The telecom market in Africa is set for the next phase of growth. The expeditious roll-out of 4G networks and the influx of low-cost smartphones have given a fillip to the region’s broadband growth. According to per industry estimates, the total mobile traffic in Africa is expected to increase 50 per cent by 2023, driven primarily by the large-scale deployment of 4G and introduction of 5G. To this end, telcos across Africa are likely to invest close to $7 billion towards the upgradation and modernisation of their networks to strengthen their broadband reach and withstand competition. Further, around 40,000 new telecom towers are expected to be installed in Africa by 2021 to support the digital initiatives in the region.
A look at the key emerging telecom trends in the Africa region…
4G gains ground
Although 2G continues to be the dominant mobile technology in most African markets, 3G and 4G are now gaining significant traction. 3G is expected to emerge as the dominant technology in the region over the next few years, accounting for 61 per cent and 70 per cent of mobile connections in sub-Saharan Africa and West Africa respectively. As of mid-2018, the region had over 100 commercial 4G/long term evolution (LTE) networks. This number is expected to increase to 115 by year end. Further, the 4G subscriber base is also doubling every year (although from a small base) with the increasing roll-out of 4G networks and devices. According to industry reports, the 4G subscriber base in Africa is expected to reach 296 million by 2022.
Rising smartphone adoption
The African continent has been witnessing a steady increase in smartphone adoption owing to the improved availability and affordability of smartphones. Markets such as Morocco, South Africa, Algeria and Egypt with a smartphone penetration of over 25 per cent are driving the uptake in the region. As per IDC, a total of 22.4 million smartphones were shipped in Africa during the quarter ended September 2018. China-based smartphone manufacturer, Transsion led the smartphone market, under its brands Tecno, iTel, Infinix and Spice, accounting for 35.4 per cent of shipments during September 2018, while Samsung accounted for a 23.2 per cent market share. By 2025, the number of smartphone connections in sub-Saharan Africa and West Africa is projected to grow to 690 million and 304 million respectively.
Fibre focus
Fibre is now emerging as the preferred solution for delivering high speed data services. The deployment of 300,000 km of fibre is currently under way. The emergence of a converged, service-neutral licensing regime is helping several mobile-only operators to venture into the fibre market. The towercos in the region are also actively exploring this space. In 2018, ATC signed a contract with Frogfoot Networks, while Helios Towers signed a partnership with Vulatel to explore the fibre opportunity in Africa.
Among operators, Liquid Telecom is at the forefront, having built Africa’s largest independent fibre network, which spans over 50,000 km running from the north of Uganda to Cape Town. Other key operators expanding their fibre reach across Africa are Movitel, Halotel, Airtel, Zantel and Vodacom Tanzania.
On the fibre-to-the-home (FTTH) front, only 2 per cent of Africa’s fixed broadband addressable demand is being met, highlighting the huge untapped potential. Safaricom and Liquid Telecom are among the front runners in the FTTH space. Safaricom signed an MoU with Huawei, while Liquid Telecom signed an MoU with the Sudatel Telecom Group to build FTTH networks.
Consolidation in the internet space
Since intense competition has driven down tariffs and impacted operators’ profitability and ability to invest in network expansion, operators have taken the consolidation route to survive in the market. This trend is now catching up amongst internet and broadband players, with the space witnessing increased consolidation activity, particularly between local internet service providers that have 4G LTE frequencies and fibre-to-the-x infrastructure, and multinational operators. The deals between Rain and ARC, and Visafone and MTN Nigeria are examples of such acquisitions. Meanwhile, Vodacom South Africa is in talks to buy 49 per cent stake in FTTH provider Vumatel.
Emerging focus areas
The advent of 4G and 5G technologies in Africa will open up new avenues with new- age solutions and systems such as internet of things (IoT), artificial intelligence, FTTH, and augmented and virtual reality. According to Ericsson, not only Nigeria and South Africa, but the rest of the region, especially East Africa, will continue to see an increase in the number of connected devices and IoT initiatives. The increase in mobile data traffic in Africa is also driving operators to look at opportunities to optimise their network capacities via Wi-Fi networks. However, as Africa embraces digital in a big way, cases of cybersecurity breach will grow manyfold. Thus several countries, including Egypt, Namibia and South Africa, are now in the process of drafting legislation.
Going forward
The commercial launch of high speed 4G services and increasing smartphone adoption are the key trends that will continue to shape the Africa telecom market over the next few years. More than 75 per cent of mobile subscribers on the continent are expected to subscribe to broadband services by 2020.
Going forward, Africa’s growing digital infrastructure market will have something to offer to every participant in the telecom value chain, be it operators, network and technology vendors, handset providers, content developers, optic fibre manufacturers, telecom equipment providers or tower companies.
Akanksha Mahajan Marwah
