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Angola online in telecommunications

Article - July 31, 2014
Impressive growth in the telecommunications sector has ensured Angola has emerged as a veritable land of opportunity for ICT players of all flavors
Over the last decade, the Angolan economy has been growing at a formidable pace and has now become the third largest economy in sub-Saharan Africa. Looming large among the star sectors that have contributed most to the country’s economic growth is the telecommunications sector, which has seen an unprecedented uptake in activity over the past 10 years.

Of particular note is the growth of Angola’s mobile users, which just a decade ago only counted 140,000 users among its ranks, but as of 2012 had already expanded to include over 12.5 million customers, with a compound annual growth rate of 56% between 2002 and 2012.

Contributing significantly to the mobile sector’s favorable performance is the competitive advantage it has over the country’s fixed line services. Even though by 1975 Angola had one of the most advanced telecommunications networks in Africa, 30 years of civil war took its toll on the country’s infrastructure. At present, Angola’s poor fixed line infrastructure, small network coverage and outdated services mean the country’s performance in the fixed line domain has been largely stagnant.

Though authorities did attempt to invigorate the sector, rehabilitating the fixed network is a long, laborious, and costly process. This fixed line handicap – in 2002, there were no more than 169,905 connected lines in a country with a population of over 18 million – coupled with the emergence of two ambitious Angolan mobile operators at the beginning of the century, paved the way for the prominence of the current Angolan mobile market.

Pushing growth forward

Keen to continue using the telecoms sector as a motor of economic expansion, the Angolan government is committed to bolstering the growth of the sector. In the words of Dr. Amílcar Safeca, Deputy CEO and Chief Technology Officer of the Angolan mobile operator, Unitel, “Information technology and communication are essential to the functioning of the modern economy, hence the structuring of public and private investments in this area is essential to furthering the emergence of new business and the economic growth of the country.”

The Angolan government largely echoes Dr. Safeca’s ideas and has mobilized various branches of the government to ensure the continued success of the Information and Communications Technology (ICT) sector.

As explained by Aristides Federico Safeca, the Telecommunications Secretary of Angola, the government published a “Telecommunications Whitepaper” in 2001. “In this paper, the government defined strategies for developing the telecommunication market, and it was also around this time when mobile operators started getting their licenses,” explains Mr. Safeca, going on to detail how, ever since, the wireless segment has taken off.

Improving the sector

Now evolved into a strong market with two key players – Movicel and Unitel – Mr. Safeca and his colleagues at the Ministry of Telecommunications are taking measures to help the industry further evolve and ensure its sustainable growth. Of top concern is industry regulation.

“A strong and independent regulator is essential to provide the visibility and predictability necessary to attract investment,” according to the Eaglestone Securities report. “And all the remaining sector issues, like competition or network sharing for example, need a strong regulator entity that can define and supervise the compliance with its rules.”

Parallel to the Telecommunications Whitepaper, the Angolan authorities also published The Information Society National Plan, a key document that stresses the need to address the weaknesses of the industry, given ICT’s overall importance to Angola’s development.

To emphasize the solid link between ICT and economic growth and development, the document references a figure from the World Bank: “for each extra 10 percentage points of Internet and broadband penetration rate, the economy grows an extra 0.77 pp and 1.3 pp, respectively.”

The Information Society National Plan also isolates four critical factors that must be aligned so as to guarantee the further developmental success of the ICT industry. Political sponsorship is the first factor – the Ministry of Telecommunications and the Angolan government must update legislation to reflect the current ICT reality.

Furthermore, the Angolan government must continue to invest in the sector and create mechanisms to attract private investment. It should also consider offering tax benefits to consumers, especially for those who are from lower income populations, as they are considered to be the main future drivers of growth in the mobile sector. As such, expanding networks to cover rural areas is a high priority, allowing the more disadvantaged members of the population to also benefit from infrastructure developments.

Telecoms in rural communities and schools

Ensuring that the expansion of mobile networks includes the more rural regions of Angola is at the top of the ICT agenda, given the proven auxiliary benefits that increased connectivity has in the areas of agriculture, education, and healthcare.

Mobile tools like Esoko, for instance, are already used in 15 African countries and allow farmers to more easily access agricultural market information including current market prices, weather alerts and forecasts, as well as crop production levels. In Ghana alone, Esoko-using farmers have seen revenues increase by an average of 10%.

Machine to Machine (M2M) services which allow farmers to increase their productivity by controlling machines remotely or automatically are also expected to become more common, and a boost to agricultural output.

From an educational perspective, Mr. Safeca explains that progress is also being made. “We are working to promote Internet connection in schools and to achieve that we are together with the Education Ministry equipping these schools with computers already connected to the Internet. We also interacted with the communities to improve the postal service, which today has modern facilities with Internet connection.”

In parallel, several cellular applications have helped streamline the distribution of educational content and improved teacher training in regions where there is a shortage of teachers.

Other applications also facilitate the collection of medical information about rural patients, allowing for real-time diagnoses and surveillance data collection. These applications and services can have a meaningful impact on closing the gap between the most developed and most destitute areas of the country.

Opening up to greater competition

Because the next wave of mobile growth in Angola is likely to be fueled by the lower income population and subscribers from rural areas, it is essential to consider the price barriers that might prevent new users from signing up for mobile services. At present, two players, Movicel and Unitel, dominate the Angolan mobile market. The two mobile operators effectively share a duopoly over the country, though Unitel, with a market share of over 70%, services the bulk of the population.

One of the hotly debated ways of achieving more competitive prices from Angolan mobile operators has been the prospect of allowing a third party operator into the market. According to the report on the Angolan telecoms market recently published by Eaglestone Securities, “More competition and licensing a third operator may be key factors to force the current operators to be more aggressive, instead of maintaining the status quo, and to make mobile services available to everyone.”

If a third mobile operator enters the market, it would push competition and make cellular phone services more affordable as well as boosting the mobile penetration rate.

Angola’s telecoms on the international stage

Though Angola’s mobile market often takes the spotlight of the Angolan telecommunications sector, the country’s involvement in the deployment of several important underwater fiber optic submarine cable projects also plays a key role in affirming the country’s position as a telecoms leader.

At present, eight such projects have been announced, and when completed, they will revolutionize the way Africa communicates with the rest of the world. It is essential to note that of these eight projects, Angola will have a landing point in all cables except the 21,100-mile BRICS cable that will connect Vladivostok to Miami through Cape Town. That all other West African submarine cables connect through Angola is a telling testament to the country’s relevance in the region, and proof that Angolan authorities have been successful in positioning the country as an ICT leader.

Due to its demographic characteristics and geography, sub-Saharan Africa has already been pinned as an attractive developing ICT industry, with Angola figuring prominently among the most alluring telecoms markets in Africa. Given its steadily developing economy and the importance the Angolan government is giving to using ICT expansion as a catalyst for the country’s development at large, Angola emerges as a veritable land of opportunity for ICT players of all flavors – from equipment vendors to application developers, and operators.

“I believe that the telecommunications sector has had a strong impact on the development of Angola, not only in terms of the creation of more jobs, but because it enabled essential communication networks for a developed society and prompted major innovation in the way people and businesses communicate,” says Dr. Safeca. Indeed, though considerable challenges exist – the costly improvement of infrastructure, the need to increase service affordability as well as industry regulation and transparency – both the Angolan government as well as the industry’s key players seem resolutely committed to ensuring progress on the promising path ahead.