Mobile giant Bharti Airtel has wrapped up what is being claimed to be the largest network transformation on the African continent, implementing an end-to-end upgrade and expansion in 16 countries, affecting 60 million subscribers.
The programme included upgrading aspects such as switching, radio, network management, data, charging, and consumer-services platforms and systems in partnership with Ericsson. The investment, which included rolling out the latest wireless 2G and 3G technologies, is set to enhance Airtel's network capacity and robustness, and help deliver services to customers at affordable rates.
Africa is one of the fastest growing economies in the world and is home to about a billion people. Sub-Saharan Africa is the fastest-growing mobile market in the world, according to the GSMA, as it has seen an annual growth rate of 44% since 2000, to 475 million mobile connections.
The rapid pace of mobile adoption has delivered huge economic benefits for the region, contributing $32 billion to the sub-Saharan African economy, says GSMA.
However, the environment is intensely competitive and operators have been slashing prices, leading to an increase in traffic and lower profit margins. To cope with the current - and expected - explosion, cellular companies have no choice but to invest in capacity, but are facing a time when revenue growth will plateau, placing pressure on their ability to fund expansion.
Spending spree
Bharti Airtel, the world's fourth-largest mobile operator, has about 60 million subscribers in 17 countries in Africa. This makes it the continent's second-largest mobile group, as MTN has a total of around 124 million customers on the continent, including in SA.
The India-based operator entered Africa in June 2010 when it bought 16 operations from Zain, which include Burkina Faso, Chad, Congo Brazzaville, Democratic Republic of Congo, Ghana, Gabon, Kenya, Madagascar, Malawi, Niger, Nigeria, Seychelles, Sierra Leone, Tanzania, Uganda and Zambia.
In its latest results presentation, the group says it has rolled out 3G services in several countries, taking the total number of countries with 3G to 11.
"Airtel now has the largest network" in comparison with its competition, which is in line with its objective of being the largest 3G network across Africa, it says. In the quarter, it spent $210.7 million on its African network.
Growing need
The recently-completed upgrade also makes Airtel's networks fully ready for next-generation services that include high-speed data and value-added services.
Airtel Africa CTO Eben Albertyn says the programme will allow the company to provide "subscribers with the best network possible, while meeting the growing usage of mobile data".
Lars Lind'en, head of Ericsson sub-Saharan Africa, says: "In the transition to a networked society in Africa, operators are facing growing challenges in meeting the rapidly evolving demands of consumers. The focus of this project was transforming Airtel Africa's networks to meet current and future consumer demands."
According to Informa Telecoms & Media's recent survey, Africa Telecoms Outlook 2013, mobile broadband is the largest single revenue opportunity in Africa in both the immediate and longer term.
Informa forecasts mobile data revenue in Africa will reach $18.5 billion by 2016, accounting for 22% of the region's total mobile service revenue - compared to 12% in 2011.
Rock and a hard place
Richard Hurst, Ovum's emerging markets analyst, says Airtel has been slashing prices in its African operations, which puts pressure on its capital spend and network rollout. He says the news of a continent-wide upgrade is "surprising" as operators are trying to trim costs.
The programme follows the 2011 announcement of an ongoing five-year multi-country managed services agreement, wherein Ericsson would manage and optimise Airtel's mobile networks across Africa.
Hurst says operators need to balance increased subscriber uptake and growing traffic, while dealing with profit margin pressures. "They must invest in their networks and capacity, otherwise they will be left behind."
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