangible growth in the socioeconomic growth of the country due to investments.

• It brings about new business for businesses of all tiers – large, medium and small – due to sub-contractions and procurement opportunities, thereby benefiting their business.

• With the public sector backing the project and inflow of cash from the private sector, risk is subsidised.

• The partnership between small enterprises and the experienced private investors are long term and beneficial for the long term growth of the smaller businesses in the developing countries.

• Risks are clearly identified at a very early stage, costs put in place and responsibilities allocated, which helps in curtailing unexpected hitches in the project; each participant knows what they are expected to do.

• The private sectors bring with them advanced skills and knowledge, which can lower costs and speed up rollout of projects.

• Both the private and public sectors gain from the partnership; the private sector benefits through the revenues received through its work, while the public sector gains through the revenues generated in leasing its state-owned assets, and/or improved infrastructure and delivery service.

Disadvantages

While there are many positives to the PPP partnership, there are several negatives attached to it as well. The disadvantages are: • The service provision by the private sector could end up being more costly for the people.

• The private sector may not always be efficient, resulting in unnecessary risks and roadblocks to the quick completion of projects.

• Since the projects are usually large, it may result in unscrupulous activities and corruption by politicians, organisations and people associated with the project.

These are amongst the reasons why the addition of the fourth “P” – making these projects smaller, expanding their transparency, and ensuring group/communal supervision and oversight – can increase their sustainability.

What PPPs have done, and keep doing

PPPs have provided the opportunity for the mobilisation of foreign direct investment (FDI) into public infrastructure in developing countries. They help to enhance the output quality of projects, introduce professional and experienced

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management teams, reduce risks and at the same time raise profitability. PPPPs help governments share untoward risks and responsibilities with private firms, while allowing them to retain assets and to improve infrastructure, and in the meantime keeping the local community enthusiastic as shareholders and/or stakeholders.

PPPPs also allow governments to keep a check on unemployment, price rises and corruption and politics, often associated with privatisation. PPPPs allow governments to retain ownership and assets while contracting projects to private investors to help in the country’s socio-economic development.

In short, the partnerships depend on the ownership, responsibilities, investment and commercial risks involved between the public and private sectors in the project. Both, the public and private sectors, benefit through this partnership.

PPPPs differ in structure and business model across locations and regions around the world. Choice of structure varies across regions and even within a sector. Sector and project characteristics, as well as government objectives, and the nature and availability of the entities to represent the “people” determine the appropriate structure. Pre-feasibility studies are essential in confirming the choice of structure. Effective communication and community sensitisation, thorough planning and strong commitment to the project is the secret to the success of PPPPs. Pre-negotiation on pricing and complete transparency of the project is the key to ensure that projects are delivered efficiently and effectively, without any surprises or untimely incidences. Professional drafting of contracts and monitoring skills are also essential elements of PPP project implementation.

However, while PPPs may be seen to solve various development issues and growth, many developing countries don’t have all the administrative or regulatory capacities to run PPPP projects successfully. Moreover, if the local government is politically unsound, there is a risk of the projects not going through due to a weak regulatory framework, laws that are not fully entrenched into the system, or poor local-level professional capacities. This results in the failure of long-term contractual relationships, which could otherwise have been beneficial for the country.

Over the past two decades, developing countries have

Over the past two decades, developing countries have introduced radical changes into their systems by incorporating stricter regulations and encompassing restructuring and privatisation.

36 AFRICA TELECOMS March 2010

introduced radical changes into their systems by incorporating stricter regulations and encompassing restructuring and privatisation. This new strategy has provided an enabling framework for the potential successes of the PPPP concept.

The concept is based on the commonsensical premise that for projects – especially in the rural areas – to be sustainable, the beneficiaries must feel a sense of ownership and inclusion.

However, this is not possible if such projects are designed and developed in capital cities and simply parachuted into the rural community, with urban officials appointed to oversee the whole project. In many developing countries, particularly in the ICT sector, equipment intended for rural ICT projects has been vandalised or poorly maintained for lack of beneficiary inclusion. On the other hand, even in the United States, some 500 rural telephone companies have survived for decades because they are owned by the rural subscribers themselves through cooperatives. While much of the money involved in many PPPPs is raised from the public coffer, a significant

As the concept of banking the unbanked takes hold and many commercial banks and other financial institutions demonstrate success in the establishment of micro-lending and ICTbased money transfer schemes, the potential for rural dwellers to become effective co-investors in all kinds of rural initiatives will also improve.

38 AFRICA TELECOMS March 2010

amount is also contributed by the private sector, and more could be raised increasingly from community sources, helping to curtail other commercial and business risks which might have otherwise been borne by the government. As the concept of banking the unbanked takes hold and many commercial banks and other financial institutions demonstrate success in the establishment of micro-lending and ICT-based money transfer schemes, the potential for rural dwellers to become effective coinvestors in all kinds of rural initiatives – including ICT projects – will also improve.

Meanwhile, from an era of mostly state-owned industries, through the wholesale privatisation of state enterprises and the promotion of mostly private projects, to the promotion of bilateral public-private partnerships, the world seems to be coming full circle after some 50 years of experimentation. It may well be that in 20 years’ time a new model and another paradigm shift may emerge, that would involve including alien visitors to earth in project design and ownership to assure sustainability. In the meantime, however, PPPPs seem to be the best formula for structuring smaller projects that are unlikely to be profitable in rural areas if owned and managed either by the state alone, the private sector alone or the combination of just the state and major private sector partners. The era of PPPPs has arrived, and the CTO is proud to be one of its first fathers. To be sure, “Success has many fathers and failure is an orphan”, so we invite the rest of the world to enjoy this newfound parenthood of the PPPP baby concept. AT

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2010

SPECIAL FEATURE

The high price of smartphones, along with the unwillingness of many mobile operators to subsidize devices, means that Africa will be a latecomer to the smartphone party.

s ma r t

S

moves on hold

By Ken Wieland

martphone adoption is slowly beginning to pick up in a handful of African countries – most notably Egypt, Morocco, Nigeria and South Africa – but it is still very much a niche market.

Gartner, a research and consultancy firm, estimates that smartphone sales across the African continent will average out at around 9% of total mobile device sales during 2010. By contrast, Gartner anticipates that more than four out of every ten mobile devices sold in most Western European countries this year will be a smartphone.

“We expect that in the more developed markets of Western Europe, the smartphone portion of device sales will go over 80% by 2013,” says Annette Zimmermann, a senior research analyst at Gartner, specialising in mobile devices. “In Africa, we expect the smartphone portion of device sales to be around 25% by that time.”

42 AFRICA TELECOMS March 2010

One obvious reason for the slower smartphone adoption rate on the continent is the high price of the device relative to income.

The average sales price of an unsubsidized high-end smartphone is just above €300 in Africa, reports Gartner, but the price can go a lot higher. In Egypt, for example, the price of an unsubsidized BlackBerry Curve on the Vodafone network is €390. The entry-level smartphone, with fewer features, retails in Africa at around €180, says Gartner.

“The smartphone prices are still way too high for them to become anywhere near a mass market proposition in Africa,” says Zimmermann. “We expect the price of entry-level smartphones to fall faster than the high-end devices this year, perhaps by €10 or €15, but the prices will still be out of the price range for the overwhelming majority of the African population.”

African mobile operators are

Suppliers aim for mass-market smartphones

At this year’s Mobile World Congress (MWC) event, suppliers were keen to talk up their intentions to deliver cheaper smartphones to drive take-up in emerging markets.

Samsung, second only to Nokia in handset sales, took the wraps off its first smartphone based on bada, its own mobile operating system (OS). JK Shin, head of Samsung's mobile operations, told Reuters in an interview he was optimistic that bada could be used in cheaper smartphone models to serve emerging markets. “I believe that the smartphone market will grow more than 20% every year for a threeyear time frame, and the growth rate in emerging markets is much higher than that of advanced countries,”

he told Reuters.

The first bada smartphones are expected to start shipping this summer, by which time Samsung will have released an SDK (software development kit) so that application developers can use the platform.

Qualcomm, a US chipmaker, was also making loud noises at MWC about turning the smartphone into a mass-market device. By repositioning BREW, its proprietary mobile OS, as BREW Mobile Platform (BMP) – which allows for integration with third-party services – Qualcomm says it has made firm strides towards that goal.

The US supplier says that OEMs (original equipment manufacturers) can lower their costs with BMP through a reduction in integration, testing and optimisation with the OEM’s existing feature phone designs, which also

means that hardware and software development time is reduced. BREW MP is also available free of charge for Qualcomm chipset customers.

“We want to enable the smartphone and touch-screen experience at the cost of standard feature phones,”

says Roberto Di Pietro, VP, marketing and business development, QCT (Qualcomm CDMA Technologies) Europe.

HTC, LG, Pantech, Samsung and ZTE are all on record as either manufacturing – or intending to manufacture – Brew MP devices.

Overall mobile phone sales to end users in South Africa (2009) Manufacturer Mobile device sales (000s) Market share Nokia 4,632.2 45.5% Samsung 2,759.4 27.1% LG Electronics 1,282.0 12.6% Others 889.3 8.7% Sony Ericsson 493.4 4.8% Motorola 50.0 0.5% HTC 32.0 0.3% Apple 27.0 0.3% Research In Motion 16.0 0.2% Grand total 10,181.3* 100.0% *Gartner estimates that 11-12% of the sales were smartphones.

Source: Gartner March 2010 AFRICA TELECOMS 43

reluctant to subsidize smartphones to try and kick-start the market. “Apart from South Africa, there are no device subsidies to be found anywhere elsewhere in sub-Saharan Africa,” says Thecla Mbongue, a senior research analyst at Informa Telecoms & Media.

The reluctance to subsidize devices is understandable given that mobile operators would have to persuade customers to enter into long-term contracts if they were to recover the cost of discounting the smartphone – or even handing it out ‘free’ – as part of a bundled package of air-time. In markets where the overwhelming majority of mobile subscribers are on pay-asyou-go tariffs, usually because they don’t have a bank account

or can’t afford the monthly contract charges, a device subsidy model is not a realistic one for many African mobile operators to pursue.

“In some sub-Saharan countries, mobile operators give customers some assistance on smartphone purchases by allowing the payments in installments, but it is not all that common as the banking system [to facilitate installment payments] – particularly outside South Africa – is not always seen as being reliable,” adds Mbongue.

Low incomes and the absence of a developed banking infrastructure also make it difficult for mobile operators to encourage post-paid contracts for data usage, which probably decreases the smartphone attraction, not only for many of the continent’s mobile operators but also for the customers themselves. “To Defining the smartphone make greater use of app stores you need a For the purposes of this article, Africa Telecoms is using the Gartner definition of data contract, which is not very common a smartphone: a device that runs on an open mobile operating system (OS). An open mobile OS allows third-party application developers to write applications in many African countries,” says Gartner’s for the device – using open APIs (application programming interfaces) – which can Zimmermann. then be accessed by the smartphone user. Examples of open mobile OSes include There is also the question of how much users Symbian, Windows Mobile, BlackBerry OS, iPhone OS and Android. Under this really need smartphones, even if they could definition, multimedia phones that run on proprietary OSes – such as Samsung’s afford them. The fast pace of mobile growth in Jet and LG’s Arena – are not classed as smartphones.

Africa to date has been stimulated by low-cost handsets (both basic and enhanced versions), 44 AFRICA TELECOMS March 2010

Africa’s early smartphone adopters Although Gartner predicts that smartphone sales in Africa, on average, will account for less than one in every ten mobile device sold this year, there are countries which should fare better. According to Gartner figures, Egypt, Morocco and Nigeria will each have smartphone sales accounting for 12% of all devices sold during 2010. The clear smartphone winner in terms of volume, however, is South Africa. Gartner calculates that smartphone sales will claim an 18% share of the device market this year, up from between 11-12% of sales during 2009.

And Vodacom, which is 65% owned by Vodafone, claims to have a leadership position in South Africa’s smartphone market. “We have around a 75% share of the smartphone subscriber base in South Africa,” says Tersia Esbach, head of research and strategy at the Vodacom Group. “Of our own subscriber base [in South Africa], smartphone users account for about 10% of the total, which is up from around 5% in 2008.”

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which are capable of voice and text, as well as mobile payments (an increasingly popular application in Africa).

And the price of these devices continues to fall. At the Mobile World Congress (MWC) event held in Barcelona earlier this year, Vodafone unveiled its “most affordable ultra low-cost handsets” – manufactured by TCL – with the cheapest of the models retailing (unsubsidized) at under US$15. Even at $15, the new device is still capable of making money transfers and bill payments.

Vodafone says it will initially launch these handsets in India and Turkey, as well as eight African markets: the Democratic Republic of Congo, Ghana, Kenya, Lesotho, Mozambique, Qatar, South Africa and Tanzania.

For high-end consumers and business users that don’t have access to a computer, however, there is clearly an attraction of using a BlackBerry device for e-mail and Internet browsing. RIM, which manufactures the BlackBerry, says it has got a presence in over 25 African countries, helped by the growing popularity of pre-paid BlackBerry email.

Where there are large business communities, RIM believes it can make inroads with its carrier partners.

It invariably quotes an Ipsos-Reid study showing that BlackBerry smartphone users can turn an hour of downtime into productive work time each day, and that BlackBerry smartphones can increase the efficiency of an entire team by nearly 38%.

RIM, which has also launched the BlackBerry Storm and BlackBerry Curve 8900 in the South African market, says it is impressed with the response to the firm’s gadgets on the continent and that it is working with its carrier partners on how to use the 2010 World Cup, held in South Africa this summer, to boost smartphone adoption still further.

“RIM has still to work out, though, how to tackle the consumer market,” adds Zimmermann.

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With just over 27 million cellular users onto 24-month contracts. Esbach The way people paid subscribers in South Africa, Vodacom’s says that many Vodacom customers who buy mobile smartphone subscriber base is not have decided to move from post-paid to insignificant and has grown fairly fast pre-paid have done so because they are bundled over the past couple of years. But it is not waiting until the right device for them packages in simply lower-cost smartphones coming becomes available before committing to onto the market that explains the greater 24-month contract. Smartphones, Europe is totally another take-up. “Price points are important but, then, may be an answer. different to the in South Africa, smartphones are usually It would be even better for mobile bundled into post-paid packages, which operators, if smartphone users way people buy were to optthough, usually mean a discount on the price for the costlier voice and them in South of the device,” says Esbach. “A greater text bundles, as well as additional data variety of smartphone devices, along with packages. As far is data is concerned, there Africa. better usability, has also contributed to an is some evidence that this is happening. increase in demand.”

Vodacom reports that the average The most popular smartphone models in South Africa come smartphone user (excluding iPhone) downloads 26MB per from Nokia, Samsung, RIM and Apple’s iPhone (of which month as opposed to the standard feature phone user, who Vodacom is the sole distributor in South Africa). And the bulk downloads an average of 13MB per month. (iPhone users of Vodacom’s smartphone owners are those willing to sign up would skew the average, if included, as they get 100MB free to the operator’s long-term contracts (two years minimum). data each month as part of their package.)

“The way people buy mobile bundled packages in Europe is Informa’s Mbongue is sceptical, however, that the totally different to the way people buy them in South Africa,” increased data usage on smartphones is making much of an adds Esbach. “In Europe, you buy the package that fits the impact on mobile data revenue. Although Vodacom posted amount of calls and text messages you usually make in a a 35.2% growth in data revenue to R1,160 million during month. In South Africa, the decision on the package is driven 2009 compared with the previous year (for its South African by the phone you can get access to. Many subscribers are not operations), the growth was largely driven, says Mbongue, by even aware of how many minutes they are entitled to.” the success of its 3G USB dongles.

Smartphones, then, could be a useful way for Vodacom – Unlimited BlackBerry email is, however, an increasingly and other South African mobile operators – to upgrade their popular service in South Africa. But the post-paid contracts existing post-paid subscribers and tempt their high-end prethat allow it, reports Mbongue, are out of the price range for

Nokia leads smartphone pack in MEA

Nokia dominates smartphone sales in Middle East and Africa (MEA). According to figures from research firm Gartner (see Table 1), Nokia holds nearly a 90% share of the region’s smartphone market. However, smartphone sales in MEA dipped slightly in 2009 compared with the previous year, which bucked the global smartphone sales trend of 24% year-on-year growth.

“One of the main reasons for this, apart from the weak economic environment, was that Nokia did not have such a compelling smartphone product portfolio during 2009 to drive sales,” says Annette Zimmermann, a senior research analyst (mobile devices) at Gartner. Although Nokia kept its high smartphone market share from 2008, its total volume sales declined year-on-year by 10% during 2009. In comparison, many other key smartphone vendors – such as HTC, Samsung, Apple and RIM – managed to increase their total smartphone volumes in 2009.

46 AFRICA TELECOMS March 2010

Smartphone sales: Middle East & Africa by manufacturer Manufacturer 2008 (000s) 2009 (000s) Nokia 11,644.0 10,507.1 HTC 259.1 430.0 Apple 29.4 424.0 Research In Motion 112.6 264.8 Samsung 59.9 195.9 Sony Ericsson 80.1 103.7 I-mate 87.9 9.9 Others 39.0 22.0 Toshiba 9.0 24.6 HP 13.1 11.7 E-ten 13.2

- Asus 9.1 0.3 Acer

- 7.6 LG Electronics 1.9 3.5 Palm 3.9 0.2 Motorola 1.2

- Total sales of smartphones 12,363.4 Source: Gartner

12,005.3

Going forward Other than affordability, Gartner’s Zimmermann stresses the need for regional content and targeted applications as a means to encourage smartphone adoption. “Regional adaptation is very important, providing local languages and market-specific applications, such as prayer alerts for Muslim countries,” she says.

Of course, some applications will run perfectly well on standard handsets (such as money transfer) so the challenge for mobile operators will be to encourage innovation – probably by working directly with application developers – so as to increase the chance of finding those compelling applications that could drive smartphone take-up.

One way to do that might be through the Wholesale Applications Community (WAC), which was announced at MWC 2010. The idea is to provide a “single point of entry” for app developers in dealing with mobile operators by harmonising software standards for accessing webbased applications. So, rather than an app developer spending time and effort building an application that can only be accessed on one mobile operating system (such as Apple or Google’s Android), it can develop an application that can be used on all mobile OS platforms and by the combined customer base of all the operators who are signed up to WAC. The WAC announcement declared the involvement of 24 mobile operators with a combined subscriber base of three billion. With such a big market on offer, mobile operators are hoping to woo the app developer community and call more of the shots in the burgeoning app store market.

Vodafone, Orange and the MTN Group, each with a strong African presence, were among the operators who initially signed up to WAC. A curious smartphone trend to emerge in Africa today, however, is that a number of purchases are done for the sake of acquiring status, rather than with the intention of actually using them. “The take-up of smartphone units is much higher than use,” says Vodacom’s Esbach. “People are purchasing smartphones on a pre-paid basis, as a prestige item to show off to friends.”

Zimmermann reports a similar trend elsewhere in Africa, particularly Nigeria. “In our consumer studies, we find that people want to show off their phones,” she says.

“BlackBerry, in particular, is seen as prestigious.”

To have a chance of making a profit out of smartphones through faster take-up and greater data usage, mobile operators will have to make a convincing case of the benefits of using them to a wider market than the comparatively very well off. Before that can happen, however, smartphone prices will have to drop by a long way. AT

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MOBILE WORLD CONGRESS 2010

Mobile's rule, OK?

Despite technology manufacturers’ tendency towards producing shinier, thinner and lighter cellular handsets with more outlandish names than ever before, it’s not making an iota of difference. The smartphone market is becoming less influenced by giant leaps in hardware engineering than the impact software and services can have on the overall usefulness of mobile devices. And as was evidenced by the sentiment at this year’s Mobile World Congress, the race is on. by brett haggard, reporting from barcelona, spain

48 AFRICA TELECOMS March 2010

A

s much as most technology vendors will have you believe the contrary, apart from aesthetic differences and a powerful enough 3G radio for fast mobile Internet connectivity, the features that make up every modern smartphone have become pretty much identical. You start with some form of aluminium or metal-alloy casing for reduced weight and increased durability. Add to that an intuitive, capacitive, high-resolution touch screen that allows for easy interaction with the operating system, multimedia and Internet, while maximising the viewable area of the content on the handset.

Now, make sure the device has enough flash-based storage capacity to house tons of digital music and video content – some of it high definition in nature – so that it doubles as a media player.

While you’re at it, mount a multiple-megapixel camera into the back casing of the phone that’s capable of taking impressive enough pictures for the sprawl of social media engines out there and the ability to record video for posting to the likes of YouTube.

You’ll also have to throw a GPS and digital compass into the mix, since location-based services are fast becoming the next big thing. These include things like map information relative to your physical location, and

March 2010 AFRICA TELECOMS 49

MOBILE WORLD CONGRESS 2010 various ‘overlays’, like the locations of nearby restaurants/hotels/shopping centres etc.

Round this impressive list of components off with a processor that can shunt data back and forth between the handset and the cloud, mark up web pages with ease and play all forms of media in near-perfect quality – and do all of these things for a full day without a recharge and you’ve got a recipe for pretty much every smartphone on the planet. It’s only when you begin looking at the operating system the device will make use of that you’ll see the first hint of differentiation poking its head out. Ironically though, the operating system arena is becoming another area where differentiation is dwindling.

Software suspects

For insight into the way things are going to work in the mobile phone space over the coming years, all we need to do is look at the more recent trends in smartphones.

Comparing the number of cellular phone operating systems available today to the number the market had to contend with only five years ago is an interesting exercise. Five years ago, nearly every vendor had a separate operating system for their devices, with the exception of a handful of vendors that made use of Microsoft’s Windows Mobile platform and an even smaller handful of companies that made use of Symbian.

Since then, things have changed substantially – today there are no more than five major operating systems in play and depending on what happens over the next five years, there will almost certainly be no more than two or three left. As the market stands today, it’s still largely anyone’s for the taking, however.

In one corner of the market, the aging (but still dominant) Symbian operating system is hanging in there with Nokia seeming to be the only vendor incapable of admitting it’s looking a little long in the tooth and in need of a revamp. According to analyst firm Gartner, Symbian’s market share in smartphones dropped from 52% in 2008 to 46.9% in 2009.

In another, there’s Linux in the forms of Google’s Android and Meego – the result of Intel and Nokia’s recent decision to blend their respective Moblin and Maemo operating systems together for greater market share and access to a larger pool of developers.

According to Gartner, Linux as a whole had a 7.6% market share in smartphones in 2008 and has seen its hold on the market slip to 4.7%.

Another contender is BlackBerry, the company with its own platform that’s been quietly cleaning up in the enterprise space and strongly moving its value proposition into the social media-fuelled consumer market. Gartner says that BlackBerry’s smartphone market is up a healthy 3.3% year on year from 16.6% in 2008 to 19.9% in 2009.

Last year’s wild card and this year’s dominant player – at least as far as vision, value proposition and model is concerned – is Apple and its iPhone operating system, which is still blazing a

50 AFRICA TELECOMS March 2010

trail. Apple’s share in smartphones is up 6.2% from 8.2% in 2008 to 14.4% in 2009 – rapid growth indeed.

And last up, there’s Microsoft, who this year finally announced an operating system move that could save its bacon in mobile, namely the Zuneinfluenced Windows Phone.

Looking at Gartner’s figures for Microsoft, Windows Phone is a much-needed fix. The company’s smartphone market share dropped from 11.8% in 2008 to 8.7% in 2009 and it currently occupies fourth in the smartphone market share stakes. So what happened to the hundreds of manufacturers with their own distinct proprietary operating systems, you ask? Well, the simple answer is that they don’t feature in the new economy.

Developers and storefronts

For insight into the way things are going to work in the mobile phone space over the coming years, all we need to do is look at the more recent trends in smartphones – since it’s clear that smartphones will in the coming years be the de facto standard as technology marches on and prices drop.

While Apple doesn’t have the dominant position in the smartphone market share stakes, it is making more money than anyone else in the smartphone space by taking a healthy commission from all applications sold in its online store.

And it has more applications in its store than any other mobile phone vendor. According to application store analyst Distimo, Apple’s store has over 150,000 applications of various descriptions and prices, where its closest competitor, Google’s Android store, has close to 20,000 applications.

The three other major players, namely Nokia with its Ovi store, BlackBerry with its AppWorld and Microsoft with its store, have just over 6,000, just under 5,000 and close to 700 applications respectively.

Apple’s dominance might be under threat, though. The Android store grew by more than 3,000 applications in February of 2010 (just over 15% of the total number of applications in the store), while Apple’s store grew by just under 14 000 applications during the same period, roughly 9% of the total number of applications in its store.

The two other major contenders, namely BlackBerry and Nokia, posted growth figures of 501 (roughly 10%) and 734 (roughly 12%) new applications respectively.

Balancing act

What’s interesting, however, is the fact that although Google’s store is growing faster than Apple’s, the iPhone manufacturer might maintain the lead when it comes to revenues.

Only 25% of the applications in Apple’s store are free,

MOBILE WORLD CONGRESS 2010

where more than 57% of the applications in Google’s store are available for no charge. Nokia and BlackBerry are an interesting pair to watch in these stakes, since the Symbian/Meego-centric manufacturer has the highest percentage of paid-for applications (85%), while BlackBerry takes a close second with 76% of its applications only available with payment.

The average selling prices of applications across these stores are also rather revealing. BlackBerry takes the lead here, with the average price for its paid applications weighing in at just over $8.

Microsoft takes a second place position, charging just under $7 for the applications on its store.

Within close proximity of each other, Apple, Nokia and Android charge an average of $3.62, $3.47 and $3.27 respectively for the applications in their stores.

So what does all of this tell us?

It tells us that success with an application store is a balancing act between the number of applications it has available to customers, what purposes those applications serve, what percentage of applications are free, what the price of the applications the store charges for is and (here’s the clincher), how many developers the store has on board have committed to writing software for your platform and publishing it via your store.

Wireless/Mobile Phone Figures $1 trillion The first time this amount was surpassed in 2009 on wireless equipment and services. The wireless supply chain garnered $900 billion in service and equipment revenue in 2009. When combined with the $110 billion in consumer spending on wireless devices and accessories for the year, it amounted to $1.01 trillion in total spending.

1.23 billion Amount of global cell phones shipped in 2008. In 2009 shipments declined by 6.7% to 1.14 billion units. Global cell phone shipments are expected to grow to 1.28 billion in 2010.

38.9% Total of global unit shipments from Nokia, padding its lead in the global cell phone market in the fourth quarter of 2009, up from 37.4 % in the third quarter.

21.1% Samsung's share in the fourth quarter of 2009. The only other Top-5 cell-phone brand to gain a share in the fourth quarter. Samsung's was up from 20.7 percent in the third quarter.

4G This market is expected to represent about 2.8% of total base station revenues in 2010. This will grow to about 54% by 2013.

Figures supplied by: www.isuppli.com/news.aspx

March 2010 AFRICA TELECOMS 51

MOBILE WORLD CONGRESS 2010

Looking ahead

When looking at applications, Gartner says gaming applications remain the most popular programs. “However, mobile shopping, social networking, utilities and productivity tools are growing in popularity too and are attracting increasing amounts of money,” explains its Dataquest report, Application Stores; The Revenue Opportunity Beyond the Hype.

“Although we are still uncertain about the true opportunity that application stores offer to developers, it is hard to ignore the success that applications such as Enigmo, F.A.S.T, Flick Fishing, Ocarina and T-Pain have seen, with revenues breaking the $1 million mark,” Gartner says.

“Looking at the mathematics of application stores, there are inputs both on the supply and demand side that help understand the success that a store could achieve.

“On the supply side these are the number, quality and range of developers as well as their productivity, business support services, competition, number of potential customers and any developer barrier of entry in the stores such as approval process cost.

“On the demand side, these are the number of potential purchasers, propensity to download applications, ease of discovery and relevance of applications, ease of purchase and payment, applications cost and life span, charges and commission,” the report states.

As smartphones grow in popularity and application stores become the focus for several players in the value chain, more and more consumers will experiment with application downloads.

Gartner believes that the number of downloads from application stores will grow over eight times from 2009 to 2013 to reach 21.6 billion a year. “We expect free downloads to grow in popularity and represent a bigger proportion of the overall download traffic toward the end of the forecast, going from 79% in 2008-2009 to

52 AFRICA TELECOMS March 2010

87% in 2013. “This can be explained by the fact that high-end smartphone users today tend to be early adopters with a taste for new technologies, perceiving values in the concept of mobile applications and more trustful of billing mechanisms, so paying for applications that can meet their needs is not an issue.

“Over time, the average smartphone user will be less tech-savvy as smartphones come down in price to have a mass market appeal.

These users will likely be more reluctant to pay for applications and might prefer to try out a “lite” free version of the applications they are interested in,” the report says.

Just because an application is free, it doesn’t mean the developer has cut himself off from earning revenue from the application.

Gartner says applications can be free because the developer is offering it at no cost to the consumer while charging for other things within the application.

“FarmVille by Zynga, for instance, is a free gaming application on the iPhone but users pay for digital crops, cattle and farmland.

Corn seed sells for 10 cents while cows cost 20 cents each. There are also applications that are free to use but that charge for physical goods that you can have delivered through the application.

“This is the case, for instance, with Touchnote, an application that allows postcards to be created from pictures taken or stored on the iPhone and then sent to an address of choice. There are many applications that are free to users and derive their revenue from advertising. This can be done with banners as well as full page advertising between game levels for instance,” the report says.

Application stores’ revenue gets split between the store owners (such as Apple in the case of the App Store or Nokia in the case of Ovi) and the applications developers. On charged-for applications, the average revenue share is based on a 70-30 split, with 70% going to the developer and right now it’s not clear how

MOBILE WORLD CONGRESS 2010 the split gets processed on advertising, or on physical goods sales generated by applications that are free to download and install, but generate revenue through their use.

Open season

Apple’s success has certainly proven that the application store game is the next big frontier for mobile device manufacturers and that it’s foreseeable, as in the desktop printer game, that devices will become virtually free while the majority of the sales margin resides in the consumables, or as in this case, in the sale and use of applications.

Gartner predicts that applications will help determine the winner among mobile device platforms while application stores will be key elements of the ecosystem battle.

What so many vendors still have to learn, however, is that success in this new economy does not necessarily only hinge on simply having a store that’s accessible to customers, a monetization model for developers and a software development kit for the operating system your device makes use of. “In many cases, offering an application store will have more to do with building an ecosystem and selling an end-to-end experience that will lock users in rather than actually drive revenue,” Gartner says.

“Nevertheless, application stores will be an important channel to market for developers and there will continue to be companies that will make large amounts of money thanks to them. Growth in smartphone sales will not necessarily mean that consumers will spend more money but it will widen the addressable market for an offering that will be advertisement-funded.

“Although we believe that application stores are here to stay, they have yet to evolve into their final form. The value chain will evolve as rules are set and broken in an attempt to find the most profitable business model for all parties involved,” the report adds.

As they continue to drive loyalty and interest from their thirdparty developers, vendors of mobile devices will have to ask themselves some tough questions – the kind the third-party developers will ask when deciding which platform to support.

“Developers will have to consider carefully not only which platform to support but also which store to promote their applications in. Certification processes, store visibility, audience relevance and billing methods and most of all revenue share agreements are all key factors for developers to consider before committing to a store, as this will determine their revenue opportunity.

“On the other hand, consumers will have a wide (and at times confusing) choice of stores and they will be looking for the ones that make it easy for them to discover apps they are interested in, offers a choice of payment offers and makes it easy to pay for them when they have to,” the report concludes.

Gartner believes that, in order to be successful, application stores will have to be part of an ecosystem of services and that this might mean that some stores will transcend boundaries such

as the ones that CSP and platform owners might want to enforce.

The bottom line

Apple might have gotten this shift in market focus started when it launched its application store a couple of years ago and might at this stage be the most successful, bringing the right combination of factors to bear on its ecosystem (the right store front, a powerful and easy to use software development kit and economies of scale in terms of customers prepared to buy applications).

But, as Gartner’s report shows, things can change very quickly.

Android is gaining more interest from consumers and its more open approach to development might well see it becoming the dominant choice for mobile software authors. Google just has to get a handle on the sprawl of devices and different software versions available, if it is to overcome some of the hurdles it faces.

BlackBerry’s supporting technologies, such as the ability to utilize push technology, security features and even payment facilities, built directly into the development platform, also make building software for this device category extremely attractive.

But BlackBerry has some work to do on improving its consumer appeal and making its devices, for lack of a better word, ‘sexy’.

On the Linux front, the biggest challenge facing developers is the slipping market share. With Nokia and Intel throwing their full weight behind distributions like Meego, however – and the ability to write software once and deploy it across multiple hardware platforms beginning to take shape – things could turn around in this space too.

Nokia with Symbian seems to be in one of the strongest positions right now, but a great deal of work has to be done on the operating system’s look and feel, since this is clearly showing its age, and the development mechanisms need to be streamlined if it is to retain its dominant market share in smartphones and put up a strong fight in the application store space.

Ironically, the wildcard entry is Microsoft with Windows Phone. While the front end seems like a massive improvement and the design, inspired by Zune, makes sense to consumers, we have yet to see what the company will do to make it easy enough for its developers to write software once and deploy it across mobile and more traditional platforms, like its Windows 7 desktop and notebook operating system. The other question mark hangs over how the Zune Store will need to change to embrace the release of Windows Phone.

Since Apple was able to make the transition from music store to ‘everything and the kitchen sink’ store with iTunes, Microsoft has a well-documented route to follow in its own transition. Since Apple is facing some strong competition, Microsoft will have to do implement the right nuances in its model if it is to win.

It’s too early to call a winner in this market. If nothing, this space will be one of the most interesting to observe and be a part of over the coming year. AT

March 2010 AFRICA TELECOMS 53

Minimising churn with mobile messaging Amid signs of economic recovery, mobile operators in Africa will have to fight hard to improve customer loyalty, and 2010 is likely to be a watershed year. By improving customer loyalty, operators can steal a march on their competitors and reduce their cost base, while also improving ARPU levels. But how can operators make this happen in a market where post-paid contracts are almost unheard of and where churn is a way of life? This article looks at how African operators that invest in value added services - such as mobile messaging - are able to stem the tide and reduce churn significantly, by offering subscribers an addictive, low-cost service that makes them think twice about moving elsewhere.

Mobile Market Characteristics: Africa In many parts of Africa, new subscribers are still signing up in droves for a mobile phone service. Average incomes - and consequently ARPU levels - are low, so operators have to deal with tight margins that make profit earning much more challenging. Fortunately, with the sheer volume of people living in most of these regions, economies of scale can be made, meaning low ARPU levels are entirely manageable.

Handsets are also an interesting topic: the vast majority of handsets being bought and used in these regions are low-end devices, and this is unlikely to change in the foreseeable future. A new report from ABI Research entitled ‘Entry-Level Devices’ reinforces these views, predicting that low cost and ultralow cost (ULCH) handsets in emerging markets will together see a compound annual growth rate (CAGR) of 24% over the next five years.

Another characteristic of the African mobile sector is high levels of subscriber

churn – a result of the continent’s overwhelming dependence on pre-paid services. The result is a competitive landscape often characterised by a ‘snatch and grab’ culture that necessitates high customer acquisition/ marketing spend simply to stand still.

So, how can operators stamp out churn, improve customer loyalty and perhaps also raise ARPU? Stamping out churn This, in my view, is where advanced mobile messaging services, such as those found in Synchronica Mobile Gateway 5.0 can help. Synchronica Mobile Gateway 5.0 is a complete mobile messaging solution that enables operators to offer push email and synchronization, Instant Messaging (IM), Social Networking Services (SNS) and Web-feeds to consumers and business users, regardless of the type of handset they use.

Mobile Gateway 5 enables operators to provide a broad range of mobile messaging services from a single platform aimed at increasing data usage and subscriber loyalty. It allows users to connect to existing Internet communities such as Facebook, Google Mail/Talk and Web-Feeds, driving traffic and user uptake, but also enables operators to create their own Email and Instant Messaging communities, creating the “stickiness” that appeals to operators to reduce churn.

Based entirely on open industry standards, Mobile Gateway 5 is a clientless solution which works on virtually any handset in use today, ensuring fast take-up in a large addressable market.

Mobile messaging services come of age But can there really be a market for

44 AFRICA TELECOMS December 54 March 2010 09 / January 2010

Carsten Brinkschulte, CEO of next-generation mobile messaging services provider Synchronica.

these advanced mobile messaging services in Africa, where PC/broadband penetration is low and many people do not even have a landline?

We are seeing that mobile email is indeed proving to be a very attractive proposition for service providers and subscribers alike, precisely because the fixed-line infrastructure in these countries is weak and the PC penetration remains low. Operators have already started deploying our mobile email services to consumers and prosumers and have rapidly gained critical mass among subscribers.

Perhaps more importantly, these services are all highly addictive.

These operators have been able to reduce customer churn, because once subscribers start relying on a mobile email service to communicate, they tend to think long and hard about losing their mobile email account by defecting to a competing operator.

In Africa, the advent of advanced mobile messaging solutions which work on any handset is proving to be a key market driver. The challenge for service providers is to select the right messaging services from the plethora of solutions purporting to offer what they need. Some service providers have had their fingers burned by offering

a mobile email service to subscribers that looked great on paper but only supported expensive Smartphones and was not compatible with feature phones or basic handsets. The upshot was that costly marketing campaigns and licensing agreements were signed, despite the fact that only a fraction of subscribers could use service from their existing handsets. Needless to say, these services failed to achieve a respectable takeup-rate.

While in the high-end enterprise market, a homogenous end-to-end solution such as BlackBerry or Windows Mobile is advantageous, the heterogeneous mass market requires vendor-neutral solutions that provide mobile email to the widest possible range of devices. These vendor-neutral solutions allow emerging market operators to offer an affordable mobile email, IM and SNS service to the largest addressable market, meaning that adoption rates are much higher.

The best solutions include Emailto-SMS and Email-to-MMS gateways for entry-level phones as well as Push IMAP and SyncML gateways for midrange and high-end phones. IMAP and SyncML provides a Blackberry-like experience without requiring additional client software to be downloaded to the handset. Email-to-SMS allows users of even basic handsets such as the ultra-low-cost Nokia 1100 - the most successful mobile phone ever, with more than 300 million devices sold – to send and receive emails as a standard SMS, with their replies being automatically converted back to an email and sent to the destination.

Benefits of offering

advanced messaging services Informa Telecoms & Media believes that the economic downturn has resulted in operators placing a greater focus on subscriber retention. During this period, lower investment capital, and less money being spent by subscribers is becoming more commonplace.

Encouraging loyalty to cut customer acquisition expenditure and maintain revenue is a vital component of longevity. The cost of acquiring a new subscriber can often exceed the cost of retaining an existing subscriber.

From my interactions with African mobile operators, this focus on customer retention is cited time and again. Value-added services such as mobile email and instant messaging that lock subscribers in, really can be the answer: they can improve customer loyalty, reduce churn and reduce the marketing costs associated with customer retention. To move from a high acquisition budget/high churn model to a lower acquisition budget/ lower churn model, the offer to the subscriber clearly needs to be right.

Priced correctly, and based on a solution that works on any handset, the potential for increased ARPU is also there.

I believe that those mobile operators that break the mould and adopt a segmented, flat-rate model for advanced messaging services such as mobile email will see customer loyalty improve. For example, an entry-level, ad-funded mobile email service offered for free to consumers with MSN or Gmail back-ends, a mid-level package at $2 to $3 a month for subscribers wanting a little more than a basic service, and a premium $5 a month flatrate service for business users wanting access to business back-ends and the ability to view attachments.

Conclusion In Africa, mobile operators have been somewhat immune to the recent global economic downturn. They have, however, had their own problems to contend with – namely, low customer loyalty, high churn rates and low ARPU. Those that succeed would have correctly identified and tapped into new revenue streams that reduced churn and perhaps also improved ARPU. Valueadded messaging services, such as mobile email, mobile IM and SNS may just be the solution Africa’s operators need. – www.synchronica.com

March 2010 AFRICA TELECOMS 55

Revenue highway? An electronically drawn map depicting the entire internet.

operators must act now or lose out on mobile content revenues

T

he mobile content and applications market in Africa and other emerging markets are currently small, but it has significant potential to drive operator nonvoice revenues and ARPU. However, most emerging market operators are yet to give this space the serious attention and resources it requires, which needs to change if they are to make the most of this opportunity. If operators fail to act soon then other players in the value chain, notably device vendor application stores, will benefit at their expense.

Content services in Africa are growing but still modest compared to messaging services that are dominated by texting, as shown in Figure 1. Content services in emerging markets only accounts for 5–7% of most operator revenues, and most of this is basic services such as ringtones, logos, wallpapers, simple games and news/information services, as shown in Figure 2.

There are multiple reasons for this state of play. Many operators have yet to commit significant organizational focus and resources to this area. Users, many of whom have very recently crossed the communications divide, are still focusing their limited budgets on basic voice and SMS services. Penetration of more capable mid-range devices and smartphones, which enable a richer mobile content experience, remains low. 3G coverage

56 AFRICA TELECOMS March 2010

also remains patchy in many markets, contributing to a slow multimedia experience.

Mobile operators in developed markets are under intense competitive pressure on the content and applications front, and are fighting hard to hold their own against the meteoric rise of device of popular device vendor application stores, headlined

by Apple. In contrast, many emerging market operators feel very confident about their current market position, and few are concerned about device vendors’ inroads into content and applications. The low penetration of smartphones and the immature payment infrastructure (which makes their billing capability that much more valuable) are the key planks of operator confidence in their market position. This strong position is the main reason that emerging market operators take a big cut of the content revenues – around 50%, far higher than the prevailing 30% norm in mature markets. Operator confidence will carry them in the short term but it could lead to complacency in the long term that will trip them up. For example, many device vendors are looking to push their application stores onto mid range phones (for example Sony Ericsson) or have vertically integrated offers tied to low end devices such as the Nokia Life Tools proposition. We would also expect device vendor and

Figure 1 Comparison of African mobile content and messaging service revenues 8000 7000 6000 5000 REVENUES 4000 ($millions) 3000 2000 1000 2008

2009

2010 2011 2012 2013 2014

Total content revenues

Figure 2 Revenue growth across core mobile content services in Africa AFRICA

2008

2009

2010

2011

2012

2013

2014

Personalisation revenue ($ millions) Personalisation connections (000s)

5.848

8.881

12.324

16.070

19.705

23.138

26.363

117

169

222

276

321

358

388

Games revenue ($ millions)

3.851

6.469

9.598

12.673

16.239

20.524

26.633

Games connections (000s)

56

92

134

175

222

278

357

Music connections (000s) Music revenue ($ millions)

2.820

4.004

5.685

7.558

9.671

11.894

14.381

5

8

11

17

21

30

35

TV / video connections (000s) TV / video revenue ($ millions)

1.286

2.069

3.280

4.631

6.307

8.672

10.685

19

30

43

59

76

100

120

Other connections (000s) Other revenue ($ millions)

6.431

7.695

8.934

10.251

11.752

12.847

13.984

64

73

81

88

96

99

103

Total messaging revenues

Other includes alerts, premium “infotainment” such as news and horoscopes, utility applications and betting/gambling

other non-operator app store players to come in with a more generous revenue share for content providers and by doing so win their allegiance.

Of course, there are other important factors that will play a major role in market development. The availability of affordable mid-range devices that enable a richer content experience is still low, but is set to rapidly improve in the medium term, although smartphone penetration will remain relatively low. Literacy challenges are a big issue, particularly in rural areas, and solutions to address this such as IVR and video are still under developed. Local content beyond the basics is not abundant in most emerging markets, but mobile operators are nonetheless more adept at providing it than many of their rivals in the content value chain. The international online/mobile content offerings are in English and cater to Western tastes, and it is a similar story for applications found on device vendor stores.

Operator shortcomings are understandable: mobile content and applications require a very different mindset to selling voice and SMS, and most operators have so far been too busy with land grabs and expansion to be able to make this transition. Many operators in emerging markets currently occupy a central role in the value chain but few are giving mobile content services the

attention required to develop an attractive service portfolio in order to succeed. Emerging market operators must improve their strategy and execution if they are to ensure sustained success in the area of mobile content and applications. Our research indicates that many operators’ strategies need more refined customer segmentation, stronger marketing (in its broadest sense), more effective management of the content value chain and a carefully considered application store strategy. In particular, operators must use their dominant position in the mobile content value chain wisely, for example providing equitable revenue share deals that foster content partners. The development of a strong, balanced and effective value chain will be one of the key factors that will shape the future of mobile content services in Africa. AT – Eden Zoller is a Principal Analyst at Ovum. Ovum has recently completed extensive research examining the current state, market potential and operator strategies in the mobile content and applications market. See our three forthcoming reports: Mobile content and applications in emerging markets: the future, and Mobile content and applications in emerging markets: operator strategies. www.ovum.com

March 2010 AFRICA TELECOMS 57

with Deon liebenberg REGIONAL director, research in motion (RIM), sub-sahara africa With this edition of Africa Telecoms focusing on the VAS industry in Africa, smartphones and their associated software like those produced by RIM becomes critical. With the November launch of BlackBerry App World in South Africa, has RIM seen a large uptake of downloaded apps? Can you divulge any of the figures associated with BlackBerry App World in South Africa?

BlackBerry App World™ offers a wide variety of applications across categories such as games, entertainment, instant messaging and social networking, news, weather, and productivity.

Social networking apps like Facebook®, MySpace™ and UberTwitter are very popular among South African users. Other favourites include instant messaging apps like BlackBerry® Messenger and Google Talk™, news and information apps like Viigo™ for BlackBerry® and TIME Mobile, and weather apps like WeatherEye BlackBerry®.

Since the global launch of BlackBerry App World in April 2009, we have seen subscribers download tens of millions of applications, such as multimedia, social networking, e-commerce, gaming and location-based applications and services, including 20 million downloads of Facebook and MySpace; and four million downloads of instant messaging clients.

58 AFRICA TELECOMS March 2010

It is important to note that what is critical is quality applications, and not quantity.

You need applications that are relevant to the mobile experience. Research shows that 99 percent of downloaded applications are discarded or ignored after just four weeks; as such the focus needs to be on SuperApps – those applications that once you start using them, you will wonder how you ever lived without them.

Is BlackBerry App World available in any other African countries besides South Africa? If so, has the download of apps in these markets been as successful as South Africa? Then, does RIM have an expected launch of BlackBerry App World to the broader African Market?

BlackBerry App World was launched in South Africa in November 2009. We are working hard to make BlackBerry App World available to our customers in other African countries. We have not yet issued a timeline of when regional versions of BlackBerry App World will launch in Africa.

With the prepaid market in Africa being substantially more predominant than the postpaid market, do you see this as a benefit or a hindrance to RIM’s penetration in Africa? And what is RIM’s strategy to tackle lower ARPU and prepaid markets in Africa?

The BlackBerry® Internet Bundle is available on contract and prepaid in various African countries.

We believe that the prepaid BlackBerry service plans enable the network operators to reach an even broader audience in Africa. Internet penetration in general is low in Africa – the bottom line in terms of strategic focus is affordability and accessibility, not only in terms of the device but especially in terms of data costs. We believe the BlackBerry proposition will democratise online access for Africans in general.

Is RIM working with mobile operators directly in the development of software and apps for BlackBerry devices to ensure they become and remain locally relevant?

Our strategy has traditionally been carrier and mobile network operator led, and our alliance strategy is open ended – any partner is free to develop and grow applications.

We believe this strategy ensures relevancy across all markets and assists operators in growing their businesses and customer relationships.

Is RIM currently working with any local African developers on any apps that would be designed in Africa, for Africa, by an African?

We will make full use of the opportunities it presents.

There are over 175,000 registered developers participating in the BlackBerry Developer programme worldwide. RIM has had a thriving developer community for many years, with well over 100 000 downloads of RIM’s Software Developer Kit to date.

Can you highlight some unexpected success stories and highlights since the launch of RIM in Africa?

Do you have any specific strategies that are implemented to assist the mobile operators to improve customer retention?

There has been a contention made that device manufacturers are trying to retain their own customer loyalty. Is this feasible and will you be competing with various mobile operators for customer retention?

To date RIM has sold over 75 million BlackBerry smartphones and has over 36 million global subscriber accounts.

We don’t seek to own customers, but rather to manage good relationships – we believe this allows mobile network operators to move beyond being simple vendors and to take up an active position with the customers.

So, yes, we do have a very clear strategy aimed at allowing mobile operators to improve their retention and relationships with customers. The BlackBerry solution has proved to be a sound retention strategy for mobile operators around the world.

At the recent GSMA Global Mobile Awards in Barcelona, RIM introduced BlackBerry Enterprise Server Express, could you give us a brief run down on the product and the direct benefits this could have for an African SMME market?

BlackBerry® Enterprise Server Express is free new server software that wirelessly and securely synchronises BlackBerry® smartphones with Microsoft® Exchange (2010, 2007 and 2003) or Microsoft® Windows® Small Business Server (2008 and 2003). The new BlackBerry Enterprise Server Express software will be provided free of charge and provides users with secure, push-based, wireless access to email, calendar, contacts, notes and tasks,

“We believe that a vast number of BlackBerry users will travel to South Africa this year and we are in discussions to ensure these visitors have a seamless BlackBerry experience. ” as well as other business applications and enterprise systems behind the firewall.

It’s a cost-effective solution that allows companies of all sizes to support enterprise-grade mobile connectivity for all employees without compromising security or manageability.

Any major plans for the FIFA World Cup? We believe that the forthcoming 2010 FIFA World Cup holds incredible business and marketing opportunities for South Africa and all companies that do business here. We believe that a vast number of BlackBerry users will travel to South Africa this year and we are in discussions with our partners in South Africa to ensure these visitors will have a seamless BlackBerry experience.

The BlackBerry solution is available in over 30 African countries, in partnership with over 60 carriers.

We believe that affordable smartphones, such as BlackBerry devices, coupled with services such as the BlackBerry Internet Bundle have the potential to bring Internet connectivity to many small businesses and consumers in Africa who could not afford it in the past.

These smartphones are giving a whole new segment of Internet users access to communications, multimedia, navigation and personal productivity applications that allow them to stay in touch with everything that matters at work and at home.

RIM is well positioned in this space due to the affordability and ease of use of the BlackBerry solution. As an example, the full BlackBerry solution offers South African end users unlimited ondevice Internet browsing and email access from their smartphones from as little as R59.00 a month (on contract and prepaid).

The BlackBerry device commands a phenomenal 20.8% share of worldwide smartphone sales, making it the second most popular platform after Nokia’s Symbian, and is the most popular smartphone among business users. To what would you attribute this success?

RIM has pioneered push email, making it work over the very first wireless networks, forever changing the way we work and communicate. RIM made smartphones before anyone even knew what a smartphone was. In the last quarter, approximately one in six phones shipped worldwide was a smartphone, according to the IDC. Business users are adopting

March 2010 AFRICA TELECOMS 59

the BlackBerry solution because of its reputation for enterprise-class security and reliability, coupled with its rich communications features and business applications. The BlackBerry solution also integrates seamlessly with the email servers and corporate applications that business customers use.

We have focused closely on communicating how the BlackBerry solution delivers return on investment (ROI) to enterprises. It enables business users to boost productivity by enabling them to perform their duties more efficiently, and by adding more productive hours to their workday.

It also allows mobile employees to remain productive when they’re away from their desks. That means workflow no longer needs to come to a grinding halt when someone involved in a business process is away from the office.

The BlackBerry device offers consumers the ability to converge all their devices into one unit. How do you see this convergence developing in Africa specifically?

To what do you attribute the BlackBerry Messenger phenomenon and do you envisage this being as successful in Africa as it has been in Europe and the US? BlackBerry® Messenger is a unique instant messaging service designed especially for the BlackBerry smartphone user. Wherever you are in the world, BlackBerry Messenger enables you to instantly chat, send and receive pictures and much more in real-time, making it the ultimate tool for people who want to keep in contact on the go.

BlackBerry Messenger is proving to be very popular with users in Africa as well. The fact that it is included in the BlackBerry Internet Bundle and doesn’t cost users anything extra makes it a very effective and affordable way to communicate.

RIM recently launched the new WebKit browser. Initial reports look very promising, and with the ability to integrate via an update, will the WebKit browser be available in Africa?

Our focus is on simplicity, ease of use and accessibility – we will continue to focus on servicing this demand in Africa, as well as in the rest of the world.

In the last quarter, approximately one in six phones shipped worldwide was a smartphone, which indicates that people are looking to take control over their business and personal lives with converged devices. Africa is no different from the rest of the world in this context – ease of use and affordability will remain key.

On 15 February, Mike Lazaridis, President and Co-CEO of RIM, provided a sneak peek of what the RIM engineers have been up to. RIM has not yet issued a timeline of when the WebKit is going to launch. We will keep you updated accordingly.

It is rumoured that RIM will be releasing up to 16 new devices in 2010. How many of these products will reach Africa?

We believe that our current value proposition is perfect to address the African market. It is one of the most affordable ways to get connected to the Internet in Africa.

We work closely with our carrier partners to make all of our latest devices available. When a new product is ready to be launched with one of our carrier partners we will issue a joint press release announcing the launch of the new product.

60 AFRICA TELECOMS March 2010

Does RIM have any plans to develop a phone specifically for the African market, particularly in the light of competitor activity in the smartphone handset arena?

Kindle for BlackBerry. Is this the future for mobile devices, and where do you see the tipping point for Africa?

Mobile applications are changing the way

we work and play. Today, the smartphone isn’t just about taking and making calls, or sending and receiving text messages.

It’s a constant companion that keeps you in touch with everything that matters in your business and personal life.

From productivity tools to personal navigation, and from social networking to shopping online, smartphones today offer an incredible range of features and functions. Many of these tools – like media players, GPS, and email – are available out of the box while countless others are available through third-party software vendors.

As the number of smartphones in circulation grows, we can expect to see a larger variety of increasingly sophisticated applications reach the market. Soon, the device will become the remote control of our lives, giving us access to every business and home entertainment tool from wherever we are.

One of the traditional obstacles to wider use of online applications for smartphones lay in the tariffs for mobile data. But mobile data is now affordable through offerings such as the BlackBerry Internet Bundle.

Mobile/wireless connectivity is at the core of BlackBerry’s mission. This must tie in perfectly with the company’s goals for Africa. Where do you see the growth potential for this iconic brand across the continent?

We plan to continue to lead and drive the smartphone market by offering customers innovative products and real value for money.

RIM will keep evolving the BlackBerry brand, and offer smartphones with new features and functionalities that make life easier and more productive for professionals and consumers alike. We will focus on our core strengths – such as our industry-leading push email functionality and the robust security built into our products. AT

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It’s down to our reputation for honest advice and reliable service, not to mention our wide range of well priced printers and multifunctions.

So, as you’ll be seeing us around a lot more, we thought we’d say ‘Hello’.

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62 AFRICA TELECOMS March 2010

Can India tame africa?

It looks like third time lucky for telecoms tycoon Sunil Bharti Mittal.

by Lesley stones

The millionaire founder of India’s largest telecoms operator, Bharti Airtel, has been yearning to enter the mighty African markets for years. Yet persistent efforts to conclude a tie-up with MTN have twice been thwarted.

Now Bharti looks like sealing a deal to buy the bulk of Zain’s African networks for US$10.7 billion, including debt. Zain expects to pocket about US$5 billion after paying off some severe liabilities.

There are a couple of obvious risks.

Bharti may be willing to pay too much in its absolute determination to enter Africa. Shareholders are well aware of that, and its stock price tumbled 9.22% when it confirmed the planned acquisition, and fell another 4.5% the next day.

That must have stung Mittal, who no doubt expected to be applauded for finally pulling off the coup. Instead, investors feared he was overpaying for underperforming assets.

“Quick comparisons with MTN suggest this business is significantly inferior in terms of profitability. This is a lossmaking business,” said analyst Shubham Majumder of Macquarie Securities.

Zain Africa is losing money, and there must be some fundamental reasons why. Bharti must be extremely circumspect in exactly which assets it buys and which it excludes from the deal because they are liabilities, not assets.

At the moment Bharti plans to acquire 15 of Zain’s 17 subsidiaries, excluding only Sudan and Morocco. The two operators have given themselves until March 25 to conduct due diligence and thrash out a deal, interestingly with a penalty clause

March 2010 AFRICA TELECOMS 63

of $150 million for both parties if a deal is not concluded.

Another risk is that operating in Africa takes particular skills. It’s a huge market with millions of untapped potential customers. But they are poor, often illiterate, with a large number who live in remote areas lacking basic infrastructure such as electricity.

Some Indian analysts are also perturbed by the potential political risks that Bharti may be getting into, given Africa’s reputation for political instability and bloodshed.

Analyst John Strand of Strand Consulting isn’t convinced that this is a smart deal for Bharti.

up with the politicians just issuing more licenses?”

Mittal has previously insisted his company will make profits in Africa because it is experienced in serving the poor mass market in India. But analysts point out that many Indians live in highly compact areas that are easier to cover.

They also argue that India is essentially one market, while Africa spans more than 50 countries each with different legislation, languages, currencies and borders getting in the way of a seamless network.

Analysts from AfricaNext says this appears to be one of those rare transactions that works for all parties, although perhaps not as well for Bharti’s shareholders.

For Zain, it’s a good price for operations that are still dragging down its earnings despite sinking around US$6-$7 billion into those networks over five years. Zain Africa accounts for about 65% of the group’s subscribers and 56% of its revenue, yet it loses money on the bottom line. CapEx was almost halved in 2009, and many operations are yearning for capital. “In essence, Bharti is buying into a turnaround business,” AfricaNext says.

“What Bharti brings may well be what the doctor ordered for Zain’s African assets. The company’s ability to put pressure on suppliers, its expertise in cutting costs and its innovation in generating profits from low income segments are well known.

If anybody can turn around the Zain Africa operations, it’s Bharti. For all the similarities, however, Africa is not India. African mobile markets are tougher than ever, and Bharti will have to spend substantially before its shareholders can see a dime.”

Zain Africa’s need for a turnaround is particularly obvious in Nigeria, Africa’s fastest-growing market, where it is has lost ground to its rivals. Mittal has chased an African footprint for two years via a merger with MTN. Now, instead of merging, they will become fierce rivals.

Bharti will instantly acquire about 42 million customers in Africa, and will compete directly with MTN in CongoBrazzaville, Ghana, Nigeria, Uganda and Zambia. It will also have Burkina Faso, Chad, the Democratic Republic of Congo, Gabon, Kenya, Madagascar, Malawi, Niger, Sierra Leone and Tanzania in its stable.

Mittal’s determination was shown not only in his efforts

"African mobile markets are tougher than ever, and Bharti will have to spend substantially before its shareholders can see a dime.”

"Zain has found the markers particularly challenging in Nigeria, Kenya, Tanzania and Uganda", he says. “That probably made them see they are not good enough to handle this region and maybe they should leave. But can an Indian company handle Africa - that’s the question?”

Strand says African operators need consolidation, because serving poor customers profitably is hugely dependent on economies of scale.

“Will Bharti be the consolidator and do they have the money?” he asks. “And if you get consolidation will it end

64 AFRICA TELECOMS March 2010

to keep the talks with MTN alive despite numerous hurdles. cut the running costs of Zain’s African operations and make It was also enunciated at the beginning of the year when he them profitable, as Zain’s skills do not include running lean created a new unit to pursue foreign acquisitions. “The next and mean operations. There was less consensus on what impact phase of our journey is set to be another game-changer,” he Bharti could have had on MTN, which already prides itself on declared. His ambition is to turn Bharti into a global operator its low-cost operating model.

Frost & Sullivan’s ICT consultant Lindsey McDonald says specialising in emerging markets.

If Mittal pulls off this deal it will be one of India’s biggest Zain’s planned sale surprised market watchers, since it had invested so heavily to become a leading regional player. The foreign take-overs, and his own first major foreign foray.

It will open a massive expansion path since Africa’s average global downturn probably influenced the decision to pull out cellular penetration rate is 36%. That is an opportunity and and focus on the Middle East, which are very lucrative markets potential source of glory too tempting to ignore. But is the with high-growth potential.

McDonald believes African consumers will benefit the most, move driven by sound business acumen or ego?

According to the Indian press, Mittal started out making as Bharti will import its market-winning strategies from India bicycle parts, steel sheets and yarn, then imported portable into Africa.

Zain’s former CEO Saad Al Barrak presumably utterly generators. His fortunes turned when the government privatised mobile telephony in 1992, and he has built Bharti opposed the sale, and quit a fortnight before the take-over bid was announced. He had clearly into India’s largest player with 125 lost the board’s support for his million subscribers. aggressive expansion plans to India’s cellphone penetration rate turn Zain into a top-ten global of about 44% still holds enormous player by the end of 2011. growth potential, yet Mittal is Barrak was also the MD and resolutely chasing foreign growth. deputy chairman, and had grown Why? Zain from a local operator into Partly because Africa is less well one of the Gulf’s most successful penetrated and has less competition international businesses during than India, says Romal Shetty, a his eight-year reign. senior telecoms analyst at KPMG. There must have been some Analysts say if anyone can make severe boardroom battles as Barrak a go of the Zain deal it is Mittal, fought to grow the company while who describes himself as a business its largest shareholder, Kuwait’s junkie, always “looking for the next Kharafi Group, wanted to cash in, big fix.” said Simon Simonian, a telecoms Bharti is making profits despite Bharti Airtel > Sunil Bharti Mittal analyst at Shuaa Capital in Dubai. its average customer spending Zain’s new chief executive Nabil extremely little. Its low-cost model bin Salamah is implementing the sees it clear a gross profit margin opposite strategy of focusing on of almost 40% from users spending its core Middle East markets. just $4 a month.

Salamah sees growth for its But revenues are flattening operations in Saudi Arabia, Iraq as rivals engage in price wars, and Sudan, and is interested in prompting some analysts to say Lebanon once the telecoms sector Bharti had to woo Zain so revenue there is privatised. growth overseas could compensate “The group is also interested for a slowdown at home. in any other opportunities to “This acquisition is a longexpand if it gives good returns term strategic necessity for Bharti and conforms with the group’s to grow its revenues abroad,” strategy for the new phase,” said said analyst Harit Shah of Karvy Salamah.

Stockbroking.

Zain > Nabil bin Salamah As long as they aren’t in Africa, One very positive point is that presumably. AT analysts seem to believe Bharti can

March 2010 AFRICA TELECOMS 65

MXit Successful mobile social communities offer excellent value proposition for global mobile operators.

M

obile social communities that are successful and dynamic enough to quickly adapt their services and content to suit different global markets make the most likely revenue-sharing partners for international Mobile Network Operators. MNOs are looking to keep increasingly savvy mobile users loyal by delivering progressive mobile social networking capabilities.

A good example of this is MXit, a South African mobile social network with a total community of over 19 million users in 120 countries. This popular mobile social networking platform is quickly duplicating its South African successes in other regions around the world. In South Africa, its registered user base is 190 times that of Twitter and 8.5 times the community size of Facebook.

66 AFRICA TELECOMS March 2010

February 2010 AFRICA TELECOMS 63

The secret lies in MXit’s ability to provide its global MNO partners with a proven revenue-sharing model as well as the level of product innovation and diversity that keeps its users coming back for more. Companies like these have the keen ability to successfully bridge the gap between creating mobile communities that excite and retain users and provide opportunities for MNOs to capitalise on data revenue.

According to the Winter 2010 Report released by global software innovator Openwave Systems at the Mobile World Congress in Barcelona last month: “Operators could promote MXit as on-deck partner, or as a pre-installed application on the handset, in return for a share of the revenue, as well as promotion of banner ads, or even content downloads.”

“Creating a successful mobile social network goes beyond applying mere technology, resources and infrastructure. To build a social environment that adds value to your offering and business, you have to invest considerable resources in creating the right management and innovation environment – as well as the marketing, acquisition, engagement and retention of users, and of course having a solid business model to back this up. This is the cornerstone of our success,” says Herman Heunis, CEO and founder of MXit South Africa.

MXit leads the innovation stakes through the delivery of a deeply entrenching consumer journey. Some key innovations include: • An M-commerce platform that includes the integration of a successful classified section and mobile wallet technology. Already vastly popular, MXit’s classified feature, called Xchange, is poised to offer buyers and sellers anything from airline tickets to iPods.

64 2010 68 AFRICA AFRICA TELECOMS February March 2010

MXit is a global mobile instant messaging and social network that allows users to chat to one another on their mobile phones or PC anywhere in the world. It also allows users to send text messages to and from mobile phones and PCs using GPRS or 3G instead of using standard SMS technology, which is expensive.

MXit delights its users by continuously unveiling social networking, entertainment, communication and lifestyle features that benefit and enrich their lives. This commitment towards innovation is the cornerstone of its success. A next generation company, MXit boasts 19 million global users. It attracts at least 25 000 to 28 000 users per day. It is in constant evolution to match the needs of its users; and is set on becoming one of the biggest instant messaging mobile networks in the world and the preferred mobile social network for communicating with young people in Africa, South East Asia, South America and the rest of the world.

MXit first introduced mobile instant messaging to South Africa in 2003. It started as a mobile game developer and evolved into a mobile instant messaging company, allowing its users to send messages at a fraction of the cost of traditional SMS.

• The recently launched MXit EVO – a free Webchat widget that enables a blogger or web owner to immediately launch a social networking community on their site.

Once embedded, the fully customisable widget facilitates real-time conversations with potential customers, which is a bonus for entrepreneurs, small to medium business and even large corporations or organisations.

It allows business owners to create a branded online community for deeper engagement with potential customers and supporters.

MXit EVO users can also connect with friends on multiple platforms through gateways (including Yahoo, Windows Live Messenger, Google Talk and AIM); or update their Facebook and Twitter profiles without ever having to log off.

• MXit Music, its popular music download platform that has launched close to 1,000 Indiebands in South Africa – and is soon to launch in its targeted countries.

• MXit has become an enormous social, life skill and educational resource for users, especially in its home country, South Africa, where it offers educational features such as online Math tutorials, learner driver licence assistance, HIV/Aids education and games that teach users how to save energy. It also offers counselling features for substance abusers, and for teens and young adults suffering from the effects of physical and mental abuse.

The global mobile market consists of 4.6 billion users and, according to the GSM Association, the next billion users are expected to access the internet for the first time using their mobile phones. Collaboration between successful social networks and telcos is a perfect way for mobile networks to increase and retain subscribers without necessarily developing their own mobile social networks from scratch or incurring the astronomical costs involved. AT

Tenders

supplied by www.tenderscan.co.za

SOUTH AFRICA Transnet freight rail, a division of Transnet Ltd. Invites all interested parties to respond to a request for proposals (RFP’S) as indicated below: RFP documents may be obtained on and after Monday, 22 February 2010 at the reception, Tender Advice Centre, Inyanda House 1, ground floor, 21 Wellington road, Parktown, Johannesburg during the office hours 08h00 to 15h00.

A non-refundable tender fee as indicated below is applicable per tender. Payment is to be made to Transnet freight rail, Standard Bank, account number 203158598, branch code 004805. The deposit slip must reflect the RFP number and the company Name. Receipt/s to be presented prior to collection of the tenders.

For queries regarding collection of documents, contact Anton Erasmus, telephone number 011 584-0669.

RFP: SIS90919, a clarification meeting will be held on Wednesday, 3 March 2010 at 10h00, Bombela Boardroom, Ground Floor, Inyanda House 2, 15 Girton Road, Parktown, Johannesburg.

RFP documents may be viewed and downloaded from the website by clicking on the request for proposal number that is highlighted in red on the website: (http://www.transnetfreightrail. co.za/website/tenders.html) These tenders will close punctually at 10h00 as indicated below, at the following address: The Chairperson, Transnet Freight Rail Acquisition Council, Inyanda House 1, 21 Wellington Rd, Parktown, Johannesburg, 2001

Transnet Freight Rail urges Clients & Suppliers to report fraud/ corruption at Transnet to TIPOFFS ANONYMOUS; 0800 003 056.

Preference will be given to BBBEE companies with BBBEE status level 5 and above.

Service, repair & testing of Telecontrol materials for a period of two years.

RFP NUMBER: SIS 9019 TENDER FEE: R250.00 CLOSING DATE: 23 March 2010 (10h00) CONTACT PERSON: Sarah Assegaai Sarah.Assagaai@transnet.net Wesley van Heerden Wesley.Vanheerden@transnet.net Replacement of intra hand held & shunting radios, nationality.

RFP NUMBER: PEDB 5680 TENDER FEE: R250.00 CLOSING DATE: 23 March 2010 (10h00) CONTACT PERSON: Sarah Assegaai Sarah.Assagaai@transnet.net Wesley van Heerden Wesley.Vanheerden@transnet.net

SOUTH AFRICA THE ELECTORAL COMMISSION (IEC) INVITES SUITABLY QUALIFIED COMPANIES/SERVICE PROVIDERS TO SUPPLY THE COMMISSION WITH THE FOLLOWING SERVICES AS PER SCHEDULE BELOW.

Call Mervin Naidoo on Tel: (012) 428-5756 Tender briefing date at 11:00 (N/A) Closing dates: 22 March 2010 Place of closure: Refer to specifications on auction.

Auction No. Refer to votaquotes http// votaquotes.elections.org.za Procurement of 300 Receivers.

Technical enquiries: James Aphane, Tel: (021) 428-5729 Tender briefing date at 11:00 (N/A) Closing dates: 22 March 2010 Place of closure: Refer to specifications on auction.

Interested service providers may view the auction at the Commission’s eProcurement website: http//votaquotes. elections.org.za Service providers are encouraged to participate in the auction by registering (if not registered) on the above website.

Important: No late submissions will be accepted!!!

Enquiries: Procurement bid procedures: eProcurement • Mavis Louw, Tel: (021) 428-5550 • Vincent Qwabe, Tel: (021) 428-5576 • Lindiwe Dlamini, Tel: (021) 428-5462

LESOTHO Documents must be deposited in the tender box in the toyer of the Electoral Commission’s Offices, situated at Election House, 250 Walker Street, Sunnyside, Pretoria, on or before the closing date and time.

Auction No. 0010111171 Service Required: IT Helpdesk automatic call distributor solution. Technical enquiries:

70 AFRICA TELECOMS March 2010

Supply, Delivery, Installation and Commissioning of telecommunications services for Metolong Dam and Water Supply Programme.

This advertisement supersedes the one that appeared in the Public Eye Newspaper of 5th February 2010.

The Government of the Kingdom of Lesotho Metolong Dam and Water Supply Programme MAGOL-AD-I-006 1. The Government of Lesotho (the “Government”) has embarked on a strategy to secure a portable water supply to the greater Maseru and surrounding towns through the construction of the Metolong Dam and associated water supply infrastructure for the Metolong Dam and water supply programme (MDWSP).

As part of the programme, the Government, acting through the Metolong Authority ( the “employer”), intends to apply a portion of the funding provided by the Government of the Republic of South Africa to the implementation of the Advance Infrastructure Phase 2 for the Metolong Dam and Water Supply Programme. Any payments made under the proposed contract will be subject to all restrictions on the use of the Government of the Republic of South Africa funding and conditions to the disbursement of the same funding. No party other than the Government and the Employer shall derive any rights from the funding or have any claims to the proceeds of the Government of the Republic of South Africa funding.

2. The Metolong Programme Implementation Unit (MPIU), to be succeeded by Metolong Authority, now invites sealed bids from eligible and qualified bidders for the Supply, Delivery, Installation and Commissioning of Telecommunications services.

3. Bidding will be conducted through the open procedure (OP) specified in the Government of Lesotho Public Procurement Regulations 2007 and is open to all interested eligible and qualified

Tenders tenders.

4. Interested eligible bidders may obtain further information and inspect the bidding Documents which will be available starting form Wednesday, 17th February 2010 at the address given below between 08:30 hours and 16:00 hours local time: Lebekoane Ntoi (Procurement and Contracts Manager) Metolong Programme Implementation Unit (to be succeeded by the Metolong Authority), Red Cross Building, 29 Mabile Road, Old Europa, Maseru Kingdom of Lesotho (e-mail: lebekoane.ntoi@ metolong.org.ls) 5. A complete set of bidding documents in English may be purchased by interested bidders starting from the date and at the address above on the submission of a written application and upon payment of a non refundable fee M500.00 (FIVE HUNDRED MALOTI ONLY) or an equivalent amount in a freely convertible currency.

The method of payment will be through Bank Transfer to the following Bank account : Account name: Metolong Authority Account Type: Current Account Account No: 021000051052 Bank name: Nedbank Lesotho Branch Code: 390161 Swift Code: NEDLLSMX

supplied by www.tenderscan.co.za

2010 at the Metolong Dam site commencing with a preliminary meeting at 09:00 hours local time at Mmelesi Lodge. Thaba Bosiu, which is situated along the main road to the Metolong Dam. 9. All bids must be accompanied by a bid-security of LSL 10, 000.00 ( ten thousand Maloti only) or an equivalent amount in a freely convertible currency.

Tax clearance certificated (either original or copy certified at source) and trader’s licence (either original or copy certified at source) where relevant.

10. Bids must be delivered to the address stated below before or on 30th March 2010 at 11:00 hours local time. Electronic bidding will not be permitted; late bids will be rejected. Bids will be opened in the presence of the bidders representatives who choose to attend in person at the address stated below at 14:30 hours local time the same day.

Malcolm Murray Chief Executive Officer Metolong Programme Implementation Unit (to be succeeded by the Metolong Authority) Board Room, Red Cross Building 29 Mabile Road, Old Europa, Maseru, Kingdom of Lesotho.

TANZANIA 6. Specific contractors requirements and experience include: evidence of previously completed supply, delivery, installation and commissioning of similar goods and services as well as a licence to deal with similar goods and services.

7. A margin of preference will not be applied.

8. A mandatory site visit will be held on Tuesday, 2nd March

Expression of interest This expression of interest follows the GPN which appeared in the Daily News, issue No. 24455 of Wednesday, 12th August, 2009, The Tanzanian Communications Regulatory Authority (TCRA) has set aside funds in its 2009/10 budget for its operations. It is intended that part of the funds set aside will be applied to cover eligible payment under the contract for

Assessment of Competition in the Telecommunications Market.

2. The overall objective of this study is to understand the state of the competition in the telecommunications sector. The assignment seeks to: 1) Define and identify the relevant markets in the telecommunications sector 2) Develop guidelines for determining and designing operators with significant market power (SMP).

3) Assess the level of competition in each market and determine existence of operators with (SMP); AND 4) Recommend appropriate regulatory obligations and remedies.

3. This assignment will involve analysing competition in the telecommunications market so as to define and identify the relevant markets and assess competition in each market.

The consultant shall develop guidelines for determining and designing operators with significant market power; and recommend appropriate remedies and regulatory obligations for operators with significant market power. The consultant shall also liaise with relevant authorities in the country to get an understanding of competition envisionment, particularly in the telecommunications sector.

4. TCRA now invites expression of interest from eligible consulting firms to indicate their interest to carry out the assignment.

5. In assessing the Expression of Interest, consideration will be given but not limited to:• Company profile (ie. Documents indicating legal status, copies of registration with relevant authorities)

• Description of similar assignments, experience in similar environment conditions and availability of appropriate skills.

6. The consultants will be selected in accordance with the International Competitive Selection procedures as set out in the Public Procurement (Selection and Employment of consultants), regulations 2005, Note that this is not a request for proposals. After review of letters for expression of interest, a shortlist of consultants will be prepared and they will be invited to submit their proposals through letters which will include specific terms of reference.

7. All applications should be prepared in two copies (original and one copy) properly sealed and marked 'original copy'. The outer envelope shall be marked 'Tender No. AE-020/2009-10/C/10/02, CONSULTANCY SERVICES FOR COMPETITION ASSESSMENT IN TELECOMMUNICATIONS MARKET IN TANZANIA'.

8. The deadline for submission/ opening of expression of interest is 11:00am on Wednesday, 31st March 2010 at the conference room of Mawasilliano Towers, Block No.2005/5/1/2, along Sam Nujoma Road Sinza. Opening will be done in the presence of consultants’ representatives who wish to attend.

9. E-mails, faxed and late submission of EOL will not be accepted.

10. Physical Address for Submission: Secretary TCRA Tender Board; Mawasilliano Tower, 5th Floor, Room No, 2005/5/1/2, along Sam Nujoma Road Sinza, PO BOX 474, Dar es Salaam

March 2010 AFRICA TELECOMS 71

THE LAST WORD

Call Centre Blues Be careful how you treat the next call centre operator you talk to, it might get rough.

F

our New Zealand Telecom call centre operators based in the Philippines were fired recently for sending customers offensive text messages. What is most startling about the five inboxes being soiled by the “F*** you, customer” text message is not that it happened, but rather that we haven’t heard of many more such cases.

“Who Wants to be a Call Centre Operator?” doesn’t have quite the same ring as “Who Wants to be a Millionaire?” and that is very much the reality for the millions of people around the world trapped behind a desk, in front of a computer monitor and shackled by telephone headpiece to mindnumbingly repetitive tasks.

Who’d want to do it?

But many do, and some with a bit more resentment than others.

The NZ Telecom customers should be grateful, in a manner of speaking – sure, they’d been offended, but they simply had to delete the message and port to another network.

Unlike the unfortunate George Bates of Bristol, England, who found himself the subject of a disturbingly malicious reaction in 2008, when he gave a bank call centre operator a low service rating.

Not only were his bank accounts frozen by the vengeful call centre operator, but his identity was changed to that of a 33-year-old Ugandan divorcee. After much trauma and inconvenience, he was eventually reimbursed and renamed by the bank, but the tale does point to the lengths that vindictive staff with the wrong levels of authority aspire to.

There was little news on how the bank dealt with the responsible person, although one can

only imagine with the full might of the law – or even just its own corporate policies.

As happened to the infamous Word Perfect helpdesk operator who lost his job after, in many people’s opinion, making the correct diagnosis of the customer’s problem – that of stupidity.

The story goes that the customer called in for help when “all of a sudden the words went away” while working on a document. After following the routine checks on the presence of flashing indicator lights, and that all the correct cables were plugged in, it emerged that a power outage was the reason for the problem – and not forgetting the completely dark room the customer was sitting in.

The rest of the transcript from the conversation goes as follows: Operator: Aha, okay, we’ve got it licked now.

Do you still have the boxes and manuals and packing stuff your computer came in?

Caller: Well, yes, I keep them in the closet.

Operator: Good. Go get them, and unplug your system and pack it up just like it was when you got it. Then take it back to the store you bought it from.

Caller: Really? Is it that bad?

Operator: Yes, I’m afraid it is.

Caller: Well, all right then, I suppose. What do I tell them?

Operator: Tell them you’re too f***ing stupid to own a computer!!!!!

Dislike them or loathe them, it’s perfectly acceptable to feel a little pity for the millions who have to endure monotony, abuse and stupidity … day after day. So, next time you find yourself on the line to a call centre, have a little patience – it may well save you Mr Bates’ fate.

THE AUTHOR | Johann Barnard is a journalist who lives in Johannesburg.

72 AFRICA TELECOMS March 2010

AFRICA TELECOMS

ISSUE 4