ANALYSIS: Ghana stakes claim to become west African hub

12 March 2013 | Guy Matthews


Ghana is taking major steps to establish itself as a regional ICT gateway for west Africa, as local operators continue to press ahead with plans to extend routes into neighbouring countries.

 

Backbone investments are being made throughout the region by Suburban West Africa, as well as by Vodafone Wholesale, the rebranded name of Ghana’s National Communications Backbone Company (NCBC).

Vodafone Wholesale managing director, Lucy Quist, said that the company’s primary mission is to extend its reach from Ghana into some of the less well-off economies in the region, some of which are landlocked, like Togo, Burkina Faso, Mali and Niger.

She said the Ghanaian government is pushing to position the country as a regional ICT gateway with Vodafone Wholesale contributing through its 130km Cinkasse Fibre Build Project: “With this project, Ghana is interconnected with both Burkina Faso and Togo,” she told Capacity.

“All communities along this route will benefit from improved voice and data services, with a number of cell sites placed on the route to boost reception. This gives us competitive advantage and leadership in internet penetration in the sub-region.”

West Africa now enjoys five world-class submarine cable systems – GLO-1, Main One, WACS, ACE and the older SAT3 – and hopes are high that the region will follow the impressive economic trajectory of the continent’s east coast.

East Africa has enjoyed several years of international connectivity and is well down the road of matching this with terrestrial backbone and access network investment. Dividends from a diverse and competitive environment are being reaped by enterprises and consumers.

Wholesale pricing in the west is already coming down significantly, even with some cable landings not complete and the cement barely dry on others. According to consulting firm TeleGeography, the price of a west African STM-1 connection fell by around 30% last year.

But there is a likelihood that west African telecoms will play out differently than has happened in the east. Telegeography senior analyst, Paul Brodsky, has pointed out the two regions are cut from somewhat different economic cloth.

“There’s around four major economies in the east, compared to a mass of often very tiny states in the west,” he said. “Nevertheless, if we continue to see matching terrestrial network developments, I predict that benefits will trickle down across west Africa, although in a slightly different way in each country. Some countries have a more competitive environment than others. With only one operator, there’s only so much impact on price a submarine cable can have.”

Dobek Pater, director and analyst with consulting firm Africa Analysis, says there is a high level of unevenness between leading west African economies, like Nigeria and Ghana, and the rest.

The more backwards telecoms markets are not necessarily lagging for reasons of poverty: “Cameroon is not poor in comparison to some countries in the region, but for regulatory reasons has not built any 3G networks,” said Pater. “This limits the ability to consume data. There’s other countries, like Niger and Mali, which are poor and where broadband is confined to a few economic centres.”

What is now required, he says, is a step change in efforts on national and metro networks: “In Nigeria you have four or five backbone operators, in other countries nothing like that,” he added. “The other constraint is access networks, which are often of relatively poor quality where they exist.”

It may still be a work in progress, but the future potential of west Africa’s telecoms scene is not lost on the rest of the world, to judge from the interest being shown in the region by a variety of global names.

In July 2012, Indian telco Tata Communications inked a deal with Nigerian cable operator Main One enabling it to extend its Video Connect Network into the country. This will allow Nigerian content to be more easily distributed around the world, and global content to reach an important emerging economy more seamlessly.

Tata also has a very different deal with west African network operator Suburban to provide it with OSS and network support services. Suburban for its part now has an NNI agreement with PCCW Global, enabling it to leverage the Hong Kong-based carrier’s global MPLS network.

France Telecom already has a stake in west African communications, and now wants to take this a step further by investing in some of the region’s less obvious opportunities, like Burkina Faso, Gabon, Mauritania and Mali.

One way it could do this would be by buying rival French communications player Vivendi’s up-for-sale 53% shareholding in Maroc Telecom, a company with a portfolio of African interests which includes Mali.

But a plum like Maroc Telecom doesn’t fall off the tree every day. France Telecom would need to see off other prospective buyers like the Middle East’s Qtel and Etisalat, and South Korea’s KT Corp, plus come up with something like $8 billion, all while appeasing Morocco’s government which still holds a 30% share.