The global GSM Association has published some staggering figures in Tanzania. The group collects data every five years from its 800 network providers. These figures, combined with the research conducted in the Sahel Region, provide a clear picture of mobile usage across the continent.
According to a GSMA report from 2015, almost half of Africa’s 1,17 billion people (557 million) had a mobile phone plan. The GSMA report states that by the end of 2015, nearly half of the 1.17 billion-strong African population (557 million people) had some mobile phone plan.
Studies conducted on the ground reveal two main characteristics of users. First, users favor pre-paid packages. Each subscriber has an average of 1.92 SIM cards.
This is despite the complications that this creates for operators. The market for SIM cards will be huge by 2020, with an estimated 1.3 Billion units.
By 2020, this explosive growth in demand will result in 730 million individual subscribers. The figures are different from one country to another, as is expected. Data for 2014, for example, shows that the top 5 countries (Nigeria, Egypt, South Africa, Ethiopia, and the Democratic Republic of Congo ) make up 44% of total GDP. In contrast, the bottom 30 countries are only 10%.
The actual market penetration rate for SIM cards is 67% amongst those aged 15+ (including those who have multiple cards). Some countries, such as Mali, Gambia, and Gabon, boast rates of over 100%.
A mobile shop in Kabale. Adam Cohn/Flickr, CC BY-NC-ND
Mobile phones have grown in popularity as landlines failed to meet customer expectations during the second half of the 20th century. Mobile use today has an inverse relationship to landline usage in the past.
4G expands rapidly in a continent with 2G.
The African market remains largely dominated by 2G packages, but high-speed mobile connections (4G/LTE) are gaining ground. In 2015, 46/LTE represented 25% of the market; this will rise to an estimated 60% by 2020.
Half of the 4G networks currently in use are less than two years old, and 4G has just been made available in 24 countries.
Smartphone sales now account for 23% of the mobile phone market. These sales are set to increase as infrastructure is modernized and network coverage improves, as are those of low-cost and counterfeit phones from Asia that are flooding the market across the entire continent due to ever-lower prices. Currently, these low-cost phones make up 50% of the market.
Potential growth in revenue per subscriber remains high, especially when compared with figures from Europe or North America. Still, it is dependent upon a wider range of options, better network coverage, and improved service quality. The estimated revenue for an average African subscriber is EUR8 per month (ranging from EUR2 in Ethiopia to EUR28 in Gabon), against EUR27 per month in Europe and EUR53 per month in North America.
The range of applications available is still largely inconsistent with the actual needs – be they to do with agriculture, education, health, food, or services – of a large and disadvantaged proportion of the population. Few are available in the customers’ regional and national languages.
Supply is rapidly adapting.
Unsurprisingly, given that it represents operators, manufacturers, and other producers, GSMA stresses the importance of a new regulatory framework for the digital ecosystem, underscoring the detrimental effect that taxes are having on the development of mobile services in the Democratic Republic of Congo, Ghana, Tanzania, and Tunisia, notably.
In its July 2016 report, the group also stated that operators’ profit margins will only decline as markets become increasingly aggressive and network investment capacities are falling. The fact that EBITDA margins, which hovered around 40% in 2010, will likely decrease to around 30% by 2020 illustrates the need to address questions about the sector’s profitability. However, the outlook for total revenue remains optimistic ($153 billion in 2015, rising to $210 billion by 2020.)
GSMA also highlights upcoming opportunities and challenges. First of all, there are opportunities for telecommunication operators to provide security, distribution, and value-creation (monetizing data content) for data collected across the entire continent. There are also significant opportunities provided by the increasing, but still modest, rise of platform solutions for B2B transactions.
Digital transformation is inevitable.
In addition to clients and regulatory authorities, the GSMA sees the cost of licensing and taxes on imports such as mobile phone accessories (cables, headphones, cameras, flash disks, and so on) as a challenge that will be counterproductive to growth in the sector.
It also highlights the lack of clarity surrounding taxation and national legislation, which deters many transnational investors, and the immaturity of regulators, which hinders the harmonization and allocation of terrestrial frequencies.
The digital recycling sector, relating to the life cycle of all high-tech products, must be completely re-examined, cleaned up, and made viable and profitable in the long run throughout the continent. Digital technology in Africa can and should be sustainable.