“Colossal disparity” between fixed, mobile penetration in Africa

By Tom Jackson, South Africa

There is a “colossal disparity” between fixed and mobile communication penetration rates in Africa, according to analyst firm Frost & Sullivan, with mobile approaching saturation in some countries while fixed suffers from lack of competition, which leads to a lack of innovation provided to customers.

Frost & Sullivan carried out reviews of the telecommunications markets across each region of Africa in 2013, and found mobile communications has 96.4 per cent of the subscriber market share compared to the 3.6 per cent held by fixed communications.

The company said fixed line communication services were hindered by the fact they are offered only by state-owned entities in Africa, meaning they have limited funds for infrastructure development and investment, while the resulting lack of competition means there is little motivation to improve services, meaning customers have increasingly chosen mobile as their primary means of communication.

However, mobile service providers are also facing challenges, according to Frost & Sullivan information and communication technologies industry analyst Naila Govan Vassen, as mobile penetration is “almost saturated” in some parts of Africa, requiring mobile network operators to seek new revenue streams, such as data services.

“In particular, the North African region is on the verge of saturation, with an average mobile penetration rate of 93.4 per cent,” Vassen said. “South Africa, Namibia, Ghana, Mali and Gabon are also in a similar situation, with a 100 plus per cent mobile penetration rate.”

According to Frost & Sullivan, in most cases where African telecoms markets are approaching mobile saturation point it is due to the widespread ownership of double subscriber identity module (SIM) cards.

“High numbers for business-related visitors and tourists has also led to the purchase of SIM cards for short-term use, contributing to mobile saturation in some markets,” the company said. “In fact, touristic appeal is the reason the destination of Seychelles registered a mobile penetration rate of 195.5 per cent by the end of 2013.”

Though the “robust” mobile penetration rates have boosted the growth of the telecoms market in Africa, there are other factors hampering the development of the market, with the company saying fixed and mobile operators alike will be required to invest “huge amounts” in infrastructure development as a result of scattered and low population densities.

“Social, economic and political instability as well as governments’ prioritisation of issues such as poverty, low levels of education, and poor access to healthcare over telecommunications too slow down development,” Frost & Sullivan said. “The market is also consolidating as operators struggle to overcome strict regulations and intense competition within the overall telecommunications market.”

Vossen said urban dwellers are set to become a “minority target” for telecoms providers as most have been exposed to technological and communication developments. She said participants will be required to make communication a commodity in order to gain market share in rural areas.

Frost & Sullivan also highlighted emerging opportunities in the creation of e-government, e-education and e-health platforms, with small and medium enterprises (SMEs) already taking advantage of the proliferation of communication technologies and integrating them into sectors crucial for the development of African countries, giving rise to services such as mobile agriculture and mobile banking.

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