International Bandwidth Trends in Africa What Has (and Hasn t) Changed in the Past Five Years

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1 International Bandwidth Trends in Africa What Has (and Hasn t) Changed in the Past Five Years Patrick Christian August 27, 2015

2 Let s Start with the Global Picture Inter-Regional Internet Bandwidth, 2015

3 Shift Away from the U.S. Regional Capacity Connected to the U.S. & Canada,

4 Growth Has Slowed International Internet Bandwidth Global Growth

5 Private Networks Have Grown International Internet, Private Network, and Switched Voice Capacity

6 IP Transit Prices Still Dropping Median 10 GigE IP Transit Prices in Major Global Cities

7 Submarine Capacity Growth

8 2002

9 2010

10 2015

11 The Future

12 Lots of New Capacity in Africa International Internet Bandwidth Growth - Africa

13 Even Faster Growth in SSA Int l Internet Bandwidth Growth Sub-Saharan Africa

14 Africa is the Fastest Growing Region International Internet Bandwidth Growth by Region,

15 What Has Changed? Sub capacity reaches 33 countries vs just 10 before 2009 (60 landing points vs 12) Seven countries have access to 3 or more cables Africa is world s fastest growing region for Internet bandwidth growth over last five years Int l Internet capacity increased more that 400% since 2011 (500% in SSA)

16 (Still) Mostly Connected to Europe Major International Internet Routes in Africa, 2015

17 Where in Europe? France & UK (Still) Share of Int l Internet Bandwidth Connected to Africa

18 Europe Has Become the Hub Not Just for Africa Changes in Subregional Capacity Connected to Europe

19 Intra-Africa Connectivity Growth Share of Africa Int l Internet Bandwidth by Region, 2011 vs 2015

20 Growth of Small Routes Country-to-Country Routes to Europe vs Within Africa 2015

21 Transit and Transport Pricing

22 IP Transit Port Prices Q Median STM-1 IP Transit Prices in Africa, Q2 2015

23 Transport Prices Rapidly Decreasing Median STM-1 Monthly Lease Prices in Africa,

24 African Routes in Line with Other Major (High Cost) Routes Median STM-1 IPL Price Trends on Major London Routes

25 Some Prices Have Not Dropped Retail Residential Fixed Broadband Prices (1 & 2 Mbps Plans) Nigeria Kenya South Africa

26 3G Mobile Subs Growing 3G & 4G Mobile Subscribers in Africa,

27 What Hasn t Changed for Africa? African Internet capacity is still a small fraction of total global capacity Int l capacity connected to Africa only accounts for 1-2% global bandwidth Int l bandwidth remains primarily on the coast and connected to Europe Little cross-border capacity, terrestrial networks IP transit prices in Africa remain very high Lowest median price $75 per Mbps for an STM-1 vs where 10 Gbps increments are available, prices rarely exceed $25 per Mbps and are below $1 in Europe & the U.S.

28 Sum Up of Changes Int l Internet bandwidth within Africa has a larger share Intra-Africa capacity 10% vs 2% in 2011 Growth in number of routes between African countries (under 1Gbps) Account for 2/3 small routes Wholesale IPT & IPL prices have dropped IPT prices reflect the cost of transport to a hub country, so as transport prices fall so will IPT; however, cross connect and backhaul fees remain expensive

29 Outlook The surge of sub cable construction is largely over and has infused the region with a significant amount of lit and potential capacity Terrestrial regional network construction has started to take off, already see increase in intra-african capacity

30 Outlook continued - Some Numbers Global int l Internet bandwidth CAGR is forecast to be 29% between Africa will be the fastest growing region during this period with demand growing at a pace of 44% per year Demand driven by 3G & 4G mobile subscription growth - 200m (2015) to 573m (2019) from 23% of total subs to 42% Anticipate Africa IP transit prices to decline at a compounded annual rate of 29% slightly higher than the global average of 25%

31 Patrick Christian Senior Analyst