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Africa is the last great, untapped telecommunications market: as straightforward subscriber growth slows in the rest of the world, Africa shows only 47% market penetration and offers 500-million potential mobile subscribers.
With this, innovation in Africa is occurring across three key areas – low cost mobile handsets, mobile payments and mobile health – that present massive growth opportunities. These are among the market sentiments of industry players from around the world.
Diogo Sousa, partner: technology, media and telecommunications at KPMG Angola, says: “Africa’s telecoms sectors will continue to undergo huge transformation. While over the last decade this has largely been fuelled by a series of deregulation, convergence and massive investments in undersea cabling and inland fixed and mobile infrastructure – the next wave of transformation in the telecoms sectors will undoubtedly be mobilised by Africa’s +1-billion potential consumers.”
According to Frost and Sullivan, mobile penetration in the sub-Saharan Africa region is expected to increase from 52% in 2012 to 79% in 2020. With this, the introduction of prepaid services and a steady decline in tariffs has meant that more than half of Africa’s close to one billion people can now afford a mobile phone. However, as lower income groups are being targeted, telecoms operators are actively looking to drive mobile and smartphone adoption by offering low-cost handsets and network solutions to mitigate infrastructure issues.
Additionally, individuals will soon have greater access to the internet as a result of digitisation (the migration from analogue to digital technology). It is estimated that the successful completion of the digitisation process will bring about a further drop in telecommunications carriage fees and drive growth in ARPUs (average revenue per users), thereby increasing profitability and allowing content producers to focus on better material. This in turn also bodes immense opportunities to further bridge the digital divide between emerging and developed markets, as digitisation will not only impact the telecommunication industry but also entertainment industries, financial service, agriculture, healthcare, consumer market, and education sectors.
“The transition from traditional to digital models is already prompting a shift in revenue and business models, where notable impact of this can be seen across financial services with the success of mobile money and mobile payments, as well as the rise of alternative business models in the digital music industry and, education where digitisation enhances reach in a region traditionally associated with low literacy levels,” says Sousa. “And we expect that digital solutions will begin to have a notable impact on mobile health too, as innovations in mobile health are transforming health care delivery to both urban and rural communities in Africa.”
Africa is certainly viewed as a growth target and no longer an emerging market and, the relative strength and growth potential of Africa presents endless opportunities. At the same time, however, never before has the telecoms landscape been more complex. Telecoms operators are faced with increasing competition from non-telecoms providers, reduced network investments and the rise of digital media and mobile technology. Added to this, consumers increasingly demand enhanced converged services.
“As communications becomes an increasingly integral element to effective functioning economies in Africa, staying on top of changing consumer behaviour will remain a critical challenge and opportunity for telecoms operators. This is particularly true in the face of new mobile technology, where innovative and sustainable review opportunities will need to be found, quickly. With that, telecoms operators are constantly under pressure to be ready to adapt their business models and service offerings – as improving and managing the customer experience becomes ever more critical to the operator’s survival in Africa’s telecoms sectors today,” Sousa says.