Last week’s newsletter looked at growth in the connectivity segment of the value chain globally. This week’s newsletter looks at some specific examples and trends. In terms of global EBITDA margin, the connectivity segment sits at 30%, which is considerably higher than anywhere else along the value chain. The table shows examples from some Asia Pacific (APAC) countries and there is a wide variation. Indonesia and Thailand have incredible EBITDA margins of around 50%. South Korea is generally improving and moving towards the 30% global average. Australia sits at just about the average of 30%, though there are some worrying […]

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 […]

In August 2022, I wrote a blog post about the need for innovation in the allocation of spectrum. One proposal was to allocate spectrum to a Managed Spectrum Park (MSP). This blog post provides a bit more detail on how this could be done. For simplicity, let’s assume that there is 60MHz available in a high-demand frequency band such as 800MHz. The question is how to allocate the 60MHz effectively.  MSPs are appealing because they address the main failing of the current mechanism for allocating spectrum: winner takes all. An operator that wins a traditional national spectrum auction gets all […]

Our usual take on sector-specific telecom taxes is that they increase the price of telecom services, lead to either a slowdown in demand or even a massive reduction in demand (we’re looking at you, Uganda). But there is another aspect that is not as widely known: how governments’ can have an impact on retail prices by trying to control wholesale prices. Australia is a great example of good intentions that became mired in inflexible policies and has lead to really high prices and slow speeds.  In 2009, Australia started building a National Broadband Network (NBN) with the objective to deliver […]

Spectrum is an extremely high-value resource with companies prepared to pay enormous sums of money for exclusive access. Nigeria recently held an auction for 100MHz in the 3.5GHz band and MTN paid USD273 million for a 10 year exclusive license. But one of the main problems is that spectrum is often not fully utilized. There are geographic areas that a national operator might decide not to use that spectrum and there may be legitimate operational reasons for this decision. However, from a country perspective, this is a wasted opportunity because spectrum is in high demand and could be used to […]

Airtel Africa released its results for the quarter ended June 2022 and their performance is pretty impressive. EBITDA margin increased from 44% to 49% between 2020 and 2022. Revenues jumped from US$ 3.4 billion to US$ 4.7 billion. But one of the more interesting statistics is the trend for both voice and data. Data grew by 108% for the 2 years between June 2020 and June 2022 and voice grew by 44% for the same period. Strong data growth is the new normal but it’s the strong voice growth that is unexpected, especially when it’s predicted that voice revenues will […]

Mobile operators are notoriously reluctant to release useful coverage information. Individual operator coverage maps are generally useless. Airtel Zambia is a classic example – as you zoom in the map abandons any hope of showing coverage and just highlights specific spots where there is (may be?) coverage: Most coverage maps exaggerate coverage dramatically. The GSMA’s Mobile Coverage Maps use a really large radius for 4G of over 20km’s. In interviews with operators, the consensus for rural areas is around 8km, depending on factors such as terrain and population density.  Accuracy is important for two reasons:  Broadband connectivity has massive benefits […]

The GSMA has just released its Mobile Gender Gap Report 2022. In the report, it finds that the gender gap is quite large. In Kenya, the gap is 38%, in Nigeria it is 36% and in Senegal it is 16%. The report defines the gender gap as: One of the key findings is that “women are now 16 per cent less likely than men to use mobile internet, which translates into 264 million fewer women than men”. It sounds really dramatic and 264 million women not using the Internet seems like an enormous amount!  One of the recommendations of the […]

This week’s newsletter provides a quick update on the OECD digital tax framework. Some background first: On October 8th 2021, the OECD announced a ground-breaking tax deal for the digital age. The OECD’s two-pillar approach intends to take unilateral digital tax measures off the table and avoid trade wars over digital service taxes. The new tax deal, signed by 137 out of 141 member states, representing over 90% of global GDP, will allocate around USD 125 billion in profits to countries around the world. The implementation of Pillars 1 and 2 follows separate paths with the plan for implementation for […]

Back in 2019, Steve Song at Many Possibilities wrote a blog post explaining how spectrum auctions led to worse outcomes for competition and rural access. The high reserve price of auctions was a barrier to entry to any apart from the large operators. The result was unused spectrum. Zambia is the latest example: In April 2022, it invited bids for spectrum in 800MHz and 2600MHz. MTN and Airtel were awarded spectrum for a price of USD 41.5 million. 40MHz in the 2600MHz band was left unsold. ZICTA plans on putting this up for auction again in Q3 2022, along with […]