The African telecoms market is set to be one of the main growth success stories for the telecoms sector in the next five years, according to a new report entitled Sub-Saharan Africa telecoms market: trends and forecasts 2013–2018 from telecoms specialist Analysys Mason.
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% CAGR during 2013-2018 (mobile at 6.7% and fixed at 1.0%), jumping from US449billion in 2013 to more than US4$65billion 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 to Analysys Mason’s regional analyst Mpho Moyo, “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% of worldwide telecoms revenue in 2013, increasing to 3.6% by 2018.
Telecoms revenue in SSA will continue to be heavily dominated by mobile services, which accounted for 86.5% of telecoms revenue in 2013 and will contribute an even higher 89.4% in 2018. Mobile voice and handset data revenue will together deliver 90% 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% compared with 4.7% 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% of handsets in 2013 to 26% in 2018 (at a CAGR of 25.2%). 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% of mobile (non-M2M) connections by 2018 while 4G will account for only 3%. Fixed broadband household penetration will continue to lag significantly behind global averages at only 3.3% in 2018, and levels well below 2.0% 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.”