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AfricaMoney | August 19, 2017

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Sub-Saharan Africa’s Telecoms market is the fastest growing globally: report

Sub-Saharan Africa’s Telecoms market is the fastest growing globally: report

The report by UK-based consulting major Analysys Mason notes that mobile voice will continue to be the largest component of the telecoms market through 2018, on the back of new subscribers, new market entrants and mobile termination rate (MTR) reductions, which would drive price competition and increase traffic. (Image: Jigsaw)

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, which also indicates that the Sub-Saharan African telecom market is set to be the fastest growing globally

The report by UK-based consulting major Analysys Mason notes that the telecoms market in Sub-Saharan Africa is transitioning, as growing revenue from mobile data services increasingly matches mobile voice growth.

According to Analysys Mason’s regional analyst, Mpho Moyo, the Sub-Saharan Africa 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.

However, he also noted that the market will still remain small compared with other regions.

Titled ‘Sub-Saharan Africa Telecoms Market: Trends and Forecasts 2013–2018′, the report asserts that telecoms service revenue in the Sub-Saharan Africa market is accordingly expected to increase at a compound annual growth rate (CAGR) of 6% during 2013–2018, mobile at 6.7% and fixed at 1.0%.

In absolute terms, revenues are expected to jump from USD 49 billion (approximately Rs 1.5 trillion) in 2013, to more than USD 65 billion (around Rs 2.0 trillion) in 2018.

Accordingly, the Sub-Saharan Africa market, which accounted for only 2.9% of worldwide telecoms revenue in 2013, is expected to increase to 3.6% by 2018.

Furthermore, the telecoms revenue in Sub-Saharan Africa will continue to be heavily dominated by mobile services, which accounted for 86.5% of telecoms revenue in 2013 and will increase to contribute an even higher 89.4% in 2018.

Factors such as increased 3G coverage and capacity and the widespread introduction of low-cost smartphones, are expected to drive the uptake of mobile data services, with a related key driver being the increasing uptake of adjacent digital economy offerings – notably, mobile financial services

Mobile growth is coming partly from expanded penetration of mobile services generally, which begins with a low base, since, as of 2013, the mobile penetration of the population was still below 80% in most Sub-Saharan African countries, excluding Ghana and South Africa.

In the next 5 years, mobile voice and handset data revenue will together deliver a whopping 90% of the total telecoms revenue growth in the region.

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 voice revenue will take second place to mobile data revenue, which will grow far faster at a 5-year CAGR of 19.6% compared with 4.7% for voice.

All in all, 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 African users.

Increased penetration of smartphones in the Sub-Saharan Africa region, with smartphone penetration set to more than double from 12% of handsets in 2013 to 26% in 2018 at a CAGR of 25.2%, is a major factor underpinning handset data growth.

However, access to high-speed broadband services will remain restricted to a minority of users in the region for the next 5 years and 3G connections will account for just 23% of mobile, non-M2M, connections by 2018, while 4G will account for only 3%.

Again, 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.

Moreover, significant structural and commercial barriers will continue to restrain fixed services growth, particularly outside major urban areas.

The report’s co-author, Alexandra Rehak noted that under-penetration of fixed and mobile data services in Sub-Saharan Africa 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,” she pointed out.

Coming to Analysys Mason Limited, the UK firm provides consulting and research services to clients in telecommunications, media, and technology sectors in the Asia-Pacific, Europe, the Americas, the Middle East, Africa, and internationally.

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