2010 African Mobile Voice Market and Major Network Operators

Mobile phones represent more than 90% of all telephone lines in Africa. Market penetration is expected to pass the 50% mark in 2010, with subscriber growth slowing to around 20% p.a. However, several individual markets are still growing at more than 100% p.a. and stand at only single-digit penetration rates. The continent’s most advanced markets have passed the 100% penetration mark.

Although the greatest demand is in the major cities, cellular solutions are also being employed to increase accessibility in rural and other disadvantaged areas. In addition to mobile networks, WLL systems have been introduced in a large number of countries for the provision of fixed-wireless services. Additional choices are available through satellite-based mobile services such as Globalstar, ICO, Iridium and Thuraya.

The introduction of prepaid services and a steady decline in tariffs has meant that about half of Africa’s close to one billion people can now afford a mobile phone. However, as lower and lower income groups are being targeted, the declining Average Revenue per User (ARPU) is putting pressure on the network operators' profit margins. Literal price wars have broken out in some markets where a large number of operators have been licensed. Despite this, international investors are still very keen to enter the market through new mobile licences or shares in existing mobile operations in Africa.

With their superior national coverage and large subscriber bases, Africa’s mobile network operators have built up a level of market power to the extent that they have been called "the new incumbents". Newly introduced converged licensing regimes have increased the competitive pressure in a number of key markets but also allow the mobile operators to branch out into new service segments.

A variety of companies have established themselves as regional major players in Africa’s mobile sector. South Africa’s MTN and Kuwait-based Zain (formerly Celtel) operate in a total of 16 African countries each, in addition to several in the Middle East. France Telecom, through its Orange mobile division has also established a presence in 16 African countries.

MTN’s archrival in its South African home market, Vodacom’s expansion across the continent has been limited to a total of only five countries due to restrictions from the partnership agreement with its majority shareholder, Vodafone which itself operates in three countries.

Millicom from Luxembourg was also among the early investors, operating under the Tigo brand in six countries.

Orascom from Egypt divested most of its sub-Saharan operations between 2002 and 2005, mostly in markets with low penetration and high growth potential, to concentrate on the more developed North African and Middle Eastern markets. However, in 2008 it established a new subsidiary Telecel Globe to re-enter sub-Saharan Africa, including some of the same markets it had abandoned five years earlier.

Other regional players with major funding from the Middle East include the UAE’s Etisalat under the Moov brand, Warid Telecom, and the Lebanon-based Comium Group. African companies that have expanded beyond their home markets include Zimbabwe’s Econet, Maroc Telecom (with backing from Vivendi of France), Libya’s LapGreen and Sudan’s Sudatel under the Expresso brand.

Further consolidation is expected as smaller players are finding it increasingly difficult to compete. But even the bigger pan-African operators have recently become takeover targets for even bigger global players.

Market highlights:

• Subscriber statistics and estimates for 2010 for each country;
• Mobile market penetration in Africa is expected to pass 50% during 2010;
• At least eight African countries will have broken the 100% mobile penetration barrier by the end of the year;
• While some African mobile markets are still growing at more than 100% p.a.; overall growth across the continent is expected to slow to 17%;
• Mobile ARPU has bottomed in some markets but is still falling rapidly in others;
• Some mobile operators are rolling out national fibre optic backbone networks and are entering new service sectors under converged licensing regimes;
• Mergers and acquisitions (M&A) are expected to intensify in an increasingly crowded market.

African mobile subscriber growth and penetration – 1998 - 2010

(Source: BuddeComm based on ITU, Global Mobile and industry data)

Data in this report is the latest available at the time of preparation and may not be for the current year.