LeveragingInvestmentinBroadbandInfrastructure:

Rwanda&SenegalMichaelMinges

UN-OHRLLSConsultant

Dakar,1March2017

Contents

•  Broadband•  Countrycontext•  Infrastructure•  Investment•  Impact•  Demand•  Conclusions

WHYBROADBAND

Whybroadband?

• Telemedicine• Remotediagnosis• Electronicrecords

• EnhancedinternalcommunicaRons

• Onlineservicedelivery

• Schoolnetworking• Digitalcontent

• Newdigitaloutlets

• NaRonalintegraRon• Employment

Whatisbroadband?

•  24/7high-speedInternetaccess•  NouniversallyagreeddefiniRonofspeed

CONTEXT

“AnetworkconnecRonthatisalwayson,availableathome,atworkandonthemove,thatdeliversprogressivelyhigher

bandwidthsthatarecapableofsupporRnginnovaRveandinteracRvecontentand

services,astoenhancetheuser-experience.”

Speeds4Mbps 10Mbps 20Mbps 50Mbps

MulR–pointvideoconferencing

NotAdequate

Adequate Adequate Adequate

Downloadhigh–definiRonvideo

NotAdequate

NotAdequate

Adequate HighlyAdequate

Serverbackup(oneterabytecapacity)

NotAdequate

NotAdequate

NotAdequate

HighlyAdequate

Distancelearning

NotAdequate

NotAdequate

NotAdequate

HighlyAdequate

Telemedicine NotAdequate

NotAdequate

NotAdequate

HighlyAdequate

CONTEXT

COUNTRYCONTEXT

Landarea:24,580km2

PopulaRon:12mPopulaRondensity:471/km2GDPpercapita:US$697

Landarea:192,530km2PopulaRon:15mPopulaRondensity:79/km2GDPpercapita:US$900

Source:ColumbiaUniversity,WorldBank(2015).

Timeline

1997 1998 1999 2001 2006 2009 2011 2012 2013

PrivaRzed Listed

PrivaRzed Insolvent

Rwandatel•  PrivaRzedtwice•  Nolongerexists

Significantforeigninvestment(France,SouthAfrica,Luxembourg,US,Libya,Sudan,India,SouthKorea)

Sonatel•  BiggestcompanyinSenegal•  Largestcompanyonregionalstock

exchange•  3overseassubsidiaries

InternetmarketshareSeptember2016

12organizaRonswithASNs 4organizaRonswithASNs

Orange65%

Tigo26%

Expresso9%

Senegal

Source:ARTP.

MTN40%

Tigo38%

Airtel22%

Others0.2%

Rwanda

Source:R

URA

.

BROADBANDINFRASTRUCTURE

Firstmile:InternaRonalbandwidth

SaoTome $2,500Kenya $287Madagascar $844Burundi $300Rwanda $125

InternaDonalconnecDvitywholesaleprices(US$perMb/spermonth),2014

Source:W

orldBank.

MiddleMile:NaRonalbackbone

InternetExchangePoints(IXPs)TowardsasustainableInternetecosystem

•  Launchedinmid2004•  ManagedbyRICTAwith11parRcipantsinlate2016

•  Trafficrose25%in2016

•  Subjectofdiscussionforseveralyears

•  StatutesadoptedinNovember2015

•  SlatedtolaunchsoonwithADIEasheadofAdministraRveCouncil

Publicandprivatedatacentersinbothcountries

Lastmile

0102030405060708090100

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Rwanda3Gcoverage(%ofpopulaDon)

Source:RURA,Sonatel,esRmates.

0102030405060708090100

2008

2009

2010

2011

2012

2013

2014

2015

2016

Senegal(3Gcoverage,%ofpopulaDon)

Broadbandspeed3G+

ê4.3Mbpsé1.9Mbps ê4.9Mbpsé1.5Mbps

Twodifferentpathsto4G•  Rwanda:PPPwholesalemodel•  Publicprivatepartnership

(PPP)establishedtodeploy4G(KTRwandaNetwork(KTRN))in2013

•  KTRNiswholesalersellingcapacitytoretailers(mobileoperators&ISPs).

•  KTtoinvestUS$140millionwhilegovernmentprovidedfiberassets&frequencies

•  Launchedin2014•  Status:14Gwholesalerand9

retailers

•  Senegal:AucRonmodel•  Operatorsallowedtotest

(2013-2015)•  Tenderlate2015

–  ReservepriceFCFA30billion(US$50million)

–  Nobids•  Sonatelextendedlicensefor

17yearsincluding4GauthorizaRoninJuly2016–  LicensefeeCFA100billionof

which4GfrequencieswereFCFA32billion($54million)

•  StatusFebruary2017:14Gprovider

4Gdeployment

0

29

47

95

0102030405060708090100

2014 2015 2016 2017

4GpopulaDoncoverage,Rwanda

Source:RURA.

70

90

0102030405060708090100

2020 2025

4GpopulaDoncoverage,Senegal(perSonatellicenseterms)

3years

9years

Source:MinistereDesPostesEtDesTelecommunicaRons.

•  ConsorRumduServiceUniversel(CSU)awardedUniversalServicelicenseawardedthroughapublicbidin2009

•  Includes5.8GHz&2.4GHzfrequency•  Launched2013

•Landarea:29,445km2 •PopulaDon(2013Census):541,032 •Density:18/km2

MATAM

INVESTMENT

Measuringinvestment

Tower:$100BaseStaRon:$100

① Infrastructuresharing② Licensefees③ Inprivatemarket,needstomakebusinesssense

$300investment $400investment

Top10privateparRcipaRonininfrastructureprojects

RWANDAProject

Investment(US$m)

AkanyaruValleyPowerProject 320

MTNRwanda 289

MillicomRwanda 187

KivuWat 142

Rwandatel–2ndDivesRture 100

KibuyePower1 76

Agahozo-ShalomPVSolarPlant 24

Rwandatel-FirstDivesRture 20

GisenyiMethaneGasPlant 16

Aggreko10MWPowerStaRon 2

TOTAL 1,176

ICT 596

ICT(%) 51%

SENEGALProject

Investment(US$m)

OrangeSonatel 2,270

BlaiseDiagneInternaRonalAirport 730

MillicomSenegal 538

SenegalThermalFacility 344

DakarDiamniadioTollRoad 264

SudatelSenegal 260

Dakar-DiamniadioTollRoadExtension 173

TobeneIPP 165

DakarSeaport 134

DakarPortTerminal 132

TOTAL 5,010

ICT 3,068

ICT(%) 61%Source:W

orldBank,Priv

ateParRcipaRo

ninInfrastructureDatabase.

Telecominvestmenttrends

Rwanda

2.9%

2.4%

3.6%

5.8%

4.3%

9.0%

3.6%

1.3%

1.5%

2.0%

3.2%

0

20

40

60

80

100

120

140

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

US$m As%ofGFCF

Senegal

Note:GFCF=GrossFixedCapitalFormaRon.PricesincurrentUS$.Excludinggovernmentinvestments&licensefees.Source:AdaptedfromRURA,WorldBank,newsreports.

4.8%

3.5%

5.5%

4.9%

4.9%

8.2%

8.7%

8.3%

12.4%

8.7%

7.7%

0

50

100

150

200

250

300

350

400

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

US$m As%ofGFCF

InvestmentcomposiRonSonatelexample

•  Mobile–  Upgradingto3G/LTE–  Extendingcoverage–  Improvingquality

•  Network–  TransformingtoIP

•  Other–  Datacenter&dataarchival–  Land,buildings&vehicles–  UpdaRnginformaRonsystems

Mobile54%

Network13%

Other33%

Sonatelinvestmentareas,2015

Totalinvestment:CFA69b(US$117m)

Source:AdaptedfromSonatelAnnualReport2015.

Investmentsources

•  Foreigninvestor(generallyonlyiniRally)•  Bankloans•  Suppliercredits•  Cashflow

ECONOMICIMPACTS

Directeconomicimpact

Rwanda

$153 $153$202 $190 $210 $232

2.5% 2.4%

3.0% 2.8%3.1%

3.3%

2010 2011 2012 2013 2014 2015

Infocommvalueadded(US$m)

As%ofGDP

Senegal

$984 $1,051$1,026$1,157$1,179$1,018

10.0% 10.0% 10.1%10.6% 10.4% 10.1%

2010 2011 2012 2013 2014 2015

Telecom&postsvalueadded(US$m)

As%ofGDP

Note:Constantprices.Source:AdaptedfromANSD&NISR.

Contributed~10%ayeartoGDPp.p.growthContributed~5%ayeartoGDPp.p.growth

Indirectimpact

Katz,RaulL.andKoutroumpis,Pantelis,“TheEconomicImpactofTelecommunicaRonsinSenegal”.Communica)ons&Strategies,No.86,2ndQuarter2012,pp.21-42.AvailableatSSRN:htps://ssrn.com/abstract=2270502

•  “Accordingtothemodel,thereissRllnosignificanteffectfromtheadopRonofbroadbandinSenegal”

•  “…suggestsanannualimpactfromeach1%incrementofmobilepenetraRontocontributeslightlymorethan0.05%onGDP”

SECTORIMPACTS

LesjeunesSénégalaisàl'assautdeYouTube

htp://www.rfi.fr/afrique/20160113-senegal-youtube-videos-buzz-sandale-man

VéritableespacedecréaRon,laplateformevidéoquioccupe20%delabandepassanteauSénégalesttrèsappréciéedesjeunesquis'ensaisissentpourproduireducontenu.

Government

Health

FinancialinclusionMobilemoney

Rwanda Senegal

55

1320.8

2.5

2013 2014

AcRveaccountsper1,000adults

TransacRonvalue(%ofGDP)

Source:IMFFinancialAccessSurvey

68 140 263 349 3690.2

3.6

6.8

12.8

18.7

2011 2012 2013 2014 2015

AcRveaccountsper1,000adults

TransacRonvalue(%ofGDP)

DEMAND

“SignificantlyincreaseaccesstoinformaRonandcommunicaRonstechnologyandstrivetoprovide

universalandaffordableaccesstotheInternetinleastdevelopedcountriesby2020”

—SustainableDevelopmentGoal9.C

2015 Rwanda Senegal

2Gcoverage(%ofpopulaRon) 99.9 92

3Gcoverage(%ofpopulaRon) 92 80

Mobilephone(%households) 60 93

Electricity(%households) 23 61Source:RURA,Sonatel&NISR,ANSD.

Affordability

Rwanda Senegal

$53

$8.45

59%

11.3%

0%

10%

20%

30%

40%

50%

60%

70%

$0

$10

$20

$30

$40

$50

$60

2011 2017

Cheapestmonthlymobiledataplan(Orange,US$)

As%ofGDPpercapita

$27 $2.8

59%

4.8%

0%

10%

20%

30%

40%

50%

60%

70%

$0

$5

$10

$15

$20

$25

$30

2010 2016

Permonth(US$)

As%ofpercapitaGDP

Affordabilitycont.

•  Existenceofdailyandweeklyplansenhanceaffordability

•  AffordabilitymoretodowithquanRtyconsumed

•  Smartphonecostisabarrier

Rwanda:71%

Age15+2012Census

Senegal:45%

Age10+2013Census

Literacy

UsageesRmateInternetusers,age15+,Feb.2017

9%

31%

2%

10%

11%

41%

Rwanda Senegal

UseFacebook Don'tuseFacebook Internetusers

Note:DerivedfromnumberofFacebookusersandraRoofsocialnetworkuserstoInternetusersinSenegalandEastAfrica(forRwanda).Source:AdaptedfromFacebook&PewResearchCenter.

2010:1.4%

2010:6.1%

Firmshavingownwebsite(%)

Source:WorldBank,EnterpriseSurveys

0102030405060708090100

Senegal(2014)

SSA World

Small(5-19) Medium(20-99)

Large(100+)

0102030405060708090100

Rwanda(2011)

SSA World

Small(5-19) Medium(20-99)

Large(100+)

Awareness

•  Rwanda:AccordingtoEICV4,only7.1%ofthepopulaRonagedtenyearsandolderwascomputerliteratein2014

AtracRvenessTopsites,February2017

Rwanda

SiteDailyTimeonSite

1 Google.com 8:58

2 Google.rw 6:57

3 Youtube.com 9:35

4 Yahoo.com 4:30

5 Igihe.com 11:35

6 Inyarwanda.com 9:42

7 Ukwezi.com 7:37

8 Umuryango.rw 11:54

9 Ask.com 2:49

10 Wikipedia.org 4:28

SenegalSite DailyTimeon

Site

1 Youtube.com 9:40

2 Google.sn 7:04

3 Google.com 9:02

4 Seneweb.com 11:15

5 Senego.com 11:11

6 Yahoo.com 4:32

7 Leral.net 7:27

8 Dakaractu.com 5:18

9 Buzzsenegal.com 5:03

10 Live.com 4:28

Source:Alexa.

allcountriesshouldhaveaNBPorstrategyorincludebroadbandintheirUASDefiniRon

targetstoachieveby2015

entry-levelbroadbandservicesshouldbemadeaffordable(<5%monthlyGNIpercapita)

40%ofhouseholdsindevelopingcountriesshouldhaveInternetaccess

InternetuserpenetraRonshouldreach50%indevelopingcountriesand15%inLDCs

achievinggenderequalityinaccesstobroadbandby2020

“EnsuringthatciRzen,businessesandgovernmentareconnectedtobroadbandandaffordablyso”.

«En2025,lenumériquepourtousetpourtouslesusagesauSénégalavecunsecteurprivédynamiqueetinnovantdansunécosystèmeperformant».

Government•  95%oftransacRonsoccurringonline

Economy•  100,000jobs•  100largetechcompanies

EducaRon• BroadbandconnecRvitytoallschools

Government• 40%ofadministraRveservicesonline

• Reducegovernmentcostsby60-70%

Economy• 30,500digitaljobs• 500newtechSMEs

EducaRon• 50%ofschoolsconnected&equipped

RWANDAUS$519mEconomicimpact

èUS$1.2b

SENEGALUS$400mEconomicimpact

èUS$0.5b

•  ~US$onebillion•  CarnegieMellonUniversityofthe

UnitedStatesisoneofthecoreanchorinsRtuRonsandthefirstphaseofitscampusisscheduledforcompleRonin2017.

•  ConstrucRonwillconRnueupto2022withaddiRonaleducaRonalandtechcompanytenants.–  4,500highlyskilledICTjobsby2022–  ExportearningsuptoanesRmated

US$180millionby2022.–  Top10companiesgeneraRngcombined

annualrevenuesof$500millionby2025;

•  ~Euro70millionfromAfricanDevelopmentBankapprovedin2015

•  ConstrucRonslatedforcompleRonin2019–  65,000directjobsby2025–  US$200millioninFDI

KIGALIINNOVATIONCITY SENEGALDIGITALTECHNOLOGYPARK(“DIAMNIADIOVALLEY”

Conclusions•  Steadygrowthinbroadbandnetworks•  RwandaaheadinbroadbandcoveragebutSenegalleadsin

usageanddirecteconomicimpact•  Demandhasnotmatchedsupply('IfYouBuildIt,TheyWill

Come’?)•  Mostimpactsare“2G”•  Operatorsmayfinditdifficulttosustaininvestmentsin

lightof“compeRRon”fromOvertheTop(OTT)applicaRons(e.g.,Skype,Viber,Whatapp,etc.)

•  Openaccess,infrastructuresharingandcost-basedwholesaleprovisioncanlowerinvestmentrequirements

•  Theissueoflicensefees

Governmentdemandsideinvestments

•  EducaRon•  Digitalliteracy•  Techstartups•  SMEs

Merci

Thankyou

Dieureudieuf