How Africa’s 1bn+ population will transform telecoms sector

Africa has earned itself many titles over the years and one of which is that it is the untapped market, with much potential. During 18th annual AfricaCom 2015, which is currently on its second day of the three-day conference in Cape Town, the continent has been branded with another title — that of being the untapped telecommunications market.

Against a slowing subscriber growth around the world, Africa is showing a 47% market penetration and offers 500 million potential mobile subscribers.

“Africa’s telecoms sectors will continue to undergo huge transformation. While over the last decade this has largely been fuelled by a series of deregulation, convergence and massive investments in undersea cabling and inland fixed and mobile infrastructure — the next wave of transformation in the telecoms sectors will undoubtedly be mobilised by Africa’s 1 billion-plus potential consumers,” said Diogo Sousa, of KPMG Angola in a recent media release.

Read more: How will new technology transform Africa? [AfricaCom]

Mobile penetration in the sub-Saharan Africa region is expected to increase from 52% in 2012 to 79% in 2020, this is according to Frost and Sullivan. A few days ago the Ericsson Mobility Report was released and though its numbers differ, it was also optimistic about mobile penetration in sub-Saharan Africa.

What is aiding the growth of mobile penetration and enabling one billion people to now afford a mobile phone, according to Frost and Sullivan, is the introduction of prepaid services and a steady decline in tariffs. The introduction of more affordable smartphones has also had a huge impact on mobile penetration.

Frost and Sullivan note that the introduction of such devices to the market is a direct result of telecom operators that are actively looking to drive mobile and smartphone adoption to mitigate infrastructure issues.

Mobile users in Africa can look to further exploit the internet when the migration from analogue to digital technology is completed. This completion will cause telecommunications carriage fees to drop thus driving the growth in average revenue per users. All of this will have a domino effect on mobile penetration, resulting in content producers to focus on creating better services as a result of the increase in profits.

Read more: What will the African tech landscape look like in 2019?

“The transition from traditional to digital models is already prompting a shift in revenue and business models, where notable impact of this can be seen across financial services with the success of mobile money and mobile payments” Sousa said.

Furthermore, the migration will not only impact the telecommunication industry. By bridging the gap between the digital divide between developing and matured markets, it will enable the entertainment industries, financial service, agriculture, healthcare, consumer market, and education sectors.

The challenge then in this fast growing mobile penetration for telecommunication companies is to stay abreast with consumer trends, even predict them where it is possible.

In addition to consumer trends, the telecoms industry faces increasing competition from non-telecoms providers, reduced network investments and the rise of digital media and mobile technology. This challenge has been intensified by the fact that Africa is ripe for endless opportunities.