Business
Africa’s mobile telecommunications experiencing rapid growth
Mobile phone use in Africa is now prolific, with handset prices dropping as low as US$10 for a basic GSM due to the accelerated growth experienced in the 2000s. Network equipment prices have also dropped, allowing operators to build coverage and capacity while gaining access to new markets. That left operators positioned to compete for subscribers, mainly using service price as a powerful lever to attract and retain customers.
As price-sensitive traffic volumes grew, operators invested in network capacity and coverage, expanding markets further, attracting yet more customers and the cycle continued.
There have been three distinct growth phases of mobile penetration in Africa from 2000-2010. In the initial tentative growth phase – (2000-2002), penetration rose from 2 percent to 6 percent, followed by a period of accelerated growth from 2003-2005 that saw a surge at a 52 percent annual rate with 21 percent penetration. From 2006-2010, penetration expanded to 51 percent, however growth decelerated slightly to a 26 percent annual rate. Even adjusting for non-addressable market, which can exclude 25 to 35 percent of the population, Africa’s growth has been nothing short of remarkable.
Several operators have driven the surge in growth in Africa and reaped the bulk of its benefits. MTN stands out as the dominant African operator with a portfolio that comprised 21 operating companies serving 141 million subscribers at the end of 2010.
The South Africa-based company – which posted revenue of approximately US$16.7 billion and earnings before interest, taxes, depreciation, and amortization (EBITDA) margins of 44 percent in 2010, has almost 20 million subscribers in South Africa and approximately 40 million in Nigeria.
Another example successfully tapping into the African market is Etisalat; the Emirati telecom’s growing specialization in Africa’s hypercompetitive markets is paying dividends as the group shares techniques and approaches across its Asian and Middle East portfolios.
Both Etisalat and Orange, also having taken up a broad position in Africa, have invested in submarine cable systems on the East and West coasts.
