Telecoms – An African development opportunity

 

When it comes to telecommunications, Africa is a continent of great opportunity. With at least 500 million potential mobile subscribers, it presents a massive consumer market when compared with the slowdown in subscriber growth in the rest of the world. With only a 55% penetration mobile penetration rate across 22 African markets, due to factors such as cost, interest by foreign investors in this market continues to grow at a steady pace.

Health and education – how mobile can help

Mobile technology, namely in the form of mobile phones, has been transformational for individuals across Africa. While the continent battles with poor infrastructure and large distances between communities, mobile telephony has brought a wide range of business and personal opportunities, including raising the standard of living for the rural poor.

According to The Learning Lab project, mobile devices are a scalable technology that can help to address education gaps and reduce drop-outs from primary education. Students with a camera enabled cell phone, for example, can do internet research or annotate their assignments with pictures. M-education allows those in far-reaching areas to access new fields of knowledge and learning, anywhere, anytime, eliminating travel time and costs. This is of enormous benefit to learners, especially in areas where reliable transport is a problem. Not only does it benefit the user/learner, it ultimately helps to uplift the community as a whole.

The telecoms industry can also help to revolutionise the healthcare industry by providing communities with instant access to health care providers and resources. A mobile health care culture aids better exchange and flow of documents and data, increased information security and privacy, and allows sharing across regions.

Orange dials into the African market

Recent trends show that Mobile Virtual Network Operators (MVNOs) could be the future of the telecommunications industry in Africa. An MVNO piggybacks on another company’s wireless network to provide services and studies by Pyramid Research reveal that this new breed of operators is expected to solve traditional network problems such as lack of consumer segmentation and network capacity. Despite the dominance of established networks, the demand for mobile telephones is a healthy indicator that MVNOs are a real possibility for Africa.

For Manifest Mind, the mobile telecommunications industry is a driving force for economic growth across the continent while enabling the development of a higher and safer standard of living. They estimate that the African telecom market will grow from a combined value of over US$60 billion in 2013 to a value in 2020 of almost US$234 billion, with a compound annual growth rate (CAGR) of 21.27% – an attractive prospect for foreign investors.

One such group is global mobile phone operator Orange which has made known its intention to enter the South African mobile market as a MVNO and is looking to build a widespread Wi-Fi network. The company will not buy an existing operator but instead join the virtual space already occupied by Virgin Mobile. Despite voicing concerns over the lack of competitiveness in the market, Orange is pressing ahead with the opportunity.

A bright future for telecommunications in Africa

Another Manifest Mind study reveals that that the telecommunications market in Africa is developing in a unique way when compared with the rest of the world, with mobile phones having become one of the most valued possessions for many Africans. And, although Africa boasts a number of fast-growing economies, many inhabitants still live below the poverty line. As such, mobile users in Africa are highly sensitive to costs and have adopted mobile phone–usage strategies such as phone sharing and SIM swopping. This exposes a mobile telecommunications market of more than 700 million people who have yet to own their own phone and are ready to explore new telecommunications opportunities.

 

David Okwara

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4 Responses to Telecoms – An African development opportunity

  1. ubababs March 25, 2014 at 12:22 pm #

    Telecoms has actually been very fantastic in the developmental opportunities in Africa in various perspectives,through the enlightenment via the pessing of information by handsets or computers,etc.

    • KPMG Africa March 27, 2014 at 9:03 am #

      Thanks Ubababs,
      You are right, in fact, we are yet to fully explore the opportunities in the mobile sector. Mobile related opportunities can be useful in the areas of telemedicine, IT Backbone, access to financial services, etc.
      We are delighted you find our reports useful.

  2. fawzi jeeachee June 1, 2014 at 12:49 am #

    I work for Mobile network and and looking for opportunities to enter africa as a MNVO.

    Can you help and advise on where i can relevent inofrmation on countries most favourable to this and how i coudl proceed please

    thanks

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