Telecoms operators need $1.7tr investments to meet data demand

By Bankole Orimisan

BETWEEN $1.5 trillion-$1.7 trillion is the amount of capital the global telecoms industry needs to invest over the next five years in order to meet the demand for data.

  Those were the figures mooted by Etisalat Chief Executive Officer, Ahmad Abdulkarim Julfar and Telenor CEO and GSMA Chairman, Jon Fredrik Baksaas at the just concluded Mobile World Congress in Barcelona, Spain.

  “The network of 2020 will be all-IP, it will need to handle enormous volumes of data, and be safe and secure. To realise this there are huge investments that need to be done,” said Baksaas, adding, “the business models behind this investment need to be there.”

  Besides, Mckinsey, a global advisor and counselor to many of world’s most influential businesses and institutions also projected that extra $30 billion will need to be put into the global telecommunications sector by 2015 for expansion.

  Indeed, in Nigeria, the Chief Executive Officer, Brymedia Consortium and a former CEO of MTN Nigeria, Adrian Wood had in an interview with The Guardian stated that Nigeria would need another $20 billion investment to revolutionise the broadband regime and record much more success that the voice era. 

  According to him, for Nigeria to become highly competitive in technology development, the country needs adequate broadband penetration, saying that in order to attract investments from foreign companies and countries, the country needs fast broadband rollout, and that is what is driving technology trends in developed counties.

  “I think the voice segment has been able to attract appreciable level of investment, about $25 billion. The next broadband phase will require additional $20 billion investment for the needed impact,” Wood noted.

  Already, Nigeria’s investment in the last 12 years, which was focused mainly on the growth of voice services, is put at over $25 billion. President Goodluck Jonathan recently affirmed that the telecommunications sector grows 30 per cent year-on-year basis.

  The minister of Communications Technology, Mrs. Omobola Johnson had at a recent broadband forum in Lagos hinted that government shopped for new $25 billion investment in Nigeria’s ICT sector, which would be channelled strategically towards realising the five-fold target increase on broadband connectivity across the country.  

  Meanwhile, at MWC, Julfar said that investments couldn’t just be made by operators, hinting that over-the-top service providers and governments needed to contribute in some way.

  “All stakeholders need to work more closely together,” he said.

  U.A.E.-based Etisalat benefits from a government that has stated its ambition to be the world’s leading provider of e-government services.

  Julfar said that the government was aware of the “transformative effect” that mobile technology has on people’s lives.

  Among the many initiatives being driven there is a scheme that will see mobile phones used in place of national identity cards.

  “Other markets lack good, visionary governments,” he acknowledged.

  Meanwhile, during the same keynote, America Movil CEO Daniel Hajj hailed the progress of Latin America.

  “A few decades ago, few people would have predicted the economic development of Latin America,” he said, pointing to the financial crisis of the 1980s.

  “Now you could call it the LatAm moment, or even the LatAm decade,” he said.

  ICT is a “powerful engine for growth” in the region, he said, and this has helped America Movil grow into Latin America’s largest operator.

  12 years ago, the company generated 80 per cent of its revenue in its home market of Mexico; now that figure stands at 32 per cent. Similarly in 2002, voice accounted for 90 per cent of America Movil’s revenue, Hajj said. Now it accounts for just 39 per cent, with data and content services making up the lion’s share.

  “The road ahead is very promising, but we as an industry need more networks, better regulation and more viable ecosystems,” he said.

  Like his opposite numbers at Telenor and Etisalat, Hajj talked up the importance of making a return on investments.

  “America Movil is investing in infrastructure for fixed, mobile and TV services. We need to find sustainable [business] models,” he said.