Challenges facing African Telecom Market

Posted on January 10, 2013 08:11 pm

Africa is officially the second largest market after Asia in mobile usage. The continents telecommunications industry has been among the best performing industries in recent years and has created millions of direct and indirect jobs. However, this year Telecom companies in Africa will face a myriad of challenges that stem from technology trends and customer demands. Most mobile subscribers across Africa regularly experience dropped calls and have been grappling with poor data services and unreliable voice services that despite advancement in technology most telecom companies have failed to upgrade and improve their services.Mobile industry in Africa has grown from the original private and publicly owned telephone monopolies with exception of Ethiopia where Ethiopian government controlled telecom operator to include a host of new entrants such as competitive access providers, resellers, value-added carriers, cable companies, wireless carriers, direct broadcast satellites and media conglomerates.Such developments have brought new challenges to the industry. I think the convergence of applications, networks and content in this new-age information super highway have become the next path breaking move in core mass market technology providing single connectivity and integrated user experience but that has not been the case in Africa.Over the last few years, the continent has created a resounding success story in telecoms. In countries like Uganda, Kenya, Tanzania and Nigeria the rewards of this success have been flowing to customers through intense competition induced price cuts, handset discounts.

Safaricom is the largest telecom company in East and Central Africa region
Safaricom is the largest telecom company in East and Central Africa region

Companies are facing challenges with falling voice revenue and this has not been helped by the fact that Other new substitutes to voice calls namely Skype and WhatsApp have taken the continent by storm. Hard economic times has led to revenues falling in the telecom industry in Africa and this year the emphasis is likely to shift to cost cutting measures to help stabilize margins that were witnessed before global economic crisis. In my opinion, long-term recovery and further organizational transformation and a move to leaner and more efficient businesses are paramount to the telecom industry survival in Africa and that could also guarantee growth and rise in revenue.Revenues have been under pressure due to increased competition among operators as well as the ongoing economic uncertainties facing some African consumers.Worse luck for telcos, African consumers would be unlikely to tolerate increases in prices for most fixed and mobile services. This leaves operators limited to pursuing further growth through LTE, fibre services and cloud data centres.Those that still dominates the telecom market has slowly been eroding.Africa’s mobile market is meanwhile reaching saturation point, with penetration exceeding 100% in some countries due to the large proportion of subscribers making use of multiple phones or SIMs.Most mobile service revenue growth fell year on year over the last financial year and experts are predicting slower revenue growth and continuing negative growth from market leaders. Due to the increasing saturation, mobile subscriber growth is likely to slow down over the next few years in some countries like South Africa, Nigeria and Egypt. Another trend likely to continue is the increasing consolidation among second-tier telecom service providers. Consolidation will help smaller providers recover in terms of revenue growth.

Contador Harrison