Electronic highways make inroads

Lack of access to internet is standing in the way of growth in continent, company says

The project, a railway that connects landlocked Zambia with Tanzania and serves as an alternative export route to Zimbabwe, South Africa and Mozambique, is often seen as one of China's landmark foreign aid projects in Africa because it has helped transform lives and economies on the continent.

But while the effects of the rail line, overseen by the Tanzania and Zambia Railways Authority, are tangible, there are other contributions from China that remain under the radar.

Zhu Ruidian, the 45-year-old executive vice-president of China International Telecommunication Construction Co, says the company's achievements in Africa, though invisible to the public eye, have been just as important as any railway, highway and bridge on the continent.

A leading general contractor for telecom engineering and construction projects in China, CITCC, whose headquarters are in Beijing, has been in charge of building several fiber-optic networks in Africa since 2003.

CITCC's networks, he says, have directly led to the increasing availability and quality of telecommunication services.

"Like roads that connect one place to another, allowing people to travel easier, fiber-optic networks are the expressways for data and information. They form a very important part of the transmission network for every modern telecommunications service provider."

CITCC, which has worked on several high-profile telecommunications-construction projects, including the base station in Qomolangma (also known as Mount Everest) and the satellite ground station in the South Pole, is eager to expand its business overseas.

But Zhu says it is focusing on Africa not only because of its potentially massive telecommunications construction market and friendly ties with China, but because of its lack of widespread access to the Internet which is constraining economic growth.

"On average, each Chinese has more than one cellphone and the smartphone penetration in China is more than 90 percent. But in Africa, cellphone penetration is about 40 to 50 percent," says Zhu, who visits Africa a dozen times a year.

In most African countries, Internet access is limited and slow. Where broadband is available, it is typically very expensive - far beyond the financial means of most Africans, said a recent World Bank report on Africa's information technology infrastructure.

"With the construction of information technology infrastructure higher on the agendas of African governments, the potential is huge. There are plenty of business opportunities for telecommunication construction contractors," Zhu says.

While CITCC's business has been growing annually at nearly 8 percent in China, it has expanded in Africa by nearly 30 percent annually over the past five years.

Africa is CITCC's largest overseas market: 80 percent of its total contracts worth $1 billion have come from African countries. Since the company first entered Africa with a project in Nigeria about 11 years ago, CITCC's African operations have gained a lot of ground. It has eight branch offices, in Nigeria, Niger, Cote d'Ivoire, Sudan, Uganda, Tanzania, the Democratic Republic of Congo and Mauritius.

The eight offices combined have more than 100 employees, 20 percent out of whom are African.

"Once we get big projects, we will bring more troops from China," Zhu says. Usually, we will have a management team of 500-600 people in charge of 5,000 to 10,000 local workers."

In Tanzania, CITCC is building the national information communication technology optical cable backbone transmission network to connect its main cities.

"It is a truly life-changing project. Not only can Tanzania's Ministry of Communication, Science and Technology make real money by leasing the network to telecom operators, but the prices of making phone calls and accessing the Internet have significantly dropped by 50 to 70 percent because of the project."

Though CITCC is the No 1 player in China's telecommunications construction market, it faces increasing competition in overseas markets as more and more Chinese and foreign companies eye business opportunities in Africa.

"It is not just about low prices any more - cultural sensitivity and quality of service are also very important," says Zhu, who adds that CITCC has been providing more consultancy-related, after-sales services.

"They need our expertise in running such networks and data centers," he says.

CITCC also aims to transform itself in Africa from being a network builder to becoming an operator and investor in overseas markets, Zhu says.

"If we only act as a constructor, our influence will end immediately after a project is finished. But we want to be a local African firm that has sustainable engagement in the African market."

Each project CITCC has worked on in Africa receives investment from the African government or loans from the Chinese government. Zhu says the company is now looking for business opportunities to invest in Africa and become a local telecommunications company that offers services ranging from construction and consultancy to becoming a telecom operator.

"There is no clear timetable for that. But I think we are only two to three years away from achieving this goal," Zhu says.

mengjing@chinadaily.com.cn

(China Daily Africa Weekly 11/07/2014 page21)