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Sub-Saharan Africa telecoms market to hit $51bn

Admire Moyo
By Admire Moyo, ITWeb's news editor.
Johannesburg, 28 Oct 2016
The number of broadband connections in Sub-Saharan Africa will increase from six million in 2015 to nearly 10 million in 2021, says Analysys Mason.
The number of broadband connections in Sub-Saharan Africa will increase from six million in 2015 to nearly 10 million in 2021, says Analysys Mason.

The Sub-Saharan Africa telecoms service market will be worth $51 billion in 2021, up from $41 billion in 2015.

This is according to a recent report by market analyst firm Analysys Mason, which notes retail telecoms revenue in the region will grow at a compound annual growth rate of 4.1% during 2015 to 2021.

The report includes data for Cameroon, C^ote d'Ivoire, Ghana, Kenya, Nigeria, Rwanda, South Africa, Sudan, Tanzania, Uganda and Zambia. It analyses the most important trends affecting fixed and mobile telecoms services in Sub-Saharan Africa, and examines the impact these trends will have during the next five years.

Analysys Mason says mobile services in the region will represent more than 88.4% of the telecoms service revenue in 2021. It notes this will be driven by population growth, expansion into rural areas and a high demand for mobile data services.

Traffic boom

Mobile voice will remain a key revenue contributor, and both connections and traffic will increase, but there will be greater commoditisation and bundling of voice minutes, the market analyst firm points out.

It adds that mobile handset data services will be the largest source of retail revenue growth in Sub-Saharan Africa between 2015 and 2021, contributing $8 billion.

The increased availability of low-cost smartphones, improved coverage of 3G and deployment of 4G networks are driving the demand for data connectivity and the development of innovative digital services.

The firm says 2G will remain the predominant technology in Sub-Saharan Africa, while 3G's share of connections will increase to 38% in 2021, but 4G will account for only 7% of total mobile connections in 2021.

Karim Yaici, senior analyst at Analysys Mason, says the mobile telecoms market in Sub-Saharan Africa has been growing faster than any other region globally over the last five years.

"While Africa lags behind more developed markets in Asia, North America and Europe in some aspects such as smartphone penetration and fixed broadband adoption, the region has more than a few home-grown success stories, more prominently mobile financial services. The Sub-Saharan Africa region, along with emerging Asia, has plenty of room for growth in terms of mobile services as there is still a large unserved population," says Yaici.

The report notes investment in fixed-wireless and fibre technologies will help to drive the adoption of fixed broadband in the region.

The number of broadband connections in Sub-Saharan Africa will increase from six million in 2015 to nearly 10 million in 2021, but this represents an overall penetration rate of only 4.2% of households, mainly because of the lack of reliable and affordable fixed broadband options, Yaici explains.

SA lead

He points out government-led national broadband plans, coupled with operators' investment in fibre networks and fixed wireless technologies such as TD-LTE, will boost coverage. These plans have already helped to improve broadband adoption in markets such as Kenya, Rwanda and SA, he notes.

"South Africa is certainly leading in terms of revenue, while Kenya is leading on the adoption of mobile financial services and non-voice share of mobile revenue, and Zambia is leading the region in terms of revenue growth CAGR between 2015 and 2021," says Yaici.

He believes in addition to macro-economic challenges faced by oil-exporting countries like Nigeria, the telecoms markets will continue to experience a number of obstacles such as limited broadband coverage, low literacy rates, economic and political volatility, low disposable income, and increasing competition and regulatory actions.

As far as infrastructure development to enable the digital economy is concerned, he urges governments and regulators to develop measures to improve the investment case for operators.

"They should develop detailed broadband plans with realistic speed and coverage targets. They should also encourage cost reduction through initiatives such as network-sharing and spectrum pooling; offer radio spectrum licences with coverage obligations; provide clarity and guidance around use of existing infrastructure; improve economic infrastructure; and encourage technology pilots," Yaici concludes.

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