Report Summary
While being the worlds most rapidly growing market for mobile telephony and also home to the fastest growing fixed telephony markets in the world, Africa still has some of the world's lowest penetration rates. Foreign investors are scrambling for positions in this very lucrative market as privatisation and liberalisation are progressively being introduced. Explosive growth in the mobile sector has meant that by early-2009 mobile users constituted around 90% of all African telephone subscribers. Other wireless solutions, such as CDMA and WiMAX, are also used to serve as substitutes for inadequate fixed-line infrastructure. A surge in demand for Internet access and broadband capabilities is expected to drive these developments further in the coming years. Several international submarine fibre cables scheduled to go live in 2009 will deliver the necessary bandwidth to Africa and bring down costs. Overall, the continent's telecoms future looks very promising and offers great opportunities to service providers, equipment vendors and investors.
The continent's mobile market is consistently growing at around 50% every year. Enormous further potential remains, with overall market penetration standing at little more than 30%, although the first African countries have recently broken the 100% barrier. Due to Africa's poor fixed-line infrastructure, the mobile networks are beginning to play an increasing role in broadband service provision as well, following the launch of third-generation (3G) services in a number of markets – a welcome new revenue stream in an almost entirely prepaid environment with low Average Revenue per User (ARPU) levels. Mobile ARPU has now bottomed in many African countries and is rising again with mobile data revenue growing at 45% in the continent's leading markets.
Mobile payment and banking services are revolutionising Africa's financial sector. More than 10% of Kenya's GDP now pass through the M-Pesa service, which has more users than there are bank account holders in the country.
At around 85% penetration, the spectacular subscriber growth curve of Algeria's mobile market is beginning to flatten and attention is shifting to maintaining or improving ARPU, which has continued to decline under the intense competition between three networks. The three mobile network operators have entered the lucrative underdeveloped Internet sector by launching mobile data services and will be able to offer true broadband services under 3G licences to be issued shortly. This upcoming competition is accelerating developments in the fixed and fixed-wireless access sector, where ADSL2+ and SHDSL are being rolled out as well as EV-DO and WiMAX wireless broadband services and one of Africa's first FttH networks. In parallel, the national and international fibre optic backbone is being upgraded to an IP-based NGN to support converged services and the growing traffic load. An opportunity to enter the market exists for investors in the upcoming privatisation of Algerie Telecom, for which 45 bidders have shown interest.
Angola is the second-largest producer of oil in sub-Saharan Africa, and the recent rise of oil prices has led to continuous GDP growth of around 20% for the past three years. With peace restored in 2002 after decades of civil war, foreign investment has multiplied and the mobile market has soared. Competition was also introduced in the underdeveloped fixed-line market and several 3G wireless technologies and WiMAX networks are being rolled out. Growth in the Internet sector is being held back by monopolistic pricing of international bandwidth, but this is expected to change with the arrival of new fibre optic submarine cables reaching the country from 2009. Privatisation of Angola Telecom, which is currently implementing a US$500 million national fibre optic backbone, and the licensing of a third mobile operator are also expected in the not too distant future.
A dispute about licence fees between the government of Benin and leading mobile network operators in the country in 2007 led to an only temporary dent in investor confidence. A newly licensed fifth mobile network successfully launched services in June 2008. Growth prospects are excellent, with penetration rates in all market sectors well below African averages. The Internet and broadband market is underdeveloped due to the poor national fixed-line infrastructure and high cost of international connectivity. A planned new international fibre link is expected to lead to significantly lower prices from 2008/09. However, for the market potential to fully unfold, several key policy decisions by the government are required.
Botswana is one of Africa's wealthiest nations with a thriving economy mainly based on diamond mining and tourism. Mobile penetration has passed the 80% mark, almost three times the continent's average. A nationwide fibre backbone network supports a wide range of services, and this landlocked country's access to international bandwidth is being improved. Broadband services are available in the form of ADSL and various wireless technologies, including a city-wide WiMAX network in the capital Gaborone, launched in mid-2008. The government is in the process of privatising the national telco BTC which, through a new service-neutral licence, is now also enabled to compete in the mobile sector.
