The world of communications technology is changing rapidly. One of the drivers of this change is Ericsson, a global leader in equipment, software and services that enable mobility. The speed of change is extremely evident in Africa, a market with huge growth potential. We talk to Fredrik Jejdling from Ericsson to find out more about operations in this explosive and exciting sector…
The telecoms industry in Africa has been one of the most important sectors in the growth story of the continent in the past two decades.The number of internet users on the continent grew at seven times the global average, with more than 3600% growth between 2000 and 2012, to 167 million users, according to data from Internet World Statistics. But while communication infrastructure development has been fast and widespread, Africa remains relatively under-connected in terms of fixed broadband, with rural areas having little or no access to any kind of online service. The majority of people access the internet through a mobile phone, and Kenya makes for a good example – the Communication Commission of Kenya reported 330,000 mobile subscriptions in 2001 compared to 30 million in 2013 and internet users grew from 200,000 in 2000 to over 19.6 million at the end of 2013, a stunning 9700% growth. There’s no doubt, telecoms is a booming market – between 2004 and 2007 the African telecoms market grew three times as fast as the world’s average and by 2005, the continent had invested $5 billion on telecoms infrastructures. However, it’s estimated that less than 1% of Africa’s internet users has access to a fixed broadband connection and although Africa accounts for 15% of the world’s population, only 6.2% of the world’s internet subscribers are Africans.
So what is the next step? How can the continent continue with its development and include more and more people? It’s a very difficult question. Fortunately, there is a huge amount of work going on on the ground, by innovative companies who are passionate about not only internet connectivity, but about telecoms as a whole and the opportunities that mobile broadband brings.
Ericsson is one such organisation, focused on providing equipment, software and services to enable transformation through mobility.
“We want to be an active part in the ecosystem and drive growth,” says Fredrik Jejdling, President and Regional Head, Ericsson sub-Saharan Africa.
Ericsson’s products and services have been hugely important for the growth of the market and the company is actively working on new solutions to add to its already burgeoning portfolio.
“We’ve seen explosive growth of voice connectivity, it’s grown to 700-800 million subscriptions over the last few years and will grow up to one billion in five years’ time. We have penetration with 3G and 4G of around 100-150 million at this stage, but that’s likely to grow up to 800 million in five years’ time. While Africa doesn’t have the penetration levels that many other markets have, (although Cape Town probably has penetration of 100% with mobile broadband) it is very diverse and is in the process of adopting these technologies. It’s going faster and I would say that the consumption patterns are similar to India and even faster in some cases.
“Mobile data traffic is doubling every year and that’s a big thing for us to keep up with. We are in the relatively early stages but the adoption of these services is happening a lot faster than in any other markets,” explains Jejdling, who has been running things for Ericsson in Africa for the past three years.
AN AFRICAN OPERATION
Stemming from its roots in Sweden, Ericsson has a long history in Africa since its first business within South Africa and Kenya in 1896. Sweden and South Africa in particular enjoy a very positive relationship and in January, President Jacob Zuma met with Swedish Prime Minister, Stefan Löfven to discuss the warm and strong bilateral relations between the two countries.
Jejdling, who is originally from Sweden but who has worked extensively in India, says that working in Africa has been an incredible experience and seeing the impact of the growing industry is particularly pleasing.
“I think it’s been a fantastic three years so far and it’s a privilege to be in a market where the telecom and technology evolution has a profound impact on an individual level and how we can connect the unconnected, facilitating services such as banking and entertainment that 80-90% of people could not access previously.
“I’ve been in Africa for three years and I’ve had the privilege to run Ericsson in sub-Saharan Africa for that period of time. We started in South Africa but are now present in more-or-less all the African nations. I try to travel as much as possible because I believe even though South Africa is a big market for us, it’s very important to be visible with the customers and also talk to the regulators and government officials in each country,” he says.
Ericsson is always developing products and services that complement what it calls the ‘Networked Society’. The company has a vision of more than 50 billion connected devices beyond2020 and whether it’s through smartphones, tablets or laptops, or machines and devices, Ericsson will play a big role in order to meet growing demand.
“In a market where you don’t have a lot of fixed line data infrastructure, the profound impact on mobility and broadband becomes high so the main focus is to build out the 3G and 4G networks, and that is happening at a rapid pace, to satisfy the strong underlying consumer demand. A lot of the networks that we have are more than doubling data traffic year-on-year in the big metros so we see a big pent up demand.
“We also believe here in Africa that the impact of broadband mobility is positive as it drives other services which have a profound impact on people. That includes media and TV distribution over the mobile networks – 85-90% of people in Africa don’t have access to content in a relevant way, largely due to the pricing and distribution of TV. There you start seeing what impacts these networks have beyond the mere data,” says Jejdling.
Financial inclusion is the perfect example of how the growing telecoms industry is helping people to become more involved in mainstream society, especially those people from rural Africa. Take Kenya for instance – mobile money transfer system, M-Pesa, was developed in 2007 and spread quickly, now boasting millions of users and often being praised for allowing people access to the formal financial system and for reducing crime in an otherwise largely cash-based society. Services like this would not be nearly as efficient or successful without the work of companies like Ericsson, providing top-of-the-range technology.
“We have around 700 million Africans who are not banked and who stand outside of the financial system. Our mobile banking solutions and other banking solutions enable them to be financially connected.
“Our focus is about mobile broadband, it is about TV and media, it is about mobile banking, and it is about operating with customer networks in sometimes complex environments,” says Jejdling.
And the demand for services and technology in Africa is no less high-profile than in any other part of the world. Consumers want the best technology at the best price and the myth that Africa is behind the times is quickly becoming exactly that – a myth.
“I don’t think people are less discerning when it comes to quality or service in Africa compared to the rest of the world. A lot of the services will go directly digital and not pass through the physical stage and so we might see a faster development of the digital services based on innovation for necessity in these markets,” says Jejdling.
“It’s foolish to say that Africa will be served by lesser or lower quality; I just don’t believe that, I think it will be the same as the rest of the world but I think the service offering might be more utilitarian in nature given that certain practical services will be digitised quicker in this market because there is no alternative in the bricks and motor world. Banking is the obvious example but also media distribution and consumption. I think the quality pattern will be the same and I think this will surpass the rates of the other markets but I think the offerings in nature will be slightly different,” he adds.
TALKING 5G
The next big step for the telecoms industry, not just in Africa but around the world, is the jump from 4G to 5G. This next generation of mobile broadband is expected to become widely available by 2020, and will be around 50 times faster than 4G – making it possible to download a two-hour film in a single second. At Mobile World Congress 2016 in Barcelona, one of the industry’s biggest trade shows, many of the big name players announced their intentions for 5G development.
“We are working on developing 5G,” says Jejdling. “For us it’s important to focus on all the technologies we develop. We still do a lot of work on 2G which is still relevant in Africa. We still do 3G and primarily 4G as this is the technology that is deployed the most globally at this stage. I would say that we spend around $5 billion each year as a company on R&D and we always look ahead and see where the future sits but the topic under discussion the most right now is 5G – all the infrastructure that’s rolled into that and how different the industry data networks will be built out to serve this IT environment that will be better served with 5G rather than 4G. From a technology perspective, 5G is almost there.”
In Barcelona, Ericsson announced a number of plans that involve 5G and its development. Specifically, Ericsson will partner with Cisco and Intel to develop and trial what is expected to be the industry’s first 5G router. This router is expected to enable business and residential customers to achieve significantly faster networking speeds, lower latency, and the ability to handle exponentially more Internet-connected devices.
Ericsson, along with partner SK Telecom, also made the announcement that it had succeeded in trials and achieved a cumulative 20Gbps of data throughput in an outdoor environment using the 15GHz frequency band with two simultaneously connected mobile devices of a downlink bit rate of over 10Gbps each. This is an important development for future 5G commercial services.
The company also announced partnerships with a host of different global companies that involve developing new technology platforms and the ‘Internet of Things’ (IoT) – the network of physical objects; devices, vehicles, buildings and other items embedded with electronics, software, sensors, and network connectivity; that enables these objects to collect and exchange data.
AT&T, Cable & Wireless, Amazon Web Services, 20thCentury Fox, Quanta, Geely Auto and Qualcomm are just some of the companies that have announced partnerships with Ericsson at global level.
In Africa, Jejdling explains that developing products and services to enhance the customer experience is a focus right now.
“We are talking a lot about the customer experience,” he says. “We are launching products around expert analytics which you can use to monitor the customers and link individual customer satisfaction and drive overall satisfaction networks by understanding individual consumers – we work a lot on these type of things to generally make the experience better for the customer.
“We have a product called NuVu which is a Video On Demand (VOD) system, very suitable for Africa and based on affordable downloads for content viewing. It’s based on utilising the networks when they are not being used. It’s not a streaming service and we believe it’s well priced for price sensitive consumers.”
Importantly, as well as investing in innovative products and partnerships, Ericsson is also keen on physically growing its footprint in order to serve potential customers in new geographic markets.
“If there’s an opportunity in the market we will take it,” Jejdling says. “Nigeria and South Africa are big markets and then there are fast growing markets with lower GDP levels like Rwanda and the DRC but they can be more opportunistic. You need telecoms in all markets and we look at it to make sure it makes sense. Mobile customers are global in nature so we need to serve them across the whole of Africa.”
THRIVING IN DIFFICULT TIMES
Interestingly, even during times when the economic climate is not fostering prosperity, Ericsson, and the wider telecoms industry, has managed to continue to post positive results.
“We publicise our results for the region, in 2014/15 we recorded growth of around 18% so that indicates a strong build up in major markets linked to 3G and 4G,” Jejdling explains. “Of course, we monitor the economic situation and we see the commodity prices and currency depreciation, and we understand the impacts but that is the reality for everybody doing business in southern Africa.
“With our business there is underlying, unsaturated demand for our services. The operators have a growing data volume to take care of.
“Our long term perspective is that we’re positive on Africa but we need to look into the short term macro-economic issues that everyone doing business is faced with in Africa,” he adds.
Growth in telecoms is important as it can quickly stimulate growth in other areas of the economy. This is why Jejdling says it’s so important for the government and the regulators to create a positive, flexible, easily managed environment.
“Every country that has a clear national broadband plan typically has a better chance of succeeding in this area. Creating an environment conducive for investment and growth, where the rules are known to all the participants, is a big task for governments.
“The whole environment of telecoms is a little bit more than just supplying equipment and services to customers and operators. For an environment in telecoms to thrive, there needs to be a standardisation process around spectrum allocation meaning that we try to influence and work together with government and regulators to bring best practice from other markets.
“It’s about trying to coexist with the regulators, governments and trying to be relevant with the operators and find solutions that work in Africa together.
“Government, regulators and operators need to have a common agenda to create a telecom environment that is conducive to growth and the benefit of this is far reaching beyond the telecom sector – other industries will be transformed and GDP will grow,” he says.
But, of course, the downside (or the upside in Jejdling’s view) is that a stable environment with big growth opportunities quickly attracts competition.
“When you have a market that has the prospect of growth, it quickly attracts a lot of competitors which is good. What we try to focus on is being the best and most relevant for our customers. If they feel like they’re getting a good service, a good product and a good relationship from us then we hope that would be the best way to fend off competitors but they are certainly here.”
Some cities in sub-Saharan Africa are becoming known for their scientific and technological environments and as such, the continent is now home to some of the world’s most forward thinking, innovative and pioneering telecoms businesses.
“We are certainly market leaders but it’s difficult to compare. 10-15 years ago, we have around 15 serious competitors but now there is just a handful left and each has different strengths. We are strong in mobility and TV and media but our competitors may have moved into handsets when we exited,” Jejdling explains. “It’s a constantly changing environment; in many of the new sectors, our traditional competitors are not even active and we find new competition.”
Ericsson’s knowledge, skills, ability, experience and global reach mean that it will remain a leader in Africa despite the economic situation and the advance of its competitors. As the telecoms market grows and demand continues to exceed supply, the need for technological solutions will become more prominent and companies that have global expertise and experience on the ground in Africa will enjoy a thriving market place.
With the onset of 5G and IoT, and with a generation of people that doesn’t expect to wait for anything, these are indeed exciting times for the telecoms industry and Ericsson and it now remains to be seen how quickly this novel organisation can develop its Networked Society – where anything is possible.