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SA set for mobile revenue surge

More low-cost smartphones available in SA will positively impact mobile Internet revenues, PwC says.

More low-cost smartphones available in SA will positively impact mobile Internet revenues, PwC says.

SA's mobile Internet access revenues will "far outpace" those from fixed broadband in growth and overall size in the years leading up to 2018 as smartphone penetration gathers pace.

This is according to PricewaterhouseCoopers' (PwC's) South African Entertainment and Media Outlook: 2014 to 2018, which forecasts revenue to increase at a compound annual growth rate (CAGR) of 24.8% during the period.

According to PwC, revenue from mobile broadband will reach a figure of around R61.2 billion in 2018. "In contrast, fixed broadband access revenues will increase at a CAGR of 8.8% over the 2013-2018 period, to total an estimated R6 billion in 2018. Much of this growth will be driven by first-time subscribers," the report says.

Mobile Internet will continue to thrive, according to the PwC, owing to its networks not being constrained by the "major limitations of their fixed-line equivalents", in particular, having a presence in areas that fixed broadband networks do not reach. The report notes a growing pool of low-cost smartphones and favourable data prices will also have a positive effect on the mobile broadband landscape.

"The number of South African mobile connections based on 3G HSPA technology is forecast to overtake the number of 2G GSM subscriptions in the country by the end of 2015," the report says.

Positive outlook

Meanwhile, the International Data Corporation (IDC) says Africa's digital media outlook remains bright, despite challenges such as low propensity to pay for applications and content, as well as lack of ubiquitous high-speed broadband infrastructure.

Citing its "Assessment and Outlook of the Digital Media Ecosystem in Africa" report, the research firm says mobile use, growing e-commerce and a "high digital appetite for social media" will be among the key drivers for continued growth.

Leonard Kore, a research analyst for telecommunications and media at IDC east Africa, says although an estimated 19% of the continent's one billion population is online, the figure is set to grow as infrastructure investment gains momentum, including 3G and the expansion of fibre-to-the-x.

"The growth of digital media has had a positive impact on businesses in Africa in terms of cost reduction, increased employee productivity, and improved communication and information sharing, both internally and externally," says Kore.

He says traditional roles of various market players are expected to evolve as telcos continue to venture into the digital media space, while over-the-top players and original equipment manufacturers emulate telecom services at the application layer, resulting in a transition that has given rise to a friend/foe relationship among these key stakeholders. "Other critical issues include app and content developers seeking better compensation/business models from dominant players such as telcos, all of which must be resolved in order for the ecosystem to grow."


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