Africa leads mobile Internet growth

Johannesburg, 22 Jul 2009

The mobile broadband market in the Middle East and Africa (MEA) will be worth $6 billion by 2011, with Africa being the larger contributor.

A recent white paper released by telecoms advisory and investment firm Delta Partners shows that the MEA region can expect a mobile Internet boom over the next few years.

“The Middle East and Africa region has been the world's fastest growing region in terms of mobile penetration in the recent past. In addition, fixed-line penetration has stagnated at around 4% across Africa, which is further driving the growth of mobile on the continent,” says Daniel Torras, a principal at Delta Partners' Johannesburg office.

The lack of fixed infrastructure, coupled with high costs of service provisioning, has severely hampered the development of broadband such as ADSL, particularly in Africa, he adds.

He says another catalyst to the growing adoption of mobile connectivity is improved international capacity linked to the continent through several undersea cable projects. The company says these cables will help lower costs over time.

According to Torras, the mobile operators in the region are aggressively developing their 3G networks and moving beyond simply providing voice. “Broadband is increasingly seen as the growth driver for mobile operators and the mechanism towards creating the stickiness factor, particularly for retaining high-value customers.”

Delta Partners predicts nearly 70% of the broadband services in the Middle East and Africa will be delivered over wireless networks by 2011 - up from about 38% today. The growth in terms of subscribers will be from 2.5 million to around 40 million by 2011, a revenue growth of $5billion to $6 billion.

“There are a few success factors operators should consider, such as gaining access to international connectivity at competitive prices, an efficient network operation and developing an effective go-to-market approach,” says Torras.

Setting up a dedicated customer care channel and targeted value proposition can also go a long way in ensuring customer development and retention, he adds. “This is especially important as high-value customers in MEA tend to constitute only 10%-20% of the subscribers, but 50%-60% of the revenue.”