Simbanet Tanzania Interview

Tanzania Internet Outlook

TANZANIAINVEST has been interviewing Mr. Rakesh Kukreja, Managing Director of Simbanet Tanzania, to gather his vision and opinion about the Tanzania telecoms sector.

TI: How would you define the current situation of high speed internet connection in Tanzania?

Rakesh Kukreja – Simbanet Tanzania: In East Africa, the only means of connecting to the internet or international gateways is satellite.

We have not received a fibre cable connection yet although there are several initiatives to bring the fibre to the eastern coast of Africa, which will bring the revolution to this part of the world.

In the meantime, satellite is the only choice to have connectivity.

As far as satellite and its reliability is concerned, I would say that we operators are able to deliver without problems.

TI: Do you think the controversial EASSy optic fibre project will go through?

RK: EASSy is a very ambitious project and it has gone though most of the hurdles it had faced.

I will not say we are on the final stage yet, but I can see that we are close to saying that it has started rolling out.

I am aware there are parallel initiatives to EASSy like the one from the Kenyan government to finance directly a fibre optic connection to disserve Kenya as well as the neighbouring countries.

It is surprising that Kenyan Telecom, which is owned by the Kenyan government, was part of the EASSy consortium.

There is also another private similar initiative called KDM.

Both projects, I think, are quiet distant from realistic feasibility.

However, such initiatives should be welcome.{xtypo_quote_right}EASSy is a very ambitious project and it has gone though most of the hurdles it had faced.{/xtypo_quote_right}

Eventually, I think the consortium structure for such ambitious projects is always the solution ahead.

You can see that in West Africa, where the fibre was deployed 4 years ago with the SAT-3 cable, the end users and the operators have not gained substantial benefits.

The cost per megabit in West Africa, before and after SAT-3, is the same if not higher.

The cost has not gone down because, by the time SAT-3 was terminated, its capacity was insufficient with the increased capacity requirements, so that the satellite is still compensating most of that requirement.

Something similar happened in South Africa where most of the fibre capacity was monopolised by the state owned company and hence the end users never received benefits from that situation.

Now EASSy is one of the ambitious projects, made of a consortium of people with different experiences and expectations and hence the chances for it to work are real.

TI: By approving a converged licensing framework in 2005 to allow operators to offer any type of services with the technology of their choice with one single license, Tanzania has made a pioneer move in Africa. What does that imply?

RK: In broad terms, this new licensing framework calls for a convergence, where most of the licenses that used to be available on the technology point of view, are on the application point of view.

For example, the first license for GSM for mobile telephony was available on GSM as a technology, but today if you have the network service license you can give any kind of telephony to your users, irrelevant to the technology you use.

TI: Tanzania is pursuing the deployment of a national cable communication backbone. How necessary is it, in consideration of the development of wireless technologies? Will the cable backbone ever see the light?

RK: Cable solutions are always targeted as final solutions for the long term because they can meet the next 15 to 20 years requirements and they are much more reliable.

If somebody takes the initiative, independently or in a consortium, to go for cable to sell data requirements to operators for internet, TV, voice and so forth, which requires 50 years to produce a Return on Investment, it will help the end users because all the operators will benefit from it and it helps further the growth of the infrastructure.

There is now, with the new Ministry of Infrastructure Development, a new and more vigorous focus towards the development of the national backbone. {xtypo_quote_left}There is now, with the new Ministry of Infrastructure Development, a new and more vigorous focus towards the development of the national backbone.{/xtypo_quote_left}

I have seen some initiatives in that sense, like the effort by the Tanzania Railways Authority (TRC) and TANESCO, the national electricity company, to deploy fibre through their network.

TANESCO, for example, covers about 30% to 40% of the population.

As it may not be economically viable and take too long to deploy the cable to all villages in Tanzania, the capillary distribution can be done by a last mile solution, like VMAX or satellite solutions.

Any technology you choose requires a very good backbone anyway.

So the idea is to connect a ring of major regional headquarters and then use last mile solutions.

As far as we are concerned, we are playing a major role in the last mile solutions and hence we are looking for the bigger players, such as TRC, to do this exercise of deploying the backbone.

If you really would like to grow, it is possible to do a lot of things together and maybe to outsource the management of the fibre to other operators.

This is how the national infrastructure can be built.

If it has to be done entirely by the government, however, [because] it will not happen because of other priorities.

If you expect the private operators to do it, they will do it for themselves and hence the common user will have to pay for it.

However, if it is done by a third party or a consortium, everybody shares it and it is the best way to do it.

The Tanzania Telecoms Sector Outlook

TI: SIMBANET is present in several different African counties. Why did it chose to come to Tanzania?

RK: SIMBANET was formed in Tanzania because the group has been in East Africa, and especially in Tanzania, for the last 30 years.

When the market started developing, we started to be more focused on software and on communication solutions as we saw that these two vertical segments would be driving the forces of the Information and Communication Technologies (ICT).

Accordingly, in 1999 we formed SIMBANET Tanzania.

I joined as General Manager and then became Managing Director three years later.

After the success here in Tanzania, two years later we took SIMBANET to Nigeria where we replicated our efforts.

The idea is to take SIMBANET to most parts of the English speaking countries in Africa where we already are, so we don’t reinvent the well everywhere we go.

In this sense, Tanzania has become the technology hub for us, the UK being our commercial headquarter.

A decade ago, people were not very optimistic that this formula would work and that we would be able to put up corporate solutions for the high speed internet and data connectivity.

Soon after, our dreams came true because we realised that being the people on the ground and knowing the land and the people better, it has helped us to bring the ICT solutions together.

Considering all the factors involved, such as human resource availability and skill and the country’s power situation, we brought the relevant technologies and the solutions that fit in these.

This is why we have all the government accounts, the oil companies, the banks and NGO’s using our solutions.

Today, SIMBANET has 13 ISPs working with our backbone. We provide them the technology and the equipment and they simply have to pay a monthly service fee.{xtypo_quote}Tanzania has become the technology hub for us, the UK being our commercial headquarter.{/xtypo_quote}

TI: Where do you foresee the most interesting opportunities in Tanzania for SIMBANET?

RK: Internet is an ongoing market and soon selling this may not be the core activity for most of the ISP’s because it will automatically become the value added service.

Hence our main focus now is the data connectivity for corporate and government institutions.

This is where we have deployed most of our efforts and investments.

Today, we have our satellite data hub in Tanzania in Dar es Salaam.

This is what helps most of the banks to connect their regional headquarters and branches to the Dar es Salaam headquarters.

We have replicated the same model in Kenya in Nairobi, in South Africa in Johannesburg and also in some European countries like Germany and UK as well as in the US.

So, today we can provide very cost effective solutions to transfer data among these peering points.

TI: You are already present in Tanzania and Kenya. What are your ambitions in Uganda?

RK: In Uganda, for some reason the government has not issued new licences for the past five years.

Recently, in 2006 they have opened up again and they are ready to license new operators.

Hence soon you will find SIMBANET having a presence in Uganda.

TI: Back to Tanzania, what do you think will be the role this country plays concerning ICT in the region?

RK: If you look at the growth which Tanzania has experienced in the last four to five years and compare it with those in its neighbouring countries, Tanzania has done an excellent job.{xtypo_quote_right}I really look forward to Tanzania playing a major role in ICT in Africa.{/xtypo_quote_right}

Especially the government has proved to be open by encouraging new initiatives, whereas, in other countries, the governments were stopping initiatives.

So, I really look forward to Tanzania playing a major role in ICT in Africa.

TI: What makes Tanzania so unique?

RK: If you see the political stability of the country from its independence, this answers most of the question.

If you compare [it] with most of the African countries [where] you see political instability that frightens investors.

I think the foundation of the country was to live together and such a foundation is so strong that all the different tribes, both at an official and a personal level, speak the same language.

This does not happen in most of the African countries that I have visited, where doing business and living together becomes difficult sometimes.

Tanzania lags behind in many areas because the country did not proceed towards a market driven economy in its early stages, but if you look at the last ten years, we are filling that gap to leave it behind.