African telcos turn to converged networks

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The market for converged networks in sub-Saharan Africa is still at an early growth stage as operators begin to invest in infrastructure.

This is according to new analysis from market research firm Frost & Sullivan, titled "Overview of Converged Networks in Sub-Saharan Africa". The research covers SA, Kenya, Uganda and Nigeria.

The firm notes that communication service providers (CSPs) face declining average revenue per user and increasing churn, and have turned to converged networks to boost their revenue streams.

It adds that convergence offers service providers the opportunity to reduce their capex and opex in the long term, with cost savings projected to be as high as 50% and 35%; respectively, from legacy networks.

The analysis also points out that the number of subscribers is set to expand from 1.1 million in 2010 to 21.4 million in 2017.

"With improving bandwidth, CSPs are able to expand their revenue-generating opportunities by providing content-rich offerings such as TV and video services of IP networks," notes Lehlohonolo Mokenela, Frost & Sullivan's ICT research analyst.

"This trend is being reinforced by customer demand for ubiquitous connectivity, as businesses and consumers seek on-the-go access and digitalised resources."

Frost & Sullivan expects that the uptake of converged services will be driven by the increasing broadband penetration rate in sub-Saharan Africa, thus motivating CSPs to invest in developing broadband infrastructure.

By providing last-mile fibre solutions, such as FTTP, the analyst firm explains, CSPs are preparing to offer triple-play packages that include IPTV.

It also believes that while migrating from legacy networks to an all-IP network will provide cost savings in the long term, it can be very expensive in the initial stages.

CSPs are, therefore, only gradually migrating to all-IP networks, more so as the business model for network convergence is still uncertain, Frost & Sullivan explains. However, the relative lack of infrastructure in most of sub-Saharan Africa gives operators the opportunity to deploy converged networks in their geographical expansion strategies.

"CSPs are still unable to estimate the ROI from deploying a fully converged network, as the business model for convergence in sub-Saharan Africa is still uncertain," explains Mokenela.

"As a result, the move towards convergence has been gradual, with service providers offering broadband as standalone services and not as part of a bundled offering."

Admire Moyo
ITWeb's business editor.

Admire Moyo is ITWeb's business editor. He has been a tech journalist at ITWeb since 2010. Before joining ITWeb, Admire worked for The Herald newspaper based in Zimbabwe. He holds a BA degree (English and History) from Africa University.

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