African ICT firms are increasingly moving towards outsourcing networks, data storage, servers, software and hardware, after realising significant benefits of this move.
These benefits include cost-savings, improved efficiency and enhanced productivity, as ICT businesses race to serve the rapidly expanding market in Africa.
This was revealed by delegates at the recent Next Generation Technology Summit, held in Nairobi, Kenya.
During the summit, it emerged that Africa's Internet usage has grown by over 2 000% in the last 10 years. However, delegates heard that penetration remains low, at 3.2%, against a global average of 6.8%, providing an opportunity for operators and ISPs to grow their revenues, as more people receive coverage.
As rapid expansion continues, the delegates concurred, companies are opting to lease their support infrastructure, including base stations, masts and server needs.
They also noted that mobile operators in Australia and Sweden have set the pace by sharing networks, halving the cost of maintaining and running individual networks, and also optimising available networks.
In Africa, some telcos have found points of collaboration, as they partner in building backbone infrastructure, with Ugandan telecos sharing the cost of laying fibre-optic cable infrastructure, which is saving the companies 70%.
“Sharing the cost of digging the trench saves us 70% of the cost of laying the cables,” said Godfrey Kisekka, of Orange Uganda. “It costs $5 000 to lay 100km of cable, so for us, it's worth partnering,” he added.
“There are considerable savings in power use, land lease, security and maintenance, which reduces the cost incurred by operators by 50%,” said Doye Ogionwo, chief marketing officer, Helios Towers.
According to the Yankee group, 30% of operators' cost goes to network maintenance. But Helios guarantees 99% uptime and marked reduction in capital expenditure, while shifting the burden of maintenance, said Ogionwo.
The shared base stations, which can take four to seven different networks, cost $1 000 to set up and an average of $600 in maintenance, he pointed out.
Analysts predict shared infrastructure could create growth opportunities in the Sub-Saharan African mobile network backhaul infrastructure market.
“The scope of things needed to be supported by the network is expanding to match an infinite combination of activities,” said Chris Lewis, GVP international telecoms and networking.
Leasing extra capacity has also turned out to be an additional revenue stream as utility firms ride on the landing of the fibre cable. Kenya Power & Lighting Company has leased 18 pairs of its 24 dark fibre cable to IT firms, earning it $6.25 million last year.
Now, more ICT companies are looking at broader ways of cutting their capital and operational costs, as competition heats up in Africa with the entry of more players and a faster uptake of new technology.
“However, for companies to seriously consider leasing services, the cost of leasing has to be cheaper than what they already have on their own,” said Matt Watts, of NetApp, a storage and data solutions company.
Outsourcing storage and data management helps operators to optimise on their core business and save on much needed space as service providers manage the data for the operators, he explained.
“Operators take up all the services they need without spending too much on setting up the initial infrastructure,” said Watts. “Since data management is our core business, we are able to use efficient technology and reduce storage needs by 50%.”
Security, control and reliability, he added, are key issues in shared services, noting that most service providers issue service level agreements, guaranteeing customers acceptable uptime and security levels.
The delegates were optimistic that as IT companies reduce their costs, they will pass on the benefits to the end-users and increase, among other services, broadband penetration in Africa, spurring growth in other sectors of the economy.
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