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The African FTTH Boom

Cover of The African FTTH Boom

Management Report
Published: December 2016
Pages: For full details, please email deborahf@cmsinfo.com
Research from: Xalam Analytics
Sector: Broadband & Fixed

From: GBP 1154.00
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Africa is in the midst of an FTTH boom – an increasingly loud FTTH revolution that is made even more notable by the unique nature of some of its characteristics. Between 2014 and 2016, the number of homes and premises passed by fibre has more than tripled. The cumulative number of African homes/premises passed by fibre crossed the 1m mark in 2016. We expect it to hit the 2 million mark in 2017.
 
The total number of FTTH connections in Africa passed the 500k mark in 2016. Recent growth has been strong: around 75% of Africa’s FTTH connection growth since 2010 has occurred over the past two years. Last mile Fibre is upending
Africa’s retail broadband market dynamics – from bandwidth speeds to user experience, pricing models and market share upheavals, it’s a whole new game. These dynamics are analyzed in our new report, “The African FTTH Boom, Last
Mile Fibre Dynamics, Economics and Outlook in African Markets” - arguably the most comprehensive analysis developed on the rise and impact of FTTH in African markets.
 
The African FTTH Boom takes an extensive look at FTTH adoption patterns across the continent, including key infrastructure, market structure and regulatory drivers along with current and projected levels of homes passed and connected.
The report provides a mapping of which markets appear most attractive for an FTTH rollout; it offers an in-depth analysis of the addressable market for FTTH in Africa, from businesses in central business districts to gated communities and
beyond. Finally, the report takes a close look at African FTTH economics, from cost of deployment to ARPU, profitability and potential returns, along with the implications of those dynamics on projected rollout and adoption
 
The insights derived from that our research on African FTTH are distilled in this report, covering critical key questions and points, including:
 
> The rise of last mile fibre is transforming Africa’s broadband retail market dynamics – from bandwidth speeds to user experience, pricing models and market share
upheavals, it’s a whole new game.
 
> The total number of FTTH connections in Africa passed the 500k mark in 2016. Recent growth has been strong: around 75% of Africa’s FTTH connection growth since 2010
has occurred over the past two years.
 
> Five markets account for 85% of Africa’s FTTH/P homes passed – South Africa, Kenya, Nigeria, Morocco and Mauritius. But this boom is about more than the top 5.
 
> Supply and demand fundamentals are coming together to push African FTTH. Only around 45% of Africa’s Fixed broadband addressable demand has been reached by fixed broadband access solutions – and only 2% is currently reached by FTTH.
 
> We find the notion of an almost mobile-only African connectivity marketplace to be largely fallacious. The rise of FTTH is built on a realization that 3G/4G, ADSL and other technologies just aren’t going to cut it for some use cases.
 
> Regulation has been a problem for African FTTH; for the most part, African market structures are not optimized for FTTH roll-outs. That African FTTH is picking up as much as it has been is really more a testimony to the bottled-up potential of demand for ultra high speed connectivity.
 
> Africa’s mobile operators have traditionally ignored FTTH. As a result, they have fallen behind. Strategically, we do not believe top tier operators can afford to lose too much ground on FTTH.
 
> African FTTH economics are good in the first 1-2 phases of rollout, and much tougher thereafter. Along with regulation, these economics are the biggest risk to all the projections we have made in our report.
 
> Our business case analysis reinforces the fact that FTTH at scale is a long, long term game. Investors looking for quick returns and payback periods will not find them here. But providers that stick to it over the long run will hold a nearly unassailable position in Africa’s digital infrastructure market.

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