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TMCNet:  Sub-Saharan Africa's Telecoms Market Fastest Growing Globally

[August 25, 2014]

Sub-Saharan Africa's Telecoms Market Fastest Growing Globally

(AllAfrica Via Acquire Media NewsEdge) The African telecoms market is set to be one of the main growth success stories for the telecoms sector in the next 5 years, according to a new report titled "Sub-Saharan Africa telecoms market: Trends and Forecasts 2013 - 2018" by Analysys Mason.


According to the report, the telecoms market in Sub-Saharan Africa (SSA) is transitioning, as growing revenue from mobile data services increasingly matches mobile voice growth.

Telecoms service revenue in the SSA market will increase at a 6 per cent compound annual growth rate (CAGR) during 2013 - 2018 (mobile at 6.7 per cent and fixed at 1.0 per cent), jumping from US $ 49 billion in 2013 to more than US $ 65 billion in 2018.

Increased 3G coverage and capacity, and the widespread introduction of low-cost smartphones will help support the take-up of mobile data services. A related key driver is the increasing take-up of adjacent digital economy offerings - notably, mobile financial services.

According Mpho Moyo, regional analysts, Analysys Mason, "SSA's telecoms market is growing faster than that of any other region, and will increase its share of worldwide telecoms revenue over the next 5 years, although this will still remain small compared with other regions." The SSA market accounted for only 2.9 per cent of worldwide telecoms revenue in 2013, increasing to 3.6 per cent by 2018.

Telecoms revenue in SSA will continue to be heavily dominated by mobile services, which accounted for 86.5 per cent of telecoms revenue in 2013 and will contribute an even higher 89.4 per cent in 2018. Mobile voice and handset data revenue will together deliver 90 per cent of the total telecoms revenue growth in the region in the next 5 years.

Mobile growth is coming in part from expanded penetration of mobile services generally. Mobile penetration of population was still below 80% in most countries in SSA in 2013, with the exception of Ghana and South Africa. Mobile voice will continue to be the largest component of the telecoms market through 2018, as new subscribers, new market entrants and mobile termination rate (MTR) reductions drive price competition and increased traffic.

However, mobile data revenue will grow far faster than mobile voice revenue (at a 5-year CAGR of 19.6 per cent compared with 4.7 per cent for voice). Mobile handset data's share of total telecoms revenue will almost double by 2018, reflecting the role of mobile devices as the main Internet access point for most users in Africa.

Increased penetration of smartphones in the SSA region is underpinning handset data growth. Smartphone penetration will more than double from 12 per cent of handsets in 2013 to 26 per cent in 2018 (at a CAGR of 25.2 per cent).

Access to high-speed broadband services will remain restricted to a minority of users in the region for the next 5 years. 3G connections will account for 23 per cent of mobile (non-M2M) connections by 2018, while 4G will account for only 3 per cent. Fixed broadband household penetration will continue to lag significantly behind global averages at only 3.3% in 2018, and levels well below 2 per cent in most markets. Significant structural and commercial barriers will continue to restrain fixed services growth - particularly outside major urban areas.

As report co-author Alexandra Rehak notes: "Under-penetration of fixed and mobile data services in SSA represents a major growth opportunity for service providers and other market players, as does the growing demand for value-added digital economy offerings such as mobile financial services. However, affordability, coverage and effective regulatory and market structures remain major challenges for successful telecoms development in Africa." Copyright CIO East Africa. Distributed by AllAfrica Global Media (allAfrica.com).

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