Telecoms Operator Profiles Egypt, Nigeria and South Africa

Telecoms Operator Profiles Egypt, Nigeria and South Africa Document Prepared for Cisco 20 August 2010 Final Deliverable “We accelerate growth" Content – Aims and Objectives Executive Summary Aims and Objectives Project Scope Methodology Introduction Country Assessment Egypt Nigeria South Africa Conclusions Appendix A 2 Aim and Objectives The aim of the project is to provide Cisco with an overview of telecoms operators providing business services in selected countries Objective 1 Provide profiles of the top four operators per country Objective 2 Determine the product and service offerings of each operators Frost & Sullivan will achieve this Objective 3 aim by focusing on Establish the high level pricing strategy of the product offerings on a best effort basis the following objectives Objective 4 Establish the African footprint and presence of the operators Objective 5 Determine the key sectors the operators currently focus on 3 Content – Project Scope Executive Summary Aims and Objectives Project Scope Methodology Introduction Country Assessment Egypt Nigeria South Africa Conclusions Appendix A 4 Project Scope The scope of the project will focus on the managed services offerings of telecoms operators in three African countries Geographic Scope Product Scope Competitor Scope • The project will focus on the • The project will focus on the • Companies profiled will include: following countries: following product segments: – TE Data – Egypt – Managed services – Linkdotnet – Nigeria – MPLS – Raya – South Africa – Network solutions – Orange – Converged solutions – MTN Nigeria – Data centre solutions – Zain / Bharti – Security solutions – Globacom Egypt – Business applications – 21 st Century – Telkom – MTN Business Nigeria – Vodacom Business – Dimension Data / IS a ic fr A th ou S 5 Content – Project Scope Executive Summary Aims and Objectives Project Scope Methodology Introduction Country Assessment Egypt Nigeria South Africa Conclusions Appendix A 6 Methodology The project will be carried out by combining primary and secondary research FrostFrost && SullivanSullivan willwill utiliseutilise aa 33 stepstep approachapproach toto performperform thethe requiredrequired analysisanalysis For the primary research, Frost & Sullivan will develop FrostFrost && SullivanSullivan willwill taptap intointo thethe cross-industrycross-industry eexpertisexpertise discussion guidelines for the 1. Internal Expertise acrossacross thethe variousvarious businessbusiness unitsunits toto understandunderstand marmarketket targeted operators. 1. Internal Expertise dynamicsdynamics inin eacheach ofof thethe threethree countriescountries targetedtargeted Our experienced team of consultants, with good technical and commercial understanding of telecommunications markets, SecondarySecondary researchresearch willwill bebe utilisedutilised toto obtainobtain basicbasic will have discussions / 2. Secondary Research informationinformation aboutabout thethe operators,operators, includingincluding aa producproductt interviews with senior 2. Secondary Research stakeholders / managers in the overview,overview, referencereference customers,customers, financialfinancial informatioinformation n targeted organisations. This approach enables Frost & Sullivan to go beyond basic market information and obtain PrimaryPrimary researchresearch willwill focusfocus onon obtainingobtaining targetedtargeted an in-depth understanding of 3.3. PrimaryPrimary researchresearch informationinformation fromfrom operatorsoperators andand regulatorsregulators toto augmenaugmentt andand telecoms service offerings to the corporate sector verifyverify informationinformation obtainedobtained fromfrom secondarysecondary sourcessources AssessmentAssessment ofof ManagedManaged ServicesServices OfferingOffering byby TelecomsTelecoms 7 Content – Introduction Executive Summary Aims and Objectives Project Scope Methodology Introduction Country Assessment Egypt Nigeria South Africa Conclusions Appendix A 8 Introduction In managed services, the service aspect is emphasised whereas the underlying technology is transparent to clients Managed services is an umbrella term for ICT services Types of Managed Services which are outsourced to a third party provider Co-location and hosting – Managed services can be provided on the customer’s Content and application management premises, similar to traditional outsourcing Data Data Storage – Alternatively services can be provided at a third party Centre provider’s facility Computing services Effort spent by the third party is ongoing and is usually MPLS VPN managed through service level agreements Site-to-site IPSEC VPN The types of managed services considered in this study IP VPN IP Remote access VPN are shown in the adjacent figure – These definitions are somewhat fluid in their usage and in the Over optical way such services are sold to clients – for example, security Over packet services may be offered as part of IP VPN services Metro Metro – Metro ethernet, in particular, may refer to different types of Ethernet metropolitan networks Managed services in Africa are most established in South SIP Trunking Africa, where the market is estimated to be worth around IP Telephony Messaging US$2.75 billion Unified Comms Egypt and Nigeria lag behind South Africa in terms of the Web conferencing / collaboration size of the managed services market Identity access – Egypt’s managed services market is conservatively estimated Operations centre at around US$150 million, whereas that of Nigeria could not be determined Perimeter protection – The smaller market size can be attributed to a lower GDP, Security Platform security smaller private sector and poorer infrastructure than found in South Africa Although managed services are the traditional domain of systems integrators, the entry by telecommunications operators into this sector has been a global trend 9 Content – Country Assessment Executive Summary Aims and Objectives Project Scope Methodology Introduction Country Assessment Egypt Nigeria South Africa Conclusions Appendix A 10 Egypt – Country Overview A liberalised business environment and infrastructure investments have resulted in a vibrant telecommunications sector in Egypt Economic reforms since 2004 have resulted in a more Key Economic and Telecommunications Indicators favourable business environment with increased 1) July 2010 competition in the private sector and a liberalised and Population 78.8 million transparent regulatory regime GPD (US$) 2) 187.9 billion 2009 This has spurred growth in general and encouraged Real GDP Growth Rate 2) 5.3% 2010 – 2011 foreign investment, although the global recession has Private Sector Contribution 3) 67.2% 2008 resulted in lower GDP growth projections Telecoms Contribution to GDP 4) 4.2% 2010 The telecommunications sector has been a beneficiary of ICT Sector Revenues (US$) 4) 7.24 billion Q2 2009 this growth and also contributes around 0.5% to overall 1) June 2010 annual GDP growth rates per year Inflation 10.2% 4) Q4 2009 Growth in telecommunications has been assisted by a Fixed Line Subscribers 10.31 million strong commitment by government to ICT development Fixed Line Penetration 4) 13.4% Q4 2009 – There have been extensive investments in infrastructure Mobile Subscribers 4) 55.35 million Q4 2009 – Improving ICT skills has become a national priority Mobile Penetration 4) 72.1% Q4 2009 – Targeted initiatives aim to leverage Egypt’s positioning to 4) Q4 2009 become a contact centre hub in the region Internet Users 16.64 million – ICT hubs (Smart Villages) have been built in major centres Internet Penetration 4) 21.7% Q4 2009 These developments have opened up opportunities for Broadband Users 5) ~ 1.5 million vendors and service providers Source: 1) CAPMAS, 2) IMF, 3) Egypt Central Bank, 4) MCIT 5) Frost & Sullivan Of the 3470 companies active in the ICT sector 8% are listed as active in the broad telecommunications The number of companies in this sector has increased environment, as per the Ministry of Information and steadily year-on-year, attesting to demand from both the Communications Technologies (MICT) private and public sectors for ICT products and services – This includes vendors, resellers and solution providers Egypt is successfully positioning itself as an ICT hub in the region leveraging its geographic position, skills base, multilingualism and ICT infrastructure 11 Egypt – Country Overview The managed services and enterprise communications markets in Egypt are still in their early growth stages The telecommunications sector is dominated by the three – More than 95% of the population has access to mobile operators, Mobinil, Etisalat and Vodafone Egypt, telecommunications, with infrastructure concentrated in densely populated areas and the fixed line incumbent, Telecom Egypt (TE) – Fibre optic rings form the national backbone – Mobinil is the market leader in mobile communications with a market share of 45.9%, followed by Vodafone with 44.4% and – Extensive international connectivity within the region provides Etisalat with 9.7% 97.2 Mb/s bandwidth but remains monopolised by TE – The mobile sector in particular is very competitive – GSM networks have deployed 3G and 3.5G – There are also more than 30 internet service providers but TE Nonetheless, only two-thirds of private businesses make Data, part of Telecom Egypt, and LINKdotNET have a regular use of the internet, according to MCIT statistics combined market share of around 90%

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