The Future of African Backbone & Metro Fibre Networks

For the past two decades, the availability of affordable terrestrial fibre capacity has been one of the biggest obstacles to the development of the African Internet, a problem so complex few markets have managed to solve it, and many despairingly looked like they never might.

There is now urgency. Long regarded as an established, if not crippling feature in the structure of the African Internet, the terrestrial fibre gap was increasingly looking like a systemic digital development risk. Things are changing. The need to support 4G and FTTH network coverage and prepare for 5G is transforming metro capacity requirements. Data center operators, cloud providers and global hyperscale Internet companies are upending demand models. Private fibrecos such as Liquid Telecom are building extensive cross-country fibre networks. Others, like Dark Fibre Africa and CSquared, are reimagining African metro fibre models and upsetting traditional pricing approaches. And a wide array of China-funded fibre backbone projects are transforming the African wholesale fibre landscape.

This report is the outcome of years of accumulated research, data, and insights, provides an unprecedented view into the dynamics underpinning the African terrestrial fibre market. It is also about how, and where to generate investor value in this mishmash of opportunity and risk. And finally, and perhaps, most of all, it is about whether Africa will, at last, solve the mother of all bottlenecks, and what this means for individual countries’ ability to partake in the next industrial revolution.

A reference report for all stakeholders and investors in the African connectivity and Internet infrastructure markets.

Executive Summary

• Other digital infrastructure barriers have been gradually removed; but the terrestrial capacity infrastructure gap has persisted, stubbornly sustaining a growing African digital divide, one that sees 80%-90% of Internet traffic, usage and benefits accrue to urban, coastal cities, while the African interior remains woefully underpenetrated.
• There is now urgency. Long regarded as an established, if not crippling feature in the structure of the African Internet, the terrestrial fibre gap was increasingly looking like a systemic digital development risk.
• Things are changing. The need to support 4G and FTTH network coverage and prepare for 5G is transforming metro capacity requirements. Data center operators, cloud providers and global hyperscale Internet companies are upending demand models.
• Private fibrecos such as Liquid Telecom are building extensive cross-country fibre networks. Others, like Dark Fibre Africa and CSquared, are reimagining African metro fibre models and upsetting traditional pricing approaches. And a wide array of China-funded fibre backbone projects are transforming the African wholesale fibre landscape.
• This report, the outcome of years of accumulated research, data, and insights, provides an unprecedented view into the dynamics underpinning the African terrestrial fibre market. It is also about how, and where to generate investor value in this mishmash of opportunity and risk. And finally, and perhaps, most of all, it is about whether Africa will, at last, solve the mother of all bottlenecks, and what this means for individual countries’ ability to partake in the next industrial revolution.
• The report explores key questions surrounding the African terrestrial market, including the state of the current infrastructure, the nature and size of leased metro fibre demand, the scale and impact of government debt-funded fibre backbones, the evolution of metro pricing models, and what, at long last, Nigeria needs to do to unleash its considerable fibre potential.
• A reference report for all stakeholders and investors in the African connectivity and Internet infrastructure markets.

The insights derived from research on terrestrial fibre markets are distilled in this report, covering critical key questions and points, including:

• Why the buildout of backbones and the densification of the African metro is now a matter of urgency
• Why African terrestrial fibre economics have historically been so complicated, and what’s being done to fix them
• How African metro geographic economics make the metro fibre case harder
• Which wholesale metro markets carry the most upside
• The state of the African fibre infrastructure; how much has been deployed, and by whom
• The African fibre deficit: how much additional infrastructure the continent needs to meet optimal broadband coverage targets, and which markets have the biggest deficits
• What is the size of demand for leased metro fibre capacity, and our long term projections
• What is the impact of global Internet providers on African demand for capacity
• What is the impact of data centers on metro fibre demand
• What has been the impact of government backbones on fibre market dynamics
• The weight of Chinese capital on African fibre buildout
• Which government backbones are true broadband catalysts - and which run the risk of turning into white elephants
• What, in our view, governments can do to maximize their backbone investments
• Who the strongest investment plays are today, in the African terrestrial fibre market
• What specifically makes Liquid Telecom, Dark Fibre Africa and CSquared stand out in this space
• Why we say the African terrestrial fibre deficit has indeed been a market failure - but a government failure too
• Why we say the South African fibre market is ripe for consolidation - and who the acquirers and targets might be
• How Nigerian terrestrial fibre is being held back - and what should be done to fix it
• How Zambia may be small - but a good example of using competition to drive fibre uptake
• And much, much more..