Mobile telecoms in Africa: Five things you should know

Sub-Saharan Africa’s mobile telecoms sector has been one of the continent’s star performers over the past decade. The mobile phone is the leading communications device in Africa.

Swedish communications technology firm Ericsson recently published its Mobility Report that discusses some of the industry trends. How we made it in Africa looks at the highlights from the report.

1. Mobile subscriptions to continue growing

It is anticipated that by the close of the decade there will be 930m mobile subscriptions in Africa, up from the 635m expected by the end of this year.

Mobile users in sub-Saharan Africa are using their phones for a variety of activities that would normally be performed on a PC.

2. Users switching to smartphones

Recent times have seen smartphones in Africa becoming more affordable. Many users are trading their basic handsets for these low-cost smartphones.

This is likely to be good news for mobile operators as smartphone subscriptions is the main source of data traffic growth.

While established players such as Samsung and Nokia have introduced cheaper phones, new entrants such as Tecno and Mi-Fone are also vying for a piece of this market.

“The rapid increase in low-cost (less than US$100) consumer-centric technology such as smartphones and tablets has played a pivotal role in driving growth within sub-Saharan Africa’s mobile market. This growth will be further driven by the increasing number of devices that cost less than $50 that are expected to enter the market over the coming years,” says Ericsson.

3. Data consumption growing, but remains a luxury to many

It is estimated that mobile data traffic in sub-Saharan Africa will rise by around 20 times over the coming six years.

Mobile broadband is now the preferred way for many sub-Saharan consumers to browse the web. In the countries researched for the report, 70% of mobile users access the internet on their devices, compared to only 6% who use PCs.

Social networking platforms have played a role in the growth of mobile traffic. According to Ericsson, some 74% of social network users in sub-Saharan Africa send messages to their friends, 62% check their friends’ updates, 46% upload photos/videos and 15% stream content from these platforms.

However, almost half of mobile users believe that data is too costly, even though they consider it cheaper and more accessible than fixed line internet.

“The region is a relatively price-sensitive market. For mobile services to fully flourish, costs must be minimised,” says Ericsson.

4. Dominance of prepaid means subscribers are less loyal

The vast majority of mobile subscriptions in sub-Saharan Africa are prepaid, as opposed to contract. Last year 99% of subscriptions in Nigeria were prepaid, as were 98% in Kenya and 83% in South Africa.

The prepaid nature of the industry means that subscribers are less loyal to network operators. The introduction of mobile number portability also means that subscribers can switch networks, while keeping their existing phone numbers.

“Operator subscription numbers are constantly fluctuating due to the non-commitment of subscribers,” states the report.

5. Mobile services are moving out of the cities

Mobile-enabled services are expanding from the cities into more remote areas. Despite urbanisation, the majority of people in sub-Saharan Africa are still rural.

Africa’s well documented mobile banking boom has increased access to financial services in rural areas.

“The growing need to be financially independent and increasing mobile penetration is driving the use of mobile phones as a banking channel. This provides a huge opportunity to transform this industry whilst helping to lift people in the lower income groups out of poverty,” says Ericsson.

In some countries, mobile technology is also playing a central role in the transformation of the agricultural sector. In Nigeria, for example, an electronic wallet system allows small-scale farmers to receive virtual vouchers for subsidised seeds and fertiliser directly onto their mobile phones.

However, poor network coverage outside cities and towns remains a challenge. “Rural areas are often seen as having low returns, but as connectivity continues to increase in importance, serving these places will be paramount in helping bridge the current digital divide.”