Frost & Sullivan estimated that, by the end of 2013, the telecommunications penetration in the African continent was 74.8%; largely dominated by mobile connectivity, which accounted for 96.6% when compared to 3.4% for fixed communication. Communication penetration in North Africa was highest, at over 100%, followed by Southern Africa at 97.2%, and West Africa at 81.2%.
Fig 1: Telecommunications Penetration, African Continent per Region, 2013, Africa
Mergers and acquisitions, infrastructure sharing and market liberalisation, are expected to reshape the telecommunications landscape.
Communication markets will become more liberal, especially in countries where governments understand the correlation between Information and Communications Technologies (ICT) development and economic growth. This will drive infrastructure sharing agreements, which are expected to take place as a measure to bring down investment costs and increase reach away from urban areas. With this, new market entrants will emerge in Africa, which will either tap into unexplored markets (for example, the case of Movitel in Mozambique) or strategically acquire a company.
With the entrance of the international submarine cables, investments on the backhaul to last mile infrastructure will begin to increase. Even land locked countries are beginning to benefit from the submarine cables and are decreasing their dependency on the satellites. Countries such as Uganda, Rwanda and Botswana are some examples.
Mobile banking and payments are growing in the continent, and with this new business models integrating communications with other sectors are developing - eEducation, eHealth, eAgriculture and eGovernance initiatives, for example. The ICT convergence with verticals will drive demand for fast, reliable and affordable broadband.
Mobile Network Operators (MNOs) are expected to expand services beyond the traditional core business by strategically entering the digital space such as e-commerce.
The African continent also presents huge opportunities for e-commerce. With the market still unexplored, it is estimated to reach $50bn by 2018, compared to just over $8bn in 2013. Some of the biggest e-commerce companies on the African continent are: Jumia and Buy Correct in Nigeria, Kenya's Kiosk, Botswana's Craft, Kasoa in Ghana, Go Shop in Sierra Leone, and Bid or Buy and Yuppiechef in South Africa.
The fixed line market is controlled by the state owned companies (SoC), which are known to have limited funds for infrastructure development and investments. Lack of competition within the fixed line market has resulted in little motivation to improve services, and customers therefore choose to communicate through mobile devices rather than fixed line modes.
Tanzania, Ghana and South Africa, are some of the exceptions, where two national operators exists:
Most fixed operators have entered the mobile communications market either as a fully state company or in partnership with a private Mobile Network Operators (MNO). Orange, the French telecommunications company for example has been one of the preferred partners for the SoC:
Overview of the mobile communications in Africa
The top five international MNOs present in the African continent are MTN, Airtel, Vodacom, Glo Mobile and Orange, which are present in more than two countries and account for combined share of 37% of the population in Africa.
Given the competitive nature of the market, markets in some regions are beginning to consolidate as a measure to increase market share, infrastructure portfolio, customer base, develop new services, and above all, drive a sustainable growth.
The mergers and acquisitions are taking place between and within MNOs, state owned operators, system integrators and managed services. Here are some examples:
Frost & Sullivan concludes that with fixed and mobile operators strategically tapping into one another's market space, the African telecommunications market will become a highly competitive space. Market consolidation will act as a key driver for the MNO to ensure a sustainable growth in the long run.