Tuesday, February 17, 2009

East Africa ICT Earnings Soar

Earnings in the ICT sector in East Africa will rise from $164 million in 2007 to a $788 million by 2014 due to a favourable business environment for Internet service providers and growth in broadband connections, according to a just released report by market analyst Frost & Sullivan.

According to the firm, the region’s lack of an undersea cable connection has meant that Internet services have been prohibitively expensive, limiting the number of people who could get hooked onto the net, since countries have had to rely on expensive satellite technology for international connectivity. This has had a negative effect on the earnings of players in the sector.

“Current deployment of undersea cable systems will provide much-needed broadband connectivity in the region, positively impacting on the cost of Internet services,” noted Frost & Sullivan research analyst Letticia Mulenga Nkumbula in a briefing statement Saturday.

“Both Kenya and Tanzania are going to have a landing point of their own, thus putting the region at an advantage,” she added.

According to Frost & Sullivan, governments’ support for the ICT sector in the region has seen the pace of liberalisation pick up, with the attendant enactment of the requisite regulatory and market legislation in the EAC’s five member states — Kenya, Uganda, Rwanda, Burundi and Tanzania.

Rwanda has taken the lead in this aspect, with the regional powerhouse, Kenya, enacting the Kenya Communications Act, 2008, last December.

Elsewhere, the liberalisation of the telecoms sector and the introduction of converged licences in the region have spurred increased competition among Internet service providers (ISPs).

This has caused a reduction in telecom tariffs, resulting in a positive effect on the subscriber base, analysts say.

In the Internet market, mobility and the ability to provide faster data transfer rates are some of the key competitive factors,” said Mr Nkumbula.

Analysts say that the level of aggressiveness demonstrated by mobile telecom operators in the data space means that internet service providers (ISPs’) across East Africa will need to look beyond their traditional Internet services to include net solutions and content in order to expand their markets.

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