With the introduction of the first 4G network in Africa and the construction of the game-changing South Atlantic Cable System (SACS), Angola is at the heart of the telecommunications revolution on the continent.
In a bid to wean the economy off crude oil, Angola is banking on the ICT sector to become a chief engine of growth. Apart from sales of smartphones, digital TV and broadband, it is anticipated that modern ICT services will improve the efficiency of companies and organizations across the entire economy. (The World Bank estimates that a 10% increase in broadband penetration in a country translates to an increase of 1.2%-1.4% in GDP.)
With the help of companies from China, Sweden, Belgium and Russia, Angola has been pioneering the telecommunications revolution in Africa.
“Angola is leading Africa´s development in the telecommunications sector,” says Amilcar Safeca, Deputy CEO of Unitel, the country’s largest mobile operator.
“Information and communication technology is essential in the functioning of the modern economy, hence the focus on public and private investments in this area in recent years. In Angola, ICT will help companies to be more efficient and competitive; it will help in the emergence of new business and in the country’s future growth.”
Improving company efficiency is starting within the telecoms industry itself: the state-owned operator Angola Telecom(AT) is currently undergoing a large-scale restructuring process with the help of international consultants. “[This] is seen as a step towards greater liberalization of the country’s telecom market, improved efficiency of the national telco and its eventual privatization,” says a report by global telecommunications research and consultancy company, BuddeComm.
The announcement earlier this year that AT expects to turn a profit in 2015 for the first time in eight years is evidence that the overhaul is paying off. The company has forecast a net income of almost $6 million in 2015, compared with a loss of $40.7 million in 2012. This return to profit will be mainly the result of a government injection of $314 million in November, 2012 – part of the restructuring process – to pay off debts, increase revenue collection, boost sales and extend and repair fiber optic cables.
For AT, the next possible step is entry into Angola’s lucrative mobile market. Mobile penetration has jumped from 20% to 65% in only four years, making Angola one of the fastest growing mobile markets in the world; BuddeComm predicts penetration will hit 70% by the end of the year. Fixed-line penetration lags far behnd, at 1.5%, while Internet access , currently 19%, is forecast to reach 26% by the close of 2014.
A third player in the industry would certainly help to further drive growth, bring down prices and improve services. But with rapid growth in penetration and millions of prospective new customers up for grabs, AT is not the only company considering a bid for the coveted third mobile license in Angola; South Africa’s MTN and Vodafone’s African subsidiary, Vodacom, have also expressed their interest.
The mobile market is currently a duopoly controlled by Movicel and Unitel. The latter is part-owned by Isabel dos Santos, Africa´s richest woman and the daughter of Angolan President Jose Eduardo dos Santos. Unitel is the dominant player, with a 70% market share and around 10 million customers.
Both companies have been at the forefront of 4G LTE (Long-term Evolution) mobile technology – and not just in Africa, but on a global level. In January, Unitel, in collaboration with Swedish firm Ericsson, became one of the first few privileged operators in the world to demo LTE Advanced (LTE-A) Carrier Aggregation technology, hailed by Ericsson as “the next step in the evolution of high-speed mobile broadband services.”
“With this demo, we are well on the way to launching the most advanced mobile network in Angola and perhaps Africa in the near future. We are working with Ericsson to make this happen,” said Unitel’s Amilcar Safeca on the launch.
The demonstration was the second milestone for the company in only four months. In October, 2013, the first-ever LTE video roaming call in Africa was made in Angola on the Unitel network, using the carrier services of Belgian company, BICS. The call was made during the visit of a Belgian trade mission, between Belgian Foreign Affairs Minister Didier Reynders in Luanda and BICS Vice-president for operations and customer Services, Johan Wouters, in Belgium. Daniel Kurgan, chief executive officer of BICS, said the call “marks the next stage of the evolution of the telecom market in Africa and the further realization of LTE roaming across the globe.”
But it was former Angola Telecom subsidiary Movicel, in partnership with Chinese phone giant ZTE, that first introduced fourth generation LTE technology in Angola in 2012, putting the country ahead of many parts of the United States, Britain, and most countries on mainland Europe in the rollout of 4G mobile services.
In order to keep the country at the forefront of the telecommunications industry, both mobile broadband and fixed-line operators plan to invest billions of dollars in improving infrastructure in the coming years. Most notable of these investments is the South Atlantic Cable System (SACS), also known as the Angola-Brazil cable. Launched earlier this year at a cost of over $200 million, SACS will stretch more than 6,000 km across the Southern Atlantic from the Angolan capital, Luanda, to Fortaleza, Brazil.
Due for completion in 2015, the SACS project will have an enormous impact on the telecommunications sector in Africa, South America and Asia. It has been reported that by connecting with existing cables, SACS could cut data traffic costs from South America, Africa and on to Asia by as much as 80%, as data traffic will no longer have to pass through Europe and the US. This should translate into big savings for telecom operators that could be passed onto customers in Angola and across Africa. With cheaper and better services, it is anticipated that the cable will increase mobile penetration to 85% in the country within two years. SACS will also provide the shortest distance between the Sao Paulo and Hong Kong stock markets, as well as providing a faster route from Europe to South America.
Angola Telecom, Unitel, Movicel. MSTelecom and Startel are all behind this monumental project. All are shareholders in Angola Cables, which is covering the total costs of the cable’s construction. Angola Telecom has a 51% share, followed by Unitel (31%), MSTelecom (9%), Movicel (6%) and Startel (3%). (See the interview with Angola Cables CEO Antonio Nunes, following this article.)
Angola is not only investing in telecoms infrastructure projects on land and ocean; it is also aiming to go into space. With the help of Russian technicians, and financed by Russian bank VTB, the West African nation is constructing its very first satellite. Ango Sat, costing $300 million, is set to be in orbit by 2017 – yet another groundbreaking venture for Angola in the telecoms industry. Like SACS, Ango Sat is expected to bring down prices while also improving services, particularly digital television.
The Minister of Telecommunications and Information Technology Jose Carvalho da Rocha has said that Ango Sat will be subsequently followed by other satellites in the long term. This would put Angola’s foot firmly in the African space race, which is currently led by the sub-Saharan Africa’s other large petro state, Nigeria (now officially the continent’s largest economy following a GDP rebasing in March, overtaking South Africa), which now has several satellites in orbit.
But Ango Sat and subsequent satellites mean much more than improved phone receptions, faster connection speeds and cheaper digital television. If Angola is to follow on the same path as Nigeria, satellite transmissions could have a much more important use. Nigeria’s satellites are being used to improve agriculture, by giving farmers access to detailed, accurate and up-to-the-minute weather forecasting that was never before available. They are also being used for security in the fight against Boko Haram extremists in the north of the country. Fortunately, Angola does not have a security issue on the scale of Nigeria’s, but like in Nigeria, satellites could be useful in efforts to improve agriculture, another priority sector in Angola for development and economic diversification.
Like Ango Sat, fourth generation mobile broadband offers much more than faster YouTube streams and instant access to Facebook. It is revolutionizing business, healthcare and education. “Banking, healthcare, and other applications have evolved on mobile, not because it was particularly suited as a platform, but because there was simply no alternative,” states a report by U.S. networking equipment manufacturer Cisco on the evolution of the use of 4G in Africa.
The ways in which advanced telecoms technology can be used to improve lives and businesses are virtually endless. Doctors can now make long distant diagnoses of those in isolated rural communities over the phone, using video calling or photo messages sent on instant messenger services. A small business owner will no longer have to travel for hours at a time to present a customer with an invoice; he or she can use a smartphone to send that invoice by email in a matter of milliseconds, and subsequently use this time for other productive activities. Mobile banking services are giving millions of people access to electronic payment services. Students can be taught English and other useful skills by teachers as far away as the U.S. or Britain using video conferencing technology.
Angolans are using 4G smartphones for far more than YouTube and Facebook access; they are utilizing the technology much more innovatively – making small businesses, famers, individuals and large organizations work in a much more efficient and effective way. This will no doubt boost an already rapidly growing economy and has the potential to substantially improve livelihoods across the board.
By Jonathan Meaney