I recently attended the Capacity Africa Telcom Conference in Dar es Salaam, Tanzania. This was the second time I had gone to the Africa conference, the last one being in Nairobi, Kenya in September 2010. The Africa telecom scene is one of the most dynamic and rapidly growing in the world. While aggregate revenues in the telecom space in the US, Europe and Japan are stagnant to down, growth in African telecom clips 10-25% per year. The core focus over the last 5-7 years has been in the adoption of mobile phones.   In 2005 there were 133M mobile subscriptions on the African continent, in 2011 over 500M. Mobile penetration in Africa is now estimated at around 60%, up from 15% in 2005 (Source: Africa & Middle East Telecom Magazine). The big US mobile operators are virtually absent from Africa, instead European (Orange, Millicom, Vodafone), Middle Eastern (Etisalat, Orascom) and Indian (Bharti Airtel) operators dominate. The largest player, MTN, is South African. The need and benefits of communication are universal, and by all accounts penetration rates should continue to rise towards the levels found in mature markets.

The other big story in Africa telecom is the arrival of submarine cable systems. No less than seven cables systems are planned or have already terminated on both the east and west coast of Africa.  East Africa leads, with Seacom, EASSy and TEAMs all commissioned in the last 2 years.   These systems mostly originate in South Africa and wind their way up the east side of Africa to the Mediterranean or towards the Middle East and India.  On the west side of Africa, the MainOne cable, Globalcom and WACS have partially or been fully deployed with the France Telecom sponsored ACE cable scheduled for early 2012.  With capacity (aka, Internet access) now located at the cable landing station, the focus has shifted to terrestrial fiber deployments. This was probably the most meaningful change in focus from the event in 2010. These is still much to do in this regard as most countries have only just begun to deploy intercity fiber networks, let alone metro and last mile access networks. As an example, I met the CEO of Burundi Fiber Networks, David Easum, in 2010. At the time, he was busy raising capital and formulating his business plan. When I saw David in Dar es Salaam again, he was happy to inform me that they had successfully raised capital and had begun phase one of the fiber rollout. With African Internet penetration today estimated at between 10-15%, there is huge upside to the rollout of low cost Internet access.

The event reinforced my view that the African telecom space will continue to grow significantly in the years ahead.