Business
Africa’s mobile telecommunications experiencing rapid growth
The rapid growth of Africa’s mobile telecommunications market over the past decade has had a huge impact on African consumers, on operators that do business on the continent, and on governments that have benefited from collecting license and service fees.
There are now more than half a billion mobile phones in use in Africa, representing one of the biggest dramatic surges in usage in mobile telecom’s three-decade history, according to a new study by Booz & Company.
“The past decade has seen a mobile revolution sweep Africa. Operators have invested in networks and coverage, and launched new services, while national governments and regulators licensed operators and established and regulated markets,” said Karim Sabbagh, senior partner and the global leader of the Communications, Media and Technology practice with Booz & Company. “The result is that in just 10 years, a mobile market of more than 500 million customers has flourished, and governments have collected substantial license and service fees.”
The needs of both operators and governments have largely been met by this robust growth, with African and multinational operator groups and their shareholders enjoying high-growth returns with the support of governments and regulators – who, in turn, have benefited from lucrative tax opportunities.
However, with a disciplined and effective regulatory and political approach this growth might have been even more impressive. Now this symbiotic relationship is under increasing strain and could be in danger of disintegrating just when it needs to be at its strongest.
Seasoned investors are taking an increasingly hard look at further investments in Africa because of extreme pricing pressure, an increasingly unattractive investment environment, and continued regulatory risk. Hesitancy on the part of investors could jeopardize Africa’s next wave of telecommunications investment and growth, the rise of 3G-enabled mobile broadband, or the widespread adoption of the Internet in Africa.
“If the relationship between operators and governments holds, the African telecommunications success story will drive forward. If it fails, Africa will miss a critical opportunity for economic and social development as the telecommunications industry and its investors move on to more accommodating markets,” said David Tusa, partner with Booz & Company.
