Africa is the next frontier for mobile manufacturers

Posted on March 2, 2013 05:59 am

Africa’s mobile phone market is now officially the fastest growing in the world. This has turned the region as the last frontier for the industry that has lured international interests from Korean, India and Chinese handset makers. African has challenges like lowering prices for handsets, services and boosting a patchy network. Use of mobiles is exploding among the one billion people in Africa, where landline networks are poorly developed. Many people rely on the devices for financial transactions and that has made Africa the leader in the use of mobile money. Despite the challenges in maintaining networks, Africa is the last frontier of mobile telephony in the world as other markets are maturing while others are saturated. Global consultants PwC recent report indicated the number of mobile telephone subscriptions in Africa has exploded from 16 million in 2000 to more than 500 million in 2012.PwC expects there will be 600 million subscribers in the next three years and many Africans will continue to have two SIM cards to profit from cheaper calls on each network.

Industry estimates data shows that only a little over one third of the population actually had a mobile telephone in the second quarter of 2012.Average revenue per consumer in Burundi, Rwanda or Egypt was about $5 a month. There has also been price challenges for handset manufacturers. According to PwC, total investment in fixed and mobile networks in Africa could rise from $78.8 billion five years ago to $145.9 billion in the next two years.Extending coverage to rural areas means bridging long distances but also requires energy, and the electrical grid is often unreliable and in most parts non existent. Most mobile operators in Africa often resort to costly solutions such as solar panels or diesel generators. The challenge for mobile operators is to provide a network from one end of the chain to the other. Fierce competition for African customers was hurting profits and an average of six operators in a country makes it a difficult market for mobile operators to make sound profits because some operators charge rates below cost and there is lack of consolidation in the telecom sector. Efforts by regulators across the continent to ensure mobile operators share infrastructure so as to ensure coverage of the continent have fallen on deaf ears and that has affected growth of the industry and development of third and fourth generation networks.

Contador Harrison