Growth in the connectivity segment of the value chain
Operators from around the world have made claims that the current telecoms environment is unsustainable and that their investments in the segment are unviable because they can’t make any profit. Here are statements from European operators and from an Australian operator. These are serious companies making the claim that their operations, their investments and employees will be shut down because it is impossible to make money. So, let’s do a quick analysis of these claims. In the table below, we have the growth between 2008 and 2020 of segments of the Internet Value Chain. It shows that in 2008, the connectivity segment share of the Internet value chain was 19%. It dropped to 15% in 2020, but the overall growth was still 331% between 2008 and 2020. Whatever way you look at it, this is impressive growth. Just on this basis alone, it seems highly unlikely that a segment that was worth US$229 billion in 2008 and is now worth US$988 billion in 2020 is an unsustainable business. The final column shows the EBITDA margin in 2020 and the connectivity segment has the highest EBITDA margin. This is a highly profitable and expanding market.
|USD billion||Share %||USD billion||Share %||USD billion||Share %|
|Enabling Technologies & Service||188||16%||442||13%||812||12%||332%||11%|
Other news from around Africa
- Spectrum in Nigeria: The NCC expects US$1.1 billion from 5G spectrum auctions. It’s surprising that neither the trade-off between high spectrum auctions and lower investment nor wasteful allocation of spectrum to two or three national operators is considered.
- Starlink in Zambia: Internet services provided by Starlink is expected to be operational within the next 6 months.
- MTN and fibre rollout: MTN’s infrastructure arm, GlobalConnect, is rolling out 135,000km of fibre-optic cabling by 2025. Fibre has been the place to be for the last few years in telecoms.