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Broadband growth will see SA ‘rival Dubai as a hub in Africa’
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Simon Mundy
Business Day
Monday, March 15, 2010
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Improving telecommunications in SA could see the country rival Dubai as a hub for multinational companies seeking a base in the Middle East and Africa, says a leading management consultant.
“Everybody sees SA as a platform to get to the future market in Africa,” Vittorio Massone, Bain & Company’s SA managing partner, told Business Day last week. “We’re talking to US multinationals who are now thinking: which is better, Johannesburg or Dubai?
“So far, technology has been a strong point for Dubai. But the arrival of the new submarine cables will allow them to run services from here.”
SA’s international connectivity received a major boost last year with the launch of the Seacom cable, a high-bandwidth data link connecting Africa with India and Europe. Two further major cables, the West African Cable System and the East African Submarine Cable, are due to come into operation over the next two years.
Massone expected the increased bandwidth availability to contribute to increased broadband penetration in SA, and predicted 20%-25% of the population would have access to broadband within three years. He noted that this depended on municipalities’ efficiency in building infrastructure, however, and warned that “25% penetration is not sufficient for a country like this to develop in a homogenous way”.
Massone called for the government to produce “a strategic telco plan. This would define clear targets on, for example, the population to be reached by broadband, and what kind of investment you can provide directly, or through partnerships with private companies.”
Studies in Europe suggested that significant increases in broadband penetration could boost gross domestic product by as much as 2%, Massone said.
SA’s cellphone costs were set to fall, he said.
“This is a seismic moment for the mobile industry in SA. The market is saturated, with average revenue per user and net additions constantly coming down. And with Telkom set to enter the mobile market, that will also have an impact.”
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