Africa’s mobile market is among the fastest-growing in the world, again gaining around 100% during 2005. The fact that 14 African countries have achieved triple-digit compound annual growth rates (CAGR) for the past five years shows that this growth is not just short-lived. It is primarily due to the small number and high cost of fixed-line connections, which seldom extend beyond the major urban centres.
As early as 2001, Africa became the first continent as a whole where mobile phones outnumbered fixed telephone lines, which individually is the case in most African countries today. Every country on the continent now has at least one mobile network in operation. Mobile penetration broke through the 10% barrier in 2005 and exceeded 13% by September, with several countries reaching more than 50%. This compares to only 3% penetration of fixed-line telephony.
The mobile market is open to competition in the majority of the countries, featuring between two and four operators, and it is largely private sector driven. However, developments are still hampered by regulatory environments. Mobile licences frequently require that operators rely on a fixed network operator for interconnection, and relatively few countries allow their mobile operators to operate their own international gateways. A number of mobile operators have therefore acquired fixed-line licences in 2005, for example in Algeria and Morocco.
Tariffs are expected to come down once mobile and fixed have an even playing field, including international gateways. Competition has already dramatically reduced mobile tariffs, which are now close to fixed services in some countries.
Africa is experiencing growth rates in Second Generation (2G) mobile systems now that much of the rest of the world saw during the nineties, and this growth will continue for some time to come - most African markets are far from reaching saturation points. Unlike the rest of the world, Africa will not experience the painful dip between 2G and 3G deployments that the rest of the world saw in recent years - probably quite in the contrary: The first 3G systems were launched in Africa as early as March 2003 (Code Division Multiple Access - CDMA 2000) and November 2004 (Wideband CDMA - WCDMA), not too far behind their European and American counterparts. And unlike the rest of the world, Africa has the killer application for 3G in store: Internet access. Fixed-line infrastructures are poor and owning a personal computer is out of reach for most Africans. But more and more Africans do own a mobile phone and will embrace the opportunity to access the Internet with 3G phones once prices for the phones come down as well. Several mobile operators have already positioned themselves as ISPs.
Regional and international players continued to jostle for positions in Africa’s lucrative mobile market throughout 2005, and 2006 is likely to see more consolidation. Particularly remarkable is the influx of Middle Eastern capital: Kuwait’s MTC acquired pan-African mobile operator Celtel for a record US$3.4 billion in 2005, outbidding South Africa’s MTN. Etisalat of the UAE acquired 50% of Atlantique Telecom’s seven African mobile operations, including management rights. Saudi Arabian companies were also involved in various bids.
MTN lost out in the Celtel bid, but nevertheless increased the number of its African country operations from 6 to 9 during 2005 and in addition acquired a stake in Iran’s second mobile licence.
This annual report offers a wealth of information on the Mobile market, covering:
Learn how to effectively navigate the market research process to help guide your organization on the journey to success.Download eBook