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Mon 22 Dec 2008 04:00 AM

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Delivering the goods

With a strong and stable economy, Botswana is rapidly moving towards 100% mobile penetration rates. CommsMEA assesses the country’s telecom potential and challenges in the market.

With a strong and stable economy, Botswana is rapidly moving towards 100% mobile penetration rates. CommsMEA assesses the country's telecom potential and challenges in the market.

With a population of just 1.8 million people and a geographical area of some 600,000 sq km, Botswana is not generally viewed as one of Africa's most lucrative telecoms markets.

However, as one of the most stable on the continent, with a liberal economy that has given strong growth since independence in 1966, the country has a vibrant and competitive telecom sector.

The telecommunications sector in Botswana is considered to be one of the most developed in Africa. The mobile market is growing at a faster rate than the fixed-line market, and 100% mobile penetration should be expected in the next 3-5 years. - Lindsay McDonald, Frost & Sullivan.

Indeed, Botswana has two mobile operators, Mascom and Orange Botswana competing with incumbent fixed-line operator BTC. Orange Botswana, which is owned by France Telecom, was formerly known as Vista Cellular, was awarded a 15-year mobile licence back in 1998, and re-branded as Orange in 2003.

Mascom was also licensed in 1998 by Botswana's regulator to provide mobile services for 15 years. The company's shareholders include Portugal telecom, T. S Masiyiwa Holding of Zimbabwe and DECI Investments, comprising the citizens of Botswana, and MTN South Africa, which acquired a 44% stake in 2005.

Botswana's fixed-line sector is less competitive, with just one service provider. Botswana Telecommunications Corp, better known as BTC is the incumbent fixed-line operator and has been granted a license by the regulator (BTA) to provide fixed-line voice services and value added services.

BTC is 100% government owned, with the Ministry of Finance and Development being the major shareholder. However the government has announced plans to privatise it, according to Lindsay McDonald, an ICT analyst with Frost & Sullivan.

"The telecommunications sector in Botswana is considered to be one of the most developed in Africa," she says. "The mobile market is growing at a faster rate than the fixed-line market, and100% mobile penetration should be expected in the next three to five years.

Furthermore, McDonald adds that the country's telecoms authority is recognised as one of the best in Africa, and that there also are plans to put a converged licensing framework in place.

But there remains room for improvement in Botswana's telecom regulations. "The telecommunications market is still not fully liberalised," McDonald says. "There are still restrictions on VoIP provision by the VANs service providers and self-provision of transmission links by the mobile operators."

There are also issues around the liberalisation of the international voice gateway and tariff rebalancing by the incumbent, according to McDonald. Indeed, she points out that the current licenses issued by BTA are service-specific, as operators are licensed to provide either mobile or fixed telephony services.

Moreover, the fixed-line market has low levels of penetration because of poor service delivery, which is below international standards. The difference in the competitiveness of the mobile and fixed-line sectors is reflected in the penetration rates.

While the country has mobile penetration of about 75%, fixed-line penetration was languishing at just 7% at the end of 2007, while internet penetration was 5.31%, according to McDonald.

Meeting potential

While most mature markets have mobile penetration rates of more than 100%, indicating that Botswana should have strong growth potential for mobile as well as fixed-line and data services, McDonald sees limited growth, for the next year or two at least.

"Given the current levels of penetration, there is not that much room for growth in this market," she says. "It is also important to remember that the country represents quite a small market anyway - there are less than two million inhabitants in the country. Growth would come mainly in the types of services provided."She adds that until VoIP is legalised, data services will be somewhat hamstrung, and this situation will need to change if the industry is to grow to its full potential.

The BTA certainly seems to be aware of these limitations and plans to liberalise the telecoms market by issuing all three telecommunications operators, Mascom, Orange and BTC, a license that will allow them to provide mobile, fixed and internet services with one license, McDonald says.

Furthermore, BTA is also promoting universal access, and along with the Ministry of Communications, Science and Technology, the organisation is planning to roll out infrastructure in rural and under-serviced areas.

BTC has already completed the deployment of a multi million dollar Pula Trans Kgalagadi Fibre Optic cable, which will allow it to provide services that are more competitively priced, McDonald says.

"Botswana has invested US$100 million in the EASSy cable fibre optic project that will allow Botswana to provide more telecommunications service with broadband," she adds.

Technology drive

As director of Motorola's Home and Networks division in sub-Saharan Africa, Noel Wright also has his finger on the pulse of the latest developments and trends in Botswana. He agrees that the market will improve further as the market becomes more liberalised.

However, he also sees another big challenge in the country - one that is familiar to operators in many African countries.

"As we see more liberalisation happening in Africa, we are starting to see a lot more opportunity creeping in. However one of the biggest stumbling blocks we have, and not just in Botswana, is ARPU," he says.

Indeed, the telecom sectors in many African countries, including Botsana, lag behind their counterparts in more developed regions owing to low teledensity and low ARPU rates. "Botswana is a pretty stable country in terms of its financial system. They have a strong currency and it works well in their favour. However they the same challenges that a lot of the African countries have," Wright says.

"You have a very small urban environment and then a vast rural dispersal of people. Typically supplying communications to those people is challenging because the cost of a base station for 1000 people is the same as for one."

While GSM deployments in Botswana are strong and the country has fibre connections between the main cities and towns, access - particularly to data - remains a significant challenge in many areas, particularly more remote parts of the country.

"With a combination of both the GSM and some fixed-line technologies they are managing to get to most of the people. But data remains a challenge. Access to data circuits and that type of thing is very limited in the rural areas," Wright adds.

Motorola has carried out various types of work for all of Botswana's operations, although Wright says the majority of its work in the country has been GSM related. "The GSM is what we are pushing hard at, purely because it is the infrastructure of choice based on the geography and the dispersion of people.

This is partly because the main area of growth in Botswana's telecoms sector has also been GSM. Wright points out that mobile penetration rates are high in the country because the mobile phone tends to be peoples' only form of connectivity. "The pre-paid market has obviously been a revelation for Africa and it has allowed everyone to walk round with a mobile phone," he says.

"The penetration rates are very good. However the services on the back of the penetration, that is what really needs to be driven. Besides SMS, data services are obviously key to giving people access to the outside world."To this end, Motorola is also offering its operator clients technologies such as WiMAX which are able to deliver high data rates wirelessly.

"There is a limited rollout using the 802.16d which is the fixed version of WiMAX. We are currently engaged with several operators looking towards 802.16e version which would then give them full mobility over WiMAX," Wright says.

For Wright, improving broadband data infrastructure is key to improving ARPU in Botswana. "That is the biggest challenge and it has a knock-on effect. We really need to grow with the markets and ensure that the requirements of data are met as the market grows," he says.

Wright is also optimistic that data use, and access to broadband will improve significantly in the coming years, not least because demand is growing.

"The market is growing consistently year-on-year. There are a lot more users and they are becoming a lot more demanding. They are putting a lot more emphasis on looking for data and additional content and in so doing the quality of the network is improving," he says.

A possible turning point could be 2010, when South Africa hosts the football World Cup. Botswana, which shares a border with the country, is likely to experience a surge in demand for data around this time, as football fans and tourists turn to the internet for information.

"There is obviously going to be a lot of tourism spill over, so I think a lot of preparation work for that is required. That goes for Botswana, Namibia and all the surrounding countries," Wright says.

Train to gain

Another challenge that Wright identifies in Botswana is a shortage of skilled telecoms engineers. Indeed, he says that Motorola likes to operate by transferring a certain amount of skills to its clients, allowing then to control and maintain certain parts of the network infrastructure that Motorola deploys. However, this is sometimes made difficult by a skills shortage.

"We don't like to come and drop boxes and walk out. We like people to pick it up, and do the tier-one and tier-two support themselves and we do tier-three support. That is the model we are trying drive as hard as possible within the Nepad and Sub-Saharan region," Wright says.

"Generally there is a skills shortage in the telecoms industry. And that is covering a multitude of technologies. Anything to do with telecoms there is a skills shortage."

Optimising networks

With limited bandwidth, it is important for operators in Botswana to ensure their networks are working at maximum capacity. This is an area that Motorola handles through its managed services division.

"Typically in some networks you can get a 10% to 15% improvement in the network quality," Wright says, referring to network optimisation techniques that Motorola deploys.

He adds that while the benefits for some networks are quite marginal, and that much depends on the initial installation and the original planning of that network. But network optimisation is also something that operators need to continually practice.

"It is a moving target, network optimisation doesn't necessarily mean that it is static. As you add base stations and as you add capacity, so you need to optimise and keep optimising," Wright adds.

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