Africa needs at least another 300,000 kms of metro and interurban fibre to extend 4G coverage and be ready for 5G.

For the past two decades, the availability of affordable terrestrial fibre capacity has been one of the most vexing obstacles to the development of the African Internet. Things are changing, according to our research.

Sub-Saharan African (SSA) countries have deployed around 260,000 kilometers in new terrestrial fibre links since 2010. Today, Africa has close to 600,000 kilometers of fibre. At least another 300,000 kms are needed to meet top line national plan targets and moderately densify major African metros.

The nature of the African terrestrial fibre market is evolving, moving from a phase of terrestrial fibre scarcity, with its focus on mobile operator self-provisioning, to an era of more open, more competitive fibre markets where independent fibre companies proliferate. Today, private, wholesale-focused fibrecos account for 50% of all wholesale providers (up from ~30% in 2010), a rise that has fundamentally altered the nature of the African terrestrial fibre market.

African governments have committed around US$1.7bn to building fibre transmission networks since 2010. Governments now control around 30% of all installed fibre in Sub-Saharan Africa (excluding South Africa). In many markets, the government is the largest holder of terrestrial fibre capacity, a trend that carries significant implications as Africa gets deeper into the 4G and 5G era.

As more countries deploy backbones, the fibre bottleneck is resolutely shifting towards metro networks. We estimate that around 70%-75% of the fibre laid out in SSA over the past five years was laid out in the interurban segment. In effect, African metros are not fiberised enough; we estimate that fewer than 20% of Africa's metros with at least 250,000 inhabitants are served by an open access metro fibre ring.

This makes the densification of the African metro as one of the most promising opportunities in the African ICT market today. Overall, we are projecting metro fibre demand to rise by a 30% CAGR between 2017 and 2022; in absolute terms, we expect demand for terrestrial fibre leased capacity to triple from 2017 levels.

Is Africa likely to meet the 300,000 kilometer target?

Our analysis suggests that most markets in Sub-Saharan Africa have hit at least half of their fibre backbone requirements already, primarily thanks to government-built backbones. If they maintain the current pace of build, backbone requirements will be largely addressed within the next 3-5 years.

Several markets do stand out for the scale of their fibre infrastructure gap: Nigeria has the highest fibre requirements in Africa, along with the Democratic Republic of Congo. Those markets need a more proactive, more aggressive push to roll out backbones.

For most others, fibre requirements are increasingly shifting towards densifying urban metros.

This is the next bottleneck, for which challenges are multiple:

• Absence of metro competition in some markets, along with a variety of regulatory constraints (e.g. limitations on ability to use utility poles);

• The cost of rollout remains high;

• Local government hurdles, through rights of way fees and other limitations;

• Some large mobile operators still prefer to build their own infrastructure, rather than share; this constraints demand, and the business case for building more metro fibre;

Most of the above hurdles are slowly being resolved. Hitting the 300,000 kms target will thus be a function of what happens in Nigeria, along with more aggressive metro deployment; the former remains uncertain, we're increasingly optimistic on the latter.

Rural investment

On a stand-alone basis, the business case for telco investment in rural areas still is not a solid one. Therefore, some policy creativity and flexibility continues to be needed to encourage private sector investment in rural areas.

With respect to fibre, we've come around to the idea that there needs to be some form of government intervention in rural areas to catalyse private telco investment. What we found, for example, was that connecting a city to a fibre backbone strengthened the business case for private telcos building more fibre within, and around that city. But this only works so long as the government backbone is not protected from competition through regulatory or other artificial barriers.

The rural business case remains challenging, but it can be made to improve.

By Guy Zibi, founder of Xalam Analytics.