Wednesday, May 05, 2004
Telkom gives glimpse into its Africa strategy
By Guy Berger
Highway Africa News Agency
CAIRO: South African fixed line telephone company, Telkom, has provided a peep into its future growth strategy, during the Africa Telecom 2004 conference taking place in Egypt this week.
In a briefing for telecom operators from other countries on the continent, the company’s Chief Techical Officer, Reuben September, laid out what he called “a vision of connected Africa through networks.”
His colleague Wally Beelders, executive for International and Special Markets, disclosed that a detailed version of the strategy would be presented to the Telkom board later this month. The directors would be asked to approve the necessary resourcing to make it happen.
According to Beelders, Telkom was looking at offering some of its satellite and submarine capacity on a wholesale basis to potential partners around the continent.
September outlined the rationale for the strategy as being “the bigger the networks, the lower the costs.” For this reason, Telkom wanted to set up “strategic partnership arrangements” with other telecoms companies in Africa.
One benefit would be using collective power to address high costs of using satellites – a technology that was sitting with huge underused capacity.
The company seems set to follow in the footsteps of its compatriot mobile fellows, Vodacom and MTN, who now earn a significant portion of their revenues from services around the continent.
Pre-empting criticism of South African expansionism, he said Telkom was seeking a take-on-board, not a take-over.
As one of the few African telecoms institutions that have made the transformation from state bureaucracy to stock-exchange listed commercial success, the company is the strongest fixed-line actor on the continent.
September said that Telkom already had relationships with other African countries, through its undersea cables, which had been build with a vision of 25 years capacity, but where take up had reduced this to ten or twelve.
An Eastern Africa submarine cable system, as part of a New Partnership for Africa's Development (Nepad) project with several countries, was in the pipeline. A total of 24 African countries used Telkom’s satellite services for basic voice traffic, and VSAT facilities were also used by major customers around the continent.
September also outlined how Telkom acted as a clearing house for international Voice over Internet Protocol (Voip) for a number of African countries, a system that enabled telcos to save on cross-border calls.
What Africa needed, he argued, was much more co-operation, and Telkom stood ready to serve as an outsource partner for players around the continent. He told the briefing that the company could offer:
* Network management from a single centre – the National Network Operations Centre in Pretoria.
* Management of companies’ local and wide area networks through the same centre.
*Network architecture through IP technologies developed by Telkom in conjunction with its Centres of Excellence – university-based institutes that included partnerships with Telkom’s supplier companies.
September said that African operators needed a strategy that would integrate fixed and mobile connectivity. The continent also needed high speed connections between domestic and foreign platforms, on a large scale so as to drive down costs.
“African issues drive the need for broadband – such as for use in e-government, e-learning, telemedicine. If we have fixation on narrowband services, we will exclude ourselves from broadband,” he argued.
Broadband could be achieved through copper, satellite, optical fibre cable, and wireless such as Wifi and Wimax. “Presently, wired and fixed wireless are most appropriate for broadband. Huge data users are still better served through fixed networks through their capacity, quality and reach.”
September cautioned that without investment and growth in broadband fixed systems, there would be a limit to the amount of traffic carried on mobile telephone systems. “Fixed and mobile will be forced back to the table, to find an integrated backbone network so that both parties can benefit,” he said.
“Mobile growth is a huge revenue source for fixed line. We support and enable the growth because we benefit from it,” added September.
“A key consideration therefore is that African operators equip their networks with broadband capability, as narrowband will not on its own fuel the economic growth of Africa.”
Asked to respond to the argument that partnerships would not work if Telkom sought to get the higher margin in any deal, Beelders responded that margins in connectivity were declining. “Value will be in what you can offer the user, because connectivity itself will become dirt cheap,” he said.
It was important that Telkom was not seen as milking any relationship, but providing commercially competitive solutions, he said.
Telkom, it appears, is positioning to help modernise fixed line services in Africa. Yet, as a member of the audience observed at the briefing, it will take lots of money and a long-term view on investment returns, for the venture to succeed.
Highway Africa reports from Cairo are made possible with support from the Swiss Agency for Development and Cooperation. Editorial decisions are solely the responsibility of Highway Africa.
By Guy Berger
Highway Africa News Agency
CAIRO: South African fixed line telephone company, Telkom, has provided a peep into its future growth strategy, during the Africa Telecom 2004 conference taking place in Egypt this week.
In a briefing for telecom operators from other countries on the continent, the company’s Chief Techical Officer, Reuben September, laid out what he called “a vision of connected Africa through networks.”
His colleague Wally Beelders, executive for International and Special Markets, disclosed that a detailed version of the strategy would be presented to the Telkom board later this month. The directors would be asked to approve the necessary resourcing to make it happen.
According to Beelders, Telkom was looking at offering some of its satellite and submarine capacity on a wholesale basis to potential partners around the continent.
September outlined the rationale for the strategy as being “the bigger the networks, the lower the costs.” For this reason, Telkom wanted to set up “strategic partnership arrangements” with other telecoms companies in Africa.
One benefit would be using collective power to address high costs of using satellites – a technology that was sitting with huge underused capacity.
The company seems set to follow in the footsteps of its compatriot mobile fellows, Vodacom and MTN, who now earn a significant portion of their revenues from services around the continent.
Pre-empting criticism of South African expansionism, he said Telkom was seeking a take-on-board, not a take-over.
As one of the few African telecoms institutions that have made the transformation from state bureaucracy to stock-exchange listed commercial success, the company is the strongest fixed-line actor on the continent.
September said that Telkom already had relationships with other African countries, through its undersea cables, which had been build with a vision of 25 years capacity, but where take up had reduced this to ten or twelve.
An Eastern Africa submarine cable system, as part of a New Partnership for Africa's Development (Nepad) project with several countries, was in the pipeline. A total of 24 African countries used Telkom’s satellite services for basic voice traffic, and VSAT facilities were also used by major customers around the continent.
September also outlined how Telkom acted as a clearing house for international Voice over Internet Protocol (Voip) for a number of African countries, a system that enabled telcos to save on cross-border calls.
What Africa needed, he argued, was much more co-operation, and Telkom stood ready to serve as an outsource partner for players around the continent. He told the briefing that the company could offer:
* Network management from a single centre – the National Network Operations Centre in Pretoria.
* Management of companies’ local and wide area networks through the same centre.
*Network architecture through IP technologies developed by Telkom in conjunction with its Centres of Excellence – university-based institutes that included partnerships with Telkom’s supplier companies.
September said that African operators needed a strategy that would integrate fixed and mobile connectivity. The continent also needed high speed connections between domestic and foreign platforms, on a large scale so as to drive down costs.
“African issues drive the need for broadband – such as for use in e-government, e-learning, telemedicine. If we have fixation on narrowband services, we will exclude ourselves from broadband,” he argued.
Broadband could be achieved through copper, satellite, optical fibre cable, and wireless such as Wifi and Wimax. “Presently, wired and fixed wireless are most appropriate for broadband. Huge data users are still better served through fixed networks through their capacity, quality and reach.”
September cautioned that without investment and growth in broadband fixed systems, there would be a limit to the amount of traffic carried on mobile telephone systems. “Fixed and mobile will be forced back to the table, to find an integrated backbone network so that both parties can benefit,” he said.
“Mobile growth is a huge revenue source for fixed line. We support and enable the growth because we benefit from it,” added September.
“A key consideration therefore is that African operators equip their networks with broadband capability, as narrowband will not on its own fuel the economic growth of Africa.”
Asked to respond to the argument that partnerships would not work if Telkom sought to get the higher margin in any deal, Beelders responded that margins in connectivity were declining. “Value will be in what you can offer the user, because connectivity itself will become dirt cheap,” he said.
It was important that Telkom was not seen as milking any relationship, but providing commercially competitive solutions, he said.
Telkom, it appears, is positioning to help modernise fixed line services in Africa. Yet, as a member of the audience observed at the briefing, it will take lots of money and a long-term view on investment returns, for the venture to succeed.
Highway Africa reports from Cairo are made possible with support from the Swiss Agency for Development and Cooperation. Editorial decisions are solely the responsibility of Highway Africa.
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